SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report: September 18, 1997
(Date of earliest event reported)
FIRSTPLUS Investment Corporation
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(Exact Name of Registrant as Specified in its Charter)
Nevada 333-26527 75-2596063
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
377 Howard Hughes Parkway
Suite 300N
Las Vegas, Nevada 89101
-------------------------- ---------------------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (702) 892-3772
No Change
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
------------
Reference is hereby made to the Registrant's Registration Statement
on Form S-3 (File No. 333-26527) pursuant to which the Registrant
registered issuances of FIRSTPLUS Home Loan Owner Trust asset backed
securities, issuable in various series, for sale in accordance with the
provisions of the Securities Act of 1933, as amended (the "Act").
Reference is also hereby made to the Prospectus dated September 10,
1997, and the related Prospectus Supplement, dated September 10, 1997
(collectively, the "Prospectus"), which were previously filed with the
Commission pursuant to Rule 424(b)(5), relating to the publicly offered
FIRSTPLUS Home Loan Owner Trust 1997-3 Asset Backed Notes and Asset
Backed Certificates, Series 1997-3, consisting of (A) the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class
A-8, Class M-1 and Class M-2 Asset Backed Notes (the "Notes") and (B)
the Class B-1 Asset Backed Certificates (the "Certificates" and,
together with the Notes, the "Publicly Offered Securities").
Capitalized terms used but not defined herein have the meanings assigned
to such terms in the Prospectus.
The Publicly Offered Securities were sold to Bear, Stearns & Co.
Inc. ("Bear Stearns"), Banc One Capital Corporation, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and PaineWebber Incorporated
(collectively, the "Underwriters") pursuant to the terms of an
underwriting agreement dated September 10, 1997, as supplemented by a
terms agreement dated September 10, 1997, each among Bear Stearns, as
representative (the "Representative") of the Underwriters (such
underwriting agreement, together with such terms agreement, the
"Underwriting Agreement"), the Registrant, FIRSTPLUS Financial, Inc.
("FFI") and FIRSTPLUS Financial Group, Inc. A copy of the Underwriting
Agreement is filed herewith as Exhibit 1.1.
The Notes were issued pursuant to an Indenture dated as of
September 1, 1997 (the "Indenture") among FIRSTPLUS Home Loan Owner
Trust 1997-3 (the "Issuer" or the "Trust") and U.S. Bank National
Association, as Indenture Trustee (the "Indenture Trustee"). A copy of
the Indenture is filed herewith as Exhibit 4.1.
The Notes are secured by the assets of the Trust pursuant to the
Indenture. The assets of the Trust primarily include a pool of home
loans (the "Home Loans") consisting of loans which are secured by
mortgages, deeds of trust or other similar security instruments. The
Home Loans consist of loans for which the related proceeds were used to
finance (i) property improvements, (ii) debt consolidation, or (iii) a
combination of property improvements, cash-out or other consumer
purposes.
The Certificates represent the entire undivided ownership interest
in the Trust and were issued pursuant to the Trust Agreement dated as of
September 1, 1997 (the "Trust Agreement") among the Registrant, as
Depositor, FIRSTPLUS Residual Holdings, Inc., as the Company, Wilmington
Trust Company, as Owner Trustee, and U.S. Bank National
Association, as Co-Owner Trustee. A copy of the Trust Agreement is
filed herewith as Exhibit 4.2.
The Home Loans were sold by FFI to the Registrant pursuant to the
terms of a Loan Sale Agreement dated as of September 1, 1997 (the "Loan
Sale Agreement") and were simultaneously sold by the Registrant to the
Trust pursuant to the Sale and Servicing Agreement (defined below). A
copy of the Loan Sale Agreement is filed herewith as Exhibit 10.1.
The Home Loans will be serviced by FFI, an affiliate of the
Registrant, pursuant to the terms of a Sale and Servicing Agreement
dated as of September 1, 1997 (the "Sale and Servicing Agreement") among
the Registrant, as Seller, FFI, as Transferor and Servicer, the Issuer,
and U.S. Bank National Association, as Indenture Trustee and Co-Owner
Trustee. A copy of the Sale and Servicing Agreement is filed herewith
as Exhibit 10.2.
Set forth below is a brief description of certain characteristics
of the Home Loans included in the Home Loan Pool as of the end of the
Funding Period.
The Home Loan Pool consists of 25,638 Home Loans having a Pool
Principal Balance as of the respective Cut-Off Dates of the related Home
Loans of $799,999,152.46. The Home Loans (by Pool Principal Balance as
of the applicable Cut-Off Dates) have the characteristics set forth in
the following tables:
<TABLE>
<CAPTION>
HOME LOAN RATE
RANGE OF NUMBER OF PERCENT OF TOTAL
HOME LOAN HOME AGGREGATE BY AGGREGATE
RATES (%) LOANS PRINCIPAL BALANCE ($) PRINCIPAL BALANCE (%)
<C> <S> <S> <S>
Less than 11.00% 164 $ 5,083,243.33 0.64%
11.00 to 11.99 2,736 93,125,075.03 11.64
12.00 to 12.99 6,148 205,322,475.25 25.67
13.00 to 13.99 6,830 217,261,597.71 27.16
14.00 to 14.99 5,092 152,364,415.36 19.05
15.00 to 15.99 3,001 85,031,646.01 10.63
16.00 to 16.99 1,189 30,866,085.04 3.86
17.00 to 17.99 378 8,824,645.71 1.10
18.00 to 18.99 91 1,917,961.76 0.24
19.00 to 19.99 9 202,007.26 0.03
TOTAL 25,638 $799,999,152.46 100.00%
</TABLE>
The weighted average Home Loan Rate of the Home Loans as of the Cut-Off
Date was approximately 13.801% per annum.
<TABLE>
<CAPTION> Cut-Off Date Loan Principal Balances
RANGE OF
CUT-OFF DATE NUMBER OF AGGREGATE
PRINCIPAL BALANCE ($) HOME LOANS PRINCIPAL BALANCE($)
<S> <C> <C>
Less than 10,000.00 197 $ 1,887,337.06
10,000.00 to 19,999.99 4,058 67,281,977.42
20,000.00 to 29,999.99 9,601 244,636,771.69
30,000.00 to 39,999.99 7,094 247,728,623.63
40,000.00 to 49,999.99 3,217 148,357,375.66
50,000.00 to 59,999.99 816 45,494,356.29
60,000.00 to 69,999.99 468 30,473,851.43
70,000.00 to 79,999.99 187 14,138,859.28
TOTAL 25,638 $799,999,152.46
</TABLE>
The average principal balance of the Home Loans as of the Cut-Off Date
was approximately $35,773.65.
Original Loan Principal Balances
<TABLE>
<CAPTION> Aggregate
Range of Principal Balances Number of Principal
at Origination ($) Home Loans Balance
<S> <C> <C>
Less than 10,000.00 11 $ 81,741.45
10,000.00 to 19,999.99 3,301 50,532,803.16
20,000.00 to 29,999.99 9,306 226,494,877.43
30,000.00 to 39,999.99 7,667 258,151,747.53
40,000.00 to 49,999.99 2,956 128,727,583.72
50,000.00 to 59,999.99 1,566 80,891,249.20
60,000.00 to 69,999.99 579 36,443,683.91
70,000.00 to 79,999.99 210 15,340,295.90
80,000.00 to 89,999.99 42 3,335,170.16
Total 25,638 $799,999,152.46
</TABLE>
The average principal balance of the Initial Home Loans at origination
was approximately $31,453.69.
Geographic Concentration
<TABLE>
<CAPTION> Number of Aggregate
State Home Loans Principal Balance
<S> <C> <C>
Alabama . . . . . . . . . . . . . . . . . . . . . . . 3 $ 89,597.92
Alaska . . . . . . . . . . . . . . . . . . . . . . . 46 1,633,706.42
Arizona . . . . . . . . . . . . . . . . . . . . . . . 919 26,739,919.33
Arkansas . . . . . . . . . . . . . . . . . . . . . . 81 2,483,855.88
California . . . . . . . . . . . . . . . . . . . . . 7,664 253,920,339.05
Colorado . . . . . . . . . . . . . . . . . . . . . . 1,052 32,849,399.13
Connecticut . . . . . . . . . . . . . . . . . . . . . 128 4,036,592.54
Delaware . . . . . . . . . . . . . . . . . . . . . . 29 880,624.82
District of Columbia . . . . . . . . . . . . . . . . 10 336,524.80
Florida . . . . . . . . . . . . . . . . . . . . . . . 2,509 76,046,622.61
Georgia . . . . . . . . . . . . . . . . . . . . . . . 1,222 36,462,657.82
Idaho . . . . . . . . . . . . . . . . . . . . . . . . 341 10,418,025.86
Illinois . . . . . . . . . . . . . . . . . . . . . . 573 17,045,333.65
Indiana . . . . . . . . . . . . . . . . . . . . . . . 638 20,014,431.35
Iowa . . . . . . . . . . . . . . . . . . . . . . . . 107 3,243,450.42
Kansas . . . . . . . . . . . . . . . . . . . . . . . 320 9,834,978.37
Kentucky . . . . . . . . . . . . . . . . . . . . . . 337 10,343,038.75
Louisiana . . . . . . . . . . . . . . . . . . . . . . 121 3,401,522.88
Maine . . . . . . . . . . . . . . . . . . . . . . . . 14 421,897.12
Maryland . . . . . . . . . . . . . . . . . . . . . . 673 21,634,004.40
Massachusetts . . . . . . . . . . . . . . . . . . . . 398 11,759,636.19
Michigan . . . . . . . . . . . . . . . . . . . . . . 686 19,913,865.82
Minnesota . . . . . . . . . . . . . . . . . . . . . . 251 7,932,518.90
Mississippi . . . . . . . . . . . . . . . . . . . . . 115 3,396,177.55
Missouri . . . . . . . . . . . . . . . . . . . . . . 493 13,899,548.85
Montana . . . . . . . . . . . . . . . . . . . . . . . 58 1,682,167.27
Nebraska . . . . . . . . . . . . . . . . . . . . . . 142 4,438,137.16
Nevada . . . . . . . . . . . . . . . . . . . . . . . 728 23,260,032.20
New Hampshire . . . . . . . . . . . . . . . . . . . . 59 1,827,336.82
New Jersey . . . . . . . . . . . . . . . . . . . . . 226 6,857,115.24
New Mexico . . . . . . . . . . . . . . . . . . . . . 209 6,927,380.21
New York . . . . . . . . . . . . . . . . . . . . . . 126 3,644,775.18
North Carolina . . . . . . . . . . . . . . . . . . . 682 20,464,071.27
North Dakota . . . . . . . . . . . . . . . . . . . . 7 206,935.96
Ohio . . . . . . . . . . . . . . . . . . . . . . . . 261 7,469,455.96
Oklahoma . . . . . . . . . . . . . . . . . . . . . . 348 10,067,831.86
Oregon . . . . . . . . . . . . . . . . . . . . . . . 298 9,186,015.27
Pennsylvania . . . . . . . . . . . . . . . . . . . . 504 14,780,294.48
Rhode Island . . . . . . . . . . . . . . . . . . . . 106 3,449,487.89
South Carolina . . . . . . . . . . . . . . . . . . . 535 15,073,203.40
South Dakota . . . . . . . . . . . . . . . . . . . . 11 293,656.99
Tennessee . . . . . . . . . . . . . . . . . . . . . . 426 11,885,647.64
Texas . . . . . . . . . . . . . . . . . . . . . . . . 6 139,772.54
Utah . . . . . . . . . . . . . . . . . . . . . . . . 323 10,222,558.40
Vermont . . . . . . . . . . . . . . . . . . . . . . . 17 515,455.45
Virginia . . . . . . . . . . . . . . . . . . . . . . 747 23,411,625.09
Washington . . . . . . . . . . . . . . . . . . . . . 828 27,305,259.01
West Virginia . . . . . . . . . . . . . . . . . . . . 16 485,536.31
Wisconsin . . . . . . . . . . . . . . . . . . . . . . 123 3,627,065.46
Wyoming . . . . . . . . . . . . . . . . . . . . . . . 122 4,040,064.97
Total 25,638 $799,999,152.46
</TABLE>
Remaining Term to Maturity
<TABLE>
<CAPTION> Aggregate
Range of Remaining Number of Principal
Term to Maturity (Months) Home Loans Balance
<S> <C> <C>
0.00 to 29.99 . . . . . . . . . . . . . . . 1 $ 9,293.45
30.00 to 59.99 . . . . . . . . . . . . . . 341 6,419,558.87
60.00 to 89.99 . . . . . . . . . . . . . . 209 4,506,729.60
90.00 to 119.99 . . . . . . . . . . . . . . 2,343 57,920,409.60
120 to 149.99 . . . . . . . . . . . . . . . 312 8,507,006.37
150 to 179.99 . . . . . . . . . . . . . . . 9,036 270,860,913.58
180 to 209.99 . . . . . . . . . . . . . . . 29 820,049.62
210 to 239.99 . . . . . . . . . . . . . . . 4,785 153,401,414.09
240 to 269.99 . . . . . . . . . . . . . . . 9 231,094.53
270 to 299.99 . . . . . . . . . . . . . . . 8,568 297,124,774.97
300.00 to 329.99 . . . . . . . . . . . . . 5 197,907.69
Total . . . . . . . . . . . . . . 25,638 $799,999,152.46
</TABLE>
The weighted average remaining term to maturity of the Home Loans as of
the Cut-Off Date was approximately 226 months.
Months Since Origination
<TABLE>
<CAPTION> Aggregate
Age Number of Principal
(In Months) Home Loans Balance
<S> <C> <C>
0.00 to 5.99 . . . . . . . . . . . . . . . 23,565 $743,889,542.62
6.00 to 11.99 . . . . . . . . . . . . . . . 936 27,282,513.31
12.00 to 17.99 . . . . . . . . . . . . . . 115 3,057,348.54
18.00 to 23.99 . . . . . . . . . . . . . . 391 9,099,332.44
24.00 to 29.99 . . . . . . . . . . . . . . 346 8,862,158.81
30.00 to 35.99 . . . . . . . . . . . . . . 131 3,672,656.46
36.00 to 41.99 . . . . . . . . . . . . . . 152 4,077,742.39
42.00 to 47.99 . . . . . . . . . . . . . . 2 57,857.89
Total 25,638 $799,999,152.46
</TABLE>
The weighted average number of months since origination of the Home
Loans as of the Cut-Off Date was approximately 3.52 months.
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits
Exhibit No. Description
--------------------------
1.1 Underwriting Agreement
4.1 Indenture
4.2 Trust Agreement
10.1 Loan Sale Agreement
10.2 Sale and Servicing Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned hereunto duly authorized.
FIRSTPLUS INVESTMENT CORPORATION
By: /s/ Lee F. Reddin
-----------------------------------------
Name: Lee F. Reddin
Title: Vice President
Dated: October 31, 1997
EXHIBIT INDEX
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Exhibit No. Description Page No.
- ----------- ----------- --------
1.1 Underwriting Agreement & Terms Agreement
4.1 Indenture
4.2 Trust Agreement
10.1 Loan Sale Agreement
10.2 Sale and Servicing Agreement
EXECUTION
FIRSTPLUS HOME LOAN OWNER TRUSTS
ASSET-BACKED SECURITIES
(Issuable in Series)
UNDERWRITING AGREEMENT
Bear, Stearns & Co. Inc., September 10, 1997
as Representative of the
several Underwriters
245 Park Avenue
New York, New York 10167
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 related Trust 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 Company, one or more affiliates of the Company and the
owner trustee named therein (the "Owner Trustee") and, to the extent
specified therein, the co-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 Home Loans"). Unless otherwise specified in the related Prospectus
Supplement and the related Sale and Servicing Agreement (as defined below),
the Company or its affiliate, as FHA Insurance Holder (the "FHA Insurance
Holder"), will enter into an FHA claims administration agreement (each, an
"FHA Claims Agreement") with FIRSTPLUS Financial, Inc. ("FFI"), as transferor
and servicer (the "Transferor" or "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 Home 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"),
among the Company as seller (the "Seller"), the Servicer, the Indenture
Trustee and the related Trust, 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 Seller 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 securities insurer named therein (the
"Securities Insurer") pursuant to an insurance and indemnity agreement among
the Seller, the Indenture Trustee, the Servicer and the Securities Insurer
(the "Insurance Agreement"). This Agreement, the related Terms Agreement,
the Trust Agreement, the Sale and Servicing Agreement, the FHA Claims
Agreement, the Indenture and the Insurance Agreement are sometimes referred
to herein as the "Operative Agreements".
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 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. 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"),
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 (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 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 required to be stated therein or
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, in the case of the Offered
Securities, 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 consummation of the transactions
contemplated by the Operative Agreements to which the Company or
FFI is a party, nor the issuance and sale of the Securities of the
related Series nor the consummation of any other of the
transactions herein or therein 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 or
FFI of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Company or FFI or
with any organizational document of the Company or FFI or any
instrument or any agreement under which the Company or FFI 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
and FFI.
(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 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 Trust Agreement, 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 Trust Agreement, 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 Trust
Agreement, Sale and Servicing Agreement or 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 that are necessary to permit the
FHA Insurance Holder to obtain the benefit of the FHA Insurance in
respect of the related Title I Home Loan as described in the
related Final Prospectus ,and the Transferor and the FHA Insurance
Holder will have completed prior to each Closing Date or Subsequent
Transfer Date, as the case may be, all material actions that are
necessary to duly and validly effect the transfer of the FHA
Insurance applicable to the Title I Home 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 binding obligation
of the Securities 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 Seller of the requisite cash therein, in the manner
specified by such Indenture, Trust Agreement or Sale and Servicing
Agreement.
(xi) Immediately prior to the transfer and as-
signment thereof on the Closing Date, and on any Subsequent
Transfer Date, the Transferor had good title to, and was
the sole owner of, each Home Loan and all action had been
taken to obtain good record title to each related Home
Loan. Each Home Loan will, as of such date(s), be
transferred free and clear of any lien, mortgage, pledge,
charge, security interest, adverse claim or other
encumbrance.
(xii) There are no actions, proceedings or
investigations pending or threatened by any court,
administrative agency or other tribunal to which the
Company or FFI is a party or of which any of their
properties is the subject (a) which if determined
adversely to the Company or FFI would have a
material adverse effect on the business or financial
condition of the Company or FFI, (b) asserting the
invalidity of the Offered Securities or any
Operative Agreement to which the Company or FFI is a
party, (c) seeking to prevent the issuance of the
Offered Securities or the consummation by the
Company or FFI of any of the transactions
contemplated by any of the Operative Agreements to
which the Company or FFI is a party, or (d) which
might materially and adversely affect the
performance by the Company or FFI of any of their
respective obligations under, or the validity or
enforcement of, the Offered Securities or any of the
Operative Agreements to which it is a party.
(xiii) Neither the Seller, 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.
(xiv) The Indenture has been qualified under the
Trust Indenture Act of 1939.
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
Brown & Wood LLP, 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.
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 each of the Preliminary Prospectus
and the Final Prospectus 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 have been so filed, and prior to the termination of
the Offering to which such Preliminary Prospectus and Final Prospectus
relate 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 to the Underwriters 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 (each such filing of such
materials and of any Collateral Term Sheets, 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 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 required to be stated therein or
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 as 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, as many signed copies of the
related Registration Statement (including exhibits thereto) 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
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 or
such taxation.
(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 and officer's
compliance certificate when and as the same are so furnished to the
Indenture Trustee pursuant to the related Sale and Servicing Agreement.
In addition, the Company shall, or shall cause the Owner Trustee to,
furnish to the Representative copies of each statement to Holders of the
Offered Securities when and as the same are furnished to such Holders
pursuant to the applicable Operative Agreement, but only if such
statement is not publicly available.
(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, (i) 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, (ii) the cost of delivering the related Offered Securities
to the office of the Underwriters, insured to the satisfaction of the
Underwriters, (iii) the fees and disbursements of the Seller's and the
Servicer's counsel and accountants, (iv) 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, (v) the printing, word processing and
duplicating expenses and supervision related to preparation of and
delivery to the Underwriters of copies of any document contemplated
hereunder and any blue sky survey and legal investment survey, (vi) the
fees of rating agencies, (vii) the fees and expenses, if any, incurred
in connection with the listing of the Offered Securities on any national
securities exchange, (viii) 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, (ix) the fees and expenses of the
Indenture Trustee, the Owner Trustee, any custodian, the backup servicer
and the Securities Insurer, and their respective counsel, and (x) 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:
(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) Brown & Wood LLP, counsel for the Company, 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.
(c) General Counsel for the Company and FFI shall have
furnished to the Underwriters an opinion, dated the related Closing
Date, in form and substance reasonably acceptable to the Underwriters,
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 the Operative Agreements to which it is a party
and to cause the issuance and sale of 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 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 or FFI of the transactions
contemplated in the Operative Agreements to which it is a party or
(b) the Company or FFI of the transactions contemplated herein or
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, if any, 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 or FFI 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
material agreement or instrument 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, if any, 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, if any, 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, if any, or the related
Securities.
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 or FFI or of public officials.
(d) The Underwriters shall have received from Stroock &
Stroock & Lavan LLP, 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 and dated the related Closing Date, to the effect that the
signer of such certificate has 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 and FFI in this Agreement, as supplemented by the related
Terms 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 his or her knowledge,
threatened; and
(iii) nothing has come to his or her 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 any
related Current Report) contains any untrue statement of a material
fact or omits to state a material fact 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 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 for purposes of state tax law
where the Owner Trustee maintains possession of the assets of the Trust
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, the Home Loans 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 Securities 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 certain matters relating to the Securities
Insurer.
In rendering such 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 Securities Insurer, if any, or of public
officials.
(k) The Owner Trustee shall have received from the Seller all
funds required to be delivered by the Seller 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 Seller, 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").
(n) On or prior to the Closing Date, there shall have been no
downgrading, nor shall any notice have been given of (i) any intended or
possible downgrading or (ii) any review or possible changes, the
direction of which has not been indicated, of 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 term is defined for purposes
of the Exchange Act).
(o) If applicable, on or prior to the Closing Date, there has
been no downgrading, nor shall any notice have been given of (i) any
intended or possible downgrading or (ii) any review or possible changes,
the direction of which has not been indicated, of the rating accorded
the Securities Insurer's claims paying ability by any "nationally
recognized statistical rating organization" (as such term 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 Securities Insurer, if any, 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 out of or are based upon
(i) 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 thereof or
supplement thereto, (ii) the omission or alleged omission to state in such
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) any untrue
statement or alleged untrue statement of a material fact contained in the
related Preliminary Prospectus or the related Final Prospectus or in the Form
8-K referred to in such Final Prospectus, or any amendment thereof or
supplement thereto, or (iv) the omission or alleged omission to state in such
Preliminary Prospectus, such Final Prospectus or such Form 8-K a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agree 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 (i) 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 (as defined in Section 9(a) below) 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 or alleged omission
therefrom results directly from an error (a "Home Loan 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, and (ii) such indemnity
with respect to any Corrected Statement (as defined below) in such Final
Prospectus (or supplement thereto) shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any loss, claim, damage or liability purchased the Securities of
the related Series that are the subject thereof if the untrue statement or
omission of a material fact contained in such Final Prospectus (or supplement
thereto) was corrected (a "Corrected Statement") in a supplement to such
Final Prospectus, such supplement was furnished by the Company to the
Underwriters prior to the delivery of the confirmation of sale of such
Securities, and the person asserting such loss, claim, damage or liability
did not receive a copy of such supplement at or prior to the confirmation of
the sale of such Securities, and (iii) such indemnity with respect to any
Home Loan Pool Error shall not inure to the benefit of any Underwriter (or
any person controlling such Underwriter) from whom the person asserting any
loss, claim, damage or liability received any Computational Materials (or any
written or electronic materials on which the Computational Materials are
based) or ABS Term Sheets that were prepared on the basis of such Home Loan
Pool Error, if, prior to the time of confirmation of the sale of the
applicable Securities to such person, the Company notified the Underwriters
of the Home Loan Pool Error or provided in written or electronic form
information superseding or correcting such Home Loan Pool Error (in any such
case, a "Corrected Home Loan Pool Error"), and such Underwriter failed to
notify such person thereof or to deliver to such person corrected
Computational Materials (or underlying written or electronic materials) or
ABS Term Sheets. This indemnity agreement will be in addition to any
liability that the Company or FFI may otherwise have.
(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 Home Loan Pool Error, other than a Corrected Home Loan
Pool Error). This indemnity agreement will be in addition to any liability
that each Underwriter may otherwise have. The Company acknowledges that the
Underwriter-Provided Information constitutes the only information furnished
in writing by or on behalf of the Underwriters for inclusion in the related
Preliminary Prospectus or Final Prospectus (other than any Computational
Materials or ABS Term Sheets (or amendments or supplements thereof)), and the
Underwriters confirm that such statements are correct. "Underwriter-Provided
Information" means any statements provided to the Company by the Underwriters
specifically for use in the preparation of the related Preliminary Prospectus
or Final Prospectus and designated as such in the Terms Agreement for the
related Series, and any Computational Materials or ABS Term Sheets furnished
to prospective investors in the related Securities.
(c) Promptly after receipt by an indemnified party under this
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 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 immediately 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 (in addition to local counsel, if retention
of local counsel is necessary in the determination of the indemnifying party)
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 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 or FFI 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 or FFI shall have the same rights to contribution as the Company or
FFI, 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"), the filing of
which material is a condition of the relief granted in such letters (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"), the filing of which 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, such
Computational Materials comply with the requirements of the Kidder
Letters, and delivery of such Computational Materials was made to
investors in a manner in accordance with the provisions 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, such Structural Term Sheets comply
with the requirements of the PSA Letter, and delivery of such
Structural Term Sheets was made to investors in a manner in
accordance with the provisions of the PSA Letter; and
(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.
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 Home Loan Pool Error (except any Corrected Home Loan Pool Error,
with respect to materials prepared after the receipt by the Underwriters from
the Company of materials superseding or correcting such Home Loan Pool
Error).
(c) Each Underwriter acknowledges and agrees that any
Computational Materials or Structural Term Sheets with respect to any Series
of Securities furnished to prospective investors in the related Securities
have been prepared and disseminated by or on behalf of such Underwriter and
not by or on behalf of the Company, and that such materials included and
shall include a disclaimer in form satisfactory to the Company to the effect
that such materials have been prepared and disseminated by such Underwriter,
and that the content and accuracy of such materials have not been reviewed by
the Company.
(d) 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 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 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, that 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 Home Loan Pool Error (except any Corrected Home Loan Pool Error,
with respect to any such amendment or supplement prepared after the receipt
by the Underwriters from the Company of materials superseding or correcting
such Corrected Home Loan 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 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, such
Collateral Term Sheets comply with the requirements of the PSA Letter,
and delivery of such Collateral Term Sheets was made to investors in a
manner in accordance with the provisions 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.
Notwithstanding the foregoing, each Underwriter makes no representation or
warranty as to whether any Collateral Term Sheet included or will include any
untrue statement resulting directly from any Home Loan Pool Error (except any
Corrected Home Loan Pool Error, with respect to materials prepared after the
receipt by the Underwriters from the Company of materials superseding or
correcting such Corrected Home Loan Pool Error).
(c) Each Underwriter acknowledges and agrees that any Collateral
Term Sheets with respect to any Series of Securities furnished to prospective
investors in the related Securities have been prepared and disseminated by or
on behalf of such Underwriter and not by or on behalf of the Company, and
that such materials shall include a disclaimer in form satisfactory to the
Company to the effect set forth in Section 8(c) hereof, and to the effect
that the information contained in such materials supersedes the information
contained in any prior Collateral Term Sheet with respect to such Series of
Securities and will be superseded by the description of the related Home
Loans in the related Prospectus Supplement . Each Underwriter agrees that it
will not represent to prospective investors that any Collateral Term Sheets
were prepared or disseminated on behalf of the Company.
(d) 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 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 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,
that 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 Home Loan Pool Error (except any Corrected Home Loan Pool
Error, with respect to any such amendment or supplement prepared after the
receipt by the Underwriters from the Company of materials superseding or
correcting such Corrected Home Loan Pool Error).
10. Delivery and Filing of Computational Materials, Collateral
----------------------------------------------------------
Term Sheets and Structural Term Sheets.
- --------------------------------------
(a) Any delivery of Computational Materials, Collateral Term
Sheets or Structural Term Sheets that is required to be made by an
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 on a Current Report on Form 8-K any such Computational
Materials, Collateral Term Sheets or Structural Term Sheets promptly
following the delivery thereof pursuant to the preceding subsection.
11. Termination. This Agreement (with respect to a particular
-----------
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, FFI or their 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, FFI or any of the officers,
directors or 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.
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 set forth herein and in the applicable Terms
Agreement. If, however, you have not completed such arrangements within such
24-hour period, then:
(a) if the aggregate original principal balance of Defaulted
Securities does not exceed 10% of the aggregate original 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 principal balance of Defaulted
Securities exceeds 10% of the aggregate original 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. FIRSTPLUS Financial Group, Inc., the parent of
---------
the Company and FFI ("FFG"), shall guarantee any obligation or liability of
the Company or FFI pursuant to Section 7 hereof. FFG's acceptance of its
guarantee obligation is acknowledged by the execution of the signature page
of this Agreement by an authorized signatory of FFG.
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 Security 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, 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 address 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., 1600 Viceroy,
7th Floor, Dallas, Texas 75235, Attention: Christopher Gramlich.
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
among the Company, FFI and the Underwriters.
Very truly yours,
FIRSTPLUS Investment Corporation
By: /s/ Lee F. Reddin
---------------------------------------
Name: Lee F. Reddin
Title: Vice President
FIRSTPLUS Financial Inc.
By: /s/ Lee F. Reddin
---------------------------------------
Name: Lee F. Reddin
Title: Vice President
Acknowledged by:
FIRSTPLUS Financial Group, Inc.
By: /s/ Christopher J. Gramlich
---------------------------------------
Name: Christopher J. Gramlich
Title: Senior Vice President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
Bear, Stearns & Co. Inc.
as Representative of
the several Underwriters
By: /s/ Matthew E. Perkins
---------------------------------------------
Name: Matthew E. Perkins
Title: Associate Director
EXHIBIT A
FIRSTPLUS HOME LOAN TRUST -
--- --
ASSET-BACKED SECURITIES
TERMS AGREEMENT
---------------
(to Underwriting Agreement,
dated September 10, 1997
among the Company, FFI and the Representative)
FIRSTPLUS Investment Corporation (Date)
3773 Howard Hughes Parkway
Suite 300N
Las Vegas, Nevada 89109
FIRSTPLUS Financial Inc.
1600 Viceroy
Dallas, Texas 75235
This letter supplements and modifies the captioned Underwriting
Agreement (the "Underwriting Agreement") with respect to the Series __-__
Securities 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 Home Loan Pool: The Series -
------------------ ----- --
Securities shall evidence the entire beneficial ownership interest in a
mortgage pool (the "Home Loan Pool") of mortgage 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:
(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:
Principal Interest Class Purchase
Class Balance Rate Price Percentage
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.
--
Class Underwriter Underwriter Underwriter
- ----- ----------- ----------- -----------
Underwriter
- -----------
(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. Underwriter-Provided Information: The Company
--------------------------------
acknowledges that the information set forth in (i) the (second sentence) of
the paragraph immediately preceding the table on the cover page of the Final
Prospectus, (ii) the last paragraph on the cover page of the Final
Prospectus, (iii) the first table under the caption "( )"
and the ( ) sentence immediately thereafter in the Final Prospectus and
(iv) the ( ) table under the caption "( )" and the ( )
and ( ) sentences immediately thereafter in the Final Prospectus, as such
information relates to the Securities, constitute the only information
furnished in writing by or on behalf of the Underwriters for inclusion in
such Final Prospectus, and the Underwriters confirm that such statements are
correct.
Section 6. Securities Insurer:
------------------
Section 7. Location of Closing:
-------------------
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,
Bear, Stearns & Co. Inc.
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:
ACKNOWLEDGED BY:
FIRSTPLUS Financial Group, Inc.
By:
---------------------------------------------
Name:
Title:
EXECUTION
FIRSTPLUS HOME LOAN TRUST 1997-3
ASSET-BACKED SECURITIES
TERMS AGREEMENT
---------------
(to Underwriting Agreement,
dated September 10, 1997
among the Company, FFI, FFG and the Representative)
FIRSTPLUS Investment Corporation September 10, 1997
3773 Howard Hughes Parkway
Suite 300N
Las Vegas, Nevada 89109
FIRSTPLUS Financial Inc.
1600 Viceroy
Dallas, Texas 75235
This letter supplements and modifies the captioned Underwriting
Agreement (the "Underwriting Agreement") with respect to the Series 1997-3
Securities solely as it relates to the purchase and sale of such Offered
Securities described below. The Series 1997-3 Securities are registered with
the Securities and Exchange Commission by means of an effective Registration
Statement (No. 333-26527). Capitalized terms used and not defined herein
have the meanings given them in the Underwriting Agreement.
Section 1. The Home Loan Pool: The Series 1997-3 Securities
------------------
shall evidence the entire beneficial ownership interest in a mortgage pool
(the "Home Loan Pool") of mortgage 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:
(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 Prospectus Supplement:
<TABLE>
<CAPTION> Principal Interest Class Purchase
Class Balance Rate Price Percentage
<S> <C> <C> <C>
Class A-1 Notes $166,090,000 (1) 100.00000%
Class A-2 Notes $91,430,000 6.48% 99.98906%
Class A-3 Notes $83,220,000 6.57% 99.99032%
Class A-4 Notes $70,500,000 6.80% 99.98959%
Class A-5 Notes $47,090,000 6.86% 99.99973%
Class A-6 Notes $57,740,000 7.08% 99.96287%
Class A-7 Notes $50,430,000 7.22% 99.94637%
Class A-8 Notes $47,580,000 7.55% 99.97537%
Class M-1 Notes $88,880,000 7.32% 99.95690%
Class M-2 Notes $44,440,000 7.52% 99.99062%
Class B-1 Certificates $35,996,400 7.79% 99.97284%
</TABLE>
____________________
(1) Interest will accrue on the Class A-1 Notes with respect to each Payment
Date at a per annum rate equal to LIBOR for the related Accrual Period
plus 0.10%, subject to a maximum rate equal to the Net Weighted Average
Rate. Capitalized terms are as defined in the Prospectus Supplement.
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 1997-3 Securities
specified opposite its name below.
Merrill Lynch,
Banc One Pierce, Fenner
Bear, Stearns Capital & Smith PaineWebber
Class & Co. Inc. Corporation Incorporated Incorporated
- ----- ---------- ----------- ------------ ------------
Class A-1 $41,524,000 $41,522,000 $41,522,000 $41,522,000
Notes
Class A-2 $22,859,000 $22,857,000 $22,857,000 $22,857,000
Notes
Class A-3 $20,805,000 $20,805,000 $20,805,000 $20,805,000
Notes
Class A-4 $17,625,000 $17,625,000 $17,625,000 $17,625,000
Notes
Class A-5 $11,774,000 $11,772,000 $11,772,000 $11,772,000
Notes
Class A-6 $14,435,000 $14,435,000 $14,435,000 $14,435,000
Notes
Class A-7 $12,609,000 $12,607,000 $12,607,000 $12,607,000
Notes
Class A-8 $11,895,000 $11,895,000 $11,895,000 $11,895,000
Notes
Class M-1 $22,220,000 $22,220,000 $22,220,000 $22,220,000
Notes
Class M-2 $11,110,000 $11,110,000 $11,110,000 $11,110,000
Notes
Class B-1 $ 8,999,100 $8,999,100 $8,999,100 $8,999,100
Certificates
(b) The Offered Securities shall have such other characteristics
as described in the Prospectus Supplement.
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 September 1, 1997 (or, in the
case of the Class A-1 Notes, from September 10, 1997) up to, but not
including, September 18, 1997 (the "Closing Date").
Section 4. Required Ratings: The Offered Securities, other
----------------
than the Class M-1 Notes, the Class M-2 Notes and the Class B-1 Certificates,
shall have received Required Ratings of at least "AAA" by each of Standard &
Poor's Rating Services, a division of The McGraw-Hill Companies, Inc. ("S&P")
and Fitch Investors Service, L.P. ("Fitch" and, together with S&P, the
"Rating Agencies"). The Class M-1 Notes, the Class M-2 Notes and the Class
B-1 Certificates shall have received Required Ratings of at least "AA," "A"
and "BBB," respectively, from each of the Rating Agencies.
Section 5. Underwriter-Provided Information: The Company
--------------------------------
acknowledges that the information set forth in (a) the first sentence of the
last paragraph on the cover page of the Prospectus Supplement, (b) the first
sentence of the last paragraph on page iii of the Prospectus Supplement, (c)
the first table under the caption "Underwriting" and the first paragraph
immediately thereafter in the Prospectus Supplement and (d) the second table
under the caption "Underwriting" and the first, second and fifth paragraphs
immediately thereafter in the Prospectus Supplement, as such information
relates to the Securities, constitute the only information furnished in
writing by or on behalf of the Underwriters for inclusion in such Prospectus
Supplement, and the Underwriters confirm that such statements are correct.
Section 6. Location of Closing: Brown & Wood LLP, One World
-------------------
Trade Center, New York, New York 10048.
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,
Bear, Stearns & Co. Inc.
as Representative of the several
Underwriters
By: /s/ Matthew E. Perkins
--------------------------------
Name: Matthew E. Perkins
Title: Associate Director
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
FIRSTPLUS Investment Corporation
By: /s/ Lee F. Reddin
---------------------------------------
Name: Lee F. Reddin
Title: Vice President
FIRSTPLUS Financial Inc.
By: /s/ Lee F. Reddin
---------------------------------------
Name: Lee F. Reddin
Title: Vice President
Acknowledged by:
FIRSTPLUS Financial Group, Inc.
By: /s/ Christopher J. Gramlich
---------------------------------------
Name: Christopher J. Gramlich
Title: Senior Vice President
EXECUTION
INDENTURE
between
FIRSTPLUS HOME LOAN OWNER TRUST 1997-3,
as Issuer
and
U. S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
Dated as of September 1, 1997
FIRSTPLUS HOME LOAN OWNER TRUST 1997-3
ASSET BACKED SECURITIES, SERIES 1997-3
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02. Incorporation by Reference of Trust Indenture Act . . . . . . . 7
1.03. Rules of Construction . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II
THE NOTES
2.01. Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.02. Execution, Authentication, Delivery and Dating . . . . . . . . 9
2.03. Registration; Registration of Transfer and Exchange . . . . . . 10
2.04. Mutilated, Destroyed, Lost or Stolen Notes . . . . . . . . . . 11
2.05. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . 12
2.06. Payment of Principal and Interest; Defaulted Interest . . . . . 12
2.07. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.08. Authentication of Notes . . . . . . . . . . . . . . . . . . . . 13
2.09. Release of Collateral . . . . . . . . . . . . . . . . . . . . . 16
2.10. Book-Entry Notes . . . . . . . . . . . . . . . . . . . . . . . 17
2.11. Notices to Clearing Agency . . . . . . . . . . . . . . . . . . 18
2.12. Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . 18
2.13. Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III
COVENANTS
3.01. Payment of Principal and Interest . . . . . . . . . . . . . . . 19
3.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . . 19
3.03. Money for Payments To Be Held in Trust . . . . . . . . . . . . 20
3.04. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.05. Protection of Collateral . . . . . . . . . . . . . . . . . . . 22
3.06. Annual Opinions as to Collateral . . . . . . . . . . . . . . . 22
3.07. Performance of Obligations; Servicing of Home Loans . . . . . . 23
3.08. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . 24
3.09. Annual Statement as to Compliance . . . . . . . . . . . . . . . 25
3.10. Covenants of the Issuer . . . . . . . . . . . . . . . . . . . . 25
3.11. Servicer's Obligations . . . . . . . . . . . . . . . . . . . . 25
3.12. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . 25
3.13. Treatment of Notes as Debt for Tax Purposes . . . . . . . . . . 26
3.14. Notice of Events of Default . . . . . . . . . . . . . . . . . . 26
3.15. Further Instruments and Acts . . . . . . . . . . . . . . . . . 26
ARTICLE IV
SATISFACTION AND DISCHARGE
4.01. Satisfaction and Discharge of Indenture . . . . . . . . . . . . 26
4.02. Application of Trust Money . . . . . . . . . . . . . . . . . . 28
4.03. Repayment of Moneys Held by Paying Agent . . . . . . . . . . . 28
ARTICLE V
REMEDIES
5.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 28
5.02. Acceleration of Maturity; Rescission and Annulment . . . . . . 30
5.03. Non-Priority Classes . . . . . . . . . . . . . . . . . . . . . 31
5.04. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee . . . . . . . . . . . . . . . . . . . . . 31
5.05. Remedies; Priorities . . . . . . . . . . . . . . . . . . . . . 33
5.06. Optional Preservation of the Collateral . . . . . . . . . . . . 35
5.07. Limitation of Suits . . . . . . . . . . . . . . . . . . . . . . 35
5.08. Unconditional Rights of Noteholders To Receive Principal
and Interest . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.09. Restoration of Rights and Remedies . . . . . . . . . . . . . . 36
5.10. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . 36
5.11. Delay or Omission Not a Waiver . . . . . . . . . . . . . . . . 36
5.12. Control by Noteholders . . . . . . . . . . . . . . . . . . . . 36
5.13. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . 37
5.14. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . 37
5.15. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . 38
5.16. Action on Notes . . . . . . . . . . . . . . . . . . . . . . . . 38
5.17. Performance and Enforcement of Certain Obligations . . . . . . 38
ARTICLE VI
THE INDENTURE TRUSTEE
6.01. Duties of Indenture Trustee . . . . . . . . . . . . . . . . . . 39
6.02. Rights of Indenture Trustee . . . . . . . . . . . . . . . . . . 40
6.03. Individual Rights of Indenture Trustee . . . . . . . . . . . . 41
6.04. Indenture Trustee's Disclaimer . . . . . . . . . . . . . . . . 41
6.05. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 41
6.06. Reports by Indenture Trustee to Holders . . . . . . . . . . . . 41
6.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . 41
6.08. Replacement of Indenture Trustee . . . . . . . . . . . . . . . 42
6.09. Successor Indenture Trustee by Merger . . . . . . . . . . . . . 43
6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee
44
6.11. Eligibility; Disqualification . . . . . . . . . . . . . . . . . 45
6.12. Preferential Collection of Claims Against Issuer . . . . . . . 45
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
7.01. Issuer To Furnish Indenture Trustee Names and Addresses
of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . 45
7.02. Preservation of Information; Communications to Noteholders . . 45
7.03. Reports by Issuer . . . . . . . . . . . . . . . . . . . . . . . 46
7.04. Reports by Indenture Trustee . . . . . . . . . . . . . . . . . 46
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
8.01. Collection of Money . . . . . . . . . . . . . . . . . . . . . . 47
8.02. Payments and Distributions . . . . . . . . . . . . . . . . . . 47
8.03. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.04. Servicer's Monthly Statements . . . . . . . . . . . . . . . . . 50
8.05. Release of Collateral . . . . . . . . . . . . . . . . . . . . . 50
8.06. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE IX
SUPPLEMENTAL INDENTURES
9.01. Supplemental Indentures Without Consent of Noteholders . . . . 51
9.02. Supplemental Indentures with Consent of Noteholders . . . . . . 52
9.03. Execution of Supplemental Indentures . . . . . . . . . . . . . 54
9.04. Effect of Supplemental Indenture . . . . . . . . . . . . . . . 54
9.05. Conformity with Trust Indenture Act . . . . . . . . . . . . . . 54
9.06. Reference in Notes to Supplemental Indentures . . . . . . . . . 54
9.07 Amendments to Trust Agreement . . . . . . . . . . . . . . . . 54
ARTICLE X
REDEMPTION OF NOTES
10.01. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.02. Form of Redemption Notice . . . . . . . . . . . . . . . . . . . . 55
10.03. Notes Payable on Termination Date; Provision for Payment of
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XI
MISCELLANEOUS
11.01. Compliance Certificates and Opinions, etc. . . . . . . . . . . . 56
11.02. Form of Documents Delivered to Indenture Trustee . . . . . . . . 58
11.03. Acts of Noteholders . . . . . . . . . . . . . . . . . . . . . . . 58
11.04. Notices, etc. to Indenture Trustee, Issuer and Rating Agencies . 59
11.05. Notices to Noteholders; Waiver . . . . . . . . . . . . . . . . . 59
11.06. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.07. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . 60
11.08. Effect of Headings and Table of Contents . . . . . . . . . . . . 60
11.09. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 60
11.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.11. Benefits of Indenture and Consent of Noteholders . . . . . . . . 61
11.12. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.13. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.15. Recording of Indenture . . . . . . . . . . . . . . . . . . . . . 61
11.16. Issuer Obligations . . . . . . . . . . . . . . . . . . . . . . . 61
11.17. No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.18. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SCHEDULE I - Schedule of Home Loans
EXHIBIT A - Forms of Notes
INDENTURE dated as of September 1, 1997, between FIRSTPLUS Home Loan
Owner Trust 1997-3, a Delaware business trust (the "Issuer"), and U.S. Bank
National Association, a national banking association, 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 Notes:
GRANTING CLAUSE
Subject to the terms of this Indenture, 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 Trust Estate (as defined in the Sale and Servicing
Agreement); (ii) the Sale and Servicing Agreement (including the Issuer's
right to cause the Transferor and/or the Seller to repurchase Home Loans from
the Issuer under certain circumstances described therein); (iii) all present
and future claims, demands, causes of action and choses 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; (iv) all funds on
deposit from time to time in the Trust Accounts and (v) all other property of
the Trust from time to time (collectively, the "Collateral").
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 hereunder and agrees
to perform the duties required of it 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. The Indenture Trustee agrees and
acknowledges that the Indenture Trustee's Home Loan Files will be held by the
Custodian for the benefit of the Indenture Trustee in Dallas, Texas. The
Indenture Trustee further agrees and acknowledges that each other item of
Collateral that is physically delivered to the Indenture Trustee will be held
by the Indenture Trustee in St. Paul, Minnesota. Subject to the conditions
set forth in this Indenture, on each Subsequent Transfer Date and pursuant to
a Subsequent Transfer Agreement, the Issuer shall Grant to the Indenture
Trustee all of the Issuer's right, title and interest of the Issuer in and to
each Subsequent Home Loan (including all interest and principal thereon
received after the related Cut-Off Date) identified
on the schedule attached to the related Subsequent Transfer Agreement and all
items in the related Indenture Trustee's Home Loan File.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
Section 1.01. Definitions. Except as otherwise specified herein or as
-----------
the context may otherwise require, (i) 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 and (ii) the
following terms have the respective meanings set forth below for all purposes
of this Indenture.
Act: the meaning specified in Section 11.03(a).
---
Affiliate: 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: 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).
Book-Entry Notes: A beneficial interest in any Class of Notes,
----------------
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10.
Certificate Depository Agreement: The meaning specified in Section
--------------------------------
1.01 of the Trust Agreement.
Certificate of Trust: The certificate of trust of the Issuer
--------------------
substantially in the form of Exhibit B to the Trust Agreement.
Collateral: The meaning specified in the Granting Clause of this
----------
Indenture.
Company: FIRSTPLUS Residual Holdings, Inc., a Nevada corporation or
-------
any successor in interest thereto.
Corporate Trust Office: 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 180 East Fifth Street, St. Paul, Minnesota 55101; Attention: Corporate
Trust Department, 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: Any occurrence that is, or with notice or the lapse of time
-------
or both would become, an Event of Default.
Definitive Notes: The meaning specified in Section 2.12.
----------------
Depository Institution: Any depository institution or trust company,
----------------------
including the Indenture Trustee, that (a) is incorporated under the laws of
the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and
(c) has outstanding unsecured commercial paper or other short-term unsecured
debt obligations that are rated in the highest rating category by each Rating
Agency, or is otherwise acceptable to each Rating Agency.
Event of Default: As specified in Section 5.01.
----------------
Executive Officer: With respect to any corporation, the Chief
-----------------
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any
general partner thereof.
Grant: 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.
Highest Priority Class Notes: Until the Class Principal Balances of
----------------------------
all Classes of Senior Notes are reduced to zero and all sums payable to the
Holders of the Senior Notes have been paid in full, the Senior Notes; when
the Class Principal Balances of all Classes of Senior Notes have been reduced
to zero and all amounts payable to the Holders of the Senior Notes have been
paid in full, the Class M-1 Notes; when the Class Principal Balances of all
Classes of Senior Notes and the Class M-1 Notes have been reduced to zero and
all sums payable to the Holders of the Senior Notes and Class M-1 Notes have
been paid in full, the Class M-2 Notes.
Holder or Noteholder: The Person in whose name a Note is registered
------
on the Note Register.
Indenture Trustee: U.S. Bank National Association, a national banking
-----------------
association, as Indenture Trustee under this Indenture acting on behalf of
the Noteholders, or any successor indenture trustee under this Indenture.
Independent: When used with respect to any specified Person, that such
-----------
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: 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 11.01, 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.
Issuer: FIRSTPLUS Home Loan Owner Trust 1997-3 until a successor
------
replaces it and, thereafter, the successor and, for purposes of any provision
contained herein and required by the TIA, each other obligor on the Notes.
Issuer Order and Issuer Request: 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.
Majority Highest Priority Class Noteholders: On any date, Holders of
-------------------------------------------
Highest Priority Class Notes representing more than 50% of the Class
Principal Balance of the Highest Priority Class Notes then outstanding.
Maturity Date: With respect to each Class of Notes, the applicable
-------------
maturity date set forth below:
Class Maturity Date
----- -------------
A-1 April 10, 2006
A-2 September 10, 2008
A-3 October 10, 2010
A-4 February 10, 2012
A-5 October 10, 2013
A-6 July 10, 2017
A-7 November 10, 2020
A-8 November 10, 2023
M-1 November 10, 2023
M-2 November 10, 2023
Non-Priority Class: As of any date of determination, any outstanding
------------------
Class of Notes other than the Highest Priority Class Notes.
Note Depository Agreement: The agreement dated September 18, 1997,
-------------------------
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: 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: The respective meanings specified in
--------------------------------
Section 2.03
Officer's Certificate: A certificate signed by any Authorized Officer
---------------------
of the Issuer or the Administrator, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01, and
delivered to the Indenture Trustee.
Opinion of Counsel: 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,
which opinion or opinions shall be addressed to the Indenture Trustee, as
Indenture Trustee, and shall comply with any applicable requirements of
Section 11.01 and shall be in form and substance satisfactory to the
Indenture Trustee.
Outstanding: With respect to any Note and as of the date of
-----------
determination, any Note 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 related Noteholders
(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
(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: The aggregate of the Note Principal Balances of all
------------------
Notes Outstanding at the date of determination.
Paying Agent: 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
Note Payment Account, including payment of principal of or interest on the
Notes on behalf of the Issuer.
Predecessor Note: 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 2.04 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: Any suit in equity, action at law or other judicial or
----------
administrative proceeding.
Rating Agency Condition: With respect to any action to which a Rating
-----------------------
Agency Condition applies, that each Rating Agency shall have been given 10
days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Seller, the Servicer and the Issuer in writing that such action will not
result in a reduction or withdrawal of the then current rating of the Notes
or the Certificates.
Registered Holder: The Person in whose name a Note is registered on
-----------------
the Note Register on the applicable Record Date.
Sale and Servicing Agreement: The Sale and Servicing Agreement dated
----------------------------
as of September 1, 1997, among the Issuer, FIRSTPLUS Investment Corporation,
as Seller, and, FIRSTPLUS Financial, Inc., as Transferor and Servicer, and
the Indenture Trustee, as Indenture Trustee and Co-Owner Trustee.
Schedule of Home Loans: The listing of the Home Loans set forth in
----------------------
Schedule A, as supplemented as of each Subsequent Transfer Date and as of any
date on which a Deleted Home Loan has been repurchased from the Trust or
substituted with a Qualified Substitute Home Loan pursuant to Section 3.05 of
the Sale and Servicing Agreement.
State: Any one of the 50 States of the United States of America or the
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District of Columbia.
Termination Date: In the case of a redemption of the Notes pursuant
----------------
to Section 10.01 or a payment to Noteholders pursuant to Section 10.03, the
Payment Date specified by the Affiliated Holder pursuant to Section 10.10.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939 as in
------------------- ---
force on the date hereof, unless otherwise specifically provided.
Section 1.02. 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" the Securities and Exchange Commission.
----------
"indenture securities" the Notes.
--------------------
"indenture security holder" a Noteholder.
-------------------------
"indenture to be qualified" this Indenture.
-------------------------
"indenture trustee" or "institutional trustee" 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 1.03. 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 (as provided in such agreements)
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 2.01. Form. The Notes shall be designated as the "FIRSTPLUS
----
Home Loan Owner Trust 1997-3 Asset Backed Notes". The Notes of each Class,
in each case together with the Indenture Trustee's certificate of
authentication, shall be in substantially the forms set forth in Exhibit A,
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.
The 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 are part of the terms of this Indenture.
Section 2.02. Execution, Authentication, Delivery and Dating. The
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Notes shall be executed on behalf of the Issuer by an Authorized Officer of
the Owner Trustee or the Administrator. 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 Owner Trustee or the Administrator
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.
Subject to the satisfaction of the conditions set forth in Section 2.08,
the Indenture Trustee shall authenticate and deliver the Notes for original
issue in the aggregate principal amounts with respect to each Class as
specified below:
Class Aggregate Principal Amount
----- --------------------------
A-1 $166,090,000.00
A-2 $ 91,430,000.00
A-3 $ 83,220.000.00
A-4 $ 70,500,000.00
A-5 $ 47,090,000.00
A-6 $ 57,740,000.00
A-7 $ 50,430,000.00
A-8 $ 47,580,000.00
M-1 $ 88,880,000.00
M-2 $ 44,440,000.00
B-2 $ 24,240,000.00
each class of Notes outstanding at any time may not exceed such respective
amounts.
The Notes that are authenticated and delivered by the Indenture Trustee
to or upon the order of the Issuer on the Closing Date shall be dated the
Closing Date. All other Notes that are authenticated after the Closing Date
for any other purpose under the Indenture shall be dated the date of their
authentication. The Notes shall be issuable as registered Notes in the
minimum denomination $100,000 and integral multiples of $1,000 in excess
thereof.
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 2.03. Registration; Registration of Transfer and Exchange. The
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Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee 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 3.02, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall be entitled to 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, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall be entitled to 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.
Any 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 Noteholder 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 2.04 or Section 9.06 not involving any
transfer.
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 2.04. 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, 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 Termination 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.
Section 2.05. Persons Deemed Owners. 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 2.06. Payment of Principal and Interest; Defaulted Interest.
-----------------------------------------------------
(a) The Notes of each Class shall accrue interest at the Interest Rate
applicable thereto, as set forth in Exhibit A, and such interest shall be
payable on each Payment Date as specified therein, subject to Section 3.01.
With respect to each outstanding Class of LIBOR Securities, if any, the
Indenture Trustee or shall determine LIBOR for each applicable Accrual Period
on the second London Business Day prior thereto. All interest payments on
each Class of Notes shall be made pro rata to the Noteholders of such Class
entitled thereto. Any installment of interest or principal payable on any
Note shall be paid on the applicable Payment Date to the Person in whose name
such Note (or one or more Predecessor Notes) is registered on the Record Date
(or, in the case of payment of Deferred Amounts, to the Person in whose name
such Note was most recently registered, if such Note has previously been
surrendered to the Indenture Trustee for final payment) 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 2.12, 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, except
for the final installment of principal payable with respect to such Note on a
Payment Date or on the Maturity Date (and except for the Termination Price ),
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
Payment Date as provided in the forms of the Notes set forth in Exhibit A.
Notwithstanding the foregoing, the entire unpaid principal amount of the
Notes together with the amount of any Deferred Amounts in respect thereof of
a Class of Notes shall be due and payable, if not previously paid, on the
earlier of (i) the Maturity Date, (ii) the Termination Date or (iii) the date
on which an Event of Default shall have occurred and be continuing, if the
Indenture Trustee or the Majority Highest Priority Class Noteholders have
declared the Notes to be immediately due and payable in the manner provided
in Section 5.02. 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 Payment 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 Payment 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 an early
termination of the Notes as provided in Section 10.01 shall be mailed to
Noteholders as provided in Section 10.02.
Section 2.07. 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
shall 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 2.08. Authentication of Notes. (a) The Notes shall be
-----------------------
authenticated by the Indenture Trustee, upon Issuer Request and upon receipt
by the Indenture Trustee of the following:
(i) An Issuer Order authorizing the execution and
authentication of such Notes;
(ii) All of the items of Collateral that are to be delivered
to the Indenture Trustee or its designee;
(iii) An executed counterpart of the Trust Agreement;
(iv) A fair value certificate from the Servicer, as agent of
the Trust, pursuant to Section 2(a)(xi) of the Administration Agreement;
(v) Except to the extent provided in subsection (b) below,
Opinions of Counsel addressed to the Indenture Trustee to the effect
that:
(A) the Issuer has been duly formed and is validly
existing as a business trust under the laws of the State of
Delaware, and has power, authority and legal right to execute
and deliver this Indenture, the Administration Agreement and
the Sale and Servicing Agreement;
(B) the issuance of the Notes has been duly and validly
authorized by the Issuer;
(C) the Notes, when executed and authenticated in
accordance with the provisions of this Indenture and delivered
against payment therefor, will be the legal, valid and
binding obligations of the Issuer pursuant to the terms of
this Indenture and will be entitled to the benefits of this
Indenture, and will be enforceable in accordance with their
terms, subject to bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent or preferential conveyance
and other similar laws of general application affecting the
rights of creditors generally and to general principles of
equity (regardless of whether such enforcement is considered
in a proceeding in equity or at law);
(D) all instruments furnished to the Indenture Trustee
as conditions precedent to the authentication of the Notes by
the Indenture Trustee pursuant to the Indenture conform to the
requirements of this Indenture and constitute all the
documents required to be delivered hereunder for the Indenture
Trustee to authenticate the Notes;
(E) all conditions precedent provided for in this
Indenture relating to the authentication of the Notes have
been complied with;
(F) assuming due authorization, execution and delivery
thereof by the Indenture Trustee, this Indenture has been duly
executed and delivered by Issuer and constitutes the legal,
valid and binding obligation of the Issuer, enforceable
against the Issuer in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent or preferential conveyance and other
similar laws of general application affecting the rights of
creditors generally and to general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(G) The Issuer is not required to be registered under
the Investment Company Act of 1940, as amended;
(H) The Notes will be treated as indebtedness for
federal income tax purposes;
(I) The Issuer will not be characterized as an
association (or publicly traded partnership) taxable as a
corporation;
(J) This Indenture has been duly qualified under the
Trust Indenture Act of 1939;
(K) The delivery by the Issuer to the Custodian, on
behalf of the Indenture Trustee, in the State of Texas of the
Debt Instruments pursuant to the Indenture will perfect such
security interest in favor of the Indenture Trustee under the
Texas UCC in all right, title and interest of the Issuer in
such Debt Instruments and, assuming the Indenture Trustee
acquires its interest in such Debt Instruments without
knowledge that the same are subject to a security interest
(other than the security interest created by this Indenture),
Indenture Trustee will acquire such security interest in such
Debt Instruments free and clear of any prior lien of a kind
which may be perfected under Article 9 of the Texas UCC. The
Debt Instruments constitute "instruments" under Article 9 of
the New York UCC and Article 9 of the Texas UCC; and
(L) The security interest in the portion of the Trust
Estate constituting "proceeds" (as defined in Section 9.306(a)
of the Texas UCC) from the Debt Instruments will be perfected
as and to the extent provided in Section 9.306 of the Texas
UCC and, assuming that none of such proceeds represent
proceeds (as defined in the Texas UCC) of collateral in which
another party has a prior perfected security interest, the
Indenture Trustee will acquire such security interest in such
proceeds free and clear of any prior lien of a kind which may
be perfected under Article 9 of the Texas UCC.
(vi) An Officer's Certificate of the Issuer complying with the
requirements of Section 11.01 and stating that:
(A) the Issuer is not in Default under this Indenture
and the issuance of the Notes will not result in any breach of
any of the terms, conditions or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Issuer is a party or by
which it is bound, or any order of any court or administrative
agency entered in any proceeding to which the Issuer is a
party or by which it may be bound or to which it may be
subject;
(B) the Issuer is the owner of all of the Home Loans,
has not assigned any interest or participation in the Home
Loans (or, if any such interest or participation has been
assigned, it has been released) and has the right to Grant all
of the Home Loans to the Indenture Trustee;
(C) the Issuer has Granted to the Indenture Trustee all
of its right, title, and interest in the Collateral, and has
delivered or caused the same to be delivered to the Indenture
Trustee;
(D) attached thereto are true and correct copies of
letters signed by Fitch and S&P, respectively, confirming that
(i) each of the Senior Notes have been rated "AAA" by each
Rating Agency, (ii) the Class M-1 Notes have been rated "AA"
by each Rating Agency, and (iii) the Class M-2 Notes have been
rated "A" by each Rating Agency; and
(E) all conditions precedent provided for in this
Indenture relating to the authentication and delivery of the
Notes have been complied with.
(b) The Opinions of Counsel to be delivered pursuant to subsection
(a)(v) above may differ from the Opinions of Counsel described in such
subsection so long as such Opinions of Counsel so delivered are acceptable to
each Rating Agency and the Indenture Trustee, which shall be conclusively
evidenced by the delivery on the Closing Date of each such Rating Agency's
rating letter and by the Indenture Trustee's authentication and delivery of
the Notes, respectively, and such acceptable opinions shall be deemed to be
Opinions of Counsel required pursuant to subsection (a)(v) above.
Section 2.09. Release of Collateral. (a) Subject to the provisions
---------------------
of Section 11.01 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, certificates in accordance with TIA Sections 3.14(c) and (d)(1), and
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1)
or an Opinion of Counsel in lieu of such Independent Certificates to the
effect that the TIA does not require any such Independent Certificates;
provided that no such Independent Certificates or Opinion of Counsel in lieu
of such Independent Certificates shall be necessary in respect of property
released from the lien of the Indenture in accordance with the provisions
hereof if such property consists solely of cash.
(b) The Issuer or the Servicer, on behalf of the Issuer, shall be
entitled to obtain a release from the lien of this Indenture for any Home
Loan and the related Mortgaged Property at any time (i) after a payment by
the Transferor or the Issuer of the Purchase Price of the Home Loan, (ii)
after a Qualified Substitute Home Loan is substituted for such Home Loan and
payment of the Substitution Adjustment, if any, (iii) after liquidation of
the Home Loan in accordance with Section 4.02 of the Sale and Servicing
Agreement and the deposit of all Liquidation Proceeds and Insurance Proceeds
thereon in the Collection Account, (iv) upon the payment in full of the Home
Loan or the sale or other disposition of the related Mortgaged Property, or
(v) as contemplated by Section 11.02(a) or (b) of the Sale and Servicing
Agreement. Any such release other than as contemplated by Section 11.02(a)
or (b) of the Sale and Servicing Agreement or pursuant to clause (iv) of the
preceding sentence shall be subject to the condition that the Issuer shall
have delivered to the Indenture Trustee an Issuer Request (A) identifying the
Home Loan and the related Mortgaged Property to be released, (B) requesting
the release thereof, (C) setting forth the amount deposited in the Collection
Account with respect thereto, (D) certifying that the amount deposited in the
Collection Account (x) equals the Purchase Price of the applicable Home Loan,
in the case of a release pursuant to clause (i) above, (y) equals the
Substitution Adjustment related to the Qualified Substitute Home Loan and the
Deleted Home Loan released pursuant to clause (ii) above, or (z) equals the
entire amount of Insurance Proceeds and Liquidation Proceeds received with
respect to such Home Loan and the related Mortgaged Property in the case of a
release pursuant to clause (iii) above. Any such release pursuant to
clause (iv) of the second preceding sentence shall be subject to the
Servicer's compliance with the provisions of Section 7.02 of the Sale and
Servicing Agreement.
(c) The Indenture Trustee shall, if requested by the Servicer,
temporarily release or cause the Custodian to temporarily release to the
Servicer the Indenture Trustee's Home Loan File pursuant to the provisions of
Section 7.02 of the Sale and Servicing Agreement upon compliance by the
Servicer of the provisions thereof provided that the Indenture Trustee's Home
Loan File shall have been stamped to signify the Issuer's pledge to the
Indenture Trustee under the Indenture.
Section 2.10. Book-Entry Notes. The 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 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 2.12. Unless and until definitive, fully registered
Notes (the "Definitive Notes") have been issued to such Note Owners pursuant
to Section 2.12:
(i) the provisions of this Section shall be in full force and
effect;
(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 2.12,
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 2.11. Notices to Clearing Agency. Whenever a notice or other
--------------------------
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to such Note Owners pursuant to
Section 2.12, 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 2.12. 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, 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 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 2.13. Tax. 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 Collateral. 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 3.01. 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 on the Notes in accordance with the terms of the
Notes and this Indenture. Without limiting the foregoing, unless the Notes
have been declared due and payable pursuant to Section 5.02 and moneys
collected by the Indenture Trustee are being applied in accordance with
Section 5.05(b), subject to and in accordance with Section 8.02(a), the
Issuer will cause to be distributed all amounts on deposit in the Note
Payment Account on a Payment Date deposited therein pursuant to the Sale and
Servicing Agreement for the benefit of the Notes of each Class, to the
Holders thereof. 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
The Notes shall be non-recourse obligations of the Issuer and shall be
limited in right of payment to amounts available from the Collateral as
provided in this Indenture. The Issuer shall not otherwise be liable for
payments of the Notes, and none of the owners, agents, officers, directors,
employees, or successors or assigns of the Issuer shall be personally liable
for any amounts payable, or performance due, under the Notes or this
Indenture. If any other provision of this Indenture shall be deemed to
conflict with the provisions of this Section 3.01, the provisions of this
Section 3.01 shall control.
Section 3.02. Maintenance of Office or Agency. The Issuer will or will
-------------------------------
cause the Administrator to 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 Administrator to serve as its agent for the foregoing
purposes and to serve as Paying Agent with respect to the Notes. 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.
Section 3.03. Money for Payments To Be Held in Trust. 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 Payment Account
pursuant to Section 8.02(a) shall be made on behalf of the Issuer by the
Indenture Trustee or by the Paying Agent, and no amounts withdrawn from the
Collection Account and deposited in the Note Payment Account for payment on
the Notes shall be paid over to the Issuer except as provided in this
Section.
Any Paying Agent shall be appointed by Issuer Order with written notice
thereof to the Indenture Trustee. Any Paying Agent appointed by the Issuer
shall be a Person who would be eligible to be Indenture Trustee hereunder as
provided in Section 6.11. The Issuer shall not appoint any Paying Agent
(other than the Indenture Trustee) which is not, at the time of such
appointment, a Depository Institution.
The Issuer will cause each Paying Agent other than the Administrator 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; provided,
however, that with respect to withholding and reporting requirements
applicable to original issue discount (if any) on the Notes, the Issuer
shall have first provided the calculations pertaining thereto to the
Indenture Trustee.
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 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 or abandoned
property, 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 3.04. Existence. (a) 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 and the
Collateral.
(b) Any successor to the Owner Trustee appointed pursuant to Section
10.02 of the Trust Agreement shall be the successor Owner Trustee under this
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to the
Owner Trustee, the Person succeeding to the Owner Trustee under the Trust
Agreement may exercise every right and power of the Owner Trustee under this
Indenture with the same effect as if such Person had been named as the Owner
Trustee herein.
Section 3.05. Protection of Collateral. The Issuer will, from time to
------------------------
time and upon direction of the Majority Highest Priority Class Noteholders,
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) provide further assurance with respect to the Grant of
all or any portion of the Collateral;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively
the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to the Collateral; or
(v) preserve and defend title to the Collateral and the
rights of the Indenture Trustee and the Noteholders in such Collateral
against the claims of all persons and parties.The Issuer hereby
designates the Administrator its agent and attorney-in-fact to execute
any financing statement, continuation statement or other instrument
required to be executed pursuant to this Section 3.05.
Section 3.06. Annual Opinions as to Collateral. On or before
--------------------------------
February 15 in each calendar year, beginning in 1998, 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 February 15th of the following calendar year.
Section 3.07. Performance of Obligations; Servicing of Home Loans. (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 Collateral 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 or otherwise obtain the assistance of
other Persons (including, without limitation, the Administrator under the
Administration Agreement) 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, the Issuer has contracted with
the Servicer and the Administrator to assist the Issuer in performing its
duties under this Indenture. The Administrator must at all times be the same
Person as the Indenture Trustee.
(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 Collateral, including
but not limited to (i) 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 and (ii) recording or
causing to be recorded all Mortgages, Assignments of Mortgage, all
intervening Assignments of Mortgage and all assumption and modification
agreements to the extent such documents are required to be recorded by the
terms of the Sale and Servicing Agreement, in each case in accordance with
and within the time periods provided for in this Indenture and/or the Sale
and Servicing Agreement, as applicable. 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 and the Holders of at least a majority of the
Outstanding Amount of the Notes.
(d) If the Servicer is terminated or resigns in accordance with the
Sale and Servicing Agreement, a successor Servicer shall be appointed as
provided in Section 10.02 of the Sale and Servicing Agreement.
(e) 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 that it will not, without the
prior written consent of the Majority Highest Priority Class Noteholders
(i) 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 (ii) waive timely performance
or observance by the Servicer or the Seller under the Sale and Servicing
Agreement. If any such amendment, modification, supplement or waiver
shall be so consented to by such Holders, the Issuer agrees, promptly
following a request by the Indenture Trustee, 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 3.08. Negative Covenants. So long as any Notes are
------------------
Outstanding, the Issuer shall not:
(a) except as expressly permitted by this Indenture, the Loan Sale
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 Collateral, unless directed to do so by the Indenture
Trustee;
(b) 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 Collateral;
(c) engage in any business or activity other than as permitted by the
Trust Agreement or other than in connection with, or relating to, the
issuance of Notes pursuant to this Indenture, or amend the Trust Agreement as
in effect on the Closing Date other than in accordance with Section 11.01
thereof;
(d) issue debt obligations under any other indenture;
(e) incur or assume any indebtedness or guaranty any indebtedness of
any Person, except for such indebtedness as may be incurred by the Issuer in
connection with the issuance of the Notes pursuant to this Indenture;
(f) dissolve or liquidate in whole or in part or merge or consolidate
with any other Person;
(g) (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 Collateral 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 Mortgaged 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
Collateral;
(h) remove the Administrator without cause unless the Rating Agency
Condition shall have been satisfied in connection with such removal; or
(i) take any other action or fail to take any action which may cause
the Issuer to be taxable as (a) an association pursuant to Section 7701 of
the Code and the corresponding regulations or (b) as a taxable mortgage pool
pursuant to Section 7701(i) of the Code and the corresponding regulations.
Section 3.09. 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 1997), 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. Covenants of the Issuer. All covenants of the Issuer in
-----------------------
this Indenture are covenants of the Issuer and are not covenants of the Owner
Trustee. The Owner Trustee is, and any successor Owner Trustee under the
Trust Agreement will be, entering into this Indenture solely as Owner Trustee
under the Trust Agreement and not in its respective individual capacity, and
in no case whatsoever shall the Owner Trustee or any such successor Owner
Trustee be personally liable on, or for any loss in respect of, any of the
statements, representations, warranties or obligations of the Issuer
hereunder, as to all of which the parties hereto agree to look solely to the
property of the Issuer.
Section 3.11. Servicer's Obligations. The Issuer shall cause the
----------------------
Servicer to comply with Sections 5.01, 6.01, 7.07 and Article IX of the Sale
----------
and Servicing Agreement.
Section 3.12. 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 holders 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 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 3.13. Treatment of Notes as Debt for Tax Purposes. The Issuer
-------------------------------------------
shall, and shall cause the Administrator to, treat the Notes as indebtedness
for all federal and state tax purposes.
Section 3.14. 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 Transferor or the Seller of its obligations under the Loan
Sale Agreement.
Section 3.15. 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 4.01. Satisfaction and Discharge of Indenture. When either (I)
---------------------------------------
the Sale and Servicing Agreement has been terminated pursuant to
Section 11.01(a) thereof or (II) all of the following have occurred:
(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 2.04 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 3.03) 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 within one year at the
Maturity Date, 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
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 (including Deferred Amounts to the extent required
to be paid hereunder) to the applicable Maturity Date of such
Class of Notes or Termination Date (if Notes shall have been
called for redemption pursuant to Section 10.01), as the case
may be;
(b) the later of (a) eighteen months after payment in full of all
outstanding obligations under the Securities, (b) the payment in full of all
unpaid Trust Fees and Expenses and (c) the date on which 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 11.01(a)
and, subject to Section 11.02, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture with respect to the Notes have been complied with, then, upon Issuer
Request, this Indenture and the lien, rights, and interests created hereby
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 3.03, 3.04, 3.05, 3.08 and 3.10 hereof, (v) the rights,
obligations and immunities of the Indenture Trustee hereunder (including the
rights of the Indenture Trustee under Section 6.07 and the obligations of the
Indenture Trustee under Section 4.02) 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 and deliver
proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, and shall pay, or assign or transfer
and deliver, to or at the direction of the Issuer, all Collateral held by
it as part of the Trust Estate after satisfaction of the conditions
specified in clauses (b) and (c) above.
Section 4.02. Application of Trust Money. All moneys deposited with
--------------------------
the Indenture Trustee pursuant to Sections 3.03 and 4.01 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 4.03. 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 3.03 and thereupon such Paying Agent shall
be released from all further liability with respect to such moneys.
ARTICLE V
REMEDIES
Section 5.01. Events of Default. (a) "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) subject to Section 5.01(b) and notwithstanding that there
may be insufficient sums in the Collection Account for payment thereof,
default for a period in excess of five days in the payment of any
interest on any Note when the same becomes due and payable or default in
the payment of the entire Principal Balance (including any Deferred
Amount to the extent required to be paid hereunder) of any Note on the
Maturity Date; or
(ii) the existence of an unpaid Deferred Amount in respect of
any Highest Priority Class Notes; 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,
the Sale and Servicing Agreement 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 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) default in the observance or performance of any covenant
or agreement of the Company made in the Trust Agreement or any
representation or warranty of the Company made in the Trust Agreement,
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 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
(v) 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 Collateral 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 Collateral, 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
(vi) 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
Collateral, 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 clauses (iii) and (iv)
above, its status and what action the Issuer is taking or proposes to
take with respect thereto.
(b) Neither (i) the failure to pay the full amount of interest payable
pursuant to Section 8.02(a)(iii) to the Holders of any Non-Priority Class,
nor (ii) an application of Allocable Loss Amounts pursuant to Section 5.07 of
the Sale and Servicing Agreement to a Non-Priority Class, shall constitute an
Event of Default under Section 5.01(a).
Section 5.02. 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, at the direction or upon the prior written
consent of the Majority Highest Priority Class Noteholders may declare all
the Notes to be immediately due and payable, by a notice in writing to the
Issuer, 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 Majority Highest Priority Class Noteholders, by written notice to the
Issuer and the Indenture Trustee, may rescind and annul such declaration and
its consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(i) all payments of principal of and interest on all Highest
Priority Class Notes and all other amounts that would then be due
hereunder or upon such Highest Priority Class Notes if the Event of
Default giving rise to such acceleration had not occurred; and
(ii) 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
(iii) 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 5.03. Non-Priority Classes. The Holders of Notes of a Non
--------------------
Priority Class shall have no right to exercise any Noteholders' rights
referred to in this Article V, except to the extent provided in Section
5.01(a).
Section 5.04. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Indenture Trustee. (a) The Issuer covenants that if default is made in the
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payment of any interest on any Highest Priority Class Note when the same
becomes due and payable, and such default continues for a period of five
days, the Issuer will, upon demand of the Indenture Trustee or, at the
direction of the Majority Highest Priority Class Noteholders, 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 interest 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, and shall, at the direction of the Majority Highest
Priority Class Noteholders, 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, and shall, at the direction of the Majority Highest Priority
Class Noteholders, as more particularly provided in Section 5.05, 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 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 Collateral, 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, upon the
direction of the Majority Highest Priority Class Noteholders, 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, 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 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.
(v) 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.
(vi) 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.
(vii) 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 5.05. Remedies; Priorities. (a) If an Event of Default shall
--------------------
have occurred and be continuing the Indenture Trustee may, and at the
direction of the Majority Highest Priority Class Noteholders shall, do one or
more of the following (subject to Section 5.06):
(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 Collateral;
(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 or the Noteholders; and
(iv) sell the Collateral or any portion thereof or rights or
interest therein in a commercially reasonable manner, 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 Collateral following an Event of Default, unless
(A) the Holders of 100% of the Outstanding Amount of the Highest
Priority Class Notes 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
(including any Deferred Amounts) and interest or (C) the Indenture
Trustee determines that the Collateral will not continue to provide
sufficient funds for the payment of principal of (including any Deferred
Amounts) 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 Highest Priority Class 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 Collateral 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 any costs or expenses incurred
by it in connection with the enforcement of the remedies provided for in
this Article V;
second: to the Servicer for the Servicing Fee then due and unpaid;
third: to the Noteholders for amounts due and unpaid on the Notes
for interest (including any premium), pro rata, according to the amounts
due and payable on the Notes for interest (including any premium);
fourth: to Noteholders for amounts due and unpaid on the Notes in
respect of principal, pro rata, according to the Class Principal
Balances thereof, until the Outstanding Amount of each Class of Notes is
reduced to zero;
fifth: to Holders of the Class M-1 Notes and Class M-2 Notes, pro
rata based on the amount of their respective Deferred Amounts, such
Deferred Amounts if any, until such Deferred Amounts are paid in full;
sixth: to the Owner Trustee or Co-Owner Trustee, as applicable,
for amounts required to be distributed to Certificateholders pursuant to
the Trust Agreement;
seventh: to the Servicer for any amounts then due and payable as
the Servicing Advance Reimbursement Amount under the Sale and Servicing
Agreement; and
eighth: to the Owner Trustee or Co-Owner Trustee, as applicable,
for any amounts to be distributed, pro rata, to the holders of the
Residual Interest.
The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Noteholders pursuant to this Section. At least 15
days before such record date, the Indenture Trustee shall mail to each
Noteholder and the Issuer a notice that states the record date, the payment
date and the amount to be paid.
Section 5.06. Optional Preservation of the Collateral. If the Notes
---------------------------------------
have been declared to be due and payable under Section 5.02 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 Collateral. It is the desire of the parties
hereto and the Noteholders that there be at all times sufficient funds for
the payment of interest and, ultimately, principal on and any Deferred
Amounts with respect to the Notes, and the Indenture Trustee shall take such
desire into account when determining whether or not to maintain possession of
the Collateral. In determining whether to maintain possession of the
Collateral, 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 Collateral for such purpose.
Section 5.07. 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:
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) the Majority Highest Priority Class Noteholders 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;
(c) 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;
(d) the Indenture Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceedings; and
(e) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 60-day period by the Majority Highest
Priority Class Noteholders.
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 the Majority Highest Priority Class
Noteholders, the Indenture Trustee in its sole discretion may determine
what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
Section 5.08. 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 on, if any, and Deferred
Amounts, if any, on such Note on or after the Maturity Date (or, in the case
of redemption, on or after the Termination 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 5.09. 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 5.10. 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 5.11. 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.
Section 5.12. Control by Noteholders. The Majority Highest Priority
----------------------
Class Noteholders 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:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to the express terms of Section 5.05, any direction to the
Indenture Trustee to sell or liquidate the Collateral shall be by Holders of
Notes representing not less than 100% of the Outstanding Amount of the Notes;
(c) if the conditions set forth in Section 5.06 have been satisfied and
the Indenture Trustee elects to retain the Collateral 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 Highest Priority
Class Notes to sell or liquidate the Collateral shall be of no force and
effect; and
(d) 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 the Noteholders set forth in this Section,
subject to Section 6.01, 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 5.13. Waiver of Past Defaults. Prior to the declaration of the
-----------------------
acceleration of the maturity of the Notes as provided in Section 5.02, the
Majority Highest Priority Class Noteholders may waive any past Default or
Event of Default and its consequences except a Default (a) in the payment of
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, as applicable. 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 5.14. 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 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 Termination Date).
Section 5.15. 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 5.16. 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 Collateral 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 5.05(b).
Section 5.17. 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 of its obligations under or in connection with the
Loan Sale 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.
(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
Majority Highest Priority Class Noteholders 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 Seller under or in connection with the Loan Sale Agreement,
including the right or power to take any action to compel or secure
performance or observance by the Seller or the Servicer, 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 Loan Sale 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 6.01. 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;
(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 5.12;
(iv) Every provision of this Indenture that in any way relates
to the Indenture Trustee is subject to this Section;
(v) 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;
(vi) Money held in trust by the Indenture Trustee shall be
segregated from other funds except to the extent permitted by law or the
terms of this Indenture or the Sale and Servicing Agreement;
(vii) 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; provided, however, that the Indenture Trustee shall not refuse or
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fail to perform any of its duties hereunder solely as a result of
nonpayment of its normal fees and expenses and further provided that
nothing in this Section 6.01(c)(vii) shall be construed to limit
the exercise by the Indenture Trustee of any right or remedy permitted
under this Indenture or otherwise in the event of the Issuer's failure
to pay the Indenture Trustee's fees and expenses pursuant to Section
6.07. In determining that such repayment or indemnity is not
reasonably assured to it, the Indenture Trustee must consider not only
the likelihood of repayment or indemnity by or on behalf of the
Issuer but also the likelihood of repayment or indemnity from
amounts payable to it from the Collateral pursuant to Section 6.07; and
(viii) 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 6.02. 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 any such 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 an 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.
(d) The Indenture Trustee shall not be liable for (i) 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 such action or omission
by the Indenture Trustee does not constitute willful misconduct, negligence
or bad faith; or (ii) any willful misconduct or gross negligence on the part
of the Custodian.
(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 with 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 6.03. Individual Rights of Indenture Trustee. The Indenture
--------------------------------------
Trustee in its individual or any other capacity other than as Indenture
Trustee or Co-Owner Trustee may, and in its capacity as Indenture Trustee or
Co-Owner Trustee may not, 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 Section 6.11.
Section 6.04. 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 or 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 6.05. Notice of Default. 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 6.06. 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 6.07. Compensation and Indemnity. As compensation for its
--------------------------
services hereunder, the Indenture Trustee shall be entitled to receive, on
each Payment Date, the Indenture Trustee's Fee, payable by the Servicer
(which compensation shall not be limited by any law on compensation of a
trustee of an express trust), and shall be entitled to reimbursement from the
Servicer 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, if any, of the Indenture Trustee's
agents, counsel, accountants and experts. The Issuer agrees to cause the
Servicer 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 Servicer
promptly of any claim for which it may seek indemnity. Failure by the
Indenture Trustee to so notify the Issuer and the Servicer shall not relieve
the Issuer of its obligations hereunder. The Issuer shall or shall cause the
Servicer to defend any such claim, and the Indenture Trustee may have
separate counsel and the Issuer shall or shall cause the Servicer to pay the
fees and expenses of such counsel. Neither the Issuer nor the Servicer need
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee to the extent attributable 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 in connection with occurrence of a Default
specified in Section 5.01(a)(v) or (vi) 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 6.08. 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. 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:
(a) the Indenture Trustee fails to comply with Section 6.11;
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(d) 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 "resigning or removed Indenture
Trustee"), the Issuer shall promptly appoint a successor Indenture Trustee
that satisfies the eligibility requirements of Section 6.11.
The resigning or removed Indenture Trustee agrees to cooperate with the
Servicer and any successor Indenture Trustee in effecting the termination of
the resigning or removed Indenture Trustee's responsibilities and rights
hereunder and shall promptly provide such successor Indenture Trustee all
documents and records reasonably requested by it to enable it to assume the
Indenture Trustee's functions hereunder. Any successor Indenture Trustee
shall have all the rights, powers and duties of the Indenture Trustee under
this Indenture.
The resigning or removed Indenture Trustee shall grant to the successor
Indenture Trustee the Collateral, including, without limitation, all of the
Indenture Trustee's Home Loan Files, the related documents and statements
held by it hereunder, and the Seller, the Servicer, the Issuer and the
resigning or removed Indenture Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor Indenture Trustee
all such rights, powers, duties and obligations.
The successor Indenture Trustee shall deliver a written acceptance of
its appointment to the resigning or removed Indenture Trustee, the Servicer,
the Seller and the Issuer. The successor Indenture Trustee shall mail a
notice of its succession to Noteholders. The resigning Indenture Trustee
shall promptly transfer all property held by it as Indenture Trustee to the
successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the resigning or
removed Indenture Trustee, the Issuer or the Holders of a majority of the
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
6.07 shall continue for the benefit of the retiring Indenture Trustee.
Section 6.09. 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
ertificate 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
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Trustee. (a) Notwithstanding any other provisions of this Indenture, at any
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time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral 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
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Collateral, or any part
thereof, 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 6.08 hereof;
(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 Collateral 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
Indenture 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,
jointly with the Indenture Trustee, 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 Indenture 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 "A" or
better by S&P or shall otherwise be acceptable to S&P. The Indenture Trustee
shall comply with TIA Section 310(b), 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 7.01. Issuer To Furnish Indenture Trustee Names and Addresses
-------------------------------------------------------
of Noteholders. The Issuer will furnish or cause to be furnished to the
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Indenture Trustee not more than five days after each 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; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list
shall be required to be furnished.
Section 7.02. 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 7.01 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 7.01 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 7.03. Reports by Issuer. (a) The Issuer shall:
-----------------
(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 7.03(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 7.04. Reports by Indenture Trustee. If required by TIA Section
----------------------------
313(a), within 60 days after each September 1, beginning with September 1,
1998, 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 securities
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 securities
exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. 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 Collateral, 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 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 8.02. Payments and Distributions. (a) Subject to
--------------------------
Section 8.02(b), on each Payment Date and on any Termination Date, to the
extent funds are available in the Note Payment Account, the Indenture Trustee
shall make the following payments pursuant to the Servicer's Monthly
Statement (except as provided in Section 5.05(b)):
(i) to the Servicer, an amount equal to the Servicing
Compensation (net of (1) any amounts retained prior to deposit into the
Collection Account pursuant to Section 5.01(b)(1) of the Sale and
Servicing Agreement, (2) any amounts representing income or gain form
investments credited to the Collection Account and paid to the Servicer
pursuant to Section 5.01(b)(2) of the Sale and Servicing Agreement and
(3) the Indenture Trustee Fee, which shall be paid to the Indenture
Trustee) and all unpaid Servicing Compensation from prior Due Periods;
(ii) to the extent of funds withdrawn from the Pre-Funding
Account and deposited in the Note Payment Account by the Indenture
Trustee pursuant to Section 5.02(b)(2) of the Sale and Servicing
Agreement (net of any amount deposited in the Certificate Distribution
Account from the Note Payment Account for distribution to
Certificateholders pursuant to Subsection 5.01(c)(2) of the Sale and
Servicing Agreement), (A) if such amount deposited in the Note Payment
Account is greater than $50,000 or an Indenture Event of Default has
occurred, pro rata, to the Holders of Notes of each Class, based
on the Class Principal Balance of each such Class, in each case to
reduce the Class Principal Balance of each such Class; or (B) if no
Indenture Event of Default has occurred and such amount deposited
in the Note Payment Account is less than or equal to $50,000
sequentially to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7 and Class A-8 Notes, in that order,
in reduction of the Class Principal Balances thereof;
(iii) to the extent of the Regular Payment Amount for such
Payment Date, in the following order of priority:
(A) to the Holders of the Senior Notes, the Senior
Noteholders' Interest Payment Amount for such Payment Date,
allocated to each Class of Senior Notes, pro rata, based on
the amount of interest payable in respect of each such Class
based on the applicable Interest Rate;
(B) to the Holders of the Class M-1 Notes, the Class M-1
Noteholders' Interest Payment Amount for such Payment Date;
(C) to the Holders of the Class M-2 Notes, the Class M-2
Noteholders' Interest Payment Amount for such Payment Date;
(D) to the Holders of the Class A-1, Class A-2, Class A-
3, Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8
Notes, in that order, until the respective Class Principal
Balances thereof are reduced to zero, the amount necessary to
reduce the aggregate of the Class Principal Balances of the
Senior Notes to the Senior Optimal Principal Balance for such
Payment Date;
(E) to the Holders of the Class M-1 Notes, the amount
necessary to reduce the Class Principal Balance thereof to the
Class M-1 Optimal Principal Balance for such Payment Date;
(F) to the Holders of the Class M-2 Notes, the amount
necessary to reduce the Class Principal Balance thereof to the
Class M-2 Optimal Principal Balance for such Payment Date;
(G) to the Holders of the Class M-1 Notes, the
applicable Deferred Amount, if any, until such Deferred Amount
has been paid in full;
(H) to the Holders of the Class M-2 Notes, the
applicable Deferred Amount, if any, until such Deferred Amount
has been paid in full;
Notwithstanding the foregoing, on any Payment Date on which a Trigger Event
has occurred and is continuing, any Regular Payment Amount applied pursuant
to clause (D) above will be paid to the holders of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8 Notes, in
that order, without regard to the Senior Optimal Principal Balance, until the
respective Class Principal Balances thereof have been reduced to zero.
(iv) to the extent of the Excess Spread, if any, in the
following order of priority:
(A) in an amount equal to the Overcollateralization
Deficiency Amount, if any, as follows:
1) to the Holders of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7 and
Class A-8 Notes, in that order, until the respective
Class Principal Balances thereof are reduced to zero, the
amount necessary to reduce the aggregate of the Class
Principal Balances thereof to the Senior Optimal
Principal Balance for such Payment Date;
2) to the Holders of the Class M-1 Notes, the
amount necessary to reduce the Class Principal Balance
thereof to the Class M-1 Optimal Principal Balance for
such Payment Date; and
3) to the Holders of the Class M-2 Notes, the
amount necessary to reduce the Class Principal Balance
thereof to the Class M-2 Optimal Principal Balance for
such Payment Date;
(B) to the Holders of the Class M-1 Notes, the
applicable Deferred Amount, if any, until such Deferred Amount
has been paid in full; and
(C) to the Holders of the Class M-2 Notes, the
applicable Deferred Amount, if any, until such Deferred Amount
has been paid in full.
Notwithstanding the foregoing, on any Payment Date on which a Trigger Event
has occurred and is continuing, any Excess Spread applied pursuant to clause
(A)(1) above will be paid to the holders of the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8, in that
order, without regard to the Senior Optimal Principal Balance, until the
respective Class Principal Balances thereof have been reduced to zero.
(b) On the Payment date on which an early redemption or termination
pursuant to Section 11.02(a) or Section 11.02(b) of the Sale and Servicing
Agreement is to occur, to the extent funds are available in the Note Payment
Account, the Indenture Trustee shall make the following payments from the
Note Payment Account in the following order of priority:
(1) to the Servicer, an amount equal to the Servicing
Compensation and all paid and unpaid Servicing Compensation from
prior Due Periods;
(2) to the holders of the Notes, all accrued and unpaid
interest on each Class of Notes and an amount equal to the
aggregate of the then outstanding Class Principal Balances of each
Class of Notes; and
(3) to the holders of the Class M-1 and Class M-2 Notes, in
that order, the applicable Deferred Amounts, until each such
Deferred Amount has been paid in full.
(c) On each Payment Date and the Termination Date, to the extent of the
interest of the Indenture Trustee in the Certificate Distribution Account (as
described in Section 5.05(a) of the Sale and Servicing Agreement), the
Indenture Trustee hereby authorizes the Owner Trustee, the Co-Owner Trustee
or the Paying Agent, as applicable, to make the distributions from the
Certificate Distribution Account as required pursuant to Section 5.05(c) of
the Sale and Servicing Agreement.
Section 8.03. (Reserved)
Section 8.04. Servicer's Monthly Statements. On each Payment Date, the
-----------------------------
Indenture Trustee shall deliver the Servicer's Monthly Statement with respect
to such Payment Date to DTC and the Rating Agencies.
Section 8.05. Release of Collateral. (a) Subject to the payment of
---------------------
its fees and expenses pursuant to Section 6.07, the Indenture Trustee may,
and when required by the provisions of this Indenture or the Sale and
Servicing Agreement 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 or the Sale and Servicing Agreement. 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 to (i) the Certificateholders pursuant to
Section 5.05(c) of the Sale and Servicing Agreement and (ii) the Servicer
pursuant to Section 8.02(a)(i) hereof have been paid, release any remaining
portion of the Collateral 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
Subsection (b) only upon receipt of an Issuer Request accompanied by an
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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 11.01.
Section 8.06. 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 8.05(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require, 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 Collateral.
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.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
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(a) Without the consent of the Holders of any Notes but with prior notice to
the Rating Agencies and with the prior written consent of 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 of 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.
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 Noteholder but with prior consent
of 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 Noteholders under this Indenture; provided,
however, that such action shall not, as evidenced by (i) an Opinion of
Counsel or (ii) satisfaction of the Rating Agency Condition, adversely affect
in any material respect the interests of any Noteholder.
Section 9.02. Supplemental Indentures with Consent of Noteholders. The
---------------------------------------------------
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also
may, with prior consent of the Rating Agencies, and with the consent of the
Holders of not less than a majority of the Outstanding Amount of the Notes,
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:
(a) 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 Termination 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 Collateral 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 Termination Date);
(b) 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;
(c) modify or alter the provisions of the proviso to the definition of
the term "Outstanding";
(d) 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 Collateral pursuant to Section 5.04;
(e) 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;
(f) 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 Payment 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
(g) 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 Collateral
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.
In connection with requesting the consent of the Noteholders 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. 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.
Section 9.03. 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 6.01 and 6.02, 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
supplemental indenture that affects the Indenture Trustee's own rights,
duties, liabilities or immunities under this Indenture or otherwise.
Section 9.04. 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 9.05. 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 9.06. 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.
Section 9.07 Amendments to Trust Agreement. Subject to Section 11.01
-----------------------------
of the Trust Agreement, the Indenture Trustee shall, upon Issuer Order,
consent to any proposed amendment to the Trust Agreement or an amendment to
or waiver of any provision of any other document relating to the Trust
Agreement, such consent to be given without the necessity of obtaining the
consent of the Holders of any Notes upon satisfaction of the requirements
under Section 11.01 of the Trust Agreement.
Nothing in this Section shall be construed to require that any Person
obtain the consent of the Indenture Trustee to any amendment or waiver or any
provision of any document where the making of such amendment or the giving of
such waiver without obtaining the consent of the Indenture Trustee is not
prohibited by this Indenture or by the terms of the document that is the
subject of the proposed amendment or waiver.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption. In connection with a sale of the Home
----------
Loans, the Affiliated Holder may, at its option, effect an early redemption
of the Notes on or after any Payment Date on which the Pool Principal Balance
declines to 15% or less of the Assumed Pool Principal Balance. In addition,
the Affiliated Holder may, at its option, effect an early redemption of the
Notes on or after the Payment Date on which the Pool Principal Balance
declines to 10% or less of the Assumed Pool Principal Balance. The
Affiliated Holder shall effect such early redemption in the manner specified
in and subject to the provisions of Section 11.02 of the Sale and Servicing
Agreement.
The Servicer or the Issuer shall furnish the Rating Agencies notice of
any such redemption in accordance with Section 10.02.
Section 10.02. Form of Redemption Notice. Notice of redemption under
-------------------------
Section 10.01 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 Termination Date to each Holder of Notes, as of the
close of business on the Record Date preceding the applicable Termination
Date, at such Holder's address or facsimile number appearing in the Note
Register.
All notices of redemption shall state:
(i) the Termination Date;
(ii) the Termination Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Termination Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name of the Issuer and at the expense of the Servicer.
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.
Section 10.03. Notes Payable on Termination Date; Provision for Payment
--------------------------------------------------------
of Indenture Trustee. The Notes or portions thereof to be redeemed shall,
- --------------------
following notice of redemption as required by Section 10.02 (in the case of
redemption pursuant to Section 10.01), on the Termination Date become due and
payable at the Termination Price and (unless the Issuer shall default in the
payment of the Termination Price) no interest shall accrue on the Termination
Price for any period after the date to which accrued interest is calculated
for purposes of calculating the Termination Price. The Issuer may not redeem
the Notes unless, (i) all outstanding obligations under the Notes have been
paid in full and (ii) the Indenture Trustee has been paid all amounts to
which it is entitled hereunder.
ARTICLE XI
MISCELLANEOUS
Section 11.01. 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 TIA Section 3.14(c), a certificate of
an accountant or, if required by such section, 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 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 or not, in the opinion of each
such signatory, such condition or covenant has been complied with.
(b) 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.
(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 (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 calendar year, 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 then Outstanding Amount of the Notes.
(v) 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.
(vi) 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 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.
Section 11.02. 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 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 11.03. 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 (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 11.04. 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:
(a) 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
(b) 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
1997-3, in care of Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890, Attention: Emmett R. Harmon, 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 the
applicable address specified in the Sale and Servicing Agreement.
Section 11.05. 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 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 11.06. (Reserved)
Section 11.07. 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 11.08. 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.
Section 11.09. 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. Severability. 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 and Consent of Noteholders.
------------------------------------------------
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 Collateral, any benefit or any
legal or equitable right, remedy or claim under this Indenture. Each
Noteholder and Note Owner, by acceptance of a Note or, in the case of a Note
Owner, a beneficial interest in a Note, consents to and agrees to be bound by
the terms and conditions of 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, AND, TO THE EXTENT
PERMITTED BY LAW 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. Issuer Obligations. 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, 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 its acceptance of a Note, hereby
covenant and agree that they will not at any time institute against the
Seller, the Servicer or the Affiliated Holder, or join in any institution
against the Seller, the Servicer, or the Affiliated Holder 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.
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 1997-3
By: Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee
By: /s/ Debra Eberly
------------------------------------------
Name: Debra Eberly
Title: Administrative Account Manager
U.S. Bank National Associtaion,
as Indenture Trustee
By: /s/ James Kaufman
--------------------------------------------
Name: James Kaufman
Title:
STATE OF DELAWARE )
)
COUNTY OF NEWCASTLE )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared
Debra Eberly,
- ------------ 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 WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner Trustee on behalf of FIRSTPLUS HOME
LOAN OWNER TRUST 1997-3, 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 18th day of September,
1997.
/s/ Kathleen A. Pedelini
--------------------------------------------
Notary Public in and for the State of New York
(Seal)
My commission expires:
10/31/98
- --------------------
STATE OF MINNESOTA )
)
COUNTY OF RAMSEY )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared
James Kaufman,
- ------------- 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 U.S. BANK NATIONAL ASSOCIATION, a national
banking association, 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 18th day of September,
1997.
/s/ Stephen G. Reymann
--------------------------------------------
Notary Public in and for the State of New York
(Seal)
My commission expires:
1/31/2000
- --------------------
SCHEDULE I
(To be Provided at the Closing and Supplemented on each Subsequent
Transfer Date on which Subsequent Home Loans are transferred to the Trust)
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 A-6
Form of Class A-6 Note
EXHIBIT A-7
Form of Class A-7 Note
EXHIBIT A-8
Form of Class A-8 Note
EXHIBIT A-9
Form of Class M-1 Note
EXHIBIT A-10
Form of Class M-2 Note
EXECUTION
TRUST AGREEMENT
among
FIRSTPLUS INVESTMENT CORPORATION,
as Depositor,
FIRSTPLUS RESIDUAL HOLDINGS, INC.,
as the Company,
WILMINGTON TRUST COMPANY,
as Owner Trustee
and
U.S. BANK NATIONAL ASSOCIATION,
as Co-Owner Trustee
Dated as of September 1, 1997
FIRSTPLUS HOME LOAN OWNER TRUST 1997-3
Asset Backed Securities, Series 1997-3
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
DEFINITIONS
1.01. Capitalized Terms . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Other Definitional Provisions . . . . . . . . . . . . . . . . . 4
ARTICLE II
ORGANIZATION
2.01. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.02. Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.03. Purposes and Powers . . . . . . . . . . . . . . . . . . . . . . 5
2.04. Appointment of Owner Trustee . . . . . . . . . . . . . . . . . 6
2.05. Initial Capital Contribution of Owner Trust Estate . . . . . . 6
2.06. Declaration of Trust . . . . . . . . . . . . . . . . . . . . . 6
2.07. Liability of the Owners . . . . . . . . . . . . . . . . . . . . 6
2.08. Title to Trust Property . . . . . . . . . . . . . . . . . . . . 7
2.09. Situs of Trust . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10. Representations and Warranties of the Depositor and the Company;
Covenant of the Company . . . . . . . . . . . . . . . . . . . . 7
2.11. Maintenance of the Demand Note . . . . . . . . . . . . . . . . 10
2.12. Federal Income Tax Allocations . . . . . . . . . . . . . . . . 10
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
3.01. Initial Ownership . . . . . . . . . . . . . . . . . . . . . . . 10
3.02. The Trust Certificates . . . . . . . . . . . . . . . . . . . . 10
3.03. Execution, Authentication and Delivery of Trust Certificates . 11
3.04. Registration of Transfer and Exchange of Trust Certificates . . 11
3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates . . . . 12
3.06. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . 12
3.07. Access to List of Owners' Names and Addresses . . . . . . . . . 12
3.08. Maintenance of Office or Agency . . . . . . . . . . . . . . . . 13
3.09. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . 13
3.10. Ownership by Company of the FRH Certificates . . . . . . . . . 14
3.11. Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . 14
3.12. Notices to Clearing Agency . . . . . . . . . . . . . . . . . . 15
3.13. Definitive Certificates . . . . . . . . . . . . . . . . . . . . 15
3.14. Restrictions on Transfer . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
4.01. Prior Notice to Owners with Respect to Certain Matters . . . . 21
4.02. Action by Owners with Respect to Certain Matters . . . . . . . 23
4.03. Action by Owners with Respect to Bankruptcy . . . . . . . . . . 23
4.04. Restrictions on Owners' Power . . . . . . . . . . . . . . . . . 23
4.05. Majority Control . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
5.01. Certificate Distribution Account . . . . . . . . . . . . . . . 23
5.02. Application of Trust Funds . . . . . . . . . . . . . . . . . . 24
5.03. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . 25
5.04. Segregation of Moneys; No Interest . . . . . . . . . . . . . . 25
5.05. Accounting and Reports to the Certificateholder, Owners, the
Internal Revenue Service and Others . . . . . . . . . . . . . . 25
5.06. Signature on Returns; Tax Matters Partner . . . . . . . . . . . 25
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
6.01. General Authority . . . . . . . . . . . . . . . . . . . . . . . 26
6.02. General Duties . . . . . . . . . . . . . . . . . . . . . . . . 26
6.03. Action upon Instruction . . . . . . . . . . . . . . . . . . . . 26
6.04. No Duties Except as Specified in this Agreement, the Basic
Documents or in Instructions . . . . . . . . . . . . . . . . . 27
6.05. No Action Except Under Specified Documents or Instructions . . 28
6.06. Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
7.01. Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . 28
7.02. Furnishing of Documents . . . . . . . . . . . . . . . . . . . . 29
7.03. Representations and Warranties . . . . . . . . . . . . . . . . 29
7.04. Reliance; Advice of Counsel . . . . . . . . . . . . . . . . . . 30
7.05. Not Acting in Individual Capacity. . . . . . . . . . . . . . . 31
7.06. Owner Trustee Not Liable for Trust Certificates or Home Loans . 31
7.07. Owner Trustee May Own Trust Certificates and Notes . . . . . . 31
7.08. Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
8.01. Owner Trustee's Fees and Expenses . . . . . . . . . . . . . . . 32
8.02. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 32
8.03. Payments to the Owner Trustee . . . . . . . . . . . . . . . . . 32
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
9.01. Termination of Trust Agreement . . . . . . . . . . . . . . . . 32
9.02. Dissolution Upon Bankruptcy of the Company . . . . . . . . . . 34
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
10.01. Eligibility Requirements for Owner Trustee . . . . . . . . . . . 34
10.02. Resignation or Removal of Owner Trustee . . . . . . . . . . . . . 34
10.03. Successor Owner Trustee . . . . . . . . . . . . . . . . . . . . . 35
10.04. Merger or Consolidation of Owner Trustee . . . . . . . . . . . . 36
10.05. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . 36
ARTICLE XI
MISCELLANEOUS
11.01. Supplements and Amendments . . . . . . . . . . . . . . . . . . . 38
11.02. No Legal Title to Owner Trust Estate in Owners . . . . . . . . . 39
11.03. Limitations on Rights of Others . . . . . . . . . . . . . . . . . 39
11.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.05. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.06 Separate Counterparts . . . . . . . . . . . . . . . . . . . . . . 40
11.07. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 40
11.08. Covenants of the Company . . . . . . . . . . . . . . . . . . . . 40
11.09. No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.10. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.11. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 41
EXHIBITS
--------
EXHIBIT A1 Forms of Certificates
EXHIBIT A2 Forms of Certificates issued to the
Company
EXHIBIT B1 Form of Residual Interest
EXHIBIT B2 Form of Residual Interest issued to
the Company
EXHIBIT C Form of Certificate of Trust
EXHIBIT D Form of Demand Note
EXHIBIT E Form of Certificate Depository Agreement
EXHIBIT F1 Form of Investment Letter
EXHIBIT F2 Form of Investment Letter
EXHIBIT G1 Form of Rule 144A Transfer
Certificate
EXHIBIT G2 Form of Purchaser's Letter for Institutional Accredited
Investor
EXHIBIT G3 Form of ERISA Transfer Affidavit
TRUST AGREEMENT, dated as of September 1, 1997, among FIRSTPLUS
Investment Corporation, a Nevada corporation, as Depositor (the "Depositor"),
FIRSTPLUS Residual Holdings, Inc., a Nevada corporation (the "Company"),
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Owner Trustee
(the "Owner Trustee") and U.S. Bank National Association, as Co-Owner Trustee
(the "Co-Owner Trustee").
ARTICLE I
DEFINITIONS
Section 1.01. Capitalized Terms. For all purposes of this Agreement,
-----------------
the following terms shall have the meanings set forth below:
Agreement: This Trust Agreement, as the same may be amended and
---------
supplemented from time to time.
Benefit Plan: The meaning assigned to such term in Section 11.13.
------------
Book-Entry Certificate: A beneficial interest in any Class of
----------------------
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.11.
Business Trust Statute: 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: The agreement among the Trust and the
--------------------------------
DTC, dated as of the Closing Date, substantially in the form attached hereto
as Exhibit E, relating to the Certificates, as the same may be amended and
supplemented from time to time.
Certificate Distribution Account: The meaning assigned to such term in
--------------------------------
Section 5.01.
Certificate of Trust: The Certificate of Trust in the form of Exhibit
--------------------
C to be filed for the Trust pursuant to Section 3810(a) of the Business Trust
Statute.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
-----------------
who is the beneficial owner of such Book-Entry Certificate, as reflected on
the books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency Participant
or as an indirect participant, in each case in accordance with the rules of
such Clearing Agency).
Certificate Register and Certificate Registrar: The register mentioned
-------------------- ---------------------
and the registrar appointed pursuant to Section 3.04.
Certificateholder or Holder: A Person in whose name a Certificate is
----------------- ------
registered.
Corporate Trust Office: With respect to the Owner Trustee, the
----------------------
principal corporate trust office of the Owner Trustee located at Rodney
Square North, 1100 North Market Street, Wilmington, DE 19890-0001; or at
such other address in the State of Delaware as the Owner Trustee may
designate by notice to the Owners and the Company, or the principal corporate
trust office of any successor Owner Trustee (the address (which shall be in
the State of Delaware) of which the successor owner trustee will notify the
Owners and the Company).
Demand Note: The Demand Note dated September 19, 1997, in the amount
-----------
of $6,000,000 from FFG to the Company in substantially the form attached
hereto as Exhibit D.
Definitive Certificates: A certificated form of security that
-----------------------
represents a Certificate pursuant to Section 3.13 or a Residual Interest
Instrument.
ERISA: The meaning assigned thereto in Section 11.13.
-----
Expenses: The meaning assigned to such term in Section 8.02.
--------
FFG: FIRSTPLUS Financial Group, Inc., a Nevada corporation.
---
FFI: FIRSTPLUS Financial, Inc., a Texas corporation.
---
FRH Certificates: (i) the Definitive Certificates in substantially the
----------------
form attached hereto as Exhibit A2, representing approximately 1.00%
Percentage Interest of the Original Certificate Principal Balance of each
Class Certificates that the Company is receiving pursuant to Section 3.10 and
(ii) the Definitive Certificate in substantially the form attached hereto as
Exhibit B2, representing approximately 1.00% Percentage Interest in the
Residual Interest that the Company is receiving pursuant to Section 3.10.
Insolvency Event: With respect to the Company, any of the following
----------------
occurrences:
(i) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Company and such decree or order shall have remained in
force, undischarged or unstayed for a period of 60 days; or
(ii) the Company shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Company or of or relating to all or substantially all of
the Company's property; or
(iii) the board of the directors of the Company shall
voluntarily dissolve the Company; or
(iv) the Company shall admit in writing its inability to pay its
debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations.
provided however, that the substantive consolidation of the Company with an
entity in respect of which the events described in clauses (i) - (iv) above
have occurred shall not constitute an Insolvency Event with respect to the
Company.
Non-permitted Foreign Holder: The meaning set forth in Section 3.14.
----------------------------
Non-U.S. Person: An individual, corporation, partnership or other
---------------
person other than a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate or trust
that is subject to U.S. federal income tax regardless of the source of its
income.
Owner: Each Holder of a Certificate and each holder of a Residual
-----
Interest Instrument, as applicable.
Owner Trust Estate: The Collateral (as defined in the Indenture),
------------------
including the contribution of $1 referred to in Section 2.05 hereof.
Paying Agent: The Co-Owner Trustee or any successor in interest thereto
------------
or any other paying agent or co-paying agent appointed pursuant to Section
3.09 and authorized by the Issuer to make payments to and distributions from
the Certificate Distribution Account, including payment of principal of or
interest on the Certificates on behalf of the Issuer.
Percentage Interest: With respect to any Certificate, the portion of
-------------------
the Certificates as a whole evidenced by such single Certificate, expressed
as a percentage rounded to five decimal places, equivalent to a fraction, the
numerator of which is the principal balance represented by such single
Certificate as of the Closing Date and the denominator of which is the
Original Certificate Principal Balance. With respect to each Residual
Interest Instrument, the percentage portion of all of the Residual Interest
evidenced thereby as stated on the face of such Residual Interest Instrument.
Prospective Owner: The meaning set forth in Section 3.14(a).
-----------------
Residual Interest Instrument or Instrument: An instrument substantially
------------------------------------------
in the form attached as Exhibit B1 hereto and evidencing the Residual
Interest.
Residual Interestholders: Any holder of the Residual Interest and,
------------------------
initially, FFI, as holder of 99% Percentage Interest of the Residual
Interest, and the Company, as holder of 1% Percentage Interest of the
Residual Interest.
Restricted Trust Certificate: Any of the Class B-2 Certificates.
----------------------------
Sale and Servicing Agreement: The Sale and Servicing Agreement dated
----------------------------
as of the date hereof, among the Trust, as Issuer, the Depositor, as Seller,
the Indenture Trustee, as Indenture Trustee and Co-Owner Trustee and FFI, as
Transferor and Servicer.
Secretary of State: The Secretary of State of the State of Delaware.
------------------
Treasury Regulations: 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: The trust established by this Agreement.
-----
Trust Certificates: The Certificates and the Residual Interest
------------------
Instruments, collectively.
U.S. Person: A citizen or resident of the United States, a corporation,
-----------
partnership or other entity created or organized in or under the laws of the
United States or any State (other than a partnership that is not treated as a
U.S. Person under any applicable Treasury regulations), or an estate whose
income is subject to United States federal income tax regardless of its
source, or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more U.S.
Persons have the authority to control all substantial decisions of the trust.
Notwithstanding the preceding sentence, to the extent provided in Treasury
regulations, certain trusts in existence on August 20, 1996 and treated as
U.S. Persons prior to such date that elect to continue to be treated as U.S.
Persons, also will be U.S. Persons.
Section 1.02. Other Definitional Provisions. (1) 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.
(2) 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.
(3) 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.
(4) 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".
(5) 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.
(6) 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 2.01. Name. The Trust created hereby shall be known as
----
"FIRSTPLUS Home Loan Owner Trust 1997-3", in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
Section 2.02. Office. The office of the Trust shall be in care of the
------
Owner Trustee at the Corporate Trust Office.
Section 2.03. Purposes and Powers. (a) The purpose of the Trust is
-------------------
to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement and to sell such Notes and such
Certificates;
(ii) with the proceeds of the sale of the Notes and the
Certificates, to fund the Pre-Funding Account, the Capitalized Interest
Account and to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance to the Depositor and the
Company, as their interests may appear pursuant to the Sale and
Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Owner Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Owners pursuant to the terms of the Sale and Servicing
Agreement any portion of the Owner Trust Estate released from the lien
of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation
of the Owner Trust Estate and the making of distributions and payments
to the Owners and the Noteholders.
(vii) to issue the FRH Certificates and the Residual Interest
Instrument pursuant to this Agreement.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
Section 2.04. Appointment of Owner Trustee. The Depositor hereby
----------------------------
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
Section 2.05. Initial Capital Contribution of Owner Trust Estate. The
--------------------------------------------------
Depositor hereby sells, assigns, transfers, conveys and sets over to the
Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date
hereof, of the foregoing contribution, which shall constitute the initial
Owner Trust Estate and shall be deposited in the Certificate Distribution
Account. The Depositor or the Company shall pay organizational expenses of
the Trust as they may arise or shall, upon the request of the Owner Trustee,
promptly reimburse the Owner Trustee for any such expenses paid by the Owner
Trustee.
Section 2.06. 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, after issuance of the
Certificates the Trust shall be treated as a partnership, with the assets of
the partnership being the Home Loans and other assets held by the Trust, the
partners of the partnership being the holders of the Trust Certificates, and
the Notes being non-recourse debt of the partnership. The parties agree
that, unless otherwise required by appropriate tax authorities, the Trust
will file or cause to be filed annual or other necessary returns, reports and
other forms consistent with the characterization of the Trust as a
partnership for such tax purposes. Effective as of the date hereof, the
Owner Trustee shall have all rights, powers and duties set forth herein and
in the Business Trust Statute with respect to accomplishing the purposes of
the Trust. The Trust shall not elect to be treated as an association taxable
as a corporation for any income or franchise tax purpose.
Section 2.07. Liability of the Owners. (a) The Company, as holder of
-----------------------
the FRH Certificates, shall be liable directly to and will indemnify the
injured party for all losses, claims, damages, liabilities and expenses of
the Trust (including Expenses, to the extent not paid out of the Owner Trust
Estate) to the extent that the Company would be liable if the Trust were a
partnership under the Delaware Revised Uniform Limited Partnership Act in
which the Company were a general partner; provided, however, that the Company
-------- -------
shall not be liable for any losses incurred by an Owner in the capacity of an
investor in the Trust Certificates or a Noteholder in the capacity of an
investor in the Notes. In addition, any third party creditors of the Trust
(other than in connection with the obligations described in the preceding
sentence for which the Company shall not be liable) shall be deemed third
party beneficiaries of this paragraph and paragraph (c) below. The
obligations of the Company under this paragraph and paragraph (c) below shall
be evidenced by the FRH Certificates the Company is receiving pursuant to
Section 3.10.
(b) No Owner, other than to the extent set forth in paragraphs (a) and
(c), shall have any personal liability for any liability or obligation of the
Trust.
(c) The Company agrees to be liable directly to and will indemnify the
injured party for all losses, claims, damages, liabilities and expenses
(other than those incurred by an Owner in the capacity of an investor in the
Trust Certificates or a Noteholder in the capacity of an investor in the
Notes) arising out of or based on the arrangements pursuant to which the
amounts distributed to the Residual Interestholders are held by the Company
and FFI, respectively, as Residual Interestholders, as though such
arrangements were partnerships under the Delaware Revised Uniform Limited
Partnership Act in which the Company were a general partner.
Section 2.08. Title to Trust Property. (a) Subject to the Indenture,
-----------------------
legal title to all the Owner Trust Estate shall be vested at all times in the
Trust as a separate legal entity except where applicable law in any
jurisdiction requires title to any part of the Owner Trust Estate to be
vested in a trustee or trustees, in which case title shall be deemed to be
vested in the Owner Trustee, the Co-Owner Trustee and/or a separate trustee,
as the case may be.
(b) The Owners shall not have legal title to any part of the Owner
Trust Estate. No transfer by operation of law or otherwise of any interest
of the Owners shall operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it
of any part of the Owner Trust Estate.
Section 2.09. Situs of Trust. The Trust will be located and
--------------
administered in the state of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of
Delaware or the State of New York, except with respect to the Co-Owner
Trustee. The Trust shall not have any employees; provided, however, that
--------
nothing herein shall restrict or prohibit the Owner Trustee from having
employees within or without the State of Delaware. Payments will be received
by the Trust only in Delaware or New York, and payments will be made by the
Trust only from Delaware or New York, except with respect to the Co-Owner
Trustee. The only office of the Trust will be at the Corporate Trust Office
in Delaware.
Section 2.10. Representations and Warranties of the Depositor and the
-------------------------------------------------------
Company; Covenant of the Company. (a) The Depositor hereby represents and
- --------------------------------
warrants to the Owner Trustee:
(i) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Nevada, with
power and authority to own its properties and to conduct its business as
such properties are currently owned and such business is presently
conducted.
(ii) The Depositor is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such
qualifications.
(iii) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has
full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Trust and the Depositor has duly
authorized such sale and assignment and deposit to the Trust by all
necessary corporate action; and the execution, delivery and performance
of this Agreement has been duly authorized by the Depositor by all
necessary corporate action.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws of the Depositor, or any
indenture, agreement or other instrument to which the Depositor is a
party or by which it is bound; nor result in the creation or imposition
of any lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Basic Documents); nor violate any law or, to the best of the Depositor's
knowledge, any order, rule or regulation applicable to the Depositor of
any court or of any Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Depositor or its properties.
(v) There are no proceedings or investigations pending or notice
of which has been received in writing before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties: (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by the Depositor of its obligations under, or the
validity or enforceability of, this Agreement.
(vi) The representations and warranties of the Depositor in
Section 3.01 of the Sale and Servicing Agreement are true and correct.
(b) The Company hereby represents and warrants to the Owner Trustee
that:
(i) The Company is duly organized and validly existing as a
corporation in good standing under the laws of the State of Nevada, with
power and authority to own its properties and to conduct its business as
such properties are currently owned and such business is presently
conducted.
(ii) The Company is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such
qualifications.
(iii) The Company has the power and authority to execute and deliver
this Agreement and to carry out its terms; and the execution, delivery
and performance of this Agreement has been duly authorized by the
Company by all necessary corporate action.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws of the Company, or any
indenture, agreement or other instrument to which the Company is a party
or by which it is bound; nor result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Basic Documents); nor violate any law or, to the best of the Company's
knowledge, any order, rule or regulation applicable to the Company of
any court or of any Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Company or its properties.
(v) There are no proceedings or investigations pending or, to the
Company's best knowledge, threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Company or its properties: (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by the Company of its obligations under, or the
validity or enforceability of, this Agreement.
(vi) From the date of its incorporation until the date of this
Agreement, except with respect to obtaining an Investing Lender Approval
from the Department of Housing and Urban Development, the Company has
not conducted any business or trade, has not entered into any contracts,
written or oral, has not had any employees, has no liabilities or
creditors, and no liens or encumbrances have existed or exist with
respect to the Company or its assets, except with respect to this Trust
Agreement and any similar trust agreement that relates to a prior
issuance of FIRSTPLUS Asset Backed Securities.
(c) The Company covenants with the Owner Trustee and the Co-Owner
Trustee that during the continuance of this Agreement it will comply in all
respects with the provisions of its Articles of Incorporation in effect from
time to time.
Section 2.11. Maintenance of the Demand Note. To the fullest extent
------------------------------
permitted by applicable law, the Company agrees that it shall not sell,
convey, pledge, transfer or otherwise dispose of the Demand Note. Upon
maturity of the Demand Note, the Company shall take such action as is
necessary to renew the Demand Note and to maintain the Demand Note in effect
until the expiration of this Agreement.
Section 2.12. Federal Income Tax Allocations. Net income of the Trust
------------------------------
for any month, as determined for Federal income tax purposes (and each item
of income, gain, loss and deduction entering into the computation thereof),
shall be allocated:
(i) among the Certificates as of the first Record Date following
the end of such month, in proportion to their ownership of principal
amount of Trust Certificates on such date, an amount of net income up to
the sum of (i) the amount distributed in respect of interest to the
Certificateholders pursuant to Section 5.05(c) of the Sale and Servicing
Agreement for such month, and (ii) the portion of the market discount on
the Home Loans accrued during such month that is allocable to the
excess, if any, of the initial aggregate principal amount of the
Certificates over their initial aggregate issue price; and
(ii) to the Residual Interestholders, pro rata, to the extent of
any remaining net income.
If the net income of the Trust for any month is insufficient for the
allocations described in clause (a) above, subsequent net income shall first
be allocated to make up such shortfall before being allocated as provided in
the preceding sentence. Net losses of the Trust, if any, for any month, as
determined for Federal income tax purposes (and each item of income, gain,
loss and deduction entering into the computation thereof), shall be allocated
to the Residual Interestholders to the extent the Residual Interestholders
are reasonably expected to bear the economic burden of such net losses, and
any remaining net losses shall be allocated among the Certificates as of the
first Record Date following the end of such month in proportion to their
ownership of principal amount of Trust certificates on such Record Date. Any
indebtedness allocated pursuant to Treasury Regulation Section 1.752 -
3(a)(3) shall be allocated to the Residual Interest.
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. Initial Ownership. Upon the formation of the Trust by the
-----------------
contribution by the Depositor pursuant to Section 2.05 and until the issuance
of the Trust Certificates, the Depositor shall be the sole Owner of the
Trust.
Section 3.02. The Trust Certificates. The Certificates shall be issued
----------------------
in minimum denominations of $250,000 and in integral multiples of $250 in
excess thereof; provided, however, the FRH Certificates issued to the Company
-------- -------
pursuant to Section 3.10 may be issued in a lesser denomination.
Concurrently with the issuance of the Trust Certificates, the Company will be
issued the FRH Certificates. The Residual Interest Instruments shall not be
issued with a principal amount. The Trust Certificates shall be executed on
behalf of the Trust by manual or facsimile signature of a Trust Officer of
the Owner Trustee. Trust Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures shall
have been affixed, authorized to sign on behalf of the Trust, shall be valid
and binding obligations of the Trust, notwithstanding that such individuals
or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Trust Certificates or did not hold such
offices at the date of authentication and delivery of such Trust
Certificates.
A transferee of a Trust Certificate shall become an Owner, and shall be
entitled to the rights and subject to the obligations of an Owner hereunder
and under the Sale and Servicing Agreement, upon such transferee's acceptance
of a Trust Certificate duly registered in such transferee's name pursuant to
Section 3.04.
Section 3.03. Execution, Authentication and Delivery of Trust
-----------------------------------------------
Certificates. Concurrently with the initial sale of the Home Loans to the
- ------------
Trust pursuant to the Sale and Servicing Agreement, the Owner Trustee shall
cause the Certificates, in an aggregate principal amount equal to the
Original Certificate Principal Balance, and the Residual Interest Instruments
representing 100% of the Percentage Interests of the Residual Interest to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Depositor, signed by its chairman of the board, its
president or any vice president, without further corporate action by the
Depositor, in authorized denominations. No Trust Certificate shall entitle
its holder to any benefit under this Agreement, or shall be valid for any
purpose, unless there shall appear on such Trust Certificate a certificate of
authentication substantially in the form set forth in Exhibit A1 or B1,
executed by the Owner Trustee or the Administrator, as the Owner Trustee's
authenticating agent, by manual or facsimile signature; such authentication
shall constitute conclusive evidence that such Trust Certificate shall have
been duly authenticated and delivered hereunder. All Trust Certificates
shall be dated the date of their authentication.
Section 3.04. 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 3.08, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Owner Trustee shall provide for the registration of Trust
Certificates and of transfers and exchanges of Trust Certificates as herein
provided. The Administrator shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate at
the office or agency maintained pursuant to Section 3.08, the Owner Trustee
shall execute, authenticate and deliver (or shall cause the Administrator as
its authenticating agent to authenticate and deliver), in the name of the
designated transferee or transferees, one or more new Trust Certificates in
authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent. At the
option of an Owner, Trust Certificates may be exchanged for other Trust
Certificates of authorized denominations of a like aggregate amount upon
surrender of the Trust Certificates to be exchanged at the office or agency
maintained pursuant to Section 3.08.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Owner or his attorney duly authorized in writing. In
addition, each Residual Interest Instrument presented or surrendered for
registration of transfer and exchange must be accompanied by a letter from
the Prospective Owner certifying as to the representations set forth in
Section 3.14(a) and (b). Each Trust Certificate surrendered for registration
of transfer or exchange shall be canceled and disposed of by the Owner
Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of 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 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates.
-------------------------------------------------------
If (a) any mutilated Trust Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust
Certificate and (b) there shall be delivered to the Certificate Registrar and
the Owner Trustee such security or indemnity as may be required by them to
save each of them harmless, then in the absence of notice that such Trust
Certificate shall have been acquired by a bona fide purchaser, the Owner
Trustee on behalf of the Trust shall execute and the Owner Trustee, or the
Administrator as the Owner Trustee's authenticating agent, shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed,
lost or stolen Trust Certificate, a new Trust Certificate of like tenor and
denomination. In connection with the issuance of any new Trust Certificate
under this Section, the Owner Trustee or the Certificate Registrar may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any
duplicate Trust Certificate issued pursuant to this Section shall constitute
conclusive evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Trust Certificate shall be found
at any time.
Section 3.06. Persons Deemed Owners. Prior to due presentation of a
---------------------
Trust Certificate for registration of transfer, the Owner Trustee or the
Certificate Registrar may treat the Person in whose name any Trust
Certificate shall be registered in the Certificate Register as the owner of
such Trust Certificate for the purpose of receiving distributions pursuant to
Section 5.02 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 3.07. Access to List of Owners' Names and Addresses. The Owner
---------------------------------------------
Trustee shall furnish or cause to be furnished to the Servicer and the
Depositor, within 15 days after receipt by the Owner Trustee of a request
therefor from the Servicer, the Depositor or the Indenture Trustee in
writing, a list, in such form as the Servicer, the Depositor or the Indenture
Trustee may reasonably require, of the names and addresses of the Owners as
of the most recent Record Date. If three or more Certificateholders or one
or more Holders of Certificates together evidencing not less than 25% of the
Certificate Principal Balance apply in writing to the Owner Trustee, and such
application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner
Trustee shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to
the current list of Certificateholders. Each Owner, by receiving and holding
a Trust Certificate, shall be deemed to have agreed not to hold any of the
Depositor, the Company, the Certificate Registrar, the Co-Owner Trustee 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 3.08. Maintenance of Office or Agency. The Owner Trustee shall
-------------------------------
maintain in the Borough of Manhattan, The City of New York, an office or
offices or agency or agencies where Trust Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Trust Certificates and the Basic
Documents may be served. The Owner Trustee initially designates the
Administrator's office in New York as its principal corporate trust office
for such purposes. The Owner Trustee shall give prompt written notice to the
Company and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
Section 3.09. Appointment of Paying Agent. The Owner Trustee hereby
----------------------------
appoints the Co-Owner Trustee as Paying Agent under this Agreement. The
Paying Agent shall make distributions to Certificateholders from the
Certificate Distribution Account pursuant to Section 5.02 hereof and Section
5.05 of the Sale and Servicing Agreement and shall report the amounts of such
distributions to the Owner Trustee. The Paying Agent shall have the
revocable power to withdraw funds from the Certificate Distribution Account
for the purpose of making the distributions referred to above. In the event
that the Co-Owner Trustee shall no longer be the Paying Agent hereunder, the
Owner Trustee shall appoint a successor to act as Paying Agent (which shall
be a bank or trust company). The Owner Trustee shall cause such successor
Paying Agent or any additional Paying Agent appointed by the Owner Trustee to
execute and deliver to the Owner Trustee an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with the Owner
Trustee that as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the Owners
in trust for the benefit of the Certificateholders entitled thereto until
such sums shall be paid to such Owners. The Paying Agent shall return all
unclaimed funds to the Owner Trustee, and upon removal of a Paying Agent,
such Paying Agent shall also return all funds in its possession to the Owner
Trustee. The provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to
the Co-Owner Trustee also in its role as Paying Agent, for so long as the Co-
Owner Trustee shall act as Paying Agent and, to the extent applicable, to any
other paying agent appointed hereunder. Any reference in this Agreement to
the Paying Agent shall include any co-paying agent unless the context
requires otherwise. Notwithstanding anything herein to the contrary, the Co-
Owner Trustee and the Paying Agent shall be the same entity as the Indenture
Trustee under the Indenture and the Sale and Servicing Agreement unless an
Indenture Event of Default has occurred and is continuing and the Indenture
Trustee determines that a conflict of interest exists or will exist if the
Indenture Trustee continues to act as Co-Owner Trustee and Paying Agent. In
such event, the Co-Owner Trustee and the Paying Agent shall resign and the
Owner Trustee shall assume the duties and obligations of the Co-Owner Trustee
and the Paying Agent hereunder and under the Sale and Servicing Agreement.
Section 3.10. Ownership by Company of the FRH Certificates. On the
--------------------------------------------
Closing Date, the Company shall receive from the Trust and thereafter shall
retain beneficial and record ownership of the FRH Certificates representing
at least a 1% Percentage Interest of the Original Class Principal Balance of
each Class and at least a 1% Percentage Interest of the Residual Interest.
The FRH Certificates shall be non-transferable. Any attempted transfer of
any FRH Certificates shall be null and void. The Owner Trustee shall cause
any FRH Certificate issued to the Company to contain a legend substantially
to such effect.
Section 3.11. Book-Entry Certificates. The Certificates, upon original
-----------------------
issuance, will be issued in the form of a typewritten Certificate or
Certificates representing Book-Entry Certificates, to be delivered to, or to
the Co-Owner Trustee as custodian for, The Depository Trust Company, the
initial Clearing Agency, by, or on behalf of, the Trust. Such Certificate or
Certificates shall initially be registered on the Certificate Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, except as
provided in Section 3.13, and no Certificate Owner will receive a Definitive
Certificate representing such Certificate Owners' interest in such
Certificate; provided, however, that upon the transfer of a Book-Entry
Certificate to an entity other than a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act (as defined below), such
Certificate will be issued to such entity in certificated form. Unless and
until Definitive Certificates, fully registered, have been issued to
Certificate Owners pursuant to Section 3.13:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Certificate Registrar, the Owner Trustee, the Co-Owner
Trustee and the Paying Agent shall be entitled to deal with the Clearing
Agency for all purposes of this Agreement (including the payment of
principal of and interest on the Certificates and the giving of
instructions or directions hereunder) as the sole Holder of the
Certificates and shall have no obligation to the Certificate Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such Certificate Owners and the Clearing
Agency and/or the Clearing Agency Participants. Pursuant to the
Certificate Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 3.13, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and
interest on the Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Certificates
evidencing a specified percentage of the Certificate Principal Balance,
the Clearing Agency shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from
Certificate Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Certificates and has delivered such instructions to the
Owner Trustee.
Section 3.12. Notices to Clearing Agency. Whenever a notice or other
--------------------------
communication to the Certificateholders is required under this Agreement,
unless and until Definitive Certificates shall have been issued to
Certificate Owners pursuant to Section 3.13, the Owner Trustee shall give all
such notices and communications specified herein to be given to
Certificateholders to the Clearing Agency, and shall have no obligations to
the Certificate Owners.
Section 3.13. Definitive Certificates. If (i) the Administrator
-----------------------
advises the Owner Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to
the Certificates, and the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Owner Trustee in
writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default,
Certificate Owners representing beneficial interests aggregating at least 50%
of the Certificate Principal Balance advise the Clearing Agency in writing
that the continuation of a book-entry system through the Clearing Agency is
no longer in the best interest of the Certificate 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
Certificates to Certificate Owners requesting the same. Upon surrender to
the Owner Trustee of the typewritten Certificate or Certificates representing
the Book-Entry Certificates by the Clearing Agency, accompanied by
registration instructions the Owner Trustee shall execute and authenticate
the Definitive Certificates in accordance with the instructions of the
Clearing Agency. Neither the Certificate Registrar nor the Owner Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates, the Owner
Trustee, the Co-Owner Trustee and the Paying Agent shall recognize the
Holders of the Definitive Certificates as Certificateholders. The Definitive
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as is reasonably acceptable to the Owner Trustee, as
evidenced by its execution thereof.
Section 3.14. Restrictions on Transfer. (a) Each prospective
------------------------
purchaser and any subsequent transferee of a Trust Certificate (each, a
"Prospective Owner"), other than FFI or the Company, shall represent and
warrant, in writing, to the Owner Trustee and the Certificate Registrar and
any of their respective successors that:
(i) Such Person is duly authorized to purchase the Trust
Certificates and its purchase of investments having the characteristics
of the Trust Certificates is authorized under, and not directly or
indirectly in contravention of, any law, charter, trust instrument or
other operative document, investment guidelines or list of permissible
or impermissible investments that is applicable to the investor.
(ii) Such Person understands that each holder of a Trust
Certificate, by virtue of its acceptance thereof, assents to the terms,
provisions and conditions of the Trust Agreement (as defined herein).
(iii) Such Person is a U.S. Person that is not an organization
exempt from tax under Section 501 of the Code.
(A) In the case of a proposed transfer of a Trust Certificate,
such Person understands that the Trust Certificates (with the exception
of those Trust Certificates transferred to the Company pursuant to
Section 3.10) will bear legends to the following effect:
THIS CERTIFICATE MAY ONLY BE PURCHASED BY A U.S. PERSON THAT IS NOT
AN ORGANIZATION EXEMPT FROM TAX UNDER SECTION 501 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE") IN COMPLIANCE WITH
THE REQUIREMENTS OF THE TRUST AGREEMENT.
NO TRANSFER OF A NON-BOOK ENTRY CERTIFICATE SHALL BE MADE TO
ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED A CERTIFICATE
FROM THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE (I) IS
NOT A PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN, TRUST OR
ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF
THE CODE OR A GOVERNMENTAL PLAN, DEFINED IN SECTION 3(32) OF
ERISA SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO
A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF
ERISA OR THE CODE (ANY SUCH PERSON BEING A "PLAN") AND (II) IS
NOT AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT
OR GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
(b) Each Prospective Owner (other than FFI or the Company) of a
Restricted Trust Certificate or a Residual Interest Instrument, shall
represent and warrant, in writing, to the Owner Trustee and the Certificate
Registrar and any of their respective successors that:
(i) Such Person is (A) a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), and is aware that the seller of the such Certificate
or Instrument may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A and is
acquiring such Certificate or Instrument for its own account or for the
account of one or more qualified institutional buyers for whom it is
authorized to act, or (B) an institutional investor that is an
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the 1933 Act.
(ii) It understands that such Certificates and Instruments
have not been registered under the 1933 Act, and that, if in the future
it decides to offer, resell, pledge or otherwise transfer such
Certificates or Instruments, such Certificates and Instruments may be
offered, resold, pledged or otherwise transferred only (A) pursuant to a
Registration Statement which has been declared effective under the 1933
Act, (B) for so long as such Certificates or Instruments are eligible
for resale pursuant to Rule 144A under the 1933 Act, to a person whom
the seller reasonably believes is a "qualified institutional buyer" as
defined in Rule 144A under the 1933 Act that is purchasing such
Certificates or Instruments for its own account or for the account of a
qualified institutional buyer to whom notice is given that the transfer
is being made in reliance on Rule 144A, or (C) to an institutional
"accredited investor" within the meaning of subparagraph (a)(1), (2),
(3) or (7) of Rule 501 under the 1933 Act that is acquiring such
Certificates or Instruments for its own account or for the account of
such an institutional "accredited investor," for investment purposes and
not with a view to, or for offer or sale in connection with, any
distribution in violation of the 1933 Act, in each case in compliance
with the requirements of the Trust Agreement. It also understands that
an employee benefit plan subject to ERISA or Section 4975 of the Code,
and entities using the assets of any such employee benefit plan, are
prohibited from acquiring the Certificates or Instruments (except to the
extent that an exemption from such prohibition is available, as
described herein).
(A) In the case of a proposed transfer of a Restricted Trust
Certificate, such Person understands that the Restricted Trust
Certificates (with the exception of those Restricted Trust
Certificates transferred to the Company pursuant to Section 3.10)
will bear legends to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS CERTIFICATE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION, UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG AS THIS
CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER
THE 1933 ACT, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER
THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A
OR (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE 1933 ACT THAT IS ACQUIRING THE CERTIFICATE FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE 1933 ACT, IN EACH CASE IN
COMPLIANCE WITH THE REQUIREMENTS OF THE TRUST AGREEMENT.
(B) in the case of a proposed transfer of a Residual Interest
Instrument, such person understands that the Residual Interest
Instrument bears a legend to the following effect:
"THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY THIS
RESIDUAL INTEREST INSTRUMENT HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS. THIS RESIDUAL INTEREST
INSTRUMENT MAY BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR
OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE HOLDER HEREOF
ONLY TO (I) A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE ACT, IN A TRANSACTION THAT IS REGISTERED
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT PURSUANT
TO RULE 144A OR (II) A PERSON INVOLVED IN THE ORGANIZATION OR
OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A PERSON WITHIN
THE MEANING OF RULE 3a-7 OF THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED (INCLUDING, BUT NOT LIMITED TO, FIRSTPLUS
RESIDUAL HOLDINGS, INC. AND FIRSTPLUS FINANCIAL, INC.) IN A
TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH LAWS. NO PERSON IS OBLIGATED
TO REGISTER THIS RESIDUAL INTEREST INSTRUMENT UNDER THE ACT OR
ANY STATE SECURITIES LAWS.
NO TRANSFER OF THIS RESIDUAL INTEREST INSTRUMENT OR ANY
BENEFICIAL INTEREST THEREIN SHALL BE MADE TO ANY PERSON UNLESS
THE OWNER TRUSTEE HAS RECEIVED A CERTIFICATE FROM THE
TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT A
PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE CODE
OR A GOVERNMENTAL PLAN, DEFINED IN SECTION 3(32) OF ERISA
SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A
MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA
OR THE CODE (ANY SUCH PERSON BEING A "PLAN") AND (II) IS NOT
AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR
GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS
BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
THIS RESIDUAL INTEREST INSTRUMENT MAY NOT BE TRANSFERRED, SOLD
OR OTHERWISE DISPOSED OF UNLESS, PRIOR TO SUCH DISPOSITION,
THE PROPOSED TRANSFEREE DELIVERS TO THE OWNER TRUSTEE AND THE
CERTIFICATE REGISTRAR A CERTIFICATE STATING THAT SUCH
TRANSFEREE (A) AGREES TO BE BOUND BY AND TO ABIDE BY THE
TRANSFER RESTRICTIONS APPLICABLE TO THIS RESIDUAL INTEREST
INSTRUMENT; (B) IS NOT AN ENTITY THAT WILL HOLD THIS RESIDUAL
INTEREST INSTRUMENT AS NOMINEE TO FACILITATE THE CLEARANCE AND
SETTLEMENT OF SUCH SECURITY THROUGH ELECTRONIC BOOK-ENTRY
CHANGES IN ACCOUNTS OF PARTICIPATING ORGANIZATIONS; AND (C)
UNDERSTANDS THAT IT MUST TAKE INTO ACCOUNT ITS PERCENTAGE
INTEREST OF THE TAXABLE INCOME RELATING TO THIS RESIDUAL
INTEREST INSTRUMENT.
THIS RESIDUAL INTEREST INSTRUMENT MAY NOT BE PURCHASED BY OR
TRANSFERRED TO ANY PERSON THAT IS A "NON-U.S. PERSON. THE
TERM "NON-U.S. PERSON" MEANS A PERSON WHO IS NOT ONE OF THE
FOLLOWING: A CITIZEN OR RESIDENT OF THE UNITED STATES, A
CORPORATION, PARTNERSHIP OR OTHER ENTITY CREATED OR ORGANIZED
IN OR UNDER THE LAWS OF THE UNITED STATES OR ANY POLITICAL
SUBDIVISION THEREOF, AN ESTATE OR TRUST THAT IS SUBJECT TO
U.S. FEDERAL INCOME TAX REGARDLESS OF THE SOURCE OF ITS INCOME
OR A TRUST IF A COURT WITHIN THE UNITED STATES IS ABLE TO
EXERCISE PRIMARY SUPERVISION OVER THE ADMINISTRATION OF THE
TRUST AND ONE OR MORE UNITED STATES FIDUCIARIES HAVE AUTHORITY
TO CONTROL ALL SUBSTANTIAL DECISIONS OF THE TRUST."
(vii) Such Person shall comply with the provisions of
Section 3.14(b), as applicable, relating to the ERISA restrictions with
respect to the acceptance or acquisition of such Trust Certificate.
(c) No transfer of a Definitive Certificate shall be made to any
Person unless the Owner Trustee has received a certificate from the
transferee to the effect that such transferee (i) is not a person which is an
employee benefit plan, trust or account subject to Title I of ERISA or
Section 4975 of the Code or a governmental plan, defined in Section 3(32) of
ERISA subject to any federal, state or local law which is, to a material
extent, similar to the foregoing provisions of ERISA or the Code (any such
person being a "Plan") and (ii) is not an entity, including an insurance
company separate account or general account, whose underlying assets include
Plan assets by reason of a Plan's investment in the entity.
(d) In the case of a proposed transfer of a Residual Interest
Instrument, by its acceptance of a Residual Interest Instrument, each
Prospective Owner agrees and acknowledges that no legal or beneficial
interest in all or any portion of any Residual Interest Instrument may be
transferred directly or indirectly to (i) an entity that holds residual
securities as nominee to facilitate the clearance and settlement of such
securities through electronic book-entry changes in accounts of participating
organizations (a "Book-Entry Nominee"), or (ii) an individual, corporation,
partnership or other person unless such transferee is not a Non-U.S. Person
(any such person being referred to herein as a "Non-permitted Foreign
Holder"), and any such purported transfer shall be void and have no effect.
(e) Subject to paragraph (f) below, the Owner Trustee shall not
execute, and shall not countersign and deliver, a Residual Interest
Instrument in connection with any transfer thereof unless the transferor
shall have provided to the Owner Trustee a certificate, substantially in the
form attached as Exhibit F1 to this Agreement, signed by the transferee, a
Book-Entry Nominee or a Non-permitted Foreign Holder, which certificate shall
contain the consent of the transferee to any amendments of this Agreement as
may be required to effectuate further the foregoing restrictions on transfer
of the Residual Interest Instruments to Book-Entry Nominees or Non-permitted
Foreign Holders, and an agreement by the transferee that it will not transfer
a Residual Interest Instrument without providing to the Owner Trustee a
certificate substantially in the form attached as Exhibit F1 to this
Agreement.
(f) Notwithstanding paragraph (e) above, in the event that
FIRSTPLUS Financial, Inc. pledges, mortgages, assigns or otherwise grants any
security interest in the Residual Interest to any person (each, a "Pledgee"),
the Owner Trustee may execute, countersign and deliver a Residual Interest
Instrument to such Pledgee, provided that such Pledgee shall have delivered
to the Owner Trustee a Certificate signed on behalf of the Pledgee
substantially in the form attached as Exhibit F2 to this Agreement.
(g) No transfer of a Definitive Certificate shall be effective
unless (i) the Owner Trustee shall have received (A) in the case of a
transfer to be made in reliance upon Rule 144A under the 1933 Act, a
certification signed by the proposed transferor substantially in the form of
Exhibit G1 hereto, and (B) in the case of a transfer to be made to an
institutional "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the 1933 Act that is not a "qualified
institutional buyer," a certification signed by the proposed transferee
substantially in the form of Exhibit G2 hereto; and (ii) in the case of
either (A) or (B) above, the Certificate Registrar shall have received an
affidavit substantially in the form of Exhibit G3 hereto signed by the
proposed transferee.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice to Owners with Respect to Certain Matters.
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With respect to the following matters, the Owner Trustee shall not take
action, and the Owners shall not direct the Owner Trustee to take any action,
unless at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Owners 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 the
Owners have 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 or other change to this Agreement or any Basic
Document in circumstances where the consent of any Noteholder is required;
(d) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Noteholder is not required
and such amendment materially adversely affects the interest of the Owners;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of
a successor Certificate Registrar, or the consent to the assignment by the
Note Registrar, Paying Agent or Indenture Trustee or Certificate Registrar of
its obligations under the Indenture or this Agreement, as applicable;
(f) the consent to the calling or waiver of any default of any Basic
Document;
(g) the consent to the assignment by the Indenture Trustee or Servicer
of their respective obligations under any Basic Document;
(h) except as provided in Article IX hereof, dissolve, terminate or
liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other entity, or
convey or transfer all or substantially all of the Trust's assets to any
other entity;
(j) cause the Trust to incur, assume or guaranty any indebtedness other
than as set forth in this Agreement;
(k) do any act that conflicts with any other Basic Document;
(l) do any act which would make it impossible to carry on the ordinary
business of the Trust as described in Section 2.03 hereof;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to property, for
other than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purpose and powers from those set forth in this
Trust Agreement.
In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books
and records separate from those of any other entity. Except as expressly set
forth herein, the Trust shall pay its indebtedness, operating expenses from
its own funds, and the Trust shall not pay the indebtedness, operating
expenses and liabilities of any other entity. The Trust shall maintain
appropriate minutes or other records of all appropriate actions and shall
maintain its office separate from the offices of the Company, the Depositor,
FFI and FFG.
For accounting purposes, the Trust shall be treated as an entity
separate and distinct from any Owner. The pricing and other material terms
of all transactions and agreements to which the Trust is a party shall be
intrinsically fair to all parties thereto. This Agreement is and shall be
the only agreement among the parties thereto with respect to the creation,
operation and termination of the Trust.
The Owner Trustee shall not have the power, except upon the direction of
the Owners, and to the extent otherwise consistent with the Transaction
Documents, to (i) remove or replace the Servicer or the Indenture Trustee,
(ii) institute proceedings to have the Trust declared or adjudicated a
bankruptcy or insolvent, (iii) consent to the institution of bankruptcy or
insolvency proceedings against the Trust, (iv) file a petition or consent to
a petition seeking reorganization or relief on behalf of the Trust under any
applicable federal or state law relating to bankruptcy, (v) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
any similar official) of the Trust or a substantial portion of the property
of the Trust, (vi) make any assignment for the benefit of the Trust's
creditors, (vii) cause the Trust to admit in writing its inability to pay its
debts generally as they become due, (viii) take any action, or cause the
Trust to take any action, in furtherance of any of the foregoing (any of the
above, a "Bankruptcy Action"). So long as the Indenture remains in effect,
no Certificateholder shall have the power to take, and shall not take, any
Bankruptcy Action with respect to the Trust or the Company or direct the
Owner Trustee to take any Bankruptcy Action with respect to the Trust or the
Company.
Section 4.02. 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 9 thereof, (b) appoint a successor Administrator pursuant
to Section 9 of the Administration Agreement, (c) remove the Servicer under
the Sale and Servicing Agreement pursuant to Section 10.01 thereof or (d)
sell the Home Loans after the termination of the Indenture. The Owner
Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Owners.
Section 4.03. 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 4.04. 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 2.03 nor shall the Owner Trustee be obligated to follow
any such direction, if given.
Section 4.05. Majority Control. Except as expressly provided herein,
----------------
any action that may be taken by the Owners under this Agreement may be taken
by the Holders of Certificates evidencing more than 50% of the aggregate
Class Certificate Principal Balance of the Certificates and holders of
Residual Interest evidencing more than 50% of the Percentage Interest in the
Residual Interest. Except as expressly provided herein, any written notice
of the Owners delivered pursuant to this Agreement shall be effective if
signed by Holders of Certificates evidencing more than 50% of the aggregate
Class Certificate Principal Balance of the Certificates and holders of
Residual Interest evidencing more than 50% of the Percentage Interest in the
Residual Interest at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01. Certificate Distribution Account. All of the right,
--------------------------------
title and interest of the Co-Owner Trustee or Owner Trustee in all funds on
deposit from time to time in the Certificate Distribution Account and in all
proceeds thereof shall be held for the benefit of the Owners and such other
persons entitled to distributions therefrom. Except as otherwise expressly
provided herein or in the Sale and Servicing Agreement, the Certificate
Distribution Account shall be under the sole dominion and control of the
Owner Trustee or Co-Owner Trustee for the benefit of the Owners and the
Servicer.
In addition to the foregoing, the Certificate Distribution Account is a
Trust Account under the Sale and Servicing Agreement and constitutes part of
the Collateral pledged by the Trust to the Indenture Trustee under the
Indenture. The Certificate Distribution Account shall be subject to and
established and maintained in accordance with the applicable provisions of
the Sale and Servicing Agreement and the Indenture, including, without
limitation, the provisions of Section 5.05(c) of the Sale and Servicing
Agreement regarding distributions from the Certificate Distribution Account.
The Company by virtue of its acceptance of the FRH Certificates, agrees
to direct and shall have the sole authority to direct the Owner Trustee or
Co-Owner Trustee, or their successor in interest, as to the Permitted
Investments in which the funds on deposit in the Trust Accounts (as such
term is defined in the Sale and Servicing Agreement) may be invested.
Section 5.02. Application of Trust Funds. (a) On each Payment Date,
--------------------------
the Owner Trustee or Co-Owner Trustee shall direct the Paying Agent to
distribute to the Certificateholders, the Servicer and the Residual
Interestholders from amounts on deposit in the Certificate Distribution
Account and the Class B-2 Account the distributions as provided in Sections
5.05 and 5.08 of the Sale and Servicing Agreement with respect to such
Payment Date.
(b) On each Payment Date, the Owner Trustee shall cause the Paying
Agent to send to each Certificateholder and each Residual Interestholder the
statement provided to the Owner Trustee by the Servicer pursuant to Section
6.01 of the Sale and Servicing Agreement with respect to such Payment 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 (b). 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 5.03. Method of Payment. Subject to Section 3.11,
-----------------
distributions required to be made to Owners on any Payment Date shall be made
to each Owner of record on the preceding Record Date either by wire transfer,
in immediately available funds, to the account of such Holder at a bank or
other entity having appropriate facilities therefor, if such Owner shall have
provided to the Certificate Registrar appropriate written instructions at
least five Business Days prior to such Payment Date and such Holder's
Certificates in the aggregate evidence a denomination of not less than
$1,000,000, or, if not, by check mailed to such Owner at the address of such
holder appearing in the Certificate Register.
Section 5.04. Segregation of Moneys; No Interest. Subject to Sections
----------------------------------
4.01 and 5.02, moneys received by the Owner Trustee or the Co-Owner Trustee
hereunder and deposited into the Certificate Distribution Account will be
segregated except to the extent required otherwise by law or the Sale and
Servicing Agreement and shall be invested in Permitted Investments at the
direction of the Company. Neither the Owner Trustee nor the Co-Owner Trustee
shall be liable for payment of any interest in respect of such moneys.
Section 5.05. Accounting and Reports to the Certificateholder, Owners,
--------------------------------------------------------
the Internal Revenue Service and Others. The Owner Trustee shall (a)
- ---------------------------------------
maintain (or cause the Trust to maintain) the books of the Trust on a
calendar year basis on the accrual method of accounting, and such books shall
be maintained separate from those of any other entity and reflect the
separate interest of the Trust, (b) deliver (or cause the Trust to deliver)
to each Owner, as may be required by the Code and applicable Treasury
Regulations, such information as may be required (including Schedule K-1) to
enable each Owner to prepare its federal and state income tax returns, (c)
file (or cause the Trust to file) such tax relating to the Trust (including a
partnership information return, IRS Form 1065), and make such elections as
may from time to time be required or appropriate under any applicable state
or Federal statute or rule or regulation thereunder so as to maintain the
Trust's characterization as a partnership for Federal income tax purposes,
(d) cause such tax returns to be signed in the manner required by law and (e)
collect (or cause the Trust to collect) any withholding tax as described in
and in accordance with Section 5.02(b) with respect to income or
distributions to Owners. The Owner Trustee shall elect under Section 1278 of
the Code to include in income currently any market discount that accrues with
respect to the Home Loans. The Owner Trustee shall not make the election
provided under Section 754 of the Code.
Section 5.06. Signature on Returns; Tax Matters Partner. (a) The
-----------------------------------------
Owner Trustee shall sign on behalf of the Trust the tax returns of the Trust,
unless applicable law requires an Owner to sign such documents, in which case
such documents shall be signed by the Company.
(b) The Company shall be designated the "tax matters partner" of the
Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority. The Owner Trustee is authorized and
-----------------
directed to execute and deliver or cause to be executed and delivered the
Notes, the Trust Certificates and the Basic Documents to which the Trust is
to be a party and each certificate or other document attached as an exhibit
to or contemplated by the Basic Documents to which the Trust is to be a party
and any amendment or other agreement or instrument described in Article III,
in each case, in such form as the Company shall approve, as evidenced
conclusively by the Owner Trustee's execution thereof, and, on behalf of the
Trust, to direct the Indenture Trustee to authenticate and deliver the Notes
and the Certificates. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust, pursuant to the Basic Documents.
Section 6.02. General Duties. It shall be the duty of the Owner
--------------
Trustee:
(a) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Basic
Documents to which the Trust is a party and to administer the Trust in the
interest of the Owners, subject to the Basic Documents and in accordance with
the provisions of this Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Basic Documents to the extent the Administrator, the
Co-Owner Trustee or the Servicer has agreed in the Administration Agreement
or this Agreement, respectively, to perform any act or to discharge any duty
of the Owner Trustee or the Trust hereunder or under any Basic Document, and
the Owner Trustee shall not be held liable for the default or failure of the
Administrator, the Co-Owner Trustee or the Servicer to carry out its
obligations under the Administration Agreement or this Agreement,
respectively; and
(b) to obtain and preserve, the Issuer's qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Notes, the
Collateral and each other instrument and agreement included in the Trust
Estate.
Section 6.03. Action upon Instruction. (a) Subject to Article IV and
-----------------------
in accordance with the terms of the Basic Documents, the Owners may by
written instruction direct the Owner Trustee in the management of the Trust
but only to the extent consistent with the limited purpose of the Trust.
Such direction may be exercised at any-time by written instruction of the
Owners pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner Trustee or
is contrary to the terms hereof or of any Basic Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or
under any Basic Document, the Owner Trustee shall promptly give notice (in
such form as shall be appropriate under the circumstances) to the Owners
requesting instruction from the Owners as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Owners received, the Owner Trustee shall
not be liable on account of such action to any Person. If the Owner Trustee
shall not have received appropriate instruction within 10 days of such notice
(or within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action, not inconsistent
with this Agreement or the Basic Documents, as it shall deem to be in the
best interests of the Owners, and shall have no liability to any Person for
such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Owners requesting instruction and, to the extent that the Owner Trustee acts
or refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement
or the 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 6.04. No Duties Except as Specified in this Agreement, the
----------------------------------------------------
Basic Documents or in Instructions. The Owner Trustee shall not have any
- ----------------------------------
duty or obligation to manage, make any payment with respect to, register,
record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or
to otherwise take or refrain from taking any action under, or in connection
with, any document contemplated hereby to which the Owner Trustee is a party,
except as expressly provided by the terms of this Agreement, any Basic
Document or in any document or written instruction received by the Owner
Trustee pursuant to Section 6.03; 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 office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted
to it hereunder or to prepare or file any Securities and Exchange Commission
filing for the Trust or to record this Agreement or any Basic Document. The
Owner Trustee nevertheless agrees that it will, at its own cost and expense,
promptly take all action as may be necessary to discharge any liens on any
part of the Owner Trust Estate that result from actions by, or claims
against, the Owner Trustee that are not related to the ownership or the
administration of the Owner Trust Estate.
Section 6.05. 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 6.06. 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 7.01. Acceptance of Trusts and Duties. The Owner Trustee
-------------------------------
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement and the
Basic Documents. The Owner Trustee also agrees to disburse all moneys
actually received by it constituting part of the Owner Trust Estate upon the
terms of the Basic Documents and this Agreement. The Owner Trustee shall not
be answerable or accountable hereunder or under any Basic Document under any
circumstances, except (i) for its own willful misconduct or gross negligence
or (ii) in the case of the inaccuracy of any representation or warranty
contained in Section 7.03 expressly made by the Owner Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Administrator or the Owners;
(c) no provision of this Agreement or any Basic Document shall require
the Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or
under any Basic Document if the Owner Trustee shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by
the Depositor or the Company or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or in
respect of the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Trust Certificates, and the Owner
Trustee shall in no event assume or incur any liability, duty, or obligation
to any Noteholder or to any Owner, other than as expressly provided for
herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct
of the Administrator, the Seller, the Company, the Indenture Trustee or the
Servicer under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations of the Trust
under this Agreement or the Basic Documents that are required to be performed
by the Administrator under the Administration Agreement, the Indenture
Trustee under the Indenture or the Servicer under the Sale and Servicing
Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation under this Agreement or otherwise or in relation to
this Agreement or any Basic Document, at the request, order or direction of
any of the Owners, unless such Owners have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby.
The right of the Owner Trustee to perform any discretionary act enumerated in
this Agreement or in any Basic Document shall not be construed as a duty, and
the Owner Trustee shall not be answerable for other than its gross negligence
or willful misconduct in the performance of any such act provided, that the
Owner Trustee shall be liable for its negligence or willful misconduct in the
event that it assumes the duties and obligations of the Co-Owner Trustee
under the Sale and Servicing Agreement pursuant to Section 10.05 hereof.
Section 7.02. 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 7.03. Representations and Warranties. (a) The Owner Trustee
------------------------------
hereby represents and warrants to the Depositor and the Company, for the
benefit of the Owners, that:
(i) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will
be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this Agreement
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will
contravene any Federal or Delaware law, governmental rule or regulation
governing the banking or trust powers of the owner Trustee or any
judgment or order binding on it, or constitute any default under its
charter documents or by-laws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound.
(b) The Co-Owner Trustee hereby represents and warrants to the
Depositor and the Company, for the benefit of the Owners, that:
(i) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Minnesota. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will
be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this Agreement
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will
contravene any Federal or Minnesota law, governmental rule or regulation
governing the banking or trust powers of the owner Trustee or any
judgment or order binding on it, or constitute any default under its
charter documents or by-laws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound.
Section 7.04. Reliance; Advice of Counsel. (a) The Owner Trustee
---------------------------
shall incur no liability to anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion,
bond, or other document or paper believed by it to be genuine and believed by
it to be signed by the proper party or parties. The Owner Trustee may accept
a certified copy of a resolution of the board of directors or other governing
body of any corporate party as conclusive evidence that such resolution has
been duly adopted by such body and that the same is in full force and effect.
As to any fact or matter the method of the determination of which is not
specifically prescribed herein, the Owner Trustee may for all purposes hereof
rely on a certificate, signed by the president or any vice president or by
the treasurer or other authorized officers of the relevant party, as to such
fact or matter and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it in good faith
in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Basic Documents, the Owner Trustee (i) may act directly or through its agents
or attorneys pursuant to agreements entered into with any of them, and the
Owner Trustee shall not be liable for the conduct or misconduct of such
agents or attorneys if such agents or attorneys shall have been selected by
the Owner Trustee with reasonable care, and (ii) may consult with counsel,
accountants and other skilled persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the written
opinion or advice of any such counsel, accountants or other such persons and
not contrary to this Agreement or any Basic Document.
Section 7.05. Not Acting in Individual Capacity. Except as provided
-----------------------------------
in this Article VII, in accepting the trusts hereby created Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any Basic Document
shall look only to the Owner Trust Estate for payment or satisfaction
thereof.
Section 7.06. Owner Trustee Not Liable for Trust Certificates or Home
-------------------------------------------------------
Loans. The recitals contained herein and in the Trust Certificates (other
- -----
than the signature and countersignature of the Owner Trustee on the Trust
Certificates) shall be taken as the statements of the Depositor and the
Company, and the Owner Trustee assumes no responsibility for the correctness
thereof. The Owner Trustee makes no representations as to the validity or
sufficiency of this Agreement, of any Basic Document or of the Trust
Certificates (other than the signature and countersignature of the Owner
Trustee on the Trust Certificates and as specified in Section 7.03) or the
Notes, or of any Home Loans or related documents. The Owner Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Home Loan, or the perfection and
priority of any security interest created by any Home Loan or the maintenance
of any such perfection and priority, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to generate the payments
to be distributed to Owners under this Agreement or the Noteholders under the
Indenture, including, without limitation: the existence, condition and
ownership of any Mortgaged Property; the existence and enforceability of any
insurance thereon; the existence and contents of any Home Loan on any
computer or other record thereof; the validity of the assignment of any Home
Loan to the Trust or of any intervening assignment; the completeness of any
Home Loan; the performance or enforcement of any Home Loan; the compliance by
the Depositor, the Company or the Servicer with any warranty or
representation made under any Basic Document or in any related document or
the accuracy of any such warranty or representation or any action of the
Administrator, the Indenture Trustee or the Servicer or any subservicer taken
in the name of the Owner Trustee.
Section 7.07. Owner Trustee May Own Trust Certificates and Notes. The
--------------------------------------------------
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Trust Certificates or Notes and may deal with the Depositor, the
Company, the Administrator, the Indenture Trustee and the Servicer in
banking transactions with the same rights as it would have if it were not
Owner Trustee.
Section 7.08. Licenses. The Owner Trustee shall cause the Trust to use
--------
its best efforts to obtain and maintain the effectiveness of any licenses
required in connection with this Agreement and the Basic Documents and the
transactions contemplated hereby and thereby until such time as the Trust
shall terminate in accordance with the terms hereof.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.01. 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 8.02. Indemnification. The Depositor shall be liable as
---------------
primary obligor, and the Servicer as secondary obligor pursuant to the
Administration Agreement, for, and shall indemnify the Owner Trustee and its
successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of
any kind and nature whatsoever (collectively, "Expenses") which may at any
time be imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement,
the Basic Documents, the Owner Trust Estate, the administration of the Owner
Trust Estate or the action or inaction of the Owner Trustee hereunder, except
only that the Depositor shall not be liable for or required to indemnify an
Indemnified Party from and against Expenses arising or resulting from any of
the matters described in the third sentence of Section 7.01. The indemnities
contained in this Section shall survive the resignation or termination of the
Owner Trustee or the termination of this Agreement. In any event of any
claim, action or proceeding for which indemnity will be sought pursuant to
this Section, the Owner Trustee's choice of legal counsel shall be subject to
the approval of the Depositor, which approval shall not be unreasonably
withheld.
Section 8.03. 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 9.01. Termination of Trust Agreement. (a) This Agreement
------------------------------
(other than Article VIII) and the Trust shall terminate and be of no further
force or effect on the earlier of: (i) the satisfaction and discharge of the
Indenture pursuant to Section 4.01 of the Indenture and the termination of
the Sale and Servicing Agreement; (ii) at the time provided in Section 9.02.;
and (iii) the expiration of 21 years from the death of the last survivor of
the descendants of Joseph P. Kennedy (the late ambassador of the United
States to the Court of St. James's). The bankruptcy, liquidation,
dissolution, death or incapacity of any Owner, other than the Company as
described in Section 9.02, shall not (x) operate to terminate this Agreement
or the Trust, nor (y) entitle such Owner's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Owner Trust Estate
nor (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) The Certificates shall be subject to an early redemption or
termination at the option of the Company in the manner and subject to the
provisions of Section 11.02 of the Sale and Servicing Agreement.
(c) Except as provided in Sections 9.01(a) and (b), none of the
Depositor, the Company nor any Owner shall be entitled to revoke or terminate
the Trust.
(d) Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Paying Agent for payment of the final distributions and cancellation, shall
be given by the Owner Trustee to the Certificateholders and the Rating
Agencies mailed within five Business Days of receipt by the Owner Trustee of
notice of such termination pursuant to Section 9.01(a) or (b), which notice
given by the Owner Trustee shall state (i) the Payment Date upon or with
respect to which final payment of the Certificates shall be made upon
presentation and surrender of the Certificates at the office of the Paying
Agent therein designated, (ii) the amount of any such final payment and
(iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Trust Certificates at the office of the Paying Agent therein specified. The
Owner Trustee shall give such notice to the Certificate Registrar (if other
than the Owner Trustee) and the Paying Agent at the time such notice is given
to Certificateholders. Upon presentation and surrender of the Certificates,
the Paying Agent shall cause to be distributed to Certificateholders amounts
distributable on such Payment Date pursuant to Section 5.05 of the Sale and
Servicing Agreement.
In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give
a second written notice to the remaining Certificateholders to surrender
their Trust Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice all the
Trust Certificates shall not have been surrendered for cancellation, the
Owner Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid out
of the funds and other assets that shall remain subject to this Agreement.
Any funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Owner Trustee to the Residual Interestholders on a pro
rata basis.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3820 of the Business Trust Statute.
Section 9.02. Dissolution Upon Bankruptcy of the Company. (i) In the
------------------------------------------
event that an Insolvency Event shall occur with respect to the Company, this
Agreement shall be terminated in accordance with Section 9.01 90 days after
the date of such Insolvency Event, unless, before the end of such 90-day
period, the Owner Trustee shall have received written instructions from (a)
each of the Owners (other than the Company) representing more than 50% of the
aggregate Class Certificate Principal Balance of the Certificates and more
than 50% of the Percentage Interest of the Residual Interest (not including
the principal balance of the Certificates and the Residual Interest
Instrument held by the Company), and (b) an Opinion of Counsel to the effect
that for federal income tax purposes the continuation of the Trust pursuant
to such instructions will not cause the Trust to be taxable as a corporation.
Promptly after the occurrence of any Insolvency Event with respect to the
Company, (A) the Company shall give the Indenture Trustee and the Owner
Trustee written notice of such Insolvency Event, (B) the Owner Trustee shall,
upon the receipt of such written notice from the Company, give prompt written
notice to the Owners (other than the Company) and the Indenture Trustee, of
the occurrence of such event, and (C) the Indenture Trustee shall, upon
receipt of written notice of such Insolvency Event from the Owner Trustee or
the Company, give prompt written notice to the Noteholders 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 9.02.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee. The Owner
------------------------------------------
Trustee shall at all times be a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute; authorized to exercise
corporate powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or state
authorities; and having (or having a parent which has) a short-term debt
rating of at least "Duff-1" by DCR, "A-1"by Fitch and "A-1" by S&P or which
is otherwise acceptable to each Rating Agency. 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 10.02.
Section 10.02. Resignation or Removal of Owner Trustee. The Owner
---------------------------------------
Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Administrator, the Indenture
Trustee. 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 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 10.01 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 10.03. 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 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice of the successor of such
Owner Trustee to all Owners, the Indenture Trustee, the Noteholders and the
Rating Agencies. If the Administrator fails to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense
of the Administrator.
Section 10.04. 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
--------
10.01, 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 10.05. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Owner Trust Estate or any Mortgaged Property may at the time be
located, and for the purpose of performing certain duties and obligations of
the Owner Trustee with respect to the Trust and the Certificates under the
Sale and Servicing Agreement, the Administrator and the Owner Trustee acting
jointly shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Owner Trustee 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 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 10.01 and
no notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.03.
The Owner Trustee hereby appoints the Indenture Trustee as Co-Owner
Trustee for the purpose of establishing and maintaining the Certificate
Distribution Account and making the distributions therefrom to the Persons
entitled thereto pursuant to Section 5.06 of the Sale and Servicing
Agreement. The Owner Trustee and the Co-Owner Trustee each agree that upon
the occurrence and continuation of an Indenture Event of Default and a
determination by the Indenture Trustee that a conflict of interest exists or
will exist if the Indenture Trustee continues to act as Co-Owner Trustee, the
Co-Owner Trustee shall resign and the Owner Trustee shall assume the duties
and obligations of the Co-Owner Trustee under the Sale and Servicing
Agreement and this Agreement, including without limitation, the obligations
of the Co-Owner Trustee as Paying Agent pursuant to Section 3.09 hereof.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provision and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is
not authorized to act separately without the Owner Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed, the Owner
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties, and obligations (including
the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Owner Trustee;
provided that Co-Owner Trustee, in performing its duties and
--------
obligations under the Sale and Servicing Agreement, may act separately
in its capacity as Co-Owner Trustee without the Owner Trustee joining in
such Acts.
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or co-
trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to the separate trustees and co-trustees, as if
given to each of them. Every instrument appointing any separate trustee or
co-trustee, other than this Agreement, shall refer to this Agreement and to
the conditions of this Article. Each separate trustee and co-trustee, upon
its acceptance of appointment, shall be vested with the estates specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating
to the conduct of, affecting the liability of, or affording protection to,
the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its Agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
The Co-Owner Trustee, in its capacity as Co-Owner Trustee, shall not
have any rights, duties or obligations except as expressly provided in this
Agreement and the Sale and Servicing Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Supplements and Amendments. This Agreement may be
--------------------------
amended by the Depositor, the Company and the Owner Trustee and with prior
written notice to the Rating Agencies, but without the consent of any of the
Noteholders or the Owners or the Indenture Trustee, to cure any ambiguity, to
correct or supplement any provisions in this Agreement or for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights of the
Noteholders or the Owners; provided, however, that such action shall not
-----------------
adversely affect in any material respect the interests of any Noteholder or
Owner. An amendment described above shall be deemed not to adversely affect
in any material respect the interests of any Noteholder or Owner if (i) an
opinion of counsel is obtained to such effect, or (ii) the party requesting
the amendment satisfies the Rating Agency Condition with respect to such
amendment.
This Agreement may also be amended from time to time by the Depositor,
the Company and the Owner Trustee, with the prior written consent of the
Rating Agencies and with the prior written consent of the Indenture Trustee,
the Holders (as defined in the Indenture) of Notes evidencing more than 50%
of the Outstanding Amount of the Notes, the Holders of Certificates
evidencing more than 50% of the aggregate Class Certificate Principal Balance
and holders of Residual Interest Instruments evidencing more than 50% of the
Percentage Interests of the Residual Interest, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Noteholders
or the Owners; provided, however, that no such amendment shall (a) increase
-------- -------
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the Home Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Principal Balance or the Percentage
Interests required to consent to any such amendment, in either case of
clause (a) or (b) without the consent of the holders of all the outstanding
Notes and Certificates, and in the case of clause (b) without the consent of
the holders of all the outstanding Residual Interest Instruments.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Indenture Trustee and each of the
Rating Agencies.
It shall not be necessary for the consent of Owners, the Noteholders or
the Indenture Trustee pursuant to this Section to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of Owners provided for in this Agreement or
in any other Basic Document) and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
Section 11.02. 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 11.03. Limitations on Rights of Others. Except for Section
-------------------------------
2.07, 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 2.07), whether
express or implied, shall be construed to give to any other Person any legal
or equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions
contained herein.
Section 11.04. Notices. (a) Unless otherwise expressly specified or
-------
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days
after mailing if mailed by certified mail, postage prepaid (except that
notice to the Owner Trustee shall be deemed given only upon actual receipt by
the Owner Trustee), at the following addresses: (i) if to the Owner Trustee,
its Corporate Trust Office; (ii) if to the Depositor, FIRSTPLUS Investment
Corporation, 3773 Howard Hughes Parkway, Suite 300N, Las Vegas, Nevada 89109,
Attention: James P. Lawler; (iii) if to the Company, FIRSTPLUS Residual
Holdings, Inc., 3773 Howard Hughes Parkway, Suite 300N, Las Vegas, Nevada
89109, Attention: James P. Lawler; (iv) if to the Co-Owner Trustee, U.S. Bank
National Association, 180 East Fifth Street, St. Paul, Minnesota 55101,
Attention: Corporate Trust Department; or, as to each such party, at such
other address as shall be designated by such party in a written notice to
each other party.
(b) Any notice required or permitted to be given to an Owner shall be
given by first-class mail, postage prepaid, at the address of such Owner as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Owner receives such notice.
Section 11.05. 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 11.06 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 11.07. Successors 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 11.08. Covenants of the Company. In the event that (a) the
------------------------
Certificate Principal Balance shall be reduced by Allocable Loan Amounts 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 FFG, or make any distribution on or in
respect of its capital stock to FFG, or repay the principal amount of any
indebtedness of the Company held by FFG, unless (i) after giving effect to
such payment, distribution or repayment, the Company's liquid assets shall
not be less than the amount of actual damages claimed in such litigation or
(ii) the Rating Agency Condition shall have been satisfied with respect to
any such payment, distribution or repayment. 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 11.09. No Petition. The Owner Trustee, by entering into this
-----------
Agreement, each Owner, by accepting a Trust Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement,
hereby covenant and agree that they will not at any time institute against
the Company, the Depositor or the Trust, or join in any institution against
the Company, the Depositor or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings
under any United States Federal or state bankruptcy or law in connection with
any obligations relating to the Trust Certificates, the Notes, this Agreement
or any of the Basic Documents.
Section 11.10. No Recourse. Each Owner by accepting a Trust
-----------
Certificate acknowledges that such Owner's Trust Certificate represents a
beneficial interest in the Trust only and does not represent an interest in
or an obligation of the Seller, the Servicer, the Company, the Administrator,
the Owner Trustee, the Co-Owner Trustee or any Affiliate thereof (other than
the Trust) 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.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as
of the day and year first above written.
FIRSTPLUS Investment Corporation,
Depositor
By: /s/ Lee F. Reddin
-------------------------------------------------
Name: Lee F. Reddin
Title: Vice President
FIRSTPLUS Residual Holdings, Inc.
By: /s/ Lee F. Reddin
-------------------------------------------------
Name: Lee F. Reddin
Title: Vice President
Wilmington Trust Company, in its
individual capacity and as Owner Trustee
By: /s/ Debra Eberly
-------------------------------------------------
Name: Debra Eberly
Title: Adminitrative Account Manager
U.S. Bank National Association, not in its individual capacity but
solely as Co-Owner Trustee
By: /s/ James Kaufman
-------------------------------------------------
Name: James Kaufman
Title:
EXHIBIT A1
FORMS OF CERTIFICATES
EXHIBIT A2
FORMS OF CERTIFICATES ISSUED TO THE COMPANY
EXHIBIT B1
FORM OF RESIDUAL INTEREST INSTRUMENT
EXHIBIT B2
FORM OF RESIDUAL INTEREST ISSUED TO THE COMPANY
EXHIBIT C
CERTIFICATE OF TRUST OF
FIRSTPLUS HOME LOAN OWNER TRUST 1997-3
--------------------------------------
THIS Certificate of Trust of FIRSTPLUS Home Loan Owner Trust 1997-3 (the
"Trust"), dated as of September __, 1997, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form
a business trust under the Delaware Business Trust Act (12 Del. Code,
----------
Section 3801 et seq.).
-- ---
1. Name. The name of the business trust formed hereby is FIRSTPLUS
----
Home Loan Owner Trust 1997-3.
2. Delaware Trustee. The name and business address of the trustee of
----------------
the Trust in the State of Delaware is Wilmington Trust Company of Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890.
Attention:___________.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
Wilmington Trust Company not in its individual
capacity but solely as Owner Trustee under a
Trust Agreement dated as of September 1, 1997.
By:
------------------------------------------
Name:
Title:
EXHIBIT D
FORM OF DEMAND NOTE
EXHIBIT E
FORM OF CERTIFICATE DEPOSITORY AGREEMENT
EXHIBIT F1
FORM OF INVESTMENT LETTER
(Date)
FIRSTPLUS Financial, Inc. U.S. Bank National Association
1250 Mockingbird Lane 180 E. Fifth Street
Dallas, Texas 75247 St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Re: FIRSTPLUS Home Loan Owner Trust 1997-3 (the "Issuer")
Asset Backed Securities, Series 1997-3
Ladies and Gentlemen:
Reference is hereby made to the Trust Agreement (the "Trust Agreement")
among FIRSTPLUS Investment Corporation, as Depositor, FIRSTPLUS Residual
Holdings, Inc., as the Company, Wilmington Trust Company, as Owner Trustee,
and First Bank, National Association, as Co-Owner Trustee, dated as of
September 1, 1997. This letter is delivered to you in connection with the
transfer of the Residual Interest Instrument by _____________________________
___________________________________ ____________________________________ (the
"Transferor") to _______________________ (the "Transferee") and in accordance
with Section 3.14(d) of the Trust Agreement. Capitalized terms used but not
defined herein have the meanings set forth in the Trust Agreement.
The undersigned, on behalf of and as an officer of the Transferee,
HEREBY CERTIFIES as follows:
1. The undersigned is a duly authorized officer of the Transferee, and
the Transferee is an entity that is duly organized and existing under the
laws of the jurisdiction of formation.
2. The Transferee hereby acknowledges that no transfer of the Residual
Interest Instrument may be made unless such transfer is exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, or is made in
accordance with the Securities Act and such laws.
3. The Transferee understands that the Residual Interest Instrument
has not been and will not be registered under the Securities Act and may be
offered, sold, pledged or otherwise transferred only to a person whom the
seller thereof reasonably believes is (A) a qualified institutional buyer (as
defined in Rule 144A under the Securities Act) or (B) a Person involved in
the organization or operation of the Trust or an affiliate of such Person, in
a transaction meeting the requirements of Rule 144A under the Securities Act
and in accordance with any applicable securities laws of any state of the
United States. The Transferee understands that the Residual Interest
Instrument bears a legend to the foregoing effect.
4. The Transferee is acquiring the Residual Interest Instrument for
its own account for investment and not with a view to offer, sell or
distribute the Residual Interest Instrument in any manner that would violate
Section 5 of the Securities Act or any applicable state securities laws.
5. The Transferee is a "qualified institutional buyer" as defined in
Rule 144A under the Securities Act, and is aware that the Transferor of the
Residual Interest Instrument may be relying on the exemption from the
registration requirements of the Securities Act provided by Rule 144A and is
acquiring such Residual Interest Instrument for its own account or for the
account of one or more qualified institutional buyers for whom it is
authorized to act.
6. The Transferee will not authorize nor has it authorized any person
to make any public offering or general solicitation by means of general
advertising or to take any other action that would constitute a sale or
distribution of the Residual Interest Instrument under the Securities Act, in
violation of Section 5 of the Securities Act or any state securities law, or
that would require registration or qualification pursuant thereto.
7. If the Transferee sells or otherwise transfers the registered
ownership of such Residual Interest Instrument, the Transferee will comply
with the restrictions and requirements with respect to the transfer of the
ownership of the Residual Interest Instrument under the applicable provisions
of the Trust Agreement, and the Transferee will obtain from any subsequent
purchaser or transferee substantially the same certifications,
representations, warranties and covenants as required under the Trust
Agreement in connection with such subsequent sale or transfer thereof,
including a certificate substantially in the form hereof.
8. The Transferee is not a Non-U.S. Person and will not sell or
otherwise transfer such Residual Interest Instrument to a Non-U.S. Person.
9. The Transferee is not an "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or a "plan" within the meaning of Section 4975(e)(1) of
the Code (any such plan or employee benefit plan, a "Plan") and is not
directly or indirectly purchasing such Residual Interest Instrument on behalf
of, as investment manager of, as named fiduciary of, as trustee of, or with
assets of a Plan.
10. The Transferee hereby indemnifies each of the Issuer, the Indenture
Trustee and the Transferee Trustee against any liability that may result if
the Transferee's transfer of a Residual Interest Instrument (or any portion
thereof) is not exempt from the registration requirements of the Securities
Act and any applicable state securities laws or is not made in accordance
with such federal and state laws. Such indemnification of the Issuer, the
Transferee Trustee and the Indenture Trustee shall survive the termination of
the related Trust Agreement.
11. The Transferee hereby consents to any amendments to the Trust
Agreement as may be required to effectuate further the restrictions on
transfer of the Residual Interest Instruments to Book-Entry Nominees or Non-
permitted Foreign Holders set forth in the Trust Agreement.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors,
by its duly authorized signatory as of the date first set forth above.
(NAME OF TRANSFEREE)
By:
-------------------------------------------------
Name:
Title:
EXHIBIT F2
FORM OF INVESTMENT LETTER
(DATE)
FIRSTPLUS Financial, Inc. U.S. Bank National Association
1600, Viceroy, 7th Floor 180 E. Fifth Street
Dallas, Texas St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Re: FIRSTPLUS Home Loan Owner Trust 1997-3 (the "Issuer")
Asset Backed Securities, Series 1997-3
Ladies and Gentlemen:
Reference is hereby made to the loan or financing transaction between
(NAME OF LENDER), as lender (the "Lender"), and FIRSTPLUS Financial, Inc., as
borrower (the "Borrower"), in which a Residual Interest Instrument
representing a 99% Percentage Interest (the "Residual Interest Instrument")
in the Residual Interest for the referenced Series 1997-1 is being pledged
with the transfer of registered ownership in the name (NAME OF OWNER) (the
"Owner"). Initially capitalized terms used but not defined herein have the
meanings assigned to such terms under the Trust Agreement for the referenced
Issuer and Series 1997-1.
The undersigned, on behalf of and as an officer of the Owner, HEREBY
CERTIFIES as follows:
1. The undersigned is a duly authorized officer of the Owner, and the
Owner is an entity that is duly organized and existing under the laws of the
jurisdiction of formation.
2. The Owner hereby acknowledges that no transfer of the Residual
Interest Instrument may be made unless such transfer is exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, or is made in
accordance with the Securities Act and such laws.
3. The Owner understands that the Residual Interest Instrument has not
been and will not be registered under the Securities Act and may be offered,
sold, pledged or otherwise transferred only to a person whom the seller
thereof reasonably believes is (A) a qualified institutional buyer (as
defined in Rule 144A under the Securities Act or (B) a Person involved in the
organization or operation of the Trust or an affiliate of such Person, in a
transaction meeting the requirements of Rule 144A under the Securities Act
and in accordance with any applicable securities laws of any state of the
United States. The Owner understands that the Residual Interest Instrument
bears a legend to the foregoing effect.
4. The Owner is acquiring the Residual Interest Instrument in
connection with a loan or financing transaction with the Borrower and not
with a view to offer, sell or distribute the Residual Interest Instrument in
any manner that would violate Section 5 of the Securities Act or any
applicable state securities laws; provided, however, that it is explicitly
-------- --------
understood by the addressees hereof that the Owner has acquired the Residual
Interest Instrument from the Borrower with an express obligation by the
Borrower to repay such loan or financing transaction for the release and
retransfer of the Residual Interest Instrument to the Borrower.
5. The Owner is a "qualified institutional buyer" as defined in
Rule 144A under the Securities Act, and is aware that the seller of the
Residual Interest Instrument may be relying on the exemption from the
registration requirements of the Securities Act provided by Rule 144A and is
acquiring such Residual Interest Instrument for its own account or for the
account of one or more qualified institutional buyers for whom it is
authorized to act.
6. The Owner will not authorize nor has it authorized any person to
make any public offering or general solicitation by means of general
advertising or to take any other action that would constitute a sale or
distribution of the Residual Interest Instrument under the Securities Act, in
violation of Section 5 of the Securities Act or any state securities law, or
that would require registration or qualification pursuant thereto.
7. If the Owner sells or otherwise transfers the registered ownership
of such Residual Interest Instrument, the Owner will comply with the
restrictions and requirements with respect to the transfer of the ownership
of the Residual Interest Instrument under the applicable provisions of the
Trust Agreement, and the Owner will obtain from any subsequent purchaser or
transferee substantially the same certifications, representations, warranties
and covenants as required under the Trust Agreement in connection with such
subsequent sale or transfer thereof.
8. The Owner is not a Non-U.S. Person and will not sell or otherwise
transfer such Residual Interest Instrument to a Non-U.S. Person.
9. The Owner is not an "employee benefit plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or a "plan" within the meaning of Section 4975(e)(1) of
the Code (any such plan or employee benefit plan, a "Plan") and is not
directly or indirectly purchasing such Residual Interest Instrument on behalf
of, as investment manager of, as named fiduciary of, as trustee of, or with
assets of a Plan.
10. The Owner hereby indemnifies each of the Issuer, the Indenture
Trustee and the Owner Trustee against any liability that may result if the
Owner's transfer of a Residual Interest Instrument (or any portion thereof)
is not exempt from the registration requirements of the Securities Act and
any applicable state securities laws or is not made in accordance with such
federal and state laws. Such indemnification of the Issuer, the Owner
Trustee and the Indenture Trustee shall survive the termination of the
related Trust Agreement.
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed
on its behalf, pursuant to the authority of its Board of Directors, by its
duly authorized signatory as of the date first set forth above.
(NAME OF OWNER)
By:
-------------------------------------------------
Name:
Title:
EXHIBIT G1
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: FIRSTPLUS Home Loan Owner Trust 1997-3
Asset-Backed Certificates, Series 1997-3
-----------------------------------------------
Reference is hereby made to the Trust Agreement dated as of September 1,
1997 (the "Trust Agreement") between FIRSTPLUS Investment Corporation (the
"Seller"), FIRSTPLUS Residual Holdings, Inc., Wilmington Trust Company, as
Owner Trustee and U.S. Bank National Association, as Co-Owner Trustee.
Capitalized terms used but not defined herein shall have the meanings given
to them in the Sale and Servicing Agreement dated as of September 1, 1997
among the Trust, the Seller, FIRSTPLUS Financial, Inc., and U.S. Bank
National Association as Indenture Trustee and Co-Owner Trustee.
The undersigned (the "Transferor") has requested a transfer of
$_________ initial Certificate Principal Balance of Certificates to (insert
name of transferee).
In connection with such request, and in respect of such Certificates,
the Transferor hereby certifies that such Certificates are being transferred
in accordance with (i) the transfer restrictions set forth in the Trust
Agreement and the Certificates and (ii) Rule 144A under the Securities Act to
a purchaser that the Transferor reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A purchasing for its own
account or for the account of a "qualified institutional buyer," which
purchaser is aware that the sale to it is being made in reliance upon Rule
144A, in a transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any state of the United
States or any other applicable jurisdiction.
The Transferor also certifies that such Certificates are being
transferred to a U.S. Person that is not an organization exempt from tax
under Section 501 of the Internal Revenue Code of 1986, as amended. For the
purposes of any such transfer, a "U.S. Person" means a citizen or resident
of the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States or any State (other than
a partnership that is not treated as a U.S. Person under any applicable
Treasury regulations), or an estate whose income is subject to United States
federal income tax regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision over the administration
of the trust and one or more U.S. Persons have the authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence,
to the extent provided in Treasury regulations, certain trusts in existence
on August 20, 1996 and treated as U.S. Persons prior to such date that elect
to continue to be treated as U.S. Persons, also will be U.S. Persons.
--------------------------------------------
(Name of Transferor)
By:
------------------------------------------
Name:
Title:
Dated: __________________, _____
EXHIBIT G2
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
------------------------
(Date)
Dear Sirs:
In connection with our proposed purchase of $_________________ initial
Certificate Principal Balance of Asset Backed Certificates, Series 1997-3
(the "Offered Certificates") issued by FIRSTPLUS Home Loan Owner Trust 1997-3
(the "Trust"), we confirm that:
(1) We have received a copy of the Private Placement Memorandum dated
September 12, 1997 relating to the Offered Certificates (the "Private
Placement Memorandum"), and we understand that the Offered Certificates
have not been, and will not be, registered under the Securities Act of
1933, as amended (the "1933 Act"), and may not be sold except as
permitted in the following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell any Offered Certificates we will do so only (A)
pursuant to a registration statement which has been declared effective
under the 1933 Act, (B) for so long as the Offered Certificates are
eligible for resale pursuant to Rule 144A under the 1933 Act, to a
Person we reasonably believe is a "qualified institutional buyer" as
defined in Rule 144A that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that
the transfer is being made in reliance on Rule 144A, (C) to an
institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the 1933 Act (an
"Institutional Accredited Investor") that is acquiring the Offered
Certificates for its own account, or for the account of such an
Institutional Accredited Investor, for investment purposes and not with
a view to, or for offer or sale in connection with, any distribution in
violation of the 1933 Act, in each case in compliance with the
requirements of the Trust Agreement dated as of September 1, 1997 among
FIRSTPLUS Investment Corporation, FIRSTPLUS Residual Holdings, Inc.,
Wilmington Trust Company, as Owner Trustee (the "Owner Trustee") and
U.S. Bank National Association, as Co-Owner Trustee; and we further
agree, in the capacities stated above, to provide to any person
purchasing any of the Offered Certificates from us a notice advising
such purchaser that resales of the Offered Certificates are restricted
as stated herein.
(2) We understand that, in connection with any proposed resale of any
Offered Certificates to an Institutional Accredited Investor, we will be
required to furnish to the Owner Trustee and the Seller a certification
from such transferee in the form hereof to confirm that the proposed
sale is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act. We
further understand that the Offered Certificates purchased by us will
bear a legend to the foregoing effect.
(3) We are acquiring the Offered Certificates for investment purposes and
not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act. We have such knowledge
and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Offered
Certificates, and we and any account for which we are acting are each
able to bear the economic risk of such investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Offered Certificates purchased by us for our own account or for one or
more accounts (each of which is an Institutional Accredited Investor) as
to each of which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in order to make
our investment decision.
(6) We understand that no transfer of a Definitive Certificate shall be made
to any Person unless the Owner Trustee has received a certificate from
the transferee to the effect that such transferee (i) is not a person
which is an employee benefit plan, trust or account subject to Title I
of ERISA or Section 4975 of the Code or a governmental plan, defined in
Section 3(32) of ERISA subject to any federal, state or local law which
is, to a material extent, similar to the foregoing provisions of ERISA
or the Code (any such person being a "Plan") and (ii) is not an entity,
including an insurance company separate account or general account,
whose underlying assets include Plan assets by reason of a Plan's
investment in the entity.
(7) We are a U.S. Person that is not an organization exempt from tax under
Section 501 of the Code, as amended. "U.S. Person" means a citizen or
resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or
any State (other than a partnership that is not treated as a U.S. Person
under any applicable Treasury regulations), or an estate whose income is
subject to United States federal income tax regardless of its source, or
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S.
Persons have the authority to control all substantial decisions of the
trust. Notwithstanding the preceding sentence, to the extent provided
in Treasury regulations, certain trusts in existence on August 20, 1996
and treated as U.S. Persons prior to such date that elect to continue to
be treated as U.S. Persons, also will be U.S. Persons.
Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Private Placement Memorandum
or, if not defined therein, in the Trust Agreement.
You and the Seller are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
---------------------------------------
(Purchaser)
By: _________________________________
Name:
Title:
EXHIBIT G3
FORM OF ERISA TRANSFER AFFIDAVIT
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ____________ of
_________________________ (the "Investor"), a (corporation duly organized)
and existing under the laws of ___________________, on behalf of which he
makes this affidavit.
2. The Investor either (i) is not a person which is an employee
benefit plan, trust or account subject to Title I of ERISA or Section 4975 of
the Code or a governmental plan, defined in section 3(32) of ERISA subject to
any federal, state or local law which is, to a material extent, similar to
the foregoing provisions of ERISA or the Code (any such person being a
"Plan") or (ii) is not an entity, including an insurance company separate
account or general account, whose underlying assets include Plan assets by
reason of a Plan's investment in the entity.
3. The Investor hereby acknowledges that under the terms of the
Trust Agreement (the "Agreement") among FIRSTPLUS Investment Corporation, as
Seller, and Wilmington Trust Company, as Owner Trustee, FIRSTPLUS Residual
Holdings, Inc., and U.S. Bank National Association, as co-owner trustee,
dated as of September 1, 1997, no transfer of the Definitive Certificates (as
defined in the Agreement) shall be permitted to be made to any person unless
the Seller and Owner Trustee have received a certificate from such transferee
in the form hereof.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to proper authority, by its duly authorized
officer, duly attested, this ____ day of ______________________, 199___.
---------------------------------------
(Investor)
By: ________________________________
Name:
Title:
ATTEST:
- ------------------------------
STATE OF )
) ss.:
COUNTY OF )
Personally appeared before me the above-named
______________________, known or proved to me to be the same person who
executed the foregoing instrument and to be the _________________________ of
the Investor, and acknowledged that he executed the same as his free act and
deed and the free act and deed of the Investor.
Subscribed and sworn before me this ______ day of
_________________199__.
----------------------------------
NOTARY PUBLIC
My commission expires the
____ day of ____________, 19__.
EXECUTION
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
LOAN SALE AGREEMENT
dated as of September 1, 1997
by and between
FIRSTPLUS FINANCIAL, INC.
(Seller)
and
FIRSTPLUS INVESTMENT CORPORATION
(Purchaser)
FIRSTPLUS Asset Backed Securities, Series 1997-3
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
This Loan Sale Agreement, dated as of September 1, 1997 (the
"Agreement"), is made and entered into by and between FIRSTPLUS Investment
Corporation, as purchaser (together with its successors and assigns, the
"Purchaser"), and FIRSTPLUS Financial, Inc., as seller (together with its
successors and assigns, "FFI").
W I T N E S S E T H:
WHEREAS, FFI is engaged in the business of underwriting, originating or
acquiring property improvement and debt consolidation loans secured by
mortgages on residential property;
WHEREAS, FFI desires to sell to Purchaser and Purchaser desires to
purchase from FFI on a whole loan basis the Initial Home Loans and all monies
due and to become due thereunder after August 31, 1997;
WHEREAS, FFI desires to sell to Purchaser and Purchaser desires to
purchase from FFI on a whole loan basis the Subsequent Home Loans and all
monies due and to become due thereunder after the related Cut-Off Date;
WHEREAS, FFI desires to sell to Purchaser and Purchaser desires to
purchase from FFI all right, title and interest of FFI in and to the
obligations of each Seller of a Home Loan pursuant to each Loan Sale
Agreement in which FFI acquired any Home Loan and all right, title and
interest of FFI in and to the rights and obligations of each Subservicer,
pursuant to any Subservicing Agreement; and
WHEREAS, Purchaser intends to transfer the Home Loans and the rights,
titles and interest described above to FIRSTPLUS Home Loan Owner Trust 1997-3
(the "Issuer" or the "Trust") in order to facilitate the issuance by the
Trust of a series of asset backed notes and certificates (the "Asset Backed
Securities").
NOW, THEREFORE, in consideration of these premises and of the mutual
agreements herein set forth, Purchaser and FFI each agree as follows:
Section 1. Representations and Warranties. FFI hereby represents
------------------------------
and warrants to the Purchaser and the Issuer, with respect to each Subsequent
Home Loan, as of the applicable Subsequent Transfer Date; and with respect to
each Initial Home Loan, as of the date hereof (each, a "Closing Date"), and
with respect to itself, as follows:
(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 Indenture 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, none of
----------------
the Initial Home Loans are more than 30 days delinquent, based on the terms
under which the related Mortgages and Debt Instruments have been made. FFI
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 Indenture Trustee'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 Indenture Trustee's Home Loan File and the terms of which are
reflected in the Indenture Trustee's Home Loan File.
(e) No Defenses. No Debt Instrument or Mortgage is subject to any
-----------
claim, 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 claim, right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such claim, 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.
(f) Compliance with Laws; Relief Act Matters. Any and all
----------------------------------------
requirements of any federal, state or local law applicable to each Home Loan
have been complied with including, without limitation, all licensing, real
estate settlement procedures act, 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. No relief has been requested by or allowed to an
Obligor under the Soldiers' and Sailors' Civil Relief Act of 1940.
(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 such Mortgage securing a Home Loan with respect
to a Superior Lien on such Mortgaged Property in connection with the
refinancing of the mortgage loan relating to such Superior Lien.
(h) Valid Lien. With respect to each Debt Instrument, the related
----------
Mortgage is or creates a valid, subsisting and enforceable lien on the
related Mortgaged Property.
(i) Validity of Home Loan Documents; Entire Agreement. 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. The Debt Instrument and the Mortgage contain the
entire agreement between the related Obligor and the lender and all
obligations of the lender under the related Home Loan, and no other agreement
defines, modifies, or expands the obligations of the lender under the Home
Loan, except for any assumptions or modifications included in the Indenture
Trustee's Home Loan File.
(j) Full Disbursement of Proceeds. 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 have been 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, FFI had good and marketable title to each Home Loan, Debt Instrument
and Mortgage, FFI was the sole owner thereof and had full right to sell each
Home Loan, Debt Instrument and Mortgage to the Purchaser; and upon the
conveyance thereof by FFI to the Purchaser, the Purchaser 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, the related Servicer's Home Loan File contains a title document
reflecting that title to the related Mortgaged Property is held at least 50%
by the Obligor under such Home Loan.
(m) No Defaults. There is no default, breach, violation or event of
-----------
acceleration existing under any Mortgage or any Debt Instrument and, to the
best of FFI's knowledge, there is no event 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 FFI 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
Indenture Trustee's Home Loan File.
(n) Consent and Delinquency of Superior Lien. No obligation secured
----------------------------------------
by a Superior Lien was more than 30 days past due at the time of origination
of the related Home Loan. With respect to each Home Loan that is not a first
mortgage loan, either (i) no consent for the Home Loan is required by the
holder of the related prior lien or (ii) such consent has been obtained and
has been delivered to the Indenture Trustee.
(o) No Condemnation or Damage; Good Repair. To the best of FFI'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. To the best of FFI's
knowledge, the related Mortgaged Property described in each Mortgage is free
of damage and in good repair or will be free of damage and in good repair
following the completion of any improvements or repairs to be financed by the
related Home Loan.
(p) Environmental Compliance. To the best of FFI knowledge, the
------------------------
Mortgaged Property is free from any and all toxic or hazardous substances and
there exists no violation of any local, state or federal environmental law,
rule or regulation.
(q) 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.
(r) Remedies Against Originators. In the event that any Home Loan
----------------------------
was originated by an entity (such entity, the "Originator") other than FFI
and to the extent that FFI has failed to fulfill or is not capable of
fulfilling its obligations to cure, substitute or repurchase such Home Loan
as required hereunder, then the Indenture Trustee on behalf of the
Securityholders may enforce any remedies for breach of representations and
warranties made by the Originator with respect to such Home Loan.
(s) Security. No Debt Instrument is, or has been, secured by any
--------
collateral except the lien of the related Mortgage.
(t) Deed of Trust. If a Mortgage for a Home Loan 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
such 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 FFI 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.
(u) Use of Proceeds of Combination Loan. With respect to each
-----------------------------------
Combination Loan the related Obligor has represented to Purchaser that a
portion of the proceeds of such Combination Loan will be used to finance
property improvements.
(v) Inspections of Improvements; and No Encroachment. To the best
------------------------------------------------
of FFI's knowledge, all inspections, licenses and certificates required to be
made, obtained and issued as of the Closing Date with respect to the
improvements and the use and occupancy of all occupied portions of all
Mortgaged Property have been made, obtained or issued as applicable. To the
best of FFI's knowledge, all improvements which were considered in
determining the appraised value of the Mortgaged Property lay wholly within
the boundaries and building restrictions lines of the related property and no
improvements on adjoining properties encroach upon such property and no
improvement located on or being a part of such property is in violation of
any applicable zoning laws or regulation.
(w) Flood Insurance. If required by federal or state law, each
---------------
Mortgaged Property is covered by flood insurance with a standard mortgagee
clause and extended coverage in an amount which is not less than the value of
such Mortgaged Property. All such insurance policies meet the requirements
of the current guidelines of the Federal Insurance Administration, conform to
the requirements of the FNMA Sellers' Guide and the FNMA Servicers' Guide,
and are of standard type and quality for the locale where the related
Mortgaged Property is located. All acts required to be performed to
preserve the rights and remedies of the Indenture Trustee in any such
insurance policies have been performed including, without limitation, any
necessary notifications of insurers and assignments of policies or interests
therein.
(x) Underwriting Origination and Servicing Practices. Each Home
------------------------------------------------
Loan has been underwritten by or re-underwritten in accordance with FFI's
then-current underwriting guidelines. The origination practices used by each
originator of the Home Loans and the servicing and collection practices used
by FFI 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. To the best of
FFI's knowledge, no fraud or misrepresentation was committed by any Person in
connection with the origination or servicing of each Home Loan.
(y) Selection Criteria; No Bulk Transfer. The Home Loans were not
------------------------------------
selected by FFI for sale to the Purchaser or the Issuer on any basis intended
to adversely affect the Purchaser or the Issuer. The sale, transfer,
assignment, conveyance and grant of the Debt Instruments and the Mortgages by
FFI to the Seller were not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction.
(z) Treasury Regulation Section301.7701. On the Closing Date and on
-----------------------------------
each Subsequent Transfer Date, 55% or more (by aggregate principal balance)
of the Home Loans do not constitute "real estate mortgages" for the purpose
of Treasury Regulation Section301.7701 under the Code. For this purpose a
Home Loan does not constitute a "real estate mortgage" if:
(i) The Home Loan is not secured by an interest in real property,
or
(ii) The Home Loan is not an "obligation principally secured by an
interest in real property." For this purpose an obligation is
"principally secured by an interest in real property" if it satisfies
either the test set out in paragraph (1) or the test set out in paragraph
(2) below.
(1) The 80-percent test. An obligation is principally secured by
an interest in real property if the fair market value of the interest in
real property securing the obligation
(A) was at least equal to 80 percent of the adjusted issue
price of the obligation at the time the obligation was
originated (or, if later, the time the obligation was
significantly modified); or
(B) is at least equal to 80 percent of the adjusted issue
price of the obligation on the Closing Date or Subsequent
Transfer Date, as applicable.
For purposes of this paragraph (1), the fair market value of
the real property interest must be first reduced by the amount
of any lien on the real property interest that is senior to
the obligation being tested, and must be further reduced by a
proportionate amount of any lien that is in parity with the
obligation being tested, in each case before the percentages
set forth in (1)(A) and (1)(B) are determined. The adjusted
issue price of an obligation is its issue price plus the
amount of accrued original issue discount, if any, as of the
date of determination.
(2) Alternative test. An obligation is principally secured by an
interest in real property if substantially all of the proceeds of the
obligation were used to acquire or to improve or protect an interest in
real property that, at the origination date, is the only security for
the obligation. For purposes of this test, loan guarantees made by the
United States or any state (or any political subdivision, agency, or
instrumentality of the United States or of any state), or other third
party credit enhancement are not viewed as additional security for a
loan. An obligation is not considered to be secured by property other
than real property solely because the obligor is personally liable on
the obligation. For this purpose only substantially all of the proceeds
of the obligation means more than 66-2/3% of the gross proceeds.
(aa) No Fraudulent Conveyance. The Home Loans are not being
------------------------
transferred with any intent to hinder, delay or defraud any creditors.
(ab) Value and Marketability. To the best of FFI's knowledge, there
-----------------------
do not exist any circumstances, conditions or information with respect to the
Home Loan, the related Mortgaged Property, the Obligor or the Obligor's
credit standing that reasonably can be expected to cause private
institutional investors investing in same type of home loan to regard
such Home Loan as an unacceptable investment, to increase the likelihood that
such Home Loan will become delinquent, or adversely affect the value or
marketability of such Home Loan.
(ac) Terms of Home Loans and Interest Method. 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 25 years and three months 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. No Debt Instrument provides for any extension of the original
term. Interest for each Home Loan is calculated at a rate of interest
computed by the simple interest method or the actuarial method.
(ad) Types of Home Loans; Retail Installment Contracts. Each Home
-------------------------------------------------
Loan is either (i) a Home Improvement Loan, (ii) a Debt Consolidation Loan,
or (iii) a Combination Loan. No Home Loan was originated for the express
purpose of purchasing a manufactured home. Some of the Home Loans are retail
installment contracts for goods or services, and some of the Home Loans are
home improvement loans for goods or services, which are either "consumer
credit contracts" or "purchase money loans" as such terms are defined in
16 C.F.R. Part 433.1.
(ae) No Buydown, GPM or Shared Appreciation Loans. No Home Loan
--------------------------------------------
contains any provisions pursuant to which principal and interest payments are
paid or partially paid with funds deposited in any separate account
established by FFI, the Obligor or anyone else on behalf of the Obligor, or
paid by any source other than the Obligor. No Home Loan contains any other
similar provision which may constitute a "buydown" provision. No Home Loan
is a graduated payment mortgage loan. No Home Loan has a shared appreciation
or other contingent interest feature.
(af) No Chattel Paper. Each Debt Instrument is comprised of one
----------------
original promissory note and each such promissory note constitutes an
"instrument" for purposes of Section 9-105(1)(i) of the UCC. No Debt
Instrument constitutes or is comprised of "chattel paper" as such term is
defined in Section 9-105(1)(b) of the UCC. Each Debt Instrument has been
delivered to the Indenture Trustee.
(ag) Description Conforms to Prospectus Supplement. Each Initial
---------------------------------------------
Home Loan conforms, and all Initial Home Loans in the aggregate conform, in
all material respects to the description thereof set forth in the Prospectus
Supplement.
(ah) Review by FFI. In light of FFI's underwriting guidelines, FFI
-------------
has reviewed all of the documents constituting each Servicer's Home Loan File
and each Indenture Trustee's Home Loan File and has made such inquiries as it
deems reasonable under the circumstances to make and confirm the accuracy of
the representations set forth herein.
Section 2. Purchase and Delivery. In consideration for the sale and
---------------------
transfer of the Home Loans to Purchaser by FFI, and upon transfer of such
Home Loans to Purchaser or Purchaser's designee from FFI on the date hereof
with respect to the Initial Home Loans, and on the applicable Subsequent
Transfer Date with respect to the Subsequent Home Loans, the Purchaser shall
pay or cause to be paid to FFI good and valuable consideration (the "Purchase
Price") including (without limitation) the net proceeds of (a) the sale of
the Asset Backed Securities and (b) certain residual classes of securities
subordinate to the Asset Backed Securities. The transfer of funds from
Purchaser to FFI for the Purchase Price for all Home Loans purchased shall be
made by wire transfer of immediately available funds to the bank account
designated by FFI.
On the date hereof with respect to the Initial Home Loans, and on the
applicable Subsequent Transfer Date with respect to the Subsequent Home
Loans, FFI shall transfer, assign and convey to Purchaser all of FFI's right,
title and interest in and to each Home Loan and the related Home Loan File,
free and clear of any adverse claims, rights or interests therein. FFI
shall, or shall cause its agent to, deliver to Purchaser or Purchaser's
designee the related Home Loan File.
On the date hereof with respect to the Initial Home Loans, and on the
Subsequent Transfer Date with respect to the Subsequent Home Loans, FFI shall
promptly transfer to Purchaser or its designee good title to the related
Mortgage, if applicable, pursuant to an Assignment of Mortgage and legal
title to the related Debt Instrument pursuant to the endorsement thereof in
the name of the Purchaser or its designee; provided that such Assignment of
Mortgage, if applicable, and endorsement of such Debt Instrument shall be
prepared and executed in the manner as specified in writing by the Purchaser.
FFI shall provide to Purchaser, at FFI's cost, a duly executed Assignment of
Mortgage, if applicable, and a blank endorsement of the related Debt
Instrument. Purchaser shall bear the cost and expense of completing and
recording such Assignment of Mortgage, if applicable, and completing the
endorsement of such Debt Instrument to the Purchaser or its designee.
Section 3. Sale Treatment. It is the express intent of the
--------------
parties hereto that the conveyance of the Home Loans by FFI to the Purchaser
as contemplated by this Agreement be, and be treated as, an absolute transfer
and conveyance of all of FFI's right, title, ownership and other interest in
the Home Loans. In the event that, notwithstanding the intent of the
parties, the Home Loans are held by a court to be the property of FFI, then
(i) this Agreement shall be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the applicable Uniform Commercial Code; (ii)
the transfer of the Home Loans provided for herein shall be deemed to be a
grant by FFI to the Purchaser of a security interest (and/or an assignment of
any security interest that FFI may hold) in all of the FFI's right, title,
ownership and other interest in and to the Home Loans and all amounts payable
to the holders of the Home Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, to the extent the Purchaser
would otherwise be entitled to own such Home Loans and proceeds thereof;
(iii) the possession by the Purchaser or the Indenture Trustee of the
Debt Instruments and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 (or comparable provision) of the
applicable Uniform Commercial Code; and (iv) notifications to persons holding
such property, and acknowledgments, receipts or confirmations from persons
holding such property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, financial intermediaries, bailees or agents
(as applicable) of the Purchaser for the purpose of perfecting such security
interest under applicable law. Any assignment of the interest of the
Purchaser pursuant to any provision hereof or pursuant to the Sale and
Servicing Agreement shall also be deemed to be an assignment of any security
interest created hereby. FFI and the Purchaser shall, to the extent
consistent with this Agreement, take such actions as may be reasonably
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Home Loans, such security interest would be deemed to be a
perfected first priority security interest under applicable law and will be
maintained as such throughout the term of the Sale and Servicing Agreement.
Section 4. Binding Effect. This Agreement shall be binding upon
--------------
and inure to the benefit of the successors and assigns of the Purchaser and
FFI, respectively.
Section 5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
-------------
AND CONSTRUED UNDER 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 REGARD TO CONFLICT OF LAWS PRINCIPLES
APPLIED IN SUCH STATE.
Section 6. Capitalized Terms. Capitalized terms used and not
-----------------
otherwise defined herein have the meanings assigned to such terms in the Sale
and Servicing Agreement dated as of September 1, 1997, by and among FFI, as
Transferor and Servicer, the Purchaser, as Seller, FIRSTPLUS Home Loan
Trust 1997-3, as Issuer and U.S. Bank National Association, as Indenture
Trustee and Co-Owner Trustee.
IN WITNESS WHEREOF, the undersigned Purchaser and FFI have executed this
Loan Sale Agreement as of the date first above written.
FIRSTPLUS Financial, Inc.,
as Seller
By: /s/ Lee F. Reddin
--------------------------
Name: Lee F. Reddin
Title: Vice President
FIRSTPLUS Investment Corporation,
as Purchaser
By: /s/ Lee F. Reddin
--------------------------
Name: Lee F. Reddin
Title: Vice President
EXECUTION
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
SALE AND SERVICING AGREEMENT
Dated as of September 1, 1997
among
FIRSTPLUS HOME LOAN OWNER TRUST 1997-3
(Issuer)
FIRSTPLUS INVESTMENT CORPORATION
(Seller)
FIRSTPLUS FINANCIAL, INC.
(Transferor and Servicer)
and
U.S. BANK NATIONAL ASSOCIATION
(Indenture Trustee and Co-Owner Trustee)
FIRSTPLUS HOME LOAN OWNER TRUST 1997-3
FIRSTPLUS ASSET BACKED SECURITIES
SERIES 1997-3
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
DEFINITIONS
1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Other Definitional Provisions . . . . . . . . . . . . . . . . . 26
1.03. Interest Calculations . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE II
CONVEYANCE OF THE HOME LOANS
2.01. Conveyance of the Initial Home Loans. . . . . . . . . . . . . . 27
2.02. Conveyance of the Subsequent Home Loans . . . . . . . . . . . . 28
2.03. Ownership and Possession of Home Loan Files . . . . . . . . . . 29
2.04. Books and Records . . . . . . . . . . . . . . . . . . . . . . . 30
2.05. Delivery of Home Loan Documents . . . . . . . . . . . . . . . . 30
2.06. Acceptance by Indenture Trustee of the Home Loans; Certain
Substitutions; Initial Certification by Custodian . . . . . . . 33
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01. Representations and Warranties of the Seller . . . . . . . . . 35
3.02. Representations, Warranties and Covenants of the Servicer and
Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.03. Individual Home Loans . . . . . . . . . . . . . . . . . . . . . 39
3.04. Subsequent Home Loans . . . . . . . . . . . . . . . . . . . . . 45
3.05. Purchase and Substitution . . . . . . . . . . . . . . . . . . . 46
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
4.01. Duties of the Servicer . . . . . . . . . . . . . . . . . . . . 48
4.02. Liquidation of Home Loans . . . . . . . . . . . . . . . . . . . 50
4.03. Fidelity Bond; Errors and Omission Insurance . . . . . . . . . 51
4.04. Title, Management and Disposition of Foreclosure Property . . . 51
4.05. Access to Certain Documentation and Information Regarding
the Home Loans . . . . . . . . . . . . . . . . . . . . . . . . 52
4.06. Superior Liens . . . . . . . . . . . . . . . . . . . . . . . . 52
4.07. Subservicing . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.08. Successor Servicers. . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
5.01. Collection Account and Note Payment Account . . . . . . . . . . 54
5.02. Pre-Funding Account. . . . . . . . . . . . . . . . . . . . . . 61
5.03. Capitalized Interest Account . . . . . . . . . . . . . . . . . 61
5.04. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . . . 62
5.05. Certificate Distribution Account . . . . . . . . . . . . . . . 62
5.06. Trust Accounts; Trust Account Property . . . . . . . . . . . . 64
5.07. Allocation of Losses . . . . . . . . . . . . . . . . . . . . . 67
5.08. Class B-2 Account . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE VI
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
6.01. Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.02 Reports of Foreclosure and Abandonment of Mortgaged Property . 72
6.03. Specification of Certain Tax Matters . . . . . . . . . . . . . 72
ARTICLE VII
GENERAL SERVICING PROCEDURES
7.01. Assumption Agreements . . . . . . . . . . . . . . . . . . . . . 72
7.02. Satisfaction of Mortgages and Release of Home Loan Files . . . 73
7.03. Servicing Compensation . . . . . . . . . . . . . . . . . . . . 74
7.04. Quarterly Statements as to Compliance . . . . . . . . . . . . . 75
7.05. Annual Independent Public Accountants' Servicing Report . . . . 75
7.06. Right to Examine Servicer Records . . . . . . . . . . . . . . . 76
7.07. Reports to the Indenture Trustee; Collection Account
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
8.01. Financial Statements . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE IX
THE SERVICER
9.01. Indemnification; Third Party Claims . . . . . . . . . . . . . . 76
9.02. Merger or Consolidation of the Servicer . . . . . . . . . . . . 78
9.03. Limitation on Liability of the Servicer and Others . . . . . . 78
9.04. Servicer Not to Resign; Assignment . . . . . . . . . . . . . . 78
9.05. Relationship of Servicer to the Issuer and the Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE X
DEFAULT
10.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 79
10.02. Indenture Trustee to Act; Appointment of Successor . . . . . . . 81
10.03. Waiver of Defaults . . . . . . . . . . . . . . . . . . . . . . . 83
10.04. Accounting Upon Termination of Servicer . . . . . . . . . . . . . 83
ARTICLE XI
TERMINATION
11.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.02. Optional Termination by Affiliated Holder . . . . . . . . . . . . 84
11.03. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . 85
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01. Acts of Securityholders . . . . . . . . . . . . . . . . . . . . . 85
12.02. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.03. Recordation of Agreement . . . . . . . . . . . . . . . . . . . . 86
12.04. Duration of Agreement . . . . . . . . . . . . . . . . . . . . . . 86
12.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.06. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.07. Severability of Provisions . . . . . . . . . . . . . . . . . . . 87
12.08. No Partnership . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.09. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 87
12.11. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.12. Actions of Securityholders . . . . . . . . . . . . . . . . . . . 87
12.13. Reports to Rating Agencies. . . . . . . . . . . . . . . . . . . . 88
12.14. Holders of the Residual Interest . . . . . . . . . . . . . . . . 88
12.15. No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
EXHIBITS
EXHIBIT A Home Loan Schedule
EXHIBIT B Form of Subsequent Transfer Agreement
EXHIBIT C Form of Addition Notice
This Sale and Servicing Agreement is entered into effective as of
September 1, 1997, among FIRSTPLUS Home Loan Owner Trust 1997-3, a Delaware
business trust (the "Issuer" or the "Trust"), FIRSTPLUS Investment
Corporation, a Nevada corporation, as Seller (the "Seller"), FIRSTPLUS
Financial, Inc., a Texas corporation ("FFI"), as Transferor (in such
capacity, the "Transferor") and Servicer (in such capacity, the "Servicer")
and U.S. Bank National Association, a national banking association, as
Indenture Trustee on behalf of the Noteholders (in such capacity, the
"Indenture Trustee") and as Co-Owner Trustee on behalf of the
Certificateholders (in such capacity, the "Co-Owner Trustee").
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.
Accrual Period: With respect to the Class A-1 Notes, the period
--------------
beginning on the Payment Date in the calendar month preceding the month in
which the related Payment Date occurs (or, in the case of the first Payment
Date, September 10, 1997) and ending on the day preceding the related Payment
Date. With respect to the other Classes of Securities, the calendar month
preceding the month in which the related Payment Date occurs.
Addition Notice: With respect to a sale of Subsequent Home Loans to the
---------------
Issuer pursuant to Section 2.02 of this Agreement, a notice from the Seller
and the Issuer substantially in the form of Exhibit C hereto delivered to the
Indenture Trustee.
Administration Agreement: The Administration Agreement dated as of
------------------------
September 1, 1997 among the Issuer, FFI, and U.S. Bank National Association,
as Administrator.
Administrator: U.S. Bank National Association, or any successor in
-------------
interest thereto, in its capacity as Administrator under the Administration
Agreement.
Affiliated Holder: FIRSTPLUS Residual Holdings, Inc., a Nevada
-----------------
corporation, as the holder of approximately 1% of the Percentage Interest of
the Residual Interest and approximately 1% of the Original Class Principal
Balance of each Class of Certificates.
Agreement: This Sale and Servicing Agreement and all amendments hereof
---------
and supplements hereto.
Allocable Loss Amount: With respect to each Payment Date after the
---------------------
Initial Undercollateralization Amount has been reduced to zero, the excess,
if any, of (a) the aggregate of the Class Principal Balances of the
Securities (after giving effect to all payments and distributions on such
Payment Date) over (b) the sum of (i) the Pool Principal Balance as of the
immediately preceding Determination Date and (ii) the amount, if any, on
deposit in the Pre-Funding Account as of the end of the immediately preceding
Due Period. With resect to each Payment Date prior to the Payment Date on
which the Initial Undercollateralization Amount is reduced to zero, zero.
Allocable Loss Amount Priority: With respect to any Payment Date,
------------------------------
sequentially, to the Class B-2 Certificates, the Class B-1 Certificates, the
Class M-2 Notes and the Class M-1 Notes, in that order, until the respective
Class Principal Balances thereof are reduced to zero.
Assignment of Mortgage: With respect to each Home Loan, an assignment,
----------------------
notice of transfer or equivalent instrument sufficient under the laws of the
jurisdiction where the related Mortgaged Property is located to reflect of
record the assignment of the Mortgage with respect to such Home Loan to the
Indenture Trustee for the benefit of the Securityholders.
Assumed Pool Principal Balance: As of any date of determination, the
------------------------------
sum of (a) the Initial Pool Principal Balance, (b) the Cut-Off Date Principal
Balance of each Subsequent Home Loan and (c) the amount, if any, on deposit
in the Pre-Funding Account as of such date (other than investment earnings).
Available Collection Amount: With respect to each Payment Date, an
---------------------------
amount equal to the sum of (a) all amounts received in respect of the Home
Loans or paid by the Servicer, the Transferor or the Seller (exclusive of
amounts not required to be deposited in the Collection Account) during the
related Due Period (and, in the case of amounts required to be paid by the
Transferor in connection with the purchase or substitution of a Defective
Home Loan, deposited in the Collection Account on or before the related
Determination Date), 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, (b) in the case of a Payment Date relating to
a Due Period that ends prior to the end of the Funding Period, the Interest
Shortfall Amount with respect to such Payment Date deposited in the Note
Payment Account pursuant to Section 5.01(b)(2), (c) in the case of the
Payment 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), (d) with respect to the final
Payment Date, or an early redemption or termination of the Securities
pursuant to Section 11.02(b), the Termination Price, or in the case of an
early redemption or termination of the Securities pursuant to Section
11.02(a), the proceeds from the sale of the Home Loans; and (e) any income or
gain from investment of funds on deposit in the Collection Account.
Available Funds: With respect to any Payment Date, the amount deposited
---------------
in the Note Payment Account with respect to such Payment Date less the
Servicing Compensation for such Payment Date.
Basic Documents: This Agreement, the Indenture, the Loan Sale
---------------
Agreement, the Certificate of Trust, the Trust Agreement, the Administration
Agreement, the Custodial Agreement, the Note Depository Agreement, the
Certificate Depository Agreement and the documents and certificates delivered
in connection therewith.
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: An account established and maintained
----------------------------
pursuant to Section 5.03.
Capitalized Interest Account Deposit: An amount equal to
------------------------------------
$1,574,922.02.
Capitalized Interest Account Requirement: On the Closing Date, the
----------------------------------------
Capitalized Interest Account Requirement will equal the Capitalized Interest
Account Deposit. Thereafter, on each Determination Date prior to the end of
the Funding Period, 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 (a)
amounts to be transferred to the Note Payment Account for payment on the next
Payment Date pursuant to Section 5.03(a), (b) amounts released to the holders
of Residual Interest pursuant to Section 5.03(d), and (c) any income and
gain, if any, on funds on deposit in the Capitalized Interest Account and any
income and gain, if any, transferred to the Capitalized Interest Account from
funds on deposit in the Pre-Funding Account pursuant to Section 5.02.
Capitalized Interest Excess: With respect to each Determination Date
---------------------------
prior to the end of the Funding Period, the Capitalized Interest Excess shall
equal the greater of (a) zero and (b) the Capitalized Interest Amount less
the Capitalized Interest Account Requirement.
Certificate(s): Any one or more Class B-1 or Class B-2 Certificate(s)
--------------
issued pursuant to the Trust Agreement.
Certificate Distribution Account: The Account established and
--------------------------------
maintained pursuant to Section 5.05.
Certificateholder: A holder of any Certificate.
-----------------
Class: With respect to the Notes, all Notes bearing the same class
-----
designation, and with respect to the Certificates, all Certificates bearing
the same class designation.
Class B-1 Certificateholders' Interest Carry-Forward Amount: With
-----------------------------------------------------------
respect to the initial Payment Date, zero; with respect to each other Payment
Date, the excess (if any) of (a) the Class B-1 Certificateholders' Monthly
Interest Distributable Amount for the immediately preceding Payment Date and
any Class B-1 Certificateholders' Interest Carry-Forward Amount remaining
outstanding with respect to prior Payment Dates, over (b) the amount in
respect of interest that was paid on such Certificates on such immediately
preceding Payment Date.
Class B-1 Certificateholders' Interest Distributable Amount: With
-----------------------------------------------------------
respect to any Payment Date, the sum of the Class B-1 Certificateholders'
Monthly Interest Distributable Amount for such date and the Class B-1
Certificateholders' Interest Carry-Forward Amount for such date; provided,
however, that on the Payment Date, if any, on which the Class Principal
Balance of the Class B-1 Certificates is reduced to zero through application
of the Allocable Loss Amount with respect to such Payment Date, the amount of
the Class B-1 Certificateholders' Interest Distributable Amount will be equal
to the Class B-1 Certificateholders' Interest Distributable Amount calculated
without giving effect to this proviso, minus the portion, if any, of such
Allocable Loss Amount that otherwise would be applied to the Subordinate
Notes on such Payment Date in the absence of this proviso.
Class B-1 Certificateholders' Monthly Interest Distributable Amount:
-------------------------------------------------------------------
With respect to any Payment Date, interest accrued for the related Due Period
at the applicable Interest Rate on the Class Principal Balance of the
Class B-1 Certificates immediately preceding such Payment Date.
Class B-1 Optimal Principal Balance: With respect to any Payment Date
-----------------------------------
prior to the Overcollateralization Stepdown Date, zero; and with respect to
any other Payment Date, the Pool Principal Balance as of the immediately
preceding Determination Date minus the sum of (a) the aggregate of the Class
Principal Balances of the Notes (after taking into account payments made on
such Payment Date) and (b) the greater of (i) 6.06% of the Pool Principal
Balance as of the immediately preceding Determination Date plus the Required
Overcollateralization Amount for such Payment Date (calculated without giving
effect to the proviso in the definition thereof) and (ii) 0.50% of the
Assumed Pool Principal Balance.
Class B-2 Account Requirement: With respect to any Payment Date, the
-----------------------------
amount (not less than zero) by which the Net Delinquency Calculation Amount
for such date exceeds the Required Overcollateralization Amount for such
date.
Class B-2 Certificateholders' Interest Carry-Forward Amount: With
-----------------------------------------------------------
respect to the initial Payment Date, zero; with respect to each other Payment
Date, the excess (if any) of (a) the Class B-2 Certificateholders' Monthly
Interest Distributable Amount for the immediately preceding Payment Date and
any Class B-2 Certificateholders' Interest Carry-Forward Amount remaining
outstanding with respect to prior Payment Dates, over (b) the amount in
respect of interest that was paid on such Certificates on such immediately
preceding Payment Date.
Class B-2 Certificateholders' Interest Distributable Amount: With
-----------------------------------------------------------
respect to any Payment Date, the sum of the Class B-2 Certificateholders'
Monthly Interest Distributable Amount for such date and the Class B-2
Certificateholders' Interest Carry-Forward Amount for such date.
Class B-2 Certificateholders' Monthly Interest Distributable Amount:
-------------------------------------------------------------------
With respect to any Payment Date, interest accrued for the related Due Period
at the applicable Interest Rate on the Class Principal Balance of the Class
B-2 Certificates immediately preceding such Payment Date.
Class B-2 Optimal Principal Balance: With respect to any Payment Date
-----------------------------------
prior to the Overcollateralization Stepdown Date, zero; and with respect to
any other Payment Date, the Pool Principal Balance as of the preceding
Determination Date minus the sum of (a) the aggregate of the Class Principal
Balances of the Notes and the Class B-1 Certificates (after taking into
account any payments made on such Payment Date) and (b) the Required
Overcollateralization Amount for such Payment Date.
Class M-1 Noteholders' Interest Carry-Forward Amount: With respect to
----------------------------------------------------
the initial Payment Date, zero; with respect to each other Payment Date, the
excess (if any) of (a) the Class M-1 Noteholders' Monthly Interest Payment
Amount for the immediately preceding Payment Date and any Class M-1
Noteholders' Interest Carry-Forward Amount remaining outstanding with respect
to prior Payment Dates, over (b) the amount in respect of interest that was
paid on such Notes on such immediately preceding Payment Date.
Class M-1 Noteholders' Interest Payment Amount: With respect to any
----------------------------------------------
Payment Date, the sum of the Class M-1 Noteholders' Monthly Interest Payment
Amount for such date and the Class M-1 Noteholders' Interest Carry-Forward
Amount for such date.
Class M-1 Noteholders' Monthly Interest Payment Amount: With respect to
------------------------------------------------------
any Payment Date, interest accrued for the related Due Period at the
applicable Interest Rate on the Class Principal Balance of the Class M-1
Notes immediately preceding such Payment Date.
Class M-1 Optimal Principal Balance: With respect to any Payment Date
-----------------------------------
prior to the Overcollateralization Stepdown Date, zero; and with respect to
any other Payment Date, the Pool Principal Balance as of the immediately
preceding Determination Date minus the sum of (a) the aggregate of the Class
Principal Balances of the Senior Notes (after taking into account payments
made on such Payment Date and (b) the greater of (i) 26.26% of the Pool
Principal Balance as of the immediately preceding Determination Date plus the
Required Overcollateralization Amount for such Payment Date (calculated
without giving effect to the proviso in the definition thereof) and (ii)
0.50% of the Assumed Pool Principal Balance.
Class M-2 Noteholders' Interest Carry-Forward Amount: With respect to
----------------------------------------------------
the initial Payment Date, zero; with respect to each other Payment Date, the
excess (if any) of (a) the Class M-2 Noteholders' Monthly Interest Payment
Amount for the immediately preceding Payment Date and any Class M-2
Noteholders' Interest Carry-Forward Amount remaining outstanding with
respect to prior Payment Dates, over (b) the amount in respect of
interest that was paid on such Notes on such immediately preceding
Payment Date.
Class M-2 Noteholders' Interest Payment Amount: With respect to any
----------------------------------------------
Payment Date, the sum of the Class M-2 Noteholders' Monthly Interest Payment
Amount for such date and the Class M-2 Noteholders' Interest Carry-Forward
Amount for such date.
Class M-2 Noteholders' Monthly Interest Payment Amount: With respect to
------------------------------------------------------
any Payment Date, interest accrued for the related Due Period at the
applicable Interest Rate on the Class Principal Balance of the Class M-2
Notes immediately preceding such Payment Date.
Class M-2 Optimal Principal Balance: With respect to any Payment Date
-----------------------------------
prior to the Overcollateralization Stepdown Date, zero; and with respect to
any other Payment Date, the Pool Principal Balance as of the immediately
preceding Determination Date minus the sum of (a) the aggregate of the Class
Principal Balances of the Senior Notes and the Class M-1 Notes (after taking
into account any payments made on such Payment Date) and (b) the greater of
(i) 15.15% of the Pool Principal Balance as of the immediately preceding
Determination Date plus the Required Overcollateralization Amount for such
Payment Date (calculated without giving effect to the proviso in the
definition thereof) and (ii) 0.50% of the Assumed Pool Principal Balance.
Class Pool Factor: With respect to each Class of Securities and any
-----------------
Payment Date, the Class Principal Balance thereof (giving effect to payments
thereon on such Payment Date) divided by the Original Class Principal Balance
of such Class.
Class Principal Balance: With respect to each Class of Securities and
-----------------------
any date of determination, the Original Class Principal Balance thereof as
reduced by (a) all amounts previously paid in respect of such Class in
reduction of the Class Principal Balance thereof and (b) in the case of the
Subordinate Securities, any Allocable Loss Amounts previously applied
thereto.
Clearing Agency: An organization registered as a "clearing agency"
---------------
pursuant to Section 17A of the Exchange Act.
Clearing Agency Participant: 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: September 18, 1997.
------------
Code: The Internal Revenue Code of 1986, as amended from time to time,
----
and Treasury Regulations promulgated thereunder.
Collection Account: An account established and maintained by the
------------------
Servicer in accordance with Section 5.01(a)(1).
Combination Loan: A loan, the proceeds of which were used by the
----------------
related Obligor in combination to finance property improvements, debt
consolidation, cash-out, or other consumer purposes.
Co-Owner Trustee: U.S. Bank National Association, a national banking
----------------
association, in its capacity as the Co-Owner Trustee under the Trust
Agreement acting on behalf of the Certificateholders, or any successor co-
owner trustee under the Trust Agreement.
Credit Score: With respect to the obligor on a home loan (including the
------------
Obligor on a Home Loan), a numerical assessment of default risk with respect
to such obligor, determined based on a methodology developed by Fair, Isaac
and Company.
Custodial Agreement: The custodial agreement dated as of September 1,
-------------------
1997 by and among the Seller, FFI, as the Transferor and the Servicer, the
Indenture Trustee, 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 Indenture Trustee.
Custodian: Any custodian appointed by the Indenture Trustee pursuant
---------
to the Custodial Agreement, which shall not be affiliated with the Servicer,
the Transferor, any Subservicer, or the Seller. Bank One, Texas, National
Association, shall be the initial Custodian pursuant to the terms of the
Custodial Agreement.
Cut-Off Date: With respect to the Initial Home Loans, the close of
------------
business on August 31, 1997 and with respect to each Subsequent Home Loan,
the close of business on the date specified as such in the applicable
Subsequent Transfer Agreement.
DCR: Duff & Phelps Credit Rating Co.
---
Debt Consolidation Loan: A 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: With respect to any Home Loan, the note or other
---------------
evidence of indebtedness evidencing the indebtedness of an Obligor under such
Home Loan.
Defective Home Loan: As defined in Section 3.05 hereof.
-------------------
Deferred Amount: As of any Payment Date and as to each Class of
---------------
Subordinate Securities, the amount of Allocable Loss Amounts previously
applied in reduction of the Class Principal Balance thereof, to the extent
not previously reimbursed, plus interest accrued thereon at the applicable
Interest Rate from the date when so applied through the end of the Due Period
immediately preceding such Payment Date.
Delinquency Event: With respect to any Payment Date, a Delinquency
-----------------
Event will have occurred and be continuing if the Net Delinquency Calculation
Amount for such date exceeds the Required Overcollateralization Amount for
such 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 by physical
delivery to the Indenture Trustee endorsed to, or registered in the name
of, the Indenture Trustee or its nominee 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 certificated security to
the Indenture Trustee in accordance with the provisions of Section 8-
301(a) of the UCC, and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of
ownership of or a security interest in any such Trust Account Property
to the Indenture Trustee, consistent with changes in applicable law or
regulations or the interpretation thereof;
(b) with respect to any security 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: the
crediting of such Trust Account Property to a securities account
maintained with a Federal Reserve Bank by a securities intermediary; the
indication by such securities intermediary that such Trust Account
Property has been credited to the Indenture Trustee's securities account
at the securities intermediary; and such additional or alternative
procedures as may hereafter become appropriate to effect complete
transfer of ownership of or a security interest in any such Trust
Account Property to the Indenture Trustee, consistent with changes in
applicable law or regulations or the interpretation thereof; and
(c) with respect to any 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 Indenture Trustee or another
Person (other than "securities intermediary" (as defined in
Section 8-102 of the UCC)) acting on behalf of the Indenture Trustee.
Deleted Home Loan: A Home Loan replaced by or to be replaced by a
-----------------
Qualified Substitute Home Loan pursuant to Section 3.05 or 2.06(c) hereof.
Determination Date: With respect to a Payment Date in a given month,
------------------
the day of such month that is three (3) Business Days prior to such Payment
Date.
DTC: The Depository Trust Company.
---
Due Date: With respect to any Home Loan, the day of the month on which
--------
the related Monthly Payment is due.
Due Period: With respect to each Payment Date, the calendar month
----------
immediately preceding the month in which such Payment Date occurs, with the
first Due Period commencing on September 1, 1997.
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 Issuer, which depository institution
or trust company shall have capital and surplus of not less than $50,000,000;
or (iv) an account that will not cause any Rating Agency to downgrade or
withdraw its then-current rating(s) assigned to the Securities, as evidenced
in writing by such Rating Agency.
Eligible Servicer: A Person that is qualified to act as Servicer of the
-----------------
Home Loans under applicable federal and state laws and regulations and who
satisfies the criteria of Section 9.04(b) hereof.
Event of Default: As specified in Section 10.01 hereof.
----------------
Excess Spread: With respect to any Payment Date, the excess of (a) the
-------------
Available Funds with respect to such Payment Date over (b) the Regular
Payment Amount with respect to such Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
FDIC: The Federal Deposit Insurance Corporation and any successor
----
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
-----
thereto.
Fidelity Bond: As described in Section 4.03 hereof.
-------------
Fitch: Fitch Investors Service, L.P.
-----
FNMA: The Federal National Mortgage Association and any successor
----
thereto.
Foreclosure Property: Any real 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 such 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 to $50,000 or less and the Transferor directs that the
Funding Period end, (b) the close of business on November 18, 1997;
provided, however, that the Funding Period shall end upon the occurrence of
an Event of Default hereunder.
HUD: The United States Department of Housing and Urban Development and
---
any successor thereto.
Home Improvement Loan: A loan, the net proceeds of which were or will
---------------------
be 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 File: As defined in Section 2.05.
--------------
Home Loan Interest Rate: With respect to any Home Loan, the fixed
-----------------------
annual rate of interest borne by the related Debt Instrument, as shown on the
Home Loan Schedule, as such rate of interest may be modified from time to
time by the Servicer in accordance with Section 4.01(c) hereof.
Home Loan Pool: Initially, the Initial Home Loans, and thereafter, as
--------------
of any date, all of the Home Loans that are subject to the lien of the
Indenture as of such date, as identified in the Home Loan Schedule.
Home Loan Schedule: The schedule of Initial Home Loans attached hereto
------------------
as Exhibit A, as amended from time to time pursuant to the terms of this
Agreement, such schedule 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 Debt
Instrument, (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 September 1, 1997, between the
---------
Issuer and the Indenture Trustee.
Indenture Event of Default: Any event of default specified in
--------------------------
Section 5.1 of the Indenture.
Indenture Trustee: U.S. Bank National Association, a national banking
-----------------
association, as Indenture Trustee under the Indenture, or any successor
indenture trustee under the Indenture.
Indenture Trustee Fee: The annual fee payable to the Indenture Trustee,
---------------------
calculated and payable monthly on each Payment Date, equal to the product of
0.0020% per annum and the Pool Principal Balance as of the immediately
preceding Determination Date, except that with respect to the first Payment
Date such monthly amount shall be pro rated for the first Due Period.
Indenture Trustee's Home Loan File: As defined in Section 2.05(d).
----------------------------------
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 received on or after the August 31, 1997 Cut-Off Date. The Initial
Home Loans subject to this Agreement are identified on the Home Loan Schedule
annexed hereto as Exhibit A.
Initial Overcollateralization Amount: Zero.
------------------------------------
Initial Pool Principal Balance: $650,331,801.86, which is the Pool
------------------------------
Principal Balance as of the August 31, 1997 Cut-Off Date.
Initial Undercollateralization Amount: With respect to any Payment
-------------------------------------
Date, an amount (not less than zero) equal to the excess, if any, of (a) the
aggregate of the Class Principal Balances of all Classes of Securities, after
giving effect to payments and distributions in respect of the Securities and
the Residual Interest on such Payment Date, over (b) the sum of (i) the Pool
Principal Balance as of the end of the preceding Due Period and (ii) the
amount, if any, on deposit in the Pre-Funding Account as of the end of such
Due Period. Notwithstanding the foregoing, on any date after the Payment
Date on which the Initial Undercollateralization Amount is first reduced to
zero, such amount shall be deemed to be zero.
Insurance Proceeds: With respect to each Payment Date, an amount equal
------------------
to, with respect to any Home Loan, the proceeds paid during the immediately
preceding Due Period to the Indenture Trustee or the Servicer by any insurer
pursuant to any insurance policy covering a Home Loan, Mortgaged Property or
REO Property or any other insurance policy that relates to a Home Loan, net
of any expenses incurred by the Indenture Trustee or the Servicer in
connection with the collection of such proceeds and not otherwise reimbursed,
but excluding the proceeds of any insurance policy that are to be applied to
the restoration or repair of the Mortgaged Property or released to the
borrower in accordance with customary loan servicing procedures.
Interest Rate: With respect to each Class of Securities, the per annum
-------------
rate of interest applicable to Securities of such Class, as specified below:
Class Interest Rate
----- -------------
A-1 (1)
A-2 6.48%
A-3 6.57%
A-4 6.80%
A-5 6.86%
A-6 7.08%
A-7 7.22%
A-8
A-8 7.55%
M-1 7.32%
M-2 7.52%
B-1 7.79%
B-2 8.50%
(1) Interest will accrue on the Class A-1 Notes during each Accrual Period
at a per annum rate equal to LIBOR for the related LIBOR Determination
Date plus 0.10%, subject to a maximum rate equal to the Net Weighted
Average Rate. The Interest Rate applicable to the Class A-1 Notes for
the initial Accrual Period will be 5.75625% per annum.
Interest Shortfall Amount: As of any Determination Date through the
-------------------------
first Determination Date after the end of the Funding Period, an amount equal
to thirty (30) days' interest on the average balance in the Pre-Funding
Account (net of investment earnings) during the immediately preceding Due
Period, computed at the Weighted Average Interest Rate as of the immediately
preceding Payment Date (after distributions and payments on such Payment
Date) or, with respect to such calculation on the first Determination Date,
as of September 1, 1997.
Interest Shortfall Rate: The per annum rate equal to 4.31%.
-----------------------
LIBOR: With respect to each Accrual Period (other than the initial
-----
Accrual Period) and each Class of LIBOR Securities, the rate for United
States dollar deposits for one month that appears on Telerate Screen Page
3750 as of 11:00 a.m., London time, on the second LIBOR Business Day before
the first day of such Accrual Period, as determined by the Indenture Trustee.
If such rate does not appear on such page (or such other page as may replace
that page on that service, or if such service is no longer offered, such
other service for displaying LIBOR or comparable rates as may be reasonably
selected by the Indenture Trustee), LIBOR for the applicable Accrual Period
will be the Reference Bank Rate. If no such quotations can be obtained by
the Indenture Trustee and no Reference Bank Rate is available, LIBOR will be
LIBOR applicable to the preceding Accrual Period. LIBOR for the initial
Accrual Period will be 5.65625%.
LIBOR Business Day: Any day on which banks are open for dealing in
------------------
foreign currency and exchange in London and New York City.
LIBOR Securities: The Class A-1 Notes.
----------------
Liquidated Home Loan: A defaulted Home Loan as to which the Servicer
--------------------
has determined that all recoverable liquidation and insurance proceeds have
been received, which will be deemed to occur upon the earlier of: (a) the
liquidation of the related Mortgaged Property acquired through foreclosure or
similar proceedings, (b) the Servicer's determination in accordance with
customary servicing practices that no further amounts are collectible from
the Home Loan and any related security, or (c) the 180th day that any portion
of a scheduled monthly payment of principal and interest is 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 Sections 4.02 or 4.04, in each case other than Post-Liquidation
Proceeds, Insurance Proceeds and Released Mortgaged Property Proceeds.
Loan Sale Agreement: Individually or collectively, as the context in
-------------------
which this term is used may require, any or all of the following: (i) the
loan sale agreement between the Transferor, as seller, and the Seller, as
purchaser, pursuant to which the Seller has acquired any of the Home Loans;
and (ii) 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 with respect to such Home Loans, 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 has been reduced to zero, the
holder or holders of in excess of 50% of the aggregate 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 50% of the aggregate Class Principal Balance of all Classes of
Certificates.
Monthly Payment: With respect to a Home Loan, the scheduled monthly
---------------
payment of principal and/or interest required to be made by the related
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 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 Delinquency Calculation Amount: With respect to any Payment Date,
----------------------------------
the excess, if any, of (x) the product of 1.7 and the Rolling Six-Month
Delinquency Average over (y) the aggregate of the amounts of Excess Spread
for the three preceding Payments Dates.
Net Liquidation Proceeds: With respect to each Payment Date, an amount
------------------------
equal to any cash amounts received during the related Due Period from
Liquidated Home Loans, whether through trustee's sale, foreclosure sale,
disposition of REO Property, whole loan sales or otherwise (other than
Insurance Proceeds and Released Mortgaged Property Proceeds), and any other
cash amounts received during the related Due Period in connection with the
management of the Mortgaged Properties from defaulted Home Loans, in each
case, net of any reimbursements to the Servicer made from such amounts for
any unreimbursed Servicing Advances made and any other fees and expenses paid
in connection with the foreclosure, conservation and liquidation of the
related Liquidated Home Loans or Mortgaged Properties pursuant to Sections
4.02 and 4.04 hereof.
Net Loan Losses: With respect to a Payment Date, the sum of (A) with
---------------
respect to the Home Loans that became Liquidated Home Loans 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 as of the related Determination Date 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 without limitation 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, less the amount of any expenses incurred in
connection with such recoveries; and
(B) with respect to any defaulted Home Loan that is subject to a
modification by the Servicer, an amount equal to the portion of the Principal
Balance, if any, released in connection with such modification.
Net Weighted Average Rate: With respect to any Accrual Period, the per
-------------------------
annum rate equal to the weighted average (by Principal Balance) of the
interest rates of the Home Loans as of the first day of the related Due
Period, as reduced by the Servicing Fee Rate.
Non-Recordation State: Any state with respect to which the Transferor
---------------------
and the Seller shall have delivered to the Indenture Trustee (and to each
Rating Agency, in the case of any state in which 10% or more by Principal
Balance as of the Cut-Off Date of the Mortgaged Properties are located) on or
prior to October 31, 1997 an opinion, memorandum or other written assurance
of counsel in a form reasonably acceptable to the Indenture Trustee (and,
where applicable, to each Rating Agency), to the effect that, as to any Home
Loan with respect to which the related Mortgaged Property is located in such
state, recordation of an Assignment of Mortgage in such state is not
necessary to transfer title to the related Mortgage Note to the Issuer or
to pledge to the Indenture Trustee the issuer's rights under such
Mortgage Note in respect of which the Mortgaged Property is located in
such state.
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, the Class A-5 Notes, the Class A-6
Notes, the Class A-7 Notes, the Class A-8 Notes, the Class M-1 Notes or the
Class M-2 Notes.
Note Payment Account: The account established and maintained pursuant
--------------------
to Section 5.01(a)(2).
Noteholder: A holder of a Note.
----------
Noteholders' Interest Carry-Forward Amount: With respect to the initial
------------------------------------------
Payment Date, zero; with respect to each other Payment Date, the excess (if
any) of (A) the Noteholders' Monthly Interest Payment Amount for the
immediately preceding Payment Date and any Noteholders' Interest Carry-
Forward Amount remaining outstanding with respect to prior Payment Dates,
over (B) the amount in respect of interest on the Notes that was paid on the
Notes on such immediately preceding Payment Date.
Noteholders' Interest Payment Amount: With respect to any Payment Date,
------------------------------------
the sum of the Noteholders' Monthly Interest Payment Amount for such Payment
Date and the Noteholders' Interest Carry-Forward Amount for such Payment
Date.
Noteholders' Monthly Interest Payment Amount: With respect to any
--------------------------------------------
Payment Date, interest accrued for the related Due Period on each Class of
Notes at the applicable Interest Rate on the Class Principal Balance thereof
immediately preceding such Payment Date.
Obligor: Each obligor on a Debt Instrument.
-------
Officer's Certificate: A certificate delivered to the Indenture Trustee
---------------------
or the Issuer signed by the President or a Vice President or an Assistant
Vice President of the Seller, the Servicer, the Transferor or the Issuer, in
each case, as required by this Agreement.
Original Class Principal Balance: With respect to each Class of
--------------------------------
Securities, the original principal balance of such Class, as set forth below:
Class Principal Balance
----- -----------------
A-1 $166,090,000.00
A-2 $ 91,430,000.00
A-3 $ 83,220,000.00
A-4 $ 70,500,000.00
A-5 $ 47,090,000.00
A-6 $ 57,740,000.00
A-7 $ 50,430,000.00
A-8 $ 47,580,000.00
M-1 $ 88,880,000.00
M-2 $ 44,440,000.00
B-1 $ 36,360,000.00
B-2 $ 24,240,000.00
Overcollateralization Amount: With respect to any Payment Date, an
----------------------------
amount (not less than zero) equal to the excess of (a) the sum of (i) the
Pool Principal Balance as of the immediately preceding Determination Date and
(ii) the amount, if any, on deposit in the Pre-Funding Account (other than
investment earnings) as of the end of such immediately preceding Due Period
over (b) the aggregate of the Class Principal Balances of all Classes of
Securities, after giving effect, unless otherwise specified, to all payments
on the Notes and distributions in respect of the Certificates and the
Residual Interest on such Payment Date.
Overcollateralization Deficiency Amount: With respect to any Payment
---------------------------------------
Date, the excess, if any, of the Required Overcollateralization Amount for
such Payment Date over the Overcollateralization Amount before giving effect
to payments on the Notes and distributions in respect of the Certificates and
the Residual Interest to be made on such Payment Date pursuant to
Section 5.01(c)(4).
Overcollateralization Stepdown Date: The first Payment Date occurring
-----------------------------------
after September 10, 2000 as to which the aggregate of the Class Principal
Balances of each Class of the Senior Notes has been reduced to an amount
equal to or less than the amount, if any, by which (a) the Pool Principal
Balance as of the immediately preceding Determination Date exceeds (b) the
greater of (i) 48.48% of the Pool Principal Balance as of such immediately
preceding Determination Date plus the Required Overcollateralization Amount
for such Payment Date (calculated without giving effect to the proviso in the
definition thereof) and (ii) 0.50% of the Assumed Pool Principal Balance as
of such Payment Date.
Overcollateralization Surplus: With respect to any Payment Date, the
-----------------------------
excess, if any, of the Overcollateralization Amount for such Payment Date
over the Required Overcollateralization Amount for such date.
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: Wilmington Trust Company, as owner trustee under the
-------------
Trust Agreement, and any successor owner trustee under the Trust Agreement.
Owner Trustee Fee: The annual fee of $2,500 payable to the Owner
-----------------
Trustee on the Payment Date occurring in September each year during the term
of this Agreement commencing in September 1997; provided that the initial
Owner Trustee fee shall be paid on the Closing Date.
Payment Date: The 10th day of any month or if such 10th day is not a
------------
Business Day, the first Business Day immediately following such day,
commencing in October 1997 and ending upon termination of this Agreement.
Permitted Investments: Each of the following:
---------------------
(1) 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;
(2) a repurchase agreement that satisfies the following criteria:
(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 short-term unsecured debt
obligations by each Rating Agency, or (b) banks rated in one of the two
highest categories for short-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 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 104% 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 104% 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;
(3) 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
short-term rating categories;
(4) 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;
(5) 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;
(6) debt obligations rated by each Rating Agency at the time at
which the investment is made in its highest short-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 short-term rating categories);
(7) money market funds which are rated by each Rating Agency at
the time at which the investment is made in its highest short-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
(8) any other demand, money market or time deposit obligation,
security or investment as may be acceptable to each Rating Agency 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 120% 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.
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: As of any Determination Date, the aggregate of
----------------------
the Principal Balances (as of the last day of the immediately preceding Due
Period) of all Home Loans in the Home Loan Pool as of such Determination
Date.
Post-Liquidation Proceeds: As defined in Section 4.02(b).
-------------------------
Pre-Funded Amount: With respect to any Payment Date, the amount then
-----------------
on deposit in the Pre-Funding Account as of the end of the related Due
Period.
Pre-Funding Account: The account established and maintained pursuant
-------------------
to Section 5.02.
Pre-Funding Account Deposit: An amount equal to $149,668,198.14.
---------------------------
Pre-Funding Account Weighted Average Balance: For purposes of computing
--------------------------------------------
the Projected Interest Shortfall, as of the Determination Date, 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 immediately preceding Due
Period (assuming that such balance for October 31, 1997, is zero), (x) the
sum of the actual amount on deposit in the Pre-Funding Account on each day in
such Due Period divided by (y) thirty (30) days.
Pre-Funding Termination Payment Date: The first Payment Date following
------------------------------------
the Due Period in which the Funding Period ends.
Principal Balance: With respect to any date of determination and with
-----------------
respect to any Home Loan or related Foreclosure Property, an amount equal to
the Cut-Off Date principal balance of such Home Loan minus all principal
reductions credited against the Principal Balance of such Home Loan since
such Cut-Off Date through the end of the immediately preceding Due Period;
provided, however, that the Principal Balance of a Liquidated Home Loan shall
be 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: As of any Determination Date prior to the
----------------------------
end of the Funding Period, an amount equal to the Interest Shortfall Rate,
multiplied by the balance in the Pre-Funding Account as of the end of the
immediately preceding Due Period, multiplied by the number of days from the
end of the previous Due Period to November 18, 1997 (assuming a 360-day year
consisting of 12 30-day months).
Prospectus: The final Prospectus, dated September 10, 1997, as
----------
supplemented by the Prospectus Supplement.
Prospectus Supplement: The Prospectus Supplement dated September 10,
---------------------
1997, 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.
--------------
Qualified Substitute Home Loan: A home loan or home loans substituted
------------------------------
for a Deleted Home Loan pursuant to Section 3.05, which (i) has or have an
interest rate or rates of not less than one percentage point and not more
than one percentage point different from 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, (v) has a
related obligor with a Credit Score equal to or greater than the Credit Score
of the Obligor with respect to the Deleted Mortgage Loan, and (vi) complies
or comply as of the date of substitution with each representation and
warranty set forth in Section 3.03 and is not more than 29 days
delinquent as of the date of substitution for such loan; and (vii) has
a related obligor with a Credit Score at origination of not less than
600. For purposes of determining whether multiple home loans proposed
to be substituted for one or more Deleted Home Loans pursuant to Section
3.05 are in fact "Qualified Substitute Home Loans" as provided above, the
criteria specified in clauses (i), (ii), (iii), (v) and (vii) 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 nor more than one percentage point different from the Home
Loan Interest Rate for the designated Deleted Home Loan or Home
Loans and the weighted average Credit Score of any Qualified Substitute Home
Loans cumulatively substituted is equal to the weighted average Credit Score
of the Deleted Home Loans, the requirements of clauses (i) and (v) above
would be deemed satisfied), except that, with respect to any such
substitution, the lowest Credit Score of any home loan substituted shall not
be lower than the lowest Credit Score of the related Deleted Home Loans.
Rating Agency: Each of S&P and Fitch and their respective successors;
-------------
provided, however, that 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 have been given to the Indenture Trustee,
the Issuer and the Servicer.
Ratings: The ratings initially assigned to the rated Securities by the
-------
Rating Agencies, as evidenced by letters from the Rating Agencies.
Record Date: With respect to each Payment Date, the close of business
-----------
on the last Business Day of the month immediately preceding the month in
which such Payment Date occurs.
Reference Bank Rate: With respect to any Accrual Period, the arithmetic
-------------------
mean (rounded upwards, if necessary, to the nearest one sixteenth of a
percent) of the offered rates for United States dollar deposits for one month
that are offered by the Reference Banks as of 11:00 a.m., New York City time,
on the second LIBOR Business Day prior to the first day of such Accrual
Period to prime banks in the London interbank market for a period of one
month in amounts approximately equal to the outstanding Class Principal
Balance of the Class A-1 Notes, provided that at least two such Reference
Banks provide such rate. If fewer than two offered rates appear, the
Reference Bank Rate will be the arithmetic mean of the rates quoted by one or
more major banks in New York City, selected by the Indenture Trustee, as of
11:00 a.m., New York City time, on such date for loans in U.S. Dollars to
leading European Banks for a period of one month in amounts approximately
equal to the outstanding Class Principal Balance of the Class A-1 Notes. If
no such quotations can be obtained, the Reference Bank Rate will be the
Reference Bank Rate applicable to the preceding Accrual Period.
Reference Banks: Three money center banks selected by the Indenture
---------------
Trustee.
Regular Payment Amount: With respect to any Payment Date, the lesser
----------------------
of (a) the Available Funds and (b) the sum of (i) the Noteholders' Interest
Payment Amount, (ii) the Certificateholders' Interest Distributable
Amount and (iii) the Regular Principal Payment Amount.
Regular Principal Payment Amount: With respect to each Payment Date,
--------------------------------
an amount equal to the lesser of:
(a) 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 Due Period, (iii) the
principal portion of all Net Liquidation Proceeds, Insurance Proceeds and
Released Mortgaged Property Proceeds received by the Servicer during the
related Due Period in respect of any Home Loan, to the extent received on or
prior to the date on which such Home Loan became a Liquidated Home Loan, (iv)
that portion of the Purchase Price of any repurchased Home Loan which
represents principal and (v) the principal portion of any Substitution
Adjustments required to be deposited in the Collection Account as of the
related Determination Date; and
(b) the aggregate of the outstanding principal balances of the
Securities immediately prior to such Payment Date.
Released Mortgaged Property Proceeds: With respect to each Payment
------------------------------------
Date, an amount equal to, with respect to any Home Loan, the 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 borrower in accordance with applicable
law, customary mortgage servicing procedures and this Agreement.
Required Overcollateralization Amount: With respect to any Payment Date
-------------------------------------
occurring prior to the Overcollateralization Stepdown Date, an amount equal
to 3.0% of the Assumed Pool Principal Balance; with respect to any other
Payment Date, an amount equal to 6.0% of the Pool Principal Balance as of the
immediately preceding Determination Date; provided, however, that the
Required Overcollateralization Amount with respect to a Payment Date will in
no event be less than 0.50% of the Assumed Pool Principal Balance as of the
end of the related Due Period.
Residual Interest: The interest which represents the right to the amount
-----------------
remaining, if any, after all prior payments and distributions have been made
under this Agreement, the Indenture and the Trust Agreement on each Payment
Date and certain other rights to receive amounts hereunder and under the
Trust Agreement.
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 Issuer, the Transferor, the Seller, or the Servicer, the President or
any Vice President, Assistant Vice President, or any Secretary or Assistant
Secretary thereof.
Rolling Six-Month Delinquency Average: With respect to any Payment
-------------------------------------
Date, the average of the applicable 60-Day Delinquency Amounts for each of
the six immediately preceding Due Periods.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
---
Companies, Inc., or any successor thereto.
Securities Act: the Securities Act of 1933, as amended.
--------------
Security or Securities: Any Notes or any Certificates, as applicable.
----------------------
Securityholder: A holder of a Note or Certificate, as applicable.
--------------
Seller: FIRSTPLUS Investment Corporation, a Nevada corporation, and any
------
successor thereto.
Senior Noteholders' Interest Carry-Forward Amount: With respect to the
--------------------------------------------------
initial Payment Date, zero; with respect to each other Payment Date, the
excess (if any) of (A) the Senior Noteholders' Monthly Interest Payment
Amount for the immediately preceding Payment Date and any Senior Noteholders'
Interest Carry-Forward Amount remaining outstanding with respect to prior
Payment Dates, over (B) the amount in respect of interest that was paid on
such Notes on such immediately preceding Payment Date.
Senior Noteholders' Interest Payment Amount: With respect to any
--------------------------------------------
Payment Date, the sum of the Senior Noteholders' Monthly Interest Payment
Amount for such Payment Date and the Senior Noteholders' Interest Carry-
Forward Amount for such Payment Date.
Senior Noteholders' Monthly Interest Payment Amount: With respect to
----------------------------------------------------
each Payment Date, interest accrued for the related Accrual Period on each
Class of Senior Notes at the applicable Interest Rates on the respective
Class Principal Balances of such Classes immediately preceding such Payment
Date.
Senior Notes: The Class A-1, the Class A-2, the Class A-3, the Class
------------
A-4, the Class A-5, the Class A-6, the Class A-7 and the Class A-8 Notes.
Senior Optimal Principal Balance: With respect to any Payment Date
--------------------------------
prior to the Overcollateralization Stepdown Date, zero; with respect to any
other Payment Date, an amount equal to the Pool Principal Balance as of the
immediately preceding Determination Date minus the greater of (a) 48.48% of
the Pool Principal Balance as of such immediately preceding Determination
Date plus the Required Overcollateralization Amount for such Payment Date
(calculated without giving effect to the proviso in the definition thereof)
and (b) 0.50% of the Assumed Pool Principal Balance.
Series or Series 1997-3: FIRSTPLUS Asset Backed Securities, Series
------ -------------
1997-3.
Servicer: FFI, in its capacity as the servicer hereunder, or any
--------
successor appointed as herein provided.
Servicer's Fiscal Year: October 1st of each year through September 30th
----------------------
of the following year.
Servicer's Home Loan Files: In respect of each Home Loan, all documents
--------------------------
customarily included in the servicer's loan file for the related type of Home
Loan in accordance with the servicing standard set forth in Section 4.01.
Servicer's Monthly Statement: As defined in Section 6.01(b).
----------------------------
Servicing Advances: Subject to Section 4.01(b), all reasonable,
------------------
customary and necessary "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 any
Foreclosure Property pursuant to Section 4.04, (iv) the preservation of the
security for a Home Loan if any lienholder under a Superior Lien has
accelerated or intends to accelerate the obligations secured by such Superior
Lien pursuant to Section 4.06; provided that such Servicing Advances are
reimbursable to the Servicer as provided in Section 5.01(c)(3)(xv) to the
extent not previously deducted or retained by the Servicer in calculating Net
Liquidation Proceeds hereunder.
Servicing Advance Reimbursement Amount: As defined in
--------------------------------------
Section 5.01(c)(3)(xv).
Servicing Compensation: With respect to a Payment Date, the Servicing
----------------------
Fee and other amounts to which the Servicer is entitled pursuant to Sections
5.01(b)(1), 5.01(b)(2), 5.01(c)(1), 7.01 and 7.03.
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
Payment Date, which shall be (a) the product of the Servicing Fee Rate and
the Principal Balance of such Home Loan as of the second preceding
Determination Date divided by (b) 12. The Servicing Fee includes any
servicing fees owed or payable to any Subservicer and any custodial fees owed
or payable to the Custodian which fees shall be paid from the Servicing Fee.
Servicing Fee Rate: 0.75% per annum.
------------------
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 Issuer and the Indenture Trustee, on
behalf of the Securityholders, as such list may from time to time be
amended.
60-Day Delinquency Amount: With respect to any Due Period, the
-------------------------
aggregate of the Principal Balances of all Home Loans that are 60 or more
days delinquent, in foreclosure or REO Property as of the end of such Due
Period, excluding any Liquidated Home Loan.
Subordinate Security: Any Class M-1 Note, Class M-2 Note, Class B-1
--------------------
Certificate or Class B-2 Certificate.
Subsequent Home Loan: An individual Home Loan that is conveyed to the
--------------------
Issuer and pledged to the Indenture Trustee 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,
received on or after the applicable Cut-Off Date, which Subsequent Home Loans
shall be identified on a schedule attached as an exhibit to the related
Subsequent Transfer Agreement.
Subsequent Purchase Price: With respect to each Subsequent Transfer
-------------------------
Date, as of the applicable Cut-Off Date, the Principal Balance of any
Subsequent Home Loans to be conveyed to the Trust on such Subsequent Transfer
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 B hereto.
Subsequent Transfer Date: The date specified in each Subsequent
------------------------
Transfer Agreement, but no later than November 18, 1997.
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 Issuer and the
Indenture Trustee.
Substitution Adjustment: As to any date on which a substitution occurs
-----------------------
pursuant to Section 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 and unpaid interest thereon
that is scheduled to be paid after the date of substitution and 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 mortgage(s) relating to the corresponding
Mortgaged Property having a superior priority lien.
Termination Price: An amount equal to the sum of (i) the then
-----------------
outstanding aggregate Class Principal Balances of the Securities plus all
accrued and unpaid interest thereon at the applicable Interest Rates, (ii)
any Servicing Compensation due and unpaid, and (iii) any unreimbursed
Servicing Advances including such Servicing Advances deemed to be
nonrecoverable.
Third-Party Purchaser: As defined in Section 11.02(a).
---------------------
Total Collection Amount: With respect to each Payment Date, an amount
-----------------------
equal to the sum of the Available Collection Amount and any investment
earnings on amounts in the Note Payment Account and the Certificate
Distribution Account during the related Due Period.
Transferor: FFI, in its capacity as the transferor hereunder.
----------
Trigger Event: With respect to any Payment Date, a Trigger Event will
-------------
have occurred and be continuing if the 60-Day Delinquency Amount for the
immediately preceding Due Period equals or exceeds one half of the sum of (a)
the aggregate of the Class Principal Balances of the Subordinate Securities
immediately prior to such Payment Date and (b) the Overcollateralization
Amount for such date (calculated without giving effect to payments or
distributions on the Securities on such date).
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 Payment Account, the Certificate Distribution
--------------
Account, the Collection Account, the Pre-Funding Account, the Capitalized
Interest Account and the Class B-2 Account.
Trust Agreement: The Trust Agreement dated as of September 1, 1997,
---------------
among the Seller as Depositor, the Affiliated Holder as the Company, the Co-
Owner Trustee and the Owner Trustee.
Trust Estate: The assets subject to this Agreement and the Indenture
------------
pledged by the Issuer to the Indenture Trustee, which assets consist of
(a) all of the Seller's right, title and interest in and to: (i) such Home
Loans as from time to time are subject to this Agreement, including both the
Initial Home Loans and any Subsequent Home Loans conveyed to the Issuer as
provided in this Agreement and as listed in the Home Loan Schedule, as the
same may be amended or supplemented from time to time (including to reflect
the removal of Deleted Home Loans and the addition of Qualified Substitute
Home Loans), together with the Servicer's Home Loan Files and the Indenture
Trustee's Home Loan Files relating thereto and all proceeds thereof, (ii) all
payments and proceeds received on or with respect to the Home Loans on or
after the applicable Cut-Off Dates, (iii) such assets as from time to time
are identified as Foreclosure Property, (iv) all assets and funds as are from
time to time deposited in any Trust Account, including amounts on deposit in
such accounts which are invested in Permitted Investments, (v) all insurance
policies with respect to the Home Loans and any Insurance Proceeds, (vi) Net
Liquidation Proceeds, Post-Liquidation Proceeds and Released Mortgaged
Property Proceeds, (vii) that certain Loan Sale Agreement under which the
Seller acquired the Initial Home Loans from the Transferor, and (b) all
right, title and interest of the Issuer, as purchaser, under each Subsequent
Transfer Agreement.
UCC: unless the context otherwise requires, the Uniform Commercial
---
Code, as in effect in the relevant jurisdiction.
Weighted Average Interest Rate: As of any date of determination, the
------------------------------
per annum rate equal to the weighted average (by Class Principal Balance) of
the Interest Rates applicable to the Classes of Securities.
Withdrawal Date: With respect to a Payment Date, the second Business Day
---------------
prior to such Payment Date.
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 and the Trust Agreement.
(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.
(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.
Section 1.03. Interest Calculation. Unless otherwise specified, all
--------------------
calculations of accrued interest and accrued fees shall be made on the basis
of a 360-day year consisting of twelve 30-day months, except that with
respect to the Class A-1 Notes, calculations of accrued interest shall be
made on the basis of a 360-day year and the actual number of days elapsed in
each Accrual Period.
ARTICLE II
CONVEYANCE OF THE HOME LOANS
Section 2.01. Conveyance of the Initial Home Loans. (a) As of the
------------------------------------
Closing Date, in consideration of the Issuer's delivery of the Notes,
Certificates and Residual Interest Instruments to the Seller or its designee,
upon the order of the Seller, 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 Trust
Estate. 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 Trust Estate or under any agreement or instrument
relating thereto except as specifically set forth herein.
(b) As of the Closing Date, the Issuer acknowledges the conveyance to
it by the Seller of all of the Seller's right, title and interest in and to
the Trust Estate, receipt of which is hereby acknowledged by the Issuer.
Concurrently with such delivery, the Issuer has pledged to the Indenture
Trustee the Trust Estate, and in exchange for the conveyance to it by the
Seller of all of the Seller's right, title and interest in and to the Trust
Estate (i) the Owner Trustee (not in its individual capacity, but solely as
Owner Trustee on behalf of the Issuer) has executed the Notes and (ii) the
Issuer has caused the Indenture Trustee to authenticate and deliver the Notes
to the Seller or its designee, upon the order of the Issuer. In addition,
concurrently with the delivery to the Issuer of all of the Seller's right,
title and interest in and to the Trust Estate and in exchange therefor, the
Owner Trustee, pursuant to the instructions 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 the Certificates and the
Residual Interest to the Seller or its designee, upon the order of the
Seller.
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 (calculated by aggregate principal balance): (i) the Home Loans
then in the possession of the Seller that satisfy the requirements of this
Section 2.02 and (ii) the maximum principal balance of Home Loans that
satisfy 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 the Seller or its designee, 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
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
schedule attached to the related Subsequent Transfer Agreement and delivered
by the Seller on such Subsequent Transfer Date and all items in the related
Indenture Trustee's Home Loan File. In connection therewith, the Transferor
shall amend the Home Loan Schedule to reflect the inclusion of the applicable
Subsequent Home Loans in the Home Loan Pool. The Transferor shall promptly
deliver to the Issuer, the Servicer (if the Transferor is not then acting as
such), and the Indenture Trustee a copy of the Home Loan Schedule as so
amended. The sale, transfer, assignment, set over and conveyance by the
Seller of 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 such Subsequent
Home Loans or under any agreement or instrument relating thereto except as
specifically set forth herein.
(b) If the Subsequent Purchase Price for the Subsequent Home Loans to
be conveyed to the Trust on any Subsequent Transfer Date 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 each Subsequent Transfer Date, the Seller shall transfer to the
Issuer the applicable 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 (except in the case of clause (iii)
below) to the related Subsequent Transfer Date:
(i) (a) 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 $5,000,000, except in the case
of the final Subsequent Transfer Date when no minimum Principal Balance
requirement shall be applicable and (b) no Subsequent Home Loan shall
be more than 29 days delinquent as of the related Cut-Off Date;
(ii) the Transferor and/or Seller shall have provided the
Indenture Trustee, the Issuer and each Rating Agency with such data as
they may reasonably request regarding all Subsequent Home Loans
transferred to the Issuer, delivered at least five Business Days prior
to such Subsequent Transfer Date;
(iii) the Servicer shall deposit in the Collection Account
within two Business Days following the Subsequent Transfer Date all
collections in respect of the Subsequent Home Loans received after the
related Cut-Off Date;
(iv) the Transferor and/or Seller shall have provided the
Issuer, the Indenture Trustee and each Rating Agency with an Addition
Notice at least five Business Days prior to such Subsequent Transfer
Date and shall have provided any information reasonably requested by the
Issuer or the Indenture Trustee with respect to the applicable
Subsequent Home Loans;
(v) the Transferor and the Seller shall certify to the
Indenture Trustee and the Issuer that, as of the Subsequent Transfer
Date, the Transferor and the Seller, respectively, were not insolvent
nor were they made insolvent by such transfer nor were they aware of any
such pending insolvency;
(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 Seller and the Issuer shall have delivered to the
Indenture Trustee a duly executed Subsequent Transfer Agreement,
including all exhibits listed therein;
(viii) the Funding Period shall not have terminated;
(ix) as of such Subsequent Transfer Date, the funds on deposit
in the Pre-Funding Account shall equal or exceed the applicable
Subsequent Transfer Price;
(x) the Transferor and Seller shall have delivered to the
Issuer and the Indenture Trustee an Officer's Certificate confirming the
satisfaction of each condition precedent specified in this Section 2.02
and in the related Subsequent Transfer Agreements; and
(xi) each Rating Agency shall have either (i) notified the
Transferor and/or the Seller in writing that such transfer of Subsequent
Home Loans will not result in a reduction or withdrawal of the then
current rating of any Class of Securities or (ii) not responded within
five Business Days after delivery of the applicable Addition Notice.
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
Indenture Trustee's Home Loan File shall be vested in the Issuer, subject to
the lien created by the Indenture in favor of the Indenture Trustee for the
benefit of the Securityholders, although possession of the Servicer's Home
Loan Files (other than items required to be maintained in the Indenture
Trustee's Home Loan Files) on behalf of the Indenture Trustee and for the
benefit of the Securityholders shall remain with the Servicer, and the
Custodian shall take possession of the Indenture Trustee's Home Loan Files as
contemplated in Section 2.06.
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 to the Issuer under generally accepted
accounting principles ("GAAP"). 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 record ownership of
each Home Loan by the Issuer, subject to the lien created by the Indenture in
favor of the Indenture Trustee for the benefit of the Securityholders.
It is the intention of the parties hereto that the transfers and
assignments contemplated by this Agreement shall constitute a sale of the
Trust Estate from the Seller to the Issuer and upon the execution of this
Agreement by the parties hereto, the Trust Estate shall no longer be owned by
the Seller. If the assignment, transfer and conveyance of the Trust Estate
to the Issuer pursuant to this Agreement is held or deemed not to be a sale
or is held or deemed to be a pledge of security for a loan, the Seller
intends that the rights and obligations of the parties to this Agreement
shall be established by the terms of this Agreement and that, in such event,
(i) the Seller shall be deemed to have granted to the Issuer a first priority
security interest in the entire right, title and interest of the Seller in
and to the Trust Estate and all proceeds thereof, and (ii) this Agreement
shall constitute a security agreement under applicable law. Prior to or
promptly after the Closing Date, the Seller shall cause to be filed a UCC-1
financing statement with the Secretary of State of Delaware naming the Seller
as "debtor" and the Issuer as "secured party" and describing the Trust
Estate.
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 as the designated agent of the Indenture Trustee
each of the following documents (collectively, the "Home Loan Files"):
(i) The original Debt Instrument, endorsed "Pay to the order
of U.S. Bank National Association, as Indenture Trustee for the
FIRSTPLUS Asset Backed Securities, Series 1997-3, 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;
(iii) With respect to each Debt Instrument, either (A) the
original Assignment of Mortgage assigned to "U.S. Bank National
Association, as Indenture Trustee for the FIRSTPLUS Asset Backed
Securities, Series 1997-3" 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
Non-Recordation States;
(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 mortgagee 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) With respect to each Home Loan, 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 with respect to Non-Recordation States; (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 with respect to the delivery of any such document 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.
The Transferor and the Seller shall not be required to record
Assignments of Mortgages for any Home Loan with respect to which the related
Mortgaged Property is located in a Non-Recordation State, and the delivery of
the Assignments of Mortgages for such Home Loans 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
and the Transferor, in its capacity as Servicer, shall retain record title to
such Mortgages on behalf of the Indenture Trustee and the holders of the
Securities. Notwithstanding the preceding provisions allowing for the non-
recordation of Assignments of Mortgage in the Non-Recordation States, if an
Event of Default occurs pursuant to clause (a)(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 Non-Recordation States.
(d) All Home Loan documents held by the Custodian on behalf of the
Indenture Trustee are referred to herein as the "Indenture Trustee'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 Indenture Trustee of the Home Loans;
--------------------------------------------------
Certain Substitutions; Initial Certification by Custodian. (a) The
- ---------------------------------------------------------
Indenture Trustee agrees to cause the Custodian to execute and deliver on the
Closing Date an acknowledgment of receipt of the Indenture Trustee's Home
Loan File for each Initial Home Loan, and the Indenture Trustee agrees to
cause the Custodian to execute and deliver on any Subsequent Transfer Date an
acknowledgment of receipt of the Indenture Trustee's Home Loan File for each
Subsequent Home Loan. The Indenture 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 Estate
and delivered to the Custodian in trust, upon and subject to the conditions
set forth herein for the benefit of the Securityholders. The Indenture
Trustee agrees, for the benefit of the Securityholders, to cause the
Custodian to review each Indenture Trustee'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 conveyance of the
related Home Loan to the Issuer) and to cause the Custodian to deliver to the
Transferor, the Seller, the Indenture Trustee, the Issuer and the Servicer an
interim 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 Indenture
Trustee 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(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
Indenture Trustee, and only as to the foregoing documents, the information
set forth on the Home Loan Schedule accurately reflects the information set
forth in the Indenture Trustee's Home Loan File and (iv) each Debt Instrument
has been endorsed as provided in Section 2.05. Neither the Issuer 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 Indenture Trustee's Home Loan
File should include any of the documents specified in Section 2.05(a)(v).
Prior to the first anniversary of the Closing Date, the Indenture Trustee
shall cause the Custodian to deliver to the Transferor, the Seller, the
Indenture Trustee, the Issuer and the Servicer a final certification
evidencing the completeness of the Home Loans in its possession or control.
(b) If the Custodian, during the process of reviewing the Indenture
Trustee's Home Loan Files, finds any document constituting a part of a
Indenture Trustee'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 Issuer 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 Indenture Trustee'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 Issuer 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 Indenture Trustee'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) (1) Subject to (2) below, each of the Seller and the Transferor
shall have the option, exercisable in its sole discretion, to remove a Home
Loan (including a Home Loan for which the current Monthly Payment is not more
than 30 days delinquent, but excluding a Home Loan which is a Defective Home
Loan, a defaulted Home Loan or a Home Loan for which the current Monthly
Payment is more than 30 days past due) 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 substitutions made by the Transferor,
and subject to the conditions that the Seller and/or the Transferor (i) may
only effect substitutions under this Section 2.06(c) (1) which, in the
aggregate, amount to not more than 10% (as measured by the aggregate
Principal Balance of the Deleted Home Loans) of the Assumed Pool Principal
Balance as of the Closing Date.
(2) No substitution referred to in (1) above shall be undertaken
unless and until the Issuer and the Indenture Trustee shall have received
written assurances from each Rating Agency that such substitution, once
effected, would not result in a downgrade of the ratings assigned to any
Class of the Securities, and an Officer's Certificate from the Transferor or
the Seller, as applicable, stating that each Qualified Substitute Home Loan
complies with the definition thereof and 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; provided that with
respect to any substitution of Home Loans under this Section 2.06(c) which,
in the aggregate, involves Qualified Substitute Home Loans with aggregate
Principal Balances exceeding 5.0% or more of the Assumed Pool Principal
Balance as of the Closing Date, the Issuer and the Indenture Trustee shall
have received an opinion of counsel, which opinion of counsel shall be
acceptable to the Indenture 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 Issuer of a certification of a Servicing
Officer to the effect that such substitution has occurred and that the
Substitution Adjustment (if any) has been credited to the Collection Account
pursuant to Section 3.05, the Indenture 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 Indenture Trustee'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 Payment Date in December of each year commencing in 1997,
the Issuer shall deliver (or cause the Custodian to deliver) to the Seller,
the Indenture Trustee and the Servicer a certification listing all Indenture
Trustee's Home Loan Files held by the Custodian on behalf of the Indenture
Trustee on such Payment 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 Issuer, the
Indenture Trustee, the Servicer 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 except where the failure to be so licensed, qualified or in good
standing, either singularly or in the aggregate, would not have a material
adverse effect on its business or its ability to perform its obligations
hereunder; the Seller 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 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.
(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 assets included in the Trust
Estate as of such date free and clear of any lien, mortgage, pledge, charge,
security interest or other encumbrance other than the lien of the Indenture.
(h) As of each 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.
(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 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 Issuer,
the Indenture Trustee 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 except where the failure to be so licensed, qualified or in good
standing, either singularly or in the aggregate, would not have a material
adverse effect on its business or its ability to perform its obligations
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 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 1600 Viceroy, Dallas, Texas
75235, 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 Issuer, the
Indenture Trustee and the Seller;
(h) The Servicer shall not solicit any refinancing of any of the Home
Loans; provided, that this covenant shall not prevent or restrict either (1)
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 or (2) any refinancing in
connection with an Obligor's unsolicited request for refinancing; 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 Issuer, the Indenture Trustee and the
Securityholders, with respect to the Initial Home Loans, as of the Closing
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 Indenture 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, none of the
----------------
Initial Home Loans are more than 29 days contractually delinquent, based on
the terms under which the related Mortgages and Debt Instruments have been
made. 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 Indenture Trustee'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 Indenture Trustee's Home Loan File and the terms of which are
reflected in the Indenture Trustee's Home Loan File.
(e) No Defenses. No Debt Instrument or Mortgage is subject to any
-----------
claim, 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 claim, right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such claim, 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.
(f) Compliance with Laws; Relief Act Matters. Any and all requirements
----------------------------------------
of any federal, state or local law applicable to each Home Loan have been
complied with including, without limitation, all licensing, real estate
settlement procedures act, 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. No relief has been requested by or allowed to an
Obligor under the Soldiers' and Sailors' Civil Relief Act of 1940.
(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 such Mortgage securing a Home Loan with respect
to a Superior Lien on such Mortgaged Property in connection with the
refinancing of the mortgage loan relating to such Superior Lien.
(h) Valid Lien. With respect to each Debt Instrument, the related
----------
Mortgage is or creates a valid, subsisting and enforceable lien on the
related Mortgaged Property.
(i) Validity of Home Loan Documents; Entire Agreement. 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. The Debt Instrument and the Mortgage contain the
entire agreement between the related Obligor and the lender and all
obligations of the lender under the related Home Loan, and no other agreement
defines, modifies, or expands the obligations of the lender under the Home
Loan, except for any assumptions or modifications included in the Indenture
Trustee's Home Loan File pursuant to Section 2.05(a)(v) or referred to in
Section 3.03(m).
(j) Full Disbursement of Proceeds. 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 have been 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, the Transferor 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,
-------------------------------
the related Servicer's Home Loan File contains a title document reflecting
that title to the related Mortgaged Property is held at least 50% by the
Obligor under such Home Loan.
(m) No Defaults. 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 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 Indenture Trustee's Home Loan File.
(n) Consent and Delinquency of Superior Lien. No obligation secured
----------------------------------------
by a Superior Lien was more than 30 days past due at the time of origination
of the related Home Loan. With respect to each Home Loan that is not a first
mortgage loan, either (i) no consent for the Home Loan is required by the
holder of the related prior lien or (ii) such consent has been obtained and
has been delivered to the Indenture Trustee.
(o) No Condemnation or Damage; Good Repair. 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. To the best of the
Transferor's knowledge, the related Mortgaged Property described in each
Mortgage is free of damage and in good repair or will be free of damage and
in good repair following the completion of any improvements or repairs to be
financed by the related Home Loan.
(p) Environmental Compliance. To the best of the Transferor's
------------------------
knowledge, the Mortgaged Property is free from any and all toxic or hazardous
substances and there exists no violation of any local, state or federal
environmental law, rule or regulation.
(q) 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.
(r) Remedies Against Originators. In the event that any Home Loan was
----------------------------
originated by an entity (such entity, the "Originator") other than the
Transferor and to the extent that the Transferor has failed to fulfill or is
not capable of fulfilling its obligations to cure, substitute or repurchase
such Home Loan as required hereunder, then the Indenture Trustee on behalf of
the Securityholders may enforce any remedies for breach of representations
and warranties made by the Originator with respect to such Home Loan.
(s) Security. No Debt Instrument is, or has been, secured by any
--------
collateral except the lien of the related Mortgage.
(t) Deed of Trust. If a Mortgage for a Home Loan 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
such 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.
(u) Use of Proceeds of Combination Loan. With respect to each
-----------------------------------
Combination Loan the related Obligor has represented to Seller that a portion
of the proceeds of such Combination Loan will be used to finance property
improvements.
(v) Inspections of Improvements; and No Encroachment. To the best of
------------------------------------------------
the Transferor's knowledge, all inspections, licenses and certificates
required to be made, obtained and issued as of the Closing Date with respect
to the improvements and the use and occupancy of all occupied portions of all
Mortgaged Property have been made, obtained or issued as applicable. To the
best of the Transferor's knowledge, all improvements which were considered in
determining the appraised value of the Mortgaged Property lay wholly within
the boundaries and building restrictions lines of the related property and no
improvements on adjoining properties encroach upon such property and no
improvement located on or being a part of such property is in violation of
any applicable zoning laws or regulation.
(w) Flood Insurance. If required by federal or state law, each
---------------
Mortgaged Property is covered by flood insurance with a standard mortgagee
clause and extended coverage in an amount which is not less than the value of
such Mortgaged Property. All such insurance policies meet the requirements
of the current guidelines of the Federal Insurance Administration, conform to
the requirements of the FNMA Sellers' Guide and the FNMA Servicers' Guide,
and are of standard type and quality for the locale where the related
Mortgaged Property is located. All acts required to be performed to
preserve the rights and remedies of the Indenture Trustee in any such
insurance policies have been performed including, without limitation, any
necessary notifications of insurers and assignments of policies or interests
therein.
(x) Underwriting Origination and Servicing Practices. Each Home Loan
------------------------------------------------
has been underwritten or re-underwritten in accordance with the Transferor's
then-current underwriting guidelines. 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.
To the best of the Transferor's knowledge, no fraud or misrepresentation was
committed by any Person in connection with the origination or servicing of
each Home Loan.
(y) Selection Criteria; No Bulk Transfer. 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. 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.
(z) Treasury Regulation Section301.7701. On the Closing Date, each
-----------------------------------
Subsequent Transfer Date and each date of substitution of a Qualified
Substitute Home Loan, 55% or more (by aggregate principal balance) of the
Home Loans do not constitute "real estate mortgages" for the purpose of
---
Treasury Regulation Section301.7701 under the Code. For this purpose a Home
Loan does not constitute a "real estate mortgage" if:
---
(i) The Home Loan is not secured by an interest in real property,
---
or
(ii) The Home Loan is not an "obligation principally secured by an
---
interest in real property." For this purpose an obligation is "principally
secured by an interest in real property" if it satisfies either the test set
------
out in paragraph (1) or the test set out in paragraph (2) below.
(1) The 80-percent test. An obligation is principally secured by
an interest in real property if the fair market value of the
interest in real property securing the obligation
(A) was at least equal to 80 percent of the adjusted issue
price of the obligation at the time the obligation was
originated (or, if later, the time the obligation was
significantly modified); or
(B) is at least equal to 80 percent of the adjusted issue
price of the obligation on the Closing Date or Subsequent
Transfer Date, as applicable.
For purposes of this paragraph (1), the fair market value of
the real property interest must be first reduced by the amount
of any lien on the real property interest that is senior to
the obligation being tested, and must be further reduced by a
proportionate amount of any lien that is in parity with the
obligation being tested, in each case before the percentages
set forth in (1)(A) and (1)(B) are determined. The adjusted
issue price of an obligation is its issue price plus the
amount of accrued original issue discount, if any, as of the
date of determination.
(2) Alternative test. An obligation is principally secured by an
interest in real property if substantially all of the proceeds
of the obligation were used to acquire or to improve or
protect an interest in real property that, at the origination
date, is the only security for the obligation. For purposes
of this test, loan guarantees made by the United States or any
state (or any political subdivision, agency, or
instrumentality of the United States or of any state), or
other third party credit enhancement are not viewed as
additional security for a loan. An obligation is not
considered to be secured by property other than real property
solely because the obligor is personally liable on the
obligation. For this purpose only substantially all of the
proceeds of the obligation means more than 66-2/3% of the
gross proceeds.
(aa) No Fraudulent Conveyance. The Home Loans are not being transferred
------------------------
with any intent to hinder, delay or defraud any creditors.
(ab) Value and Marketability. To the best of the Transferor's
-----------------------
knowledge, there do not exist any circumstances, conditions or information
with respect to the Home Loan, the related Mortgaged Property, the Obligor or
the Obligor's credit standing that reasonably can be expected to cause private
institutional investors investing in same type of home loan to regard
such Home Loan as an unacceptable investment, to increase the
likelihood that such Home Loan will become delinquent, or adversely
affect the value or marketability of such Home Loan.
(ac) Terms of Home Loans and Interest Method. 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 25 years and three months 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. No Debt Instrument provides for any extension of the original
term. Interest for each Home Loan is calculated at a rate of interest
computed by the simple interest method or the actuarial method.
(ad) Types of Home Loans; Retail Installment Contracts. Each Home Loan
-------------------------------------------------
is either (i) a Home Improvement Loan, (ii) a Debt Consolidation Loan, or
(iii) a Combination Loan. No Home Loan was originated for the express
purpose of purchasing a manufactured home. Some of the Home Loans are retail
installment contracts for goods or services, and some of the Home Loans are
home improvement loans for goods or services, which are either "consumer
credit contracts" or "purchase money loans" as such terms are defined in
16 C.F.R. Part 433.1.
(ae) No Buydown, GPM or Shared Appreciation Loans. No Home Loan
--------------------------------------------
contains any provisions pursuant to which principal and interest payments are
paid or partially paid with funds deposited in any separate account
established by the Transferor, the Obligor or anyone else on behalf of the
Obligor, or paid by any source other than the Obligor. No Home Loan contains
any other similar provision which may constitute a "buydown" provision. No
Home Loan is a graduated payment mortgage loan. No Home Loan has a shared
appreciation or other contingent interest feature.
(af) No Chattel Paper. Each Debt Instrument is comprised of one
----------------
original promissory note and each such promissory note constitutes an
"instrument" for purposes of Section 9-105(1)(i) of the UCC. No Debt
Instrument constitutes or is comprised of "chattel paper" as such term is
defined in Section 9-105(1)(b) of the UCC. Each Debt Instrument has been
delivered to the Indenture Trustee.
(ag) Description Conforms to Prospectus Supplement. Each Initial Home
---------------------------------------------
Loan conforms, and all Initial Home Loans in the aggregate conform, in all
material respects to the description thereof set forth in the Prospectus
Supplement.
(ah) Review by Transferor. In light of the Transferor's underwriting
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guidelines, the Transferor has reviewed all of the documents constituting
each Servicer's Home Loan File and each Indenture Trustee's Home Loan File
and has made such inquiries as it deems reasonable under the circumstances to
make and confirm the accuracy of the representations set forth herein.
Section 3.04. Subsequent Home Loans. With respect to the Subsequent
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Home Loans conveyed by the Transferor to the Seller on a given Subsequent
Transfer Date, the Transferor, as of such Subsequent Transfer Date,
represents and warrants to the Seller, the Issuer, the Indenture Trustee and
the Securityholders that:
(i) No such Subsequent Home Loans is more than 29 days
contractually delinquent as of the related Cut-Off Date;
(ii) The original term to stated maturity of each such
Subsequent Home Loan does not exceed 25 years, and the scheduled
maturity of each such Subsequent Home Loan is not later than November
18, 2022;
(iii) Each such Subsequent Home Loan has a Home Loan Interest
Rate of not less than 9.99%;
(iv) Following the purchase of such Subsequent Home Loans by
the Trust, the Home Loans included in the Home Loan Pool (including the
Subsequent Home Loans) will have a weighted average interest rate and a
weighted average remaining term to maturity as of each respective Cut-
Off Date comparable to those of the Initial Home Loans included in the
initial Home Loan Pool;
(v) 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;
(vi) 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;
(vii) 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;
(viii) The weighted average of the Credit Scores of the Obligors
with respect to such Subsequent Home Loans is not less than 683.
Section 3.05. Purchase and Substitution. (a) It is understood and
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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, the Grant
of the Home Loans to the Indenture Trustee and the delivery of the Securities
to the Securityholders. Upon discovery by the Seller, the Servicer, the
Transferor, the Custodian, the Issuer, the Indenture Trustee 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 which materially and adversely affects
the interests of the Securityholders 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 may have been 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, or of its discovery or its receipt
of notice of a material defect in a document contained in an Indenture
Trustee's Home Loan File as referred to in the last sentence of
Section 2.06(b), promptly cure such breach in all material respects. If,
however, within 60 days after the Seller's discovery of or receipt of
notice of such a breach or defective document, as applicable, such
breach or defective document, as applicable, has not been remedied
by the Transferor and such breach or defective document, as applicable,
materially and adversely affects the interests of the Securityholders
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 Estate (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. In the event the Seller or
the Transferor is notified that any Mortgaged Property was, as of the Closing
Date, 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 Indenture Trustee and the Issuer
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 in which such repurchase
occurs 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 payment 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).
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 Collection Amount for any Payment
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 Payment Date shall be deemed to have been paid during the related
Due Period and shall be transferred to the Note Payment Account to be
retained therein or transferred to the Certificate Distribution Account
pursuant to Section 5.01(c).
As to any Home Loan for which the Transferor substitutes a Qualified
Substitute Home Loan or Loans, the Transferor shall effect such substitution
by delivering (i) to the Issuer 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 (ii) to the Custodian on behalf
of the Indenture Trustee, the documents constituting the Indenture Trustee's
Loan File for such Qualified Substitute Home Loan or Loans.
(b) In addition to the preceding repurchase obligations, each of the
Transferor and Servicer shall have the option, exercisable in its sole
discretion at any time, to repurchase from the Issuer or to substitute one or
more Qualified Substitute Home Loans for any Home Loan that is delinquent or
is in foreclosure or default or as to which default is imminent; provided
that any repurchase or substitution pursuant to this paragraph is conducted
in the same manner as the repurchase or substitution, respectively, of a
Defective Home Loan pursuant to this Section 3.05.
(c) 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. All 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 Issuer, the Servicer (if the Transferor is
not then acting as such) and the Indenture Trustee that such substitution
has taken place. 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 related Substitution Adjustment, if any. In addition, on
the date of such substitution, (i) the Issuer shall cause such Qualified
Substitute Home Loan to be pledged to the Indenture Trustee under the
Indenture as part of the Trust Estate and (ii) the Indenture Trustee shall
(A) release the applicable Deleted Home Loan from the lien of the Indenture,
(B) release (or cause the Custodian to release) to the Servicer for release
to the Seller the Indenture Trustee's Home Loan File for such Deleted Home
Loan and (C) execute, without recourse, representation or warranty, and
deliver such instruments of transfer and release presented to it by the
Servicer as shall be necessary to transfer such Deleted Home Loan to the
Seller and to evidence such release.
(d) 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 Indenture
Trustee and the Securityholders 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 material
defect in a document contained in an Indenture Trustee's Home Loan File as
contemplated by Section 2.06(b) 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 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 Issuer, (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 Issuer or the Majority
Securityholders for all amounts payable in respect of such Home Loan.
(e) Neither the Issuer 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.
(f) In connection with a repurchase of or substitution for a Home Loan
pursuant to this Section 3.05, the Transferor shall amend the Home Loan
Schedule to reflect (i) the removal of the applicable Deleted Home Loan from
the terms of this Agreement and (ii) if applicable, the substitution of the
applicable Qualified Substitute Home Loan. The Transferor shall promptly
deliver to the Issuer, the Servicer (if the Transferor is not then acting as
such) and the Indenture Trustee a copy of the Home Loan Schedule as so
amended.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 4.01. Duties of the Servicer. (a) Servicing Standard. The
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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' 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.
(b) Servicing Advances. In accordance with the preceding general
------------------
servicing standard, the Servicer, or any Subservicer on behalf of the
Servicer, shall make all 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 payments or
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 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 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
secured by 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; 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 the indebtedness secured by 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 Issuer 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 Indenture Trustee'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), the
Servicer may modify, vary or waive any defaulted Home Loan in a manner that
in the reasonable judgment of the Servicer will be likely to maximize the net
proceeds realizable from such defaulted Home Loan under the circumstances,
including, without limitation, the deferment or forgiveness of any principal
or interest payments due or to become due thereon; provided, however, that no
such modification, waiver or variation of a Home Loan pursuant to this
subsection (c) shall involve the execution by the related Obligor of a new
Debt Instrument.
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. 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.
The Servicer may, in a manner consistent with its servicing practices,
permit an Obligor who is selling his principal residence and purchasing a new
residence to substitute the new Mortgaged Property as collateral for the
related Home Loan. In such circumstances, the Servicer acknowledges that it
intends to, consistent with its servicing practices, generally require such
Obligor to make a partial prepayment in reduction of the principal balance of
the Home Loan to the extent that such Obligor has received proceeds from the
sale of the prior residence that will not be applied to the purchase of the
new residence.
(d) Instruments of Satisfaction or Release. Without limiting the
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generality of the foregoing, the Servicer is hereby authorized and empowered
to execute and deliver on behalf of the Issuer, the Indenture Trustee, each
Securityholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Home Loans and with respect to the related Mortgaged
Properties. If reasonably required by the Servicer, the Issuer and the
Indenture 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
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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, in accordance with the standard of care specified in Section 4.01(a),
take such action as it shall deem to be in the best interest of the
Securityholders to collect or liquidate such Home Loan in default in a manner
that in the reasonable judgment of the Servicer will be likely to maximize
the net proceeds realizable therefrom under the circumstances (including, but
without limitation, the purchase 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 Indenture Trustee for the benefit of
Securityholders). In addition, the Servicer shall have the power and
authority, exercisable in its sole discretion at any time, to sell any
Liquidated Home Loan on behalf of the Indenture Trustee for the benefit of
the Securityholders to one or more third party purchasers in a manner that,
in the reasonable judgment of the Servicer, will be likely to maximize the
net proceeds realizable therefrom. The purchase price paid for any
Liquidated Loan sold to an affiliate of the Servicer shall not be less than
the price that would have been paid for such Liquidated Loan by an
unaffiliated third party. The Servicer shall promptly deposit the Net
Liquidation Proceeds or Post-Liquidation Proceeds, as applicable, from the
sale of such Liquidated Home Loans into the Collection Account in accordance
with Section 5.01 of this Agreement. The Servicer shall give the Indenture
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 liquidation activities, the Servicer shall
exercise collection or liquidation 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 Issuer, the Indenture Trustee 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 Loan Losses incurred in connection therewith; and (iv) any Post-
Liquidation Proceeds.
Section 4.03. Fidelity Bond; Errors and Omission Insurance. The
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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 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
Issuer, the Indenture Trustee, 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
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Property. The deed or certificate of sale in respect of each Foreclosure
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Property shall be taken in the name of the Indenture Trustee for the benefit
of the Securityholders.
The Servicer shall manage, conserve, protect and operate each
Foreclosure Property for the Indenture Trustee and the Securityholders 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. 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
Indenture Trustee and the Securityholders 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 in
accordance with Section 5.01 of this Agreement and the
Indenture, 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
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the Home Loans. The Servicer shall provide to the Issuer, the Indenture
- --------------
Trustee, the Securityholders 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.
Section 4.06. Superior Liens. (a) The Servicer shall file (or cause
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to be filed) of record a request for notice of any action by a lienholder
under a Superior Lien for the protection of the Indenture Trustee'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 Issuer and the Indenture Trustee, all
reasonable actions that are necessary to protect the interests of the
Securityholders, 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 Issuer 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 Indenture Trustee and each Rating Agency, 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 Issuer, the Indenture Trustee 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.
(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
Issuer, the Indenture Trustee 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.
(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 Issuer, 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 Issuer, the Indenture Trustee 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 Issuer, the
Indenture Trustee or the Securityholders 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 each Rating Agency.
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01. Collection Account and Note Payment Account.
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(a)(1) Establishment of Collection Account. The Servicer, for the
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benefit of the Securityholders, shall cause to be established and maintained
one or more Collection Accounts, which shall be separate Eligible Accounts,
which may be interest-bearing, entitled "Collection Account, U.S. Bank
National Association, as Indenture Trustee, in trust for the FIRSTPLUS Asset
Backed Securities, Series 1997-3". The Collection Account may be maintained
with the Indenture Trustee or, subject to the following paragraph, 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 Indenture Trustee and, upon
request of any Securityholder, to such Securityholder. Funds in the
Collection Account shall be invested in accordance with Section 5.06.
As of the Closing Date, the Collection Account shall be established with
the Indenture Trustee, and thereafter upon written notice to the Issuer and
the Indenture Trustee, and the Collection Account may be transferred by the
Servicer to a different depository institution so long as such transfer is to
an Eligible Account.
(a)(2) Establishment of Note Payment Account. No later than the
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Closing Date, the Servicer, for the benefit of the Securityholders, shall
cause to be established and maintained with the Indenture Trustee one or more
Note Payment Accounts, which shall be separate Eligible Accounts, which may
be interest-bearing and which shall be entitled "Note Payment Account, U.S.
Bank National Association, as Indenture Trustee, in trust for the
"FIRSTPLUS Asset Backed Securities, Series 1997-3." Funds in the Note
Payment Account shall be invested in accordance with Section 5.06.
(b)(1) Deposits to Collection Account. The Servicer shall use its
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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 in
trust for the benefit of the Securityholders:
(i) all payments on account of principal on each Home Loan
received after its related Cut-Off Date;
(ii) all payments on account of interest on each Home Loan received
after its related Cut-Off Date;
(iii) all Net Liquidation Proceeds and Post-Liquidation Proceeds
pursuant to Sections 4.02 or 4.04;
(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
Section 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 and any other proceeds of the sale of the Home Loans under Section
11.02; and
(viii) interest and gains on funds held in the Collection Account.
The Servicer shall be entitled to retain and not deposit into the
Collection Account any amounts received with respect to a Home Loan that
constitute additional servicing compensation pursuant to Section 7.03, and
such amounts retained by the Servicer during a Due Period shall be excluded
from the calculation of the Servicing Compensation that is distributable to
the Servicer from the Note Payment Account on the next Payment Date following
such Due Period.
(b)(2) Deposits to Note Payment Account. On the Withdrawal Date with
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respect to each Payment Date, the Indenture Trustee (based on information
contained in the Servicer's Monthly Remittance Report for such Payment Date)
shall (i) withdraw the Available Collection Amount with respect to such
Payment Date from the Collection Account, pay the portion thereof
representing income or gain from investments credited to the Collection
Account during the preceding Due Period to the Servicer as Servicing
Compensation with respect to such Payment Date, and deposit the remainder in
the Note Payment Account and (ii) make withdrawals from the Pre-Funding
Account and the Capitalized Interest Account, as applicable, of amounts
required to be deposited in the Note Payment Account from such
accounts on such Withdrawal Date and deposit into the Note Payment Account
the amounts so withdrawn.
(c) Withdrawals from Note Payment Account. Subject to Section 5.01(e),
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no later than 11:00 a.m. (New York City time) on the second Business Day
prior to each Payment Date, to the extent funds are available in the Note
Payment Account, the Indenture Trustee (based on the information contained in
the Servicer's Monthly Remittance Report for such Payment Date) shall either
(1) retain funds in the Note Payment Account for payment or distribution on
such Payment Date or (2) make withdrawals from the Note Payment Account and
deposits into the other Trust Accounts as indicated, in each case as
specified below and in the following order of priority:
(1) to retain in the Note Payment Account for payment on such
Payment Date pursuant to the Indenture, to the Servicer, an amount equal
to the Servicing Compensation (net of (i) any amounts retained prior to
deposit into the Collection Account pursuant to subsection (b)(1) above,
(ii) any amounts representing income or gain from investments credited
to the Collection Account and paid to the Servicer pursuant to
subsection (b)(2) above and (iii) the Indenture Trustee Fee, which shall
be paid to the Indenture Trustee) and all unpaid Servicing Compensation
from prior Due Periods;
(2) to retain in the Note Payment Account for payment pursuant to
the Indenture on such Payment Date and to deposit in the Certificate
Distribution Account for distribution pursuant to Section 5.02, any
amount remaining from the Pre-Funding Account Deposit at the end of the
Funding Period, which will be paid (x) if no Indenture Event of Default
has occurred and such amount remaining is greater than $50,000, in
reduction, on a pro rata basis, of the Class Principal Balances of each
Class of Securities as provided in Section 8.2(a)(ii) of the Indenture
and Section 5.05(c)(i) hereof, (y) if no Indenture Event of Default has
occurred and such amount remaining is less than or equal to $50,000,
such remaining amount will be retained in the Note Payment Account and
be paid on the Pre-Funding Termination Payment Date sequentially to the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7 and Class A-8 Notes, in that order, in reduction of the Class
Principal Balances thereof, or (ii) if an Indenture Event of Default has
occurred, such remaining amount will be retained in the Note Payment
Account and be paid in reduction of the Class Principal Balances of each
Class of Notes, pro rata based on the Class Principal Balances thereof;
(3) to retain in the Note Payment Account with respect to the
Notes, or to deposit in the Certificate Distribution Account with
respect to the Certificates, as applicable, to the extent of the Regular
Payment Amount for such Payment Date, in the following order of
priority:
(i) for payment pursuant to the Indenture to the holders
of the Senior Notes, the Senior Noteholders' Interest Payment
Amount for such Payment Date, allocated to each Class of Senior
Notes, pro rata, based on the amount of interest payable in
respect of each such Class based on the applicable Interest Rate;
(ii) for payment pursuant to the Indenture to the holders
of the Class M-1 Notes, the Class M-1 Noteholders' Interest Payment
Amount for such Payment Date;
(iii) for payment pursuant to the Indenture to the holders
of the Class M-2 Notes, the Class M-2 Noteholders' Interest Payment
for such Payment Date;
(iv) for distribution pursuant to Section 5.05 to the
holders of the Class B-1 Certificates, the Class B-1
Certificateholders' Interest Distributable Amount for such Payment
Date;
(v) for distribution pursuant to Section 5.05 to the
holders of the Class B-2 Certificates, the Class B-2
Certificateholders' Interest Distributable Amount for such Payment
Date;
(vi) for payment pursuant to the Indenture to the holders
of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6, Class A-7 and Class A-8 Notes, in that order, until the
respective Class Principal Balances thereof are reduced to zero,
the amount necessary to reduce the aggregate of the Class Principal
Balances of the Senior Notes to the Senior Optimal Principal
Balance for such Payment Date;
(vii) for payment pursuant to the Indenture to the holders
of the Class M-1 Notes, the amount necessary to reduce the Class
Principal Balance thereof to the Class M-1 Optimal Principal
Balance for such Payment Date;
(viii) for payment pursuant to the Indenture to the holders
of the Class M-2 Notes, the amount necessary to reduce the Class
Principal Balance thereof to the Class M-2 Optimal Principal
Balance for such Payment Date;
(ix) for distribution pursuant to Section 5.05 to the
holders of the Class B-1 Certificates, the amount necessary to
reduce the Class Principal Balance thereof to the Class B-1 Optimal
Principal Balance for such Payment Date;
(x) for distribution pursuant to Section 5.05 to the
holders of the Class B-2 Certificates, the amount necessary to
reduce the Class Principal Balance thereof to the Class B-2 Optimal
Principal Balance;
(xi) for payment pursuant to the Indenture to the holders
of the Class M-1 Notes, the applicable Deferred Amount, if any,
until such Deferred Amount has been paid in full;
(xii) for payment pursuant to the Indenture to the holders
of the Class M-2 Notes, the applicable Deferred Amount, if any,
until such Deferred Amount has been paid in full;
(xiii) for distribution pursuant to Section 5.05 to the
holders of the Class B-1 Certificates, the applicable Deferred
Amount, if any, until such Deferred Amount has been paid in full;
(xiv) for distribution pursuant to Section 5.05 to the
holders of the Class B-2 Certificates, the applicable Deferred
Amount, if any, until such Deferred Amount has been paid in full;
(xv) for distribution pursuant to Section 5.05 to the
Servicer, an amount equal to any Servicing Advances previously made
by the Servicer and not previously reimbursed (the "Servicing
Advance Reimbursement Amount"); and
(xvi) to deposit any remaining amount in the Certificate
Distribution Account for application as follows: first, to the
extent required pursuant to Section 5.08, for deposit into the
Class B-2 Account, and second, for distribution pursuant to
Section 5.05 to the holders of the Residual Interest.
Notwithstanding the foregoing, on any Payment Date on which a Trigger Event
has occurred and is continuing, any Regular Payment Amount applied pursuant
to clause (vi) above will be retained in the Note Payment Account for payment
to the holders of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6, Class A-7 and Class A-8 Notes, in that order, without regard to
the Senior Optimal Principal Balance, until the respective Class Principal
Balances thereof have been reduced to zero.
(4) to retain in the Note Payment Account with respect to the
Notes, or to deposit in the Certificate Distribution Account with
respect to the Certificates, as applicable, to the extent of the Excess
Spread, if any, in the following order of priority:
(i) in an amount equal to the Overcollateralization
Deficiency Amount, if any, as follows:
(A) for payment pursuant to the Indenture to the holders
of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6, Class A-7 and Class A-8 Notes, in that order, until
the respective Class Principal Balances thereof are reduced to
zero, the amount necessary to reduce the aggregate of the
Class Principal Balances of the Senior Notes to the Senior
Optimal Principal Balance for such Payment Date;
(B) for payment pursuant to the Indenture to the holders
of the Class M-1 Notes, the amount necessary to reduce the
Class Principal Balance thereof to the Class M-1 Optimal
Principal Balance for such Payment Date;
(C) for payment pursuant to the Indenture to the holders
of the Class M-2 Notes, the amount necessary to reduce the
Class Principal Balance thereof to the Class M-2 Optimal
Principal Balance for such Payment Date;
(D) for distribution pursuant to Section 5.05 to the
holders of the Class B-1 Certificates, the amount necessary to
reduce the Class Principal Balance thereof to the Class B-1
Optimal Principal Balance for such Payment Date; and
(E) for distribution pursuant to Section 5.05 to the
holders of the Class B-2 Certificates, the amount necessary to
reduce the Class Principal Balance thereof to the Class B-2
Optimal Principal Balance;
(ii) for payment pursuant to the Indenture to the holders
of the Class M-1 Notes, the applicable Deferred Amount, if any,
until such Deferred Amount has been paid in full;
(iii) for payment pursuant to the Indenture to the holders
of the Class M-2 Notes, the applicable Deferred Amount, if any,
until such Deferred Amount has been paid in full;
(iv) for distribution pursuant to Section 5.05 to the
holders of the Class B-1 Certificates, the applicable Deferred
Amount, if any, until such Deferred Amount has been paid in full;
(v) for distribution pursuant to Section 5.05 to the
holders of the Class B-2 Certificates, the applicable Deferred
Amount, if any, until such Deferred Amount is paid in full; and
(vi) to deposit any remaining amount in the Certificate
Distribution Account for application as follows: first, to the
extent required pursuant to Section 5.08, for deposit into the
Class B-2 Account, and second, for distribution pursuant to
Section 5.05 to the holders of the Residual Interest.
Notwithstanding the foregoing, on any Payment Date on which a Trigger Event
has occurred and is continuing, any Excess Spread applied pursuant to clause
(i)(A) above will be retained in the Note Payment Account for payment to the
holders of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7 and Class A-8 Notes, in that order, without regard to the
Senior Optimal Principal Balance, until the respective Class Principal
Balances thereof have been reduced to zero.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee and the Servicer shall continue to maintain the Collection Account
and the Note Payment Account hereunder until the Class Principal Balance of
each Class of Securities has been reduced to zero.
(d) Additional Withdrawals from Collection Account. The Indenture
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Trustee, at the direction of the Servicer, shall also make the following
withdrawals from the Collection Account, in no particular order of priority:
(i) to withdraw and pay as directed by the Servicer any amount not
required to be deposited in the Collection Account, including, without
limitation, any payments on or proceeds from a Home Loan received on or
prior to its related Cut-Off Date, or deposited therein in error; and
(ii) 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 Payment Account on a first-in, first-out
basis.
(e) Additional Withdrawals from Note Payment Account Following Early
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Redemption or Termination. No later than 11:00 a.m. (New York City time) on
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the second Business Day prior to the Payment Date on which an early
redemption or termination pursuant to Section 11.02(a) or Section 11.02(b) is
to occur, to the extent funds are available in the Note Payment Account, the
Indenture Trustee (based on the information contained in the Servicer's
Monthly Remittance Report for such Payment Date) shall either (x) retain
funds in the Note Payment Account for payment on such Payment Date or (y)
make withdrawals from the Note Payment Account and deposits into the other
Trust Accounts as indicated, in each case as specified below and in the
following order of priority: (1) to deposit in the Certificate Distribution
Account for distribution pursuant to Section 5.05 to the Servicer, the
Servicing Advance Reimbursement Amount, and (2) to retain in the Note Payment
Account or to deposit in the Certificate Distribution Account, as specified
in each succeeding clause: (i) to retain in the Note Payment Account for
payment pursuant to the Indenture to the holders of the Notes, all accrued
and unpaid interest on each Class of Notes and an amount equal to the
aggregate of the then outstanding Class Principal Balances of each Class of
Notes; (ii) to deposit in the Certificate Distribution Account for
distribution pursuant to Section 5.05 to the Certificateholders, all accrued
and unpaid interest on each Class of Certificates and an amount equal to the
aggregate of the then outstanding Class Principal Balances of each Class of
Certificates; (iii) to retain in the Note Payment Account for payment
pursuant to the Indenture to the holders of the Class M-1 and Class M-2
Notes, in that order, the applicable Deferred Amounts, if any, until each
such Deferred Amount has been paid in full; (iv) to deposit in the
Certificate Distribution Account for distribution pursuant to Section 5.05 to
the Class B-1 and Class B-2 Certificateholders, in that order, the applicable
Deferred Amounts, if any, until each such Deferred Amount has been paid in
full; and (v) to deposit any remaining amount in the Certificate
Distribution Account for distribution pursuant to Section 5.05 to the
holders of the Residual Interest.
Section 5.02. Pre-Funding Account. (a) Establishment and Withdrawals.
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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 separate Eligible Accounts entitled "Pre-Funding Account, U.S. Bank
National Association, as Indenture Trustee, in trust for the FIRSTPLUS Asset
Backed Securities, Series 1997-3." On the Closing Date, the Pre-Funding
Account Deposit shall 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 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 pay such withdrawn 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. Funds in
the Pre-Funding Account shall be invested in accordance with Section 5.06.
On or before each Payment Date, all interest and any other investment
earnings on funds held in the Pre-Funding Account shall be deposited into the
Capitalized Interest Account.
(b) (Reserved)
(c) Remaining Balance. If the Pre-Funding Account has not been reduced
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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
Payment Account, on the Withdrawal Date with respect to the Pre-Funding
Termination Payment Date, for payment or distribution on the Pre-Funding
Termination Payment Date as follows:
(i) if no Indenture Event of Default has occurred and such
remaining amount is greater than $50,000, to the Securityholders in
reduction of the Class Principal Balances of the Securities, pro rata
based on their respective Class Principal Balances;
(ii) if no Indenture Event of Default has occurred and such
remaining amount is less than or equal to $50,000, sequentially to each
Class of Senior Notes in ascending order of their respective Class
designations in reduction of the respective Class Principal Balances
thereof; or
(iii) if an Indenture Event of Default has occurred, to the
Noteholders in reduction of the Class Principal Balance of each Class of
Notes, pro rata based on the Class Principal Balance of each Class of
Notes.
Section 5.03. Capitalized Interest Account. (a) Establishment. No
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later than the Closing Date, the Issuer, for the benefit of the
Securityholders, shall cause to be established and maintained with the
Indenture Trustee one or more separate Eligible Accounts entitled
"Capitalized Interest Account, U.S. Bank National Association, as Indenture
Trustee, in trust for FIRSTPLUS Asset Backed Securities, Series 1997-3."
On the Closing Date, the Capitalized Interest Account Deposit shall 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. On the
Withdrawal Date with respect to each Payment Date during the Funding
Period and the first Payment 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 Payment Account the Interest Shortfall Amount, if any,
with respect to such Payment Date. Funds in the Capitalized Interest
Account shall be invested in accordance with Section 5.06.
(b) (Reserved)
(c) (Reserved)
(d) Excess to Transferor. On each Determination Date that occurs prior
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to the end of the Funding Period, the Servicer shall calculate the
Capitalized Interest Account Requirement and 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 the end of the Funding Period,
such Capitalized Interest Excess will be released to the Transferor on the
following Payment Date. On the Payment Date following the Due Period in
which the Funding Period ends, the Servicer shall instruct the Indenture
Trustee to release and distribute to the Transferor the Capitalized Interest
Amount, if any, that remains after the distribution of any Interest Shortfall
Amount on such Payment Date.
Section 5.04. (Reserved)
Section 5.05. Certificate Distribution Account. (a) Establishment.
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No later than the Closing Date, the Servicer, for the benefit of the
Securityholders, will establish and maintain with U.S. Bank National
Association for the benefit of the Owner Trustee or Co-Owner Trustee on
behalf of the Certificateholders one or more separate Eligible Accounts,
which while the Co-Owner Trustee holds such Trust Account shall be entitled
"Certificate Distribution Account, U.S. Bank National Association, as Co-
Owner Trustee, in trust for the FIRSTPLUS Asset Backed Securities, Series
1997-3." Funds in the Certificate Distribution Account shall be invested in
accordance with Section 5.06.
(b) (Reserved)
(c) Distributions. Subject to Section 5.05(f), no later than the
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second Business Day before each Payment Date, the Indenture Trustee shall
withdraw from the Note Payment Account all amounts required to be deposited
in the Certificate Distribution Account with respect to the preceding Due
Period pursuant to Section 5.01(c) and remit such amount to the Owner Trustee
or the Co-Owner Trustee for deposit into the Certificate Distribution
Account. On each Payment Date, the Owner Trustee or the Co-Owner Trustee
shall distribute all amounts on deposit in the Certificate Distribution
Account to Certificateholders in respect of the Certificates to the extent of
amounts due and unpaid on the Certificates for principal and interest and to
the other parties specified below the following amounts:
(i) only to the extent of funds withdrawn from the
Pre-Funding Account attributable to the remaining amount therein and
deposited in the Certificate Distribution Account by the Indenture
Trustee pursuant to Section 5.01(c)(2), pro rata, to the
Certificateholders;
(ii) to the Certificateholders, the amounts, if any, deposited
in the Certificate Distribution Account pursuant to Sections 5.01(c)(3)
and 5.01(c)(4), in the order of priority provided therein;
(iii) to the Servicer, the amount, if any, in respect of the
Servicing Advance Reimbursement Amount deposited in the Certificate
Distribution Account pursuant to Section 5.01(c)(3)(xv); and
(iv) to the holders of the Residual Interest, the amounts
deposited in the Certificate Distribution Account pursuant to
Sections 5.01(c)(3)(xvi) and 5.01(c)(4)(vi).
(d) All distributions made on the Certificates of each Class on each
Payment Date will be made on a pro rata basis among the Certificateholders of
record of such Class on the next preceding Record Date based on the
Percentage Interest represented by their respective Certificates, and except
as otherwise provided in the next succeeding sentence, shall be made by wire
transfer of immediately available funds to the account of such
Certificateholder, if such Certificateholder shall own of record Certificates
that have original denominations aggregating at least $250,000 and shall have
so notified the Owner Trustee or Co-Owner Trustee, and otherwise by check
mailed to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
location specified in the notice to Certificateholders of such final
distribution.
(e) All distributions made on the Residual Interest on each Payment
Date will be made on a pro rata basis among the Residual Interest holders of
record on the next preceding Record Date based on the Percentage Interest
represented by their respective Residual Interest Instruments, and except as
otherwise provided in the next succeeding sentence, shall be made by wire
transfer of immediately available funds to the account of such Residual
Interest holder, if such Residual Interest Holder shall own of record a
Percentage Interest of at least 1% of the Residual Interest and shall have so
notified the Owner Trustee or Co-Owner Trustee, and otherwise by check mailed
to the address of such Residual Interest Holder appearing in the Certificate
Register. The final distribution on each Residual Interest Instrument will
be made in like manner, but only upon presentment and surrender of such
Residual Interest Instrument at the location specified in the notice to
Residual Interest Holders of such final distribution.
(f) Distributions Following Early Redemption or Termination. No later
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than the second Business Day before the Payment Date on which an early
redemption or termination pursuant to Section 11.02(a) or 11.02(b) is to
occur, the Indenture Trustee shall withdraw from the Note Payment Account all
amounts required to be deposited in the Certificate Distribution Account
with respect to the preceding Due Period pursuant to Section 5.01(e) and
remit such amount to the Owner Trustee or the Co-Owner Trustee for
deposit into the Certificate Distribution Account. On such
Payment Date, the Owner Trustee or the Co-Owner Trustee shall distribute all
amounts on deposit in the Certificate Distribution Account to
Certificateholders in respect of the Certificates to the extent of amounts
due and unpaid on the Certificates for principal and interest and to the
other parties specified below the following amounts:
(i) to the Class B-1 Certificateholders, an amount equal to
the Class Principal Balance of the Class B-1 Certificates and all
accrued and unpaid interest thereon;
(ii) to the Class B-2 Certificateholders, an amount equal to
the Class Principal Balance of the Class B-2 Certificates and all
accrued and unpaid interest thereon;
(iii) to the Certificateholders, the amounts, if any, deposited
in the Certificate Distribution Account pursuant to Section
5.01(e)(2)(iv); and
(iv) to the holders of the Residual Interest, the amounts
deposited in the Certificate Distribution Account pursuant to
Section 5.01(e)(2)(v).
Section 5.06. Trust Accounts; Trust Account Property. (a) Control of
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Trust Accounts. Each of the Trust Accounts established hereunder has been
pledged by the Issuer to the Indenture Trustee under the Indenture and shall
be subject to the lien of the Indenture. In addition to the provisions
hereunder, each of the Trust Accounts shall also be established and
maintained pursuant to the Indenture. Amounts paid or distributed from each
Trust Account in accordance with the Indenture and this Agreement shall be
released from the lien of the Indenture upon such payment or distribution
thereunder or hereunder. The Indenture Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Trust
Accounts (other than the Certificate Distribution Account) 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
and the Trust Estate. If, at any time, any Trust Account 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) (i) establish a new Trust
Account as an Eligible Account, (ii) terminate the ineligible Trust Account,
and (iii) transfer any cash and investments from such ineligible Trust
Account to such new Trust Account. With respect to the Trust Accounts
(other than the Certificate Distribution Account), the Indenture Trustee
agrees, by its acceptance hereof, that each such Trust Account shall be
subject to the sole and exclusive custody and control of the Indenture
Trustee for the benefit of the Securityholders and the Issuer, as the case
may be, and the Indenture Trustee shall have sole signature and withdrawal
authority with respect thereto.
In addition to this Agreement and the Indenture, the Certificate
Distribution Account established hereunder also shall be subject to and
established and maintained in accordance with the Trust Agreement. Subject
to rights of the Indenture Trustee hereunder and under the Indenture, the
Owner Trustee or Co-Owner Trustee shall possess all right, title and
interest for the benefit of the Certificateholders in all funds on
deposit from time to time in the Certificate Distribution Account 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
and the Trust Estate. Subject to the rights of the Indenture Trustee, the
Owner Trustee and Co-Owner Trustee agree, by their acceptance hereof, that
such Certificate Distribution Account shall be subject to the sole and
exclusive custody and control of the Owner Trustee and Co-Owner Trustee for
the benefit of the Issuer and the parties entitled to distributions
therefrom, including without limitation, the Certificateholders and the Owner
Trustee and the Co-Owner Trustee shall have sole signature and withdrawal
authority with respect to the Certificate Distribution Account.
Notwithstanding the preceding, the distribution of amounts from the
Certificate Distribution Account in accordance with Section 5.05(c) also
shall be made for the benefit of the Indenture Trustee (including, without
limitation, with respect to its duties under the Indenture and this Agreement
relating to the Trust Estate), and the Indenture Trustee (in its capacity as
Indenture Trustee) shall have the right, but not the obligation, to take
custody and control of the Certificate Distribution Account and to cause the
distribution of amounts therefrom in the event that the Owner Trustee fails
to distribute such amounts in accordance with Section 5.05(c).
The Servicer shall have the power, revocable by the Indenture Trustee or
by the Owner Trustee or Co-Owner Trustee with the consent of the Indenture
Trustee, to instruct the Indenture Trustee or Owner Trustee or Co-Owner
Trustee to make withdrawals and payments from the Trust Accounts for the
purpose of permitting the Servicer to carry out its respective duties
hereunder or permitting the Indenture Trustee or Owner Trustee or Co-Owner
Trustee to carry out its duties herein or under the Indenture or the Trust
Agreement, as applicable.
(b)(1) Investment of Funds. So long as no Event of Default shall
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have occurred and be continuing, the funds held in any Trust Account may be
invested (to the extent practicable and consistent with any requirements of
the Code) in Permitted Investments, as directed by the Servicer, in the case
of the Collection Account, or by the Affiliated Holder, in the case of each
other Trust Account, in each case in writing or by telephone or facsimile
transmission confirmed in writing by the Servicer or the Affiliated Holder,
as applicable. In any case, funds in any Trust Account must be available for
withdrawal without penalty, and any Permitted Investments must mature or
otherwise be available for withdrawal, not later than three (3) Business Days
(except with respect to the Note Payment Account, Pre-Funding Account and
Certificate Distribution Account, which shall be invested on a one (1)
Business Day basis) immediately preceding the Payment Date next following the
date of such investment and shall not be sold or disposed of prior to its
maturity subject to Section 5.06(b)(2) below. All interest and any other
investment earnings on amounts or investments held in any Trust Account shall
be deposited into such Trust Account immediately upon receipt by the
Indenture Trustee, or in the case of the Certificate Distribution Account,
the Owner Trustee or Co-Owner Trustee, as applicable. All Permitted
Investments in which funds in any Trust Account (other than the Certificate
Distribution Account) are invested must be held by or registered in the name
of "U.S. Bank National Association, as Indenture Trustee, in trust for the
FIRSTPLUS Asset Backed Securities, Series 1997-3". While the Co-Owner
Trustee holds the Certificate Distribution Account, all Permitted Investments
in which funds in the Certificate Distribution Account are invested shall
be held by or registered in the name of "U.S. Bank National
Association, as Co-Owner Trustee, in trust for the FIRSTPLUS Asset
Backed Securities, Series 1997-3".
(b)(2) Insufficiency and Losses in Trust Accounts. 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, or Owner Trustee or Co-Owner
Trustee in the case of the Certificate Distribution Account, shall cause to
be sold or otherwise converted to cash a sufficient amount of the investments
in such Trust Account. The Indenture Trustee, or Owner Trustee or Co-Owner
Trustee in the case of the Certificate Distribution Account, shall not be
liable for any investment loss or other charge resulting therefrom, unless
such loss or charge is caused by the failure of the Indenture Trustee or
Owner Trustee or Co-Owner Trustee, respectively, to perform in accordance
with this Section 5.06.
If any losses are realized in connection with any investment in any
Trust Account pursuant to this Agreement and the Indenture, then the
Servicer, with respect to the Collection Account, and the Affiliated Holder,
with respect to each other Trust Account, shall deposit the amount of such
losses (to the extent not offset by income from other investments in such
Trust Account) in such Trust Account immediately upon the realization of such
loss or, to the extent that the Servicer or the Affiliated Holder, as
applicable, fails to deposit any portion of such amount, the Affiliated
Holder or the Servicer, as applicable, shall deposit any insufficiency from
such failure in such Trust Account. All interest and any other investment
earnings on amounts held in any Trust Account shall be taxed to the Issuer
and for federal and state income tax purposes the Issuer shall be deemed to
be the owner of each Trust Account.
(c) Subject to Section 6.1 of the Indenture, the Indenture Trustee
shall not in any way be held liable by reason of any insufficiency in any
Trust 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, with respect to such Permitted Investment, is the
obligor and has defaulted thereon).
(d) With respect to the Trust Account Property, the Indenture Trustee
acknowledges and agrees that:
(1) any Trust Account Property that is held in deposit accounts
shall be held solely in the Eligible Accounts and, subject to the last
sentence of Section 5.06(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;
(2) 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;
(3) 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
(4) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed by
clause (3) 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 Issuer 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 Issuer to
carry out its respective duties hereunder or permitting the Indenture Trustee
to carry out its duties under the Indenture.
Section 5.07. Allocation of Losses. (a) In the event that Net
--------------------
Liquidation Proceeds, Insurance Proceeds or Released Mortgaged Property
Proceeds on a Liquidated Home Loan are less than the related Principal
Balance plus accrued interest thereon, or any Obligor makes a partial payment
of any Monthly Payment due on a Home Loan, such Net Liquidation Proceeds,
Insurance Proceeds, Released Mortgaged Property Proceeds or partial payment
shall be applied to payment of the related Debt Instrument, first to interest
accrued at the Home Loan Interest Rate and then to principal.
(b) On any Payment Date, any Allocable Loss Amount shall be applied,
after giving effect to all payments and distributions made on such Payment
Date, to the reduction of the Class Principal Balances of the Subordinate
Securities in accordance with the Allocable Loss Amount Priority. Any
Allocable Loss Amount allocated to a Class of Securities pursuant to this
Section 5.07(b) shall be allocated among the Securities of such Class in
proportion to their respective outstanding principal balances.
Section 5.08. Class B-2 Accounts. (a) Establishment. No later than
------------------ -------------
the first Payment Date, the Servicer, for the benefit of the Securityholders,
will establish and maintain with U.S. Bank National Association for the
benefit of the Owner Trustee or Co-Owner Trustee on behalf of the Class B-2
Certificateholders a separate Eligible Account, which while the Co-Owner
Trustee holds such Trust Account shall be entitled "Class B-2 Account, U.S.
Bank National Association, as Co-Owner Trustee, in trust for the FIRSTPLUS
Asset Backed Securities, Series 1997-3." Funds in the Class B-2 Account
shall be invested in accordance with Section 5.06.
(b) Deposits to the Class B-2 Account. Notwithstanding anything to the
---------------------------------
contrary herein, on each Payment Date on which a Delinquency Event has
occurred and is continuing, the Indenture Trustee will deposit into the
Class B-2 Account any amounts otherwise distributable to holders of the
Residual Interest pursuant to Sections 5.01(c)(3)(xvi) and 5.01(c)(4)(vi),
to the extent necessary to cause amounts on deposit therein to equal the
Class B-2 Account Requirement for such date.
(c) Withdrawals from the Class B-2 Account. (i) On each Payment Date,
--------------------------------------
any amount on deposit in the Class B-2 Account (other than investment
earnings) will be distributed to the Class B-2 Certificateholders in an
amount equal to, first, any amount that, absent such distribution, would be
applied as an Allocable Loss Amount to the reduction of the Class Principal
Balance of the Class B-2 Certificates on such date, and second, any Deferred
Amount in respect of the Class B-2 (calculated after giving effect to all
other distributions thereto on such date).
(ii) On each Payment Date, any amounts representing income or gain from
investment of amounts on deposit in the Class B-2 Account during the
immediately preceding Due Period shall be paid to the Servicer.
(iii) On each Payment Date, any amount remaining on deposit in the
Class B-2 Account in excess of the Class B-2 Account Requirement for such
date after application pursuant to clauses (i) and (ii) above will be
distributed to the holders of the Residual Interest.
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 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)(1) Subject to the modification of the Servicer's Monthly
Statement by the Servicer with the prior written consent of the Majority
Securityholders and the Indenture Trustee, no later than three (3) Business
Days before each Payment Date, the Servicer shall prepare and the Indenture
Trustee shall distribute a monthly statement (the "Servicer's Monthly
Statement", with respect to such Payment Date) to the Seller, the
Securityholders and each Rating Agency, 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 1997-3"), the series designation of the
Securities (i.e., "Series 1997-3"), the date of this Agreement and the
following information:
(i) the Available Collection Amount, the Regular Payment
Amount and the Excess Spread for the related Payment Date;
(ii) the amount, if any, on deposit in the Pre-Funding Account
and the Capitalized Interest Account on such Payment Date;
(iii) the Class Principal Balance of each Class of Securities,
and the Pool Principal Balance as of the first day of the related Due
Period and after giving effect to payments and distributions made to the
holders of such Securities on such Payment Date;
(iv) the Class Pool Factor with respect to each Class of
Securities then outstanding;
(v) the amount of principal and interest received on the Home
Loans during the related Due Period;
(vi) the amount, if any, of the Overcollateralization Surplus
Amount;
(vii) the Servicing Compensation for such Payment Date;
(viii) the Overcollateralization Amount with respect to such
Payment Date, the Required Overcollateralization Amount as of such
Payment Date, the Net Loan Losses incurred during the related Due Period
and the cumulative Net Loan Losses with respect to such Payment Date;
(ix) the amount, if any, paid on such Payment Date to each
Class of Subordinate Securities in respect of Deferred Amounts;
(x) with respect to each Class of Subordinate Securities, the
amount of any applicable Deferred Amounts remaining unreimbursed after
giving effect to payments made on such Payment Date;
(xi) the weighted average maturity of the Home Loans and the
weighted average Home Loan Interest Rate of the Home Loans each as of
such Payment Date;
(xii) certain performance information, including delinquency
and foreclosure information with respect to the Home Loans, as set forth
in the Servicer's Monthly Remittance Report;
(xiii) the amount of any Servicing Advance Reimbursement Amount
to be paid to the Servicer on such Payment Date, and the amount of any
Servicing Advance Reimbursement Amount remaining unpaid following such
payment;
(xiv) the number of and aggregate Principal Balance of all Home
Loans in foreclosure 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;
(xv) the number of and the aggregate Principal Balance of the
Home Loans in bankruptcy proceedings (other than any Home Loans
described in clause (xvii)) 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) during the related Due Period, the aggregate Principal
Balance of Home Loans for each of the following: (A) that became
Liquidated Home Loans, (B) that became Deleted Home Loans pursuant to
Section 3.05(c) as a result of such Deleted Home Loans being Defective
Home Loans, and (C) that became Deleted Home Loans pursuant to
Section 3.05(c) as a result of such Deleted Home Loans being Liquidated
Home Loans or a Home Loan in foreclosure, default or imminent default,
including the foregoing amounts by loan type (i.e., Combination Loans,
Debt Consolidation Loans, Home Improvement Loans, and Purchase or
Refinance Loans);
(xviii) from the Closing Date through the most current Due
Period, the cumulative aggregate Principal Balance of Home Loans for
each of the following: (A) that became Liquidated Home Loans, and (B)
that became Deleted Home Loans pursuant to Section 3.05(c) as a result
of such Deleted Home Loans being in foreclosure, default or imminent
default;
(xix) the scheduled principal payments and the principal
prepayments received with respect to the Home Loans during the related
Due Period;
(xx) the number of and aggregate principal balance of all Home
Loans (both during the related Due Period and in aggregate since the
Closing Date) repurchased or substituted pursuant to Sections 2.06, 3.05
or 4.02;
(xxi) whether a Trigger Event has occurred and is continuing;
(xxii) the number of Home Loans remaining in the Home Loan Pool;
and
(xxiii) such other information as may be reasonably
requested by the Indenture Trustee.
(2) No later than three (3) Business Days before each Payment
Date, the Servicer shall prepare and distribute to the Seller and each Rating
Agency a monthly statement that includes the cumulative aggregate Principal
Balance of Home Loans that became Deleted Home Loans pursuant to Section
3.05(c) as a result of such Deleted Home Loans being Defective Home Loans,
from the Closing Date through the most current Due Period.
(3) No later than seven days following a repurchase or
substitution pursuant to Sections 2.06, 3.05 or 4.02, the Servicer shall
notify each Rating Agency of the aggregate principal balances of the Home
Loans repurchased or substituted and (if applicable) the relevant
Substitution Adjustment.
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 Payment Date, the Indenture Trustee shall forward to DTC
and to the holders of the Residual Interest a copy of the Servicer's Monthly
Statement in respect of such Payment Date and a statement setting forth the
amounts actually distributed to such holders of the Residual Interest on
such Payment 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) 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 holders
of the Residual Interest, or otherwise with respect to the purposes of this
Agreement, all such reports or information to be provided by and in
accordance with such applicable instructions and directions as the
Securityholders or the holders of the 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 1997 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 payments or 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 PROCEDURES
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 Home Loan 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 Indenture Trustee's Home Loan File and shall, for
all purposes, be considered a part of such Indenture Trustee's Home Loan 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 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
Indenture Trustee's Home Loan File. Upon receipt of such certification and
request and in accordance with Section 2.9 of the Indenture, the Custodian
shall promptly release the related Indenture Trustee'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, the Note Payment Account, or the Certificate Distribution
Account. Upon receipt by the Custodian of the certification of a Servicing
Officer with respect to the release of the Indenture Trustee's Home Loan File
for any Home Loan or any documents included therein, the Custodian shall
release to the Servicer such Indenture Trustee'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 Indenture Trustee's Home
Loan File in accordance with such certification of the Servicing Officer.
The release to the Servicer of an Indenture Trustee's Home Loan File pursuant
to such certification shall not require or be subject to the prior approval
of the Indenture Trustee in the case of a release in connection with the
following: (1) the satisfaction or release of a Mortgage upon the payment
in full of the Home Loan or upon such Home Loan becoming a Liquidated Home
Loan; (2) a Home Loan in default for which the Servicer is or will be
pursuing foreclosure or another method of liquidation pursuant to Section
4.02; or (3) the correction of documentation in the Indenture Trustee's
Home Loan File for errors and ambiguities, provided that such corrections
shall be performed and returned to the Custodian in a prompt manner, and
provided further that no more than 100 Indenture Trustee's Home Loan
Files shall be released and held by the Servicer at any one time.
In the case of a release of the related Indenture Trustee's Home Loan
File to the Servicer in connection with a substitution or
repurchase of any Home Loan pursuant to Section 3.05 or Section 11.02 or a
release for other servicing reasons, such release of the Indenture Trustee's
Home Loan File by the Custodian shall be subject to the prior approval of the
Indenture Trustee.
The Indenture 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. Together with such documents or
pleadings, the Servicer shall deliver to the Indenture Trustee a certificate
of a Servicing Officer requesting that such pleadings or documents be
executed by the Indenture Trustee and certifying as to the reason such
documents or pleadings are required and that the execution and delivery
thereof by the Indenture 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 Indenture Trustee
shall, upon receipt of a written request from a Servicing Officer, execute
any document provided to the Indenture 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 Indenture 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 Indenture Trustee's receipt of such certificate or documents. Such
certificate or documents shall establish to the Indenture 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 Indenture 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 Indenture Trustee and Servicer with a "Certification for Assignment of
Home Loan" in form and substance satisfactory to the Indenture 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 not more than 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 related Obligor. 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 receive from the Collection
Account, the Servicing Fee out of which the Servicer shall pay any servicing
fees owed or payable to any Subservicer and any custodial fees owed or
payable to the Custodian. 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 part of the Servicing
Compensation payable to the Servicer hereunder and shall be paid either by
the Servicer retaining such additional servicing compensation prior to
deposit in the Collection Account pursuant to Section 5.01(b)(1) or if
deposited into the Collection Account as part of the Servicing Compensation
withdrawn from the Note Payment Account pursuant to Section 8.2(a) of the
Indenture.
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) the Owner Trustee Fee and the Indenture
Trustee Fee, and the fees of the Co-Owner Trustee and the Custodian, (ii) 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 Trustee
or the Seller, such investigation is warranted on the basis of adverse
information about the Servicer obtained from a reasonably reliable source,
(iii) 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 (iv) 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 November, 1997, the Servicer will
deliver to the Indenture Trustee, the Issuer 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 officer 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.
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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
Issuer, the Securityholders 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 Issuer 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 and the Issuer 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 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(b)(2) 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 Securityholders, to prospective
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
Securityholders, any prospective 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 Securityholders, any prospective
Securityholder to inspect the Servicer's servicing facilities during normal
business hours for the purpose of satisfying the Securityholders and such
prospective 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 Co-Owner Trustee, the
Issuer, the Seller 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 Issuer, the Seller or any Securityholder may sustain directly
resulting from the negligence or willful 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 Issuer, the
Seller 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 Issuer) 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 Issuer, the Seller and/or any Securityholder in respect of such claim.
(b) The Seller agrees to indemnify and hold the Indenture Trustee, the
Issuer, the Servicer 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 Issuer, the Servicer 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 Issuer, the Servicer 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 Issuer) 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 Issuer and/or any
Securityholder in respect of such claim.
(c) The Transferor agrees to indemnify and hold the Indenture Trustee,
the Issuer, the Servicer 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 Issuer, the Servicer 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 Issuer, the Servicer and each
Securityholder if a claim is made by a third party with respect to this
Agreement, and the Transferor shall assume (with the consent of the Indenture
Trustee and the Issuer) 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 Issuer 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 and the Issuer.
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
Issuer 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 Issuer and the Seller, which opinion
of counsel shall be in form and substance acceptable to the Indenture Trustee
and the Issuer. 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.
(b) The Servicer shall not assign this Agreement or any of its
obligations, rights and duties hereunder without the prior written consent of
the Seller, the Indenture Trustee, the Issuer and the Majority
Securityholders; provided, however, the Servicer may assign this Agreement
(i) without the prior written consent of the Seller, the Indenture Trustee
and the Issuer, but with the prior written consent of the Majority
Securityholders to the Indenture Trustee or (ii) without the prior written
consent of the Seller, but with the prior written consent of the Indenture
Trustee, the Issuer and the Majority Securityholders, to any Person that (A)
services not less than $25,000,000 in aggregate outstanding principal amount
of loans similar in type to the Home Loans, (B) has a net worth of not less
than $2,500,000, (C) has a blanket fidelity bond and errors and omissions
insurance coverage satisfying the requirements set forth in Section 4.03 and
(D) 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 and
the Issuer of an agreement, duly executed by the Servicer and such successor
servicer in a form reasonably satisfactory to the Indenture Trustee and the
Issuer, 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 the Issuer and the Indenture
--------------------------------------------------------
Trustee. The relationship of the Servicer (and of any successor to the
- -------
Servicer as servicer under this Agreement) to the Issuer 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 Issuer 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 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 second
Business Day following the day on which such payments were received; or
(ii) any 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 (other than a covenant,
obligation or agreement, or default in the observance of which, that is
elsewhere in this Section 10.01 specifically dealt with), 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 Trustee or the Issuer,
or (b) to the Servicer, the Indenture Trustee or the Issuer by any
Securityholder; or
(iii) (A) the entry by a court or supervisory authority having
jurisdiction of a decree or order for relief in respect of the Servicer
in an involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization, or other similar law or
(B) the appointment a custodian, receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of such member or of
any substantial part of its property, or ordering the winding up or
liquidation of the Servicer's affairs, and the continuance of any such
decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(iv) the commencement by the Servicer of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or of any other case or proceeding
to be adjudicated bankrupt or insolvent or the consent by the Servicer
to the entry of a decree or order for relief in respect of itself in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
the Servicer, or the filing by the Servicer of a petition or answer or
consent seeking reorganization or relief under any applicable federal or
state law, or the consent by the Servicer to the filing of such petition
or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator, or similar official of the
Servicer or of any substantial part of its property, or the
making by the Servicer of an assignment for the benefit of creditors, or
the Servicer's failure to pay its debts generally as they become due, or
the taking of corporate action by the Servicer in furtherance of any
such action; 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 (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
a) has experienced a material adverse change in its
business, assets, liabilities, operations, condition
(financial or otherwise) or prospects,
b) has defaulted on any of its material obligations, or
c) has ceased to conduct its business in the ordinary
course; or
(vii) as of any Determination Date, the total Expected Loan
Loss Percentage (as defined below) exceeds (1) up to the fifth (5th)
anniversary of the August 31, 1997 Cut-Off Date, 19.5%, or
(2) thereafter, 29.5% (where the "Expected Loan Loss Percentage" shall
be the sum of (A) the cumulative Net Loan Losses divided by the Assumed
Pool Principal Balance, plus (B) 25% of the aggregate Principal Balance
of the Home Loans which are then more than 30 but less than 60 days
delinquent divided by the Assumed Pool Principal Balance, plus (C) 50%
of the aggregate Principal Balance of the Home Loans which are then more
than 60 but less than 90 days delinquent divided by the Assumed Pool
Principal Balance, plus (D) 100% of the aggregate Principal Balance of
the Home Loans which are then more than 90 days delinquent divided by
the Assumed Pool Principal Balance).
(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
Indenture Trustee or the Issuer by notice in writing to the Servicer and each
Rating Agency may, in addition to whatever rights such Person may have at law
or equity to damages, including injunctive relief and specific performance
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 Rating Agencies,
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, with
the consent of the Majority Securityholders, shall appoint a successor
Servicer acceptable to the Rating Agencies 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 and shall assume the responsibilities of the Servicer hereunder. In
the event that the Indenture Trustee assumed the responsibilities of Servicer
pursuant to this Section 10.02, the Indenture Trustee will 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 this Section 10.02, shall be entitled to all Servicing
Compensation as provided in this Agreement. 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. Any collections received by the prior Servicer after
its 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 Fee,
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 Fee 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 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 successor Servicer.
The Indenture Trustee, the Issuer, 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 of a
successor Servicer. 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 the applicable party 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 payment hereunder or any portion thereof caused by
(i) the failure of the prior Servicer to deliver, or any delay in delivering,
cash, documents or records to it, or (ii) restrictions relating to the prior
Servicer imposed by any regulatory authority having jurisdiction over the
prior Servicer. No appointment of a successor Servicer hereunder shall be
effective until written notice of such proposed appointment shall have been
provided by the Indenture Trustee to each Securityholder, the Issuer and the
Seller and, except in the case of the appointment of the Indenture Trustee as
successor Servicer (when no consent shall be required), the Seller, the
Majority Securityholders and the Issuer shall have consented thereto.
Pending appointment of a successor 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 as it
and such successor Servicer shall agree; provided, however, that no such
compensation shall be in excess of the Servicing Compensation in the form of
assumption fees, late payment charges or otherwise as provided in this
Agreement.
Section 10.03. Waiver of Defaults. The Majority Securityholders may,
------------------
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 payment
or distribution on a Security or Residual Interest without the consent of the
related Securityholder or holders 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 of the Servicer's files, documents and
statements relating to the Home Loans 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 Issuer 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. (a) This Agreement shall terminate upon
-----------
any of the following events: (i) the later of (a) the satisfaction and
discharge of the Indenture pursuant to Section 4.1 of the Indenture and
Notice to the Indenture Trustee of such discharge and (b) the disposition of
all funds with respect to the last Home Loan and the remittance of all funds
due hereunder; (ii) payment of all amounts due and payable to the
Securityholders, the Servicer, the Indenture Trustee, the Owner Trustee, the
Co-Owner Trustee and the Issuer pursuant to this Agreement and the Indenture
and written notice to the Indenture Trustee from the Issuer of the Issuer's
interest to terminate this Agreement; or (iii) mutual written consent of the
Servicer, the Seller, the Transferor and all Securityholders in writing.
(b) Notice of termination of this Agreement pursuant to Section
11.01(a)(i) shall be sent by the Indenture Trustee to the Securityholders in
accordance with Section 2.6(b) of the Indenture. Notice of termination of
this Agreement pursuant to Section 11.01(a)(ii) or (iii) shall be mailed or
-----
transmitted by facsimile by the Indenture Trustee to the Securityholders on
the Business Day immediately following the day on which the Indenture Trustee
receives notice of such termination, and such notice to the Securityholders
shall state that the Securityholders are to surrender their respective
Securities for cancellation and shall specify the place where such Securities
are to be surrendered.
Section 11.02. Optional Termination by Affiliated Holder. (a) The
-----------------------------------------
Affiliated Holder may, at its option with the unanimous consent of its Board
of Directors, effect an early redemption or termination of the Securities on
or after any Payment Date on which the Pool Principal Balance declines to 15%
or less of the Assumed Pool Principal Balance as of the Closing Date. The
Affiliated Holder shall effect such early redemption or termination by
providing notice thereof to the Indenture Trustee and the Owner Trustee and
by directing the Indenture Trustee to sell all of the Home Loans to a person
(the "Third-Party Purchaser") that is not affiliated with the Affiliated
Holder, the Seller, or the Servicer at a price not less than the
Termination Price.
(b) In addition, the Affiliated Holder may, at its option, effect an
early redemption or termination of the Securities on or after any Payment
Date on which the Pool Principal Balance declines to 10% or less of the
Assumed Pool Principal Balance as of the Closing Date. The Affiliated Holder
shall effect such early redemption or termination by providing notice thereof
to the Indenture Trustee and Owner Trustee and by paying into the Collection
Account in the manner described below an amount equal to the Termination
Price.
(c) Any early redemption and termination by the Affiliated Holder
pursuant to Sections 11.01(a) or (b) shall be accomplished by depositing into
the Collection Account on the Determination Date immediately preceding the
Payment Date on which the early redemption or termination is to occur (i) the
full amount of the applicable purchase price, in the case of an early
redemption or termination pursuant to Section 11.01(a), or (ii) the
Termination Price, in the case of an early redemption or termination pursuant
to Section 11.01(b). The amount so deposited and any other 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)(1) and any amounts
withdrawable therefrom by the Indenture Trustee pursuant to Section 5.01(d))
shall be transferred to the Note Payment Account pursuant to
Section 5.01(b)(2) for payment or distribution to Securityholders on the
final Payment Date; and any amounts received with respect to the Home Loans
and Foreclosure Properties subsequent to the Due Period immediately preceding
such final Payment Date shall belong to the Third-Party Purchaser, in the
case of an early redemption or termination pursuant to Section 11.02(a), or
the Affiliated Holder, in the case of an early redemption or termination
pursuant to Section 11.02(b). For purposes of calculating the payments and
distributions to be made on the final Payment Date, amounts transferred to
the Note Payment Account immediately preceding such final Payment Date shall
in all cases be deemed to have been received during the related Due Period,
and amounts so transferred shall be applied pursuant to Section 5.01(d).
Section 11.03. Notice of Termination. Notice of termination of this
---------------------
Agreement or of early redemption and termination of the Securities shall be
sent (i) by the Indenture Trustee to the Noteholders in accordance with
Section 10.2 of the Indenture and (ii) by the Owner Trustee to the
Certificateholders in accordance with Section 9.1(d) of the Trust Agreement.
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 Issuer, the Seller, the Servicer, the Transferor and the
Indenture Trustee by written agreement with notice thereof to the
Securityholders, without the consent of any of the Securityholders, to cure
any error or ambiguity, to correct or supplement any provisions hereof which
may be defective or inconsistent with any other provisions hereof, 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.
(b) This Agreement may also be amended from time to time by the Issuer,
the Seller, the Servicer, the Transferor and the Indenture Trustee by written
agreement, with the prior written consent of the Majority Securityholders,
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 payments or distributions which
are required to be made on any Security, without the consent of the holders
of 100% of each Class of Securities affected thereby, (ii) adversely affect
in any material respect the interests of the holders of any Class of
Securities in any manner other than as described in (i), without the consent
of the holders of 100% of such Class of Securities, or (iii) reduce the
percentage of any Class of Securities, the holders of which are required to
consent to any such amendment, without the consent of the holders of 100% of
such Class of Securities.
(c) It shall not be necessary for the consent of Securityholders 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.
(d) Prior to the execution of any amendment to this Agreement, the
Issuer 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 Issuer and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects such Person'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, 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, AND, TO THE EXTENT PERMITTED BY LAW, 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) in the case of the Seller,
FIRSTPLUS Investment Corporation, 3773 Howard Hughes Parkway, Suite 300N, Las
Vegas, Nevada 89109, Attention: James Lawler, or such other addresses as
may hereafter be furnished to the Securityholders and the other parties
hereto in writing by the Seller, (ii) in the case of the Issuer, FIRSTPLUS
Home Loan Owner Trust 1997-3, c/o Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Emmett R. Harmon, 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., 1600 Viceroy, 7th
Floor, Dallas, Texas 75235, Attention: Lee Reddin, 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 the
Indenture Trustee or Co-Owner Trustee, U.S. Bank National Association,
180 East Fifth Street, St. Paul, Minnesota 55101, Attention: Structured
Finance, FIRSTPLUS 1997-3, and (v) 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 receipt of such notice by such party, provided, however, that a facsimile
-------- -------
or other form of electronic transmission shall be deemed to be received by
the parties referred to in (i) to (v) above when transmitted so long as the
transmitting machine has provided an electronic confirmation of such
transmission and such facsimile or other form of electronic transmission is
confirmed with a printed paper copy thereof by mail or overnight courier
service; and provided, further, that any delivery of computer readable format
hereunder shall be accompanied or confirmed by the delivery of a printed
paper copy thereof. Notices to the Securityholders shall be effective upon
mailing or personal delivery. Each party may, by notice, designate any
further or different address to which subsequent notices, certificates or
other communications to such party shall be sent.
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 Issuer 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 Indenture
Trustee, the Seller, the Servicer or the Issuer. 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 Issuer if made in the manner provided in this Section.
(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 Issuer 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 Indenture Trustee, the Seller, the Servicer or the Issuer in
reliance thereon, whether or not notation of such action is made upon such
Security.
(d) The Seller, the Servicer or the Issuer 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 Indenture Trustee
--------------------------
shall provide to each Rating Agency copies of statements, reports and
notices, to the extent received by it from the Servicer, the Transferor or
the Issuer 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
Issuer;
(iv) notice of final payment on the Notes and final
distributions with respect to the Certificates;
(v) notice of the occurrence 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 Indenture Trustee 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 S&P, 26 Broadway, 15th Floor, New York, New
York 10004-1064, Attention: Asset-Backed Monitoring Department, and (ii) if
to Fitch, One State Street Plaza, New York, New York 10004.
Section 12.14. Holders of the Residual Interest. (a) Any sums to be
--------------------------------
distributed or otherwise paid hereunder or under the Trust Agreement to the
holders of the Residual Interest shall be distributed to such holders pro
rata based on their percentage holdings in the Residual Interest.
(b) Where any act or event hereunder is expressed to be subject to the
consent or approval of the holders of the Residual Interest, such consent or
approval shall be capable of being given by the holder or holders of not less
than 51% of the Residual Interest in aggregate.
Section 12.15. No Petition. Each of the Indenture Trustee, the Seller
-----------
and the Servicer by entering into this Agreement, hereby covenants and agrees
that it will not at any time institute against the Issuer, or join in any
institution against 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 Securities or any of the
Basic Documents.
IN WITNESS WHEREOF, the Servicer, the Transferor, the Issuer 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 1997-3,
By: Wilmington Trust Company, as Owner Trustee
By: /s/ Debra Eberly
--------------------------------------------
Name: Debra Eberly
Title: Administrative Account Manager
FIRSTPLUS Investment Corporation, as Seller
By: /s/ Lee F. Reddin
---------------------------------------------
Name: Lee F. Reddin
Title: Vice President
FIRSTPLUS Financial, Inc., as Transferor and Servicer
By: /s/ Lee F. Reddin
---------------------------------------------
Name: Lee F. Reddin
Title: Vice President
U.S. Bank National Association, as Indenture Trustee
and Co-Owner Trustee
By: /s/ James Kaufman
--------------------------------------------
Name: James Kaufman
Title:
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared Lee F. Reddin, known to me to be
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS FINANCIAL,
INC., a Texas corporation, 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 18th day of September,
1997.
/s/ Lisa Bufkin
--------------------------------------------
Notary Public, State of Texas
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared Lee F. Reddin, known to me to be
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS INVESTMENT
CORPORATION, a Nevada corporation, 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 18th day of September,
1997.
/s/ Lisa Bufkin
--------------------------------------------
Notary Public, State of Texas
THE STATE OF DELAWARE )
)
COUNTY OF NEWCASTLE )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared Debra Eberly, known to me to
be the person and officer whose name subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said FIRSTPLUS HOME
LOAN OWNER TRUST 1997-2, as Issuer, and that he executed the same as the act
of such association for the purposes and consideration therein expressed, and
in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 18th day of September,
1997.
/s/ Stephen G. Reymann
--------------------------------------------
Notary Public, State of Delaware
My commission expires:
Stephen G. Reymann
--------------------------------------------
1/31/00 (printed name)
- -------------
THE STATE OF MINNESOTA )
)
COUNTY OF RAMSEY )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared J.T. Kaufman, known to me to
be the person and officer whose name subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said U.S. BANK
NATIONAL ASSOCIATION, as Indenture Trustee, and that she executed the same as
the act of such association for the purposes and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 18th day of September,
1997.
/s/ Kathleen A. Pedelini
--------------------------------------------
Notary Public, State of Minnesota
My commission expires:
Kathleen A. Pedelini
--------------------------------------------
. (printed name)
- --------------------
EXHIBIT A
Home Loan Schedule
(Delivered under Separate Cover)
EXHIBIT B
Form Of Subsequent Transfer Agreement
This SUBSEQUENT TRANSFER AGREEMENT dated as of _____________, 1997 (this
"Agreement") is entered into between FIRSTPLUS Financial, Inc., as Transferor
and Servicer (the "Transferor" and "Servicer"), FIRSTPLUS Investment
Corporation, as Seller (the "Seller"), and FIRSTPLUS Home Loan Owner Trust
1997-3, as Issuer (the "Issuer") and U.S. Bank National Association, as
Indenture Trustee and Co-Owner Trustee (the "Indenture Trustee" and "Co-Owner
Trustee"), with respect to that certain Loan Sale Agreement dated as of
September 1, 1997 (the "Loan Sale Agreement") by and between the Transferor
and the Seller, and that certain Sale and Servicing Agreement dated as of
September 1, 1997 (the "Sale and Servicing Agreement") among the Issuer, the
Seller, the Transferor and Servicer, the Indenture Trustee and the Co-Owner
Trustee;
WHEREAS, pursuant to the Loan Sale Agreement and the Sale and Servicing
Agreement, the Transferor, the Seller, the Issuer and the Indenture Trustee
agreed to the sale by the Transferor to the Seller, the sale by the Seller to
the Issuer and the pledge by the Issuer to Indenture Trustee of additional
Home Loans following the Closing Date; and
WHEREAS, the Transferor, the Seller, the Issuer and the Indenture
Trustee desire to enter into this Subsequent Transfer Agreement to reflect
the sale, transfer, assignment, set over, conveyance and grant of certain
additional Home Loans to the Issuer and their pledge to the Indenture
Trustee.
NOW, THEREFORE, in consideration of the premises herein contained and
for other good and valuable consideration, the receipt and sufficiency of
which are mutually acknowledged, the Transferor, the Seller, the Issuer and
the Indenture Trustee hereby agree as follows:
Section 1. Subsequent Home Loans. The Transferor, the Seller, the
Issuer and the Indenture Trustee hereby agree to the sale, transfer,
assignment, set over, conveyance and grant by the Transferor to the Seller,
the sale, transfer, assignment, set over, conveyance and grant by the Seller
to the Issuer and the Grant by the Issuer to the Indenture Trustee of the
additional home loans as described on Attachment A attached hereto (the
"Subsequent Home Loans") and the Home Loan Schedule attached hereto as
Attachment B (the "Home Loan Schedule"). The Home Loan Schedule shall
supersede any Addition Notices for any Subsequent Transfer Agreement insofar
as the Home Loan Schedule relates to the identification of Subsequent Home
Loans transferred to the Issuer. Capitalized terms used and not defined
herein have the meanings assigned to them in the Sale and Servicing
Agreement.
Section 2. Sale by Transferor to Seller of Subsequent Home Loans. The
-----------------------------------------------------
Transferor does hereby sell, transfer, assign, set over, convey and Grant to
the Seller:
(i) all of the right, title and interest of the Transferor in and
to each Subsequent Home Loan identified on the Home Loan Schedule,
including without limitation, the Home Loans, the Servicer's Home Loan
Files and the Debt Instruments, and all payments on, and proceeds with
respect to, such Subsequent Home Loans received on and after the
applicable Cut-Off Date;
(ii) all right, title and interest of the Transferor in the
Mortgages on the properties securing the Subsequent Home Loans, if any,
including any Mortgaged Property acquired by or on behalf of the Seller
or its successor by foreclosure or deed in lieu of foreclosure or
otherwise;
(iii) all right, title and interest of the Transferor in and to
any rights in or proceeds from any insurance policies (including title
insurance policies) covering the Subsequent Home Loans, the related
Mortgaged Properties or the related Obligors and any amounts recovered
from third parties in respect of any Liquidated Home Loans; and
(iv) all the proceeds of each of the foregoing.
With respect to each Subsequent Home Loan, the Transferor has delivered
or caused to be delivered to the Seller, each item set forth in Section 2.02
of the Sale and Servicing Agreement. The transfer to the Seller by the
Transferor of the Subsequent Home Loans identified on the Mortgage Loan
Schedule shall be absolute and is intended by the Transferor and the Seller
to constitute and to be treated as an absolute conveyance and sale by the
Transferor. The expenses and costs relating to the delivery of the
Subsequent Home Loans, this Agreement and the Sale and Servicing Agreement
shall be borne by the Transferor. Additional terms of the sale, including
the purchase price, are set forth on Attachment A attached hereto.
Section 3. Sale by Seller to Issuer of Subsequent Home Loans. Upon and
-------------------------------------------------
simultaneous with the purchase by the Seller from the Transferor of the
Subsequent Home Loans, the Seller does hereby sell, transfer, assign, set
over, convey and Grant to the Issuer:
(i) all of the right, title and interest of the Seller in and to
each Subsequent Home Loan identified on the Home Loan Schedule,
including without limitation, the Home Loans, the Servicer's Home Loan
Files and the related Debt Instruments, and all payments on, and
proceeds with respect to, such Subsequent Home Loans received on and
after the applicable Cut-off Date;
(ii) all right, title and interest of the Seller in the Mortgages
on the properties securing the Subsequent Home Loans, if any, including
any Mortgaged Property acquired by or on behalf of the Issuer by
foreclosure or deed in lieu of foreclosure or otherwise;
(iii) all right, title and interest of the Seller in and to any
rights in or proceeds from any insurance policies (including title
insurance policies) covering the Subsequent Home Loans, the related
Mortgaged Properties or the related Obligors and any amounts recovered
from third parties in respect of any Liquidated Home Loans; and
(iv) all the proceeds of each of the foregoing.
With respect to each Subsequent Home Loan, the Seller has delivered or
caused to be delivered to the Issuer, each item set forth in Section 2.02 of
the Sale and Servicing Agreement. The transfer to the Issuer by the Seller
of the Subsequent Home Loans identified on the Mortgage Loan Schedule shall
be absolute and is intended by the Seller, the Transferor, the Issuer, the
Certificateholders and the Noteholders to constitute and to be treated as an
absolute conveyance and sale by the Seller. The expenses and costs relating
to the delivery of the Subsequent Home Loans, this Agreement and the Sale and
Servicing Agreement shall be borne by the Seller to the extent that the same
are not paid by the Transferor. Additional terms of the sale, including the
purchase price, are set forth on Attachment A attached hereto.
Section 4. Grant by Issuer to Indenture Trustee of Subsequent Home
- - -------------------------------------------------------
Loans.
- -----
Upon and simultaneous with the purchase by the Seller from the
Transferor of the Subsequent Home Loans and the purchase by the Issuer from
the Seller of the Subsequent Home Loans, and pursuant to the terms of the
Indenture, the Issuer does hereby Grant to the Indenture Trustee:
(i) all of the right, title and interest of the Issuer in and to
each Subsequent Home Loan identified on the Home Loan Schedule,
including without limitation, the Home Loans, the Servicer's Home Loan
Files and the Debt Instruments, and all payments on, and proceeds with
respect to, such Subsequent Home Loans received on and after the
applicable Cut-off Date;
(ii) all right, title and interest of the Issuer in the Mortgages
on the properties securing the Subsequent Home Loans, if any, including
any Mortgaged Property acquired by or on behalf of the Issuer by
foreclosure or deed in lieu of foreclosure or otherwise;
(iii) all right, title and interest of the Issuer in and to any
rights in or proceeds from any insurance policies (including title
insurance policies) covering the Subsequent Home Loans, the related
Mortgaged Properties or the related Obligors and any amounts recovered
from third parties in respect of any Liquidated Home Loans; and
(iv) all the proceeds of each of the foregoing.
Section 5. Representations and Warranties; Conditions Precedent.
----------------------------------------------------
(a) The Transferor hereby makes the representations, warranties and
covenants set forth in Sections 3.02 and 3.04 of the Sale and Servicing
Agreement with respect to the Subsequent Home Loans as of the date hereof and
the applicable Subsequent Transfer Date, and the Transferor hereby
confirms that with respect to the sale by the Transferor to
the Seller of the Subsequent Home Loans each of the conditions
set forth in Sections 2.02 of the Sale and Servicing Agreement for such sale
have been satisfied as of the date hereof and the applicable Subsequent
Transfer Date. In addition, the Transferor hereby reconfirms the accuracy of
the representations and warranties set forth in Section 3.03 of the Sale and
Servicing Agreement with respect to the Subsequent Home Loans as of the date
hereof and the applicable Subsequent Transfer Date.
(b) In reliance upon the representations, warranties and covenants made
by the Transferor in the preceding subsection (a) and in the Officer's
Certificate of the Transferor dated as of the date hereof, the Seller hereby
affirms the representations, warranties and covenants set forth in Section
3.01 of the Sale and Servicing Agreement with respect to the Subsequent Home
Loans as of the date hereof and the applicable Subsequent Transfer Date, and
the Seller hereby confirms that each of the conditions set forth in Sections
2.02 and 3.04 of the Sale and Servicing Agreement are satisfied as of the
date hereof and the applicable Subsequent Transfer Date.
(c) The Transferor and the Seller hereby represent and warrant to the
Issuer, the Indenture Trustee, the Securities Insurer and the Securityholders
that as of the end of the Funding Period, the Home Loans have satisfied all
of the criteria set forth in paragraph 23 of the Securities Insurer
Commitment.
(d) All terms and conditions of the Sale and Servicing Agreement are
hereby ratified and confirmed; provided however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Sale and Servicing Agreement.
Section 6. Recordation of Agreement. This Agreement is subject to
------------------------
recordation in all appropriate public offices for real property records in
all 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
Transferor, at its expense, in the event such recordation materially and
beneficially affects the interests of the Noteholders or the
Certificateholders.
Section 7. 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 8. Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the Transferor, the Seller, the Issuer, the
Indenture Trustee and their respective successors and permitted assigns.
Section 9. 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.
IN WITNESS WHEREOF, the Transferor, the Seller, the Issuer and the
Indenture Trustee have caused this SUBSEQUENT TRANSFER AGREEMENT to be signed
by their respective officers thereunto duly authorized, as of the day and
year first above written.
FIRSTPLUS Financial, Inc.,
as Transferor
By:
----------------------------------------------
Name:
Title:
FIRSTPLUS Investment Corporation,
as Seller
By:
----------------------------------------------
Name:
Title:
FIRSTPLUS Home Owner Trust 1997-3
By: Wilmington Trustee Company as Owner Trustee
By:
----------------------------------------------
Name:
Title:
U.S. Bank National Association
as Indenture Trustee
By:
----------------------------------------------
Name:
Title:
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ____________________________________, known to me to be
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS FINANCIAL,
INC., a Texas corporation, 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
___________________, 1997.
--------------------------------------------
Notary Public, State of Texas
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ____________________________________, known to me to be
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS INVESTMENT
CORPORATION, a Nevada corporation, 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
___________________, 1997.
--------------------------------------------
Notary Public, State of Texas
THE STATE OF DELAWARE )
)
COUNTY OF NEWCASTLE )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared _______________________________________, known to me to
be the person and officer whose name subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said FIRSTPLUS Home
Loan Owner Trust 1997-3, as Issuer, and that he executed the same as the act
of such association 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
___________________, 1997.
--------------------------------------------
Notary Public, State of Delaware
My commission expires:
--------------------------------------------
. (printed name)
- --------------------
THE STATE OF MINNESOTA )
)
COUNTY OF RAMSEY )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared _______________________________________, known to me to
be the person and officer whose name subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said U.S. BANK
NATIONAL ASSOCIATION, as Indenture Trustee, and that she executed the same as
the act of such association 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
__________________, 1997.
--------------------------------------------
Notary Public, State of Minnesota
My commission expires:
--------------------------------------------
. (printed name)
- --------------------
ATTACHMENT A
1. Transfer Source of Subsequent Mortgage Loans:
-------------------
Subsequent Transfer Date:
----------
Cut-Off Date:
----------
Aggregate Outstanding Principal Balances
of Subsequent Mortgage Loans: ----------
Purchase Price for Subsequent
Mortgage Loans:
----------
2. Transfer Source of Subsequent Mortgage Loans:
-------------------
Subsequent Transfer Date:
----------
Cut-Off Date:
---------
Aggregate Outstanding Principal Balances
of Subsequent Mortgage Loans:
----------
Purchase Price for Subsequent
Mortgage Loans:
----------
3. Transfer Source of Subsequent Mortgage Loans:
-------------------
Subsequent Transfer Date:
----------
Cut-Off Date:
----------
Aggregate Outstanding Principal Balances
of Subsequent Mortgage Loans:
----------
Purchase Price for Subsequent
Mortgage Loans:
----------
ATTACHMENT B
Home Loan Schedule
EXHIBIT C
Form of Addition Notice
Pursuant to Section 2.02 of the Sale and Servicing Agreement dated as of
____________, 1997 among FIRSTPLUS Home Loan Owner Trust 1997-3, as Issuer
(the "Issuer"), FIRSTPLUS Investment Corporation, as Seller (the "Seller"),
FIRSTPLUS Financial, Inc., as Servicer and Transferor (the "Transferor" and
"Servicer"), and U.S. Bank National Association, as Indenture Trustee and Co-
Owner Trustee (the "Indenture Trustee" and "Co-Owner Trustee"), the
Transferor and the Seller hereby provide notice to the Issuer and the
Indenture Trustee that the Subsequent Home Loans identified on Attachment A
attached hereto will be sold to the Issuer pursuant to a Subsequent Transfer
Agreement dated as of _____________, 1997 (the "Subsequent Transfer
Agreement") between the Transferor and Servicer, the Seller, the Issuer and
the Indenture Trustee and Co-Owner Trustee. The aggregate Principal Balance
of such Subsequent Home Loans as of the applicable Cut-Off Date, set forth on
such Attachment A, with respect to the source of the Seller is set forth on
the Schedules attached hereto as Attachment B.
FIRSTPLUS Investment Corporation,
as Seller
By:
-----------------------------------------
Name:
Title:
FIRSTPLUS Financial, Inc.,
as Transferor
By:
-----------------------------------------
Name:
Title:
ATTACHMENT A
1. Transfer Source of Subsequent Mortgage Loans:
-------------------
Subsequent Transfer Date:
----------
Cut-Off Date: ----------
Aggregate Outstanding Principal Balances
of Subsequent Mortgage Loans:
----------
Purchase Price for Subsequent
Mortgage Loans:
----------
2. Transfer Source of Subsequent Mortgage Loans:
-------------------
Subsequent Transfer Date:
----------
Cut-Off Date:
----------
Aggregate Outstanding Principal Balances
of Subsequent Mortgage Loans:
----------
Purchase Price for Subsequent
Mortgage Loans:
----------
3. Transfer Source of Subsequent Mortgage Loans:
-------------------
Subsequent Transfer Date:
----------
Cut-Off Date:
----------
Aggregate Outstanding Principal Balances
of Subsequent Mortgage Loans:
----------
Purchase Price for Subsequent
Mortgage Loans:
----------
ATTACHMENT B
Home Loan Schedule
