______________________________
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: August 25, 1998
(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.)
3773 Howard Hughes Parkway
Suite 300N
Las Vegas, Nevada 89109
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (702) 892-3772
No Change
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
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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 August 19, 1998 (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 1998-5 Asset Backed
Securities, Series 1998-5, consisting of 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 A-9, Class M-1,
Class M-2 and Class B-1 Asset Backed 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"), Deutsche Bank Securities Inc., 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 August 19, 1998
(the "Underwriting Terms Agreement"), 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. A copy of the Underwriting Terms Agreement is filed herewith as Exhibit
1.2.
The Notes were issued pursuant to an Indenture dated as of August 1,
1998 (the "Indenture") among FIRSTPLUS Home Loan Owner Trust 1998-5 (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 Home Loans were sold by FFI to the Registrant pursuant to the
terms of a Loan Sale Agreement dated as of August 1, 1998 (the "Loan Sale
Agreement") and were simultaneously sold by the Registrant to the Trust
pursuant to the Sale and Servicing Agreement (defined below).
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 August 1, 1998 (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 10.1.
The Home Loan Pool consists of 14,539 Home Loans having a Pool
Principal Balance as of the July 31, 1998 Cut-Off Date of $499,988,110.54.
Item 7. Financial Statements and Exhibits
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(a) Not applicable.
(b) Not applicable.
(c) Exhibits
Exhibit No. Description
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1.1 Underwriting Agreement
1.2 Underwriting Terms Agreement
4.1 Indenture
10.1 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
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Name: Lee F. Reddin
Title: Vice President
Dated: September 4, 1998
EXHIBIT INDEX
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Exhibit No. Description Page No.
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1.1 Underwriting Agreement
1.2 Underwriting Terms Agreement
4.1 Indenture
10.1 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
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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 assignment 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
Name:
Title:
FIRSTPLUS Financial Inc.
Name:
Title:
Acknowledged by:
FIRSTPLUS Financial Group, Inc.
Name:
Title:
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:
Name:
Title:
<PAGE>
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:
-------------------
<PAGE>
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
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 1998-5
ASSET-BACKED SECURITIES
TERMS AGREEMENT
---------------
(to Underwriting Agreement
dated September 10, 1997
among the Company, FFI and the Representative
on behalf of the Underwriter)
FIRSTPLUS Investment Corporation August 25, 1998
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 1998-5
Securities solely as it relates to the purchase and sale of the Offered
Securities described below. The Series 1998-5 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 1998-5 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(1) Price Percentage
----- ------- ------- ----------------
Class A-1 Notes (2) 6.00% 11.65036%
Class A-2 Notes $148,100,000.00 (3) 99.90000%
Class A-3 Notes 60,500,000.00 6.06% 99.86538%
Class A-4 Notes 87,130,000.00 6.25% 99.80757%
Class A-5 Notes 38,000,000.00 6.35% 99.79519%
Class A-6 Notes 22,800,000.00 6.42% 99.74193%
Class A-7 Notes 47,850,000.00 6.67% 99.66070%
Class A-8 Notes 23,700,000.00 6.82% 99.60435%
Class A-9 Notes 29,450,000.00 7.01% 99.47946%
Class M-1 Notes 68,750,000.00 6.92% 99.29961%
Class M-2 Notes 37,875,000.00 7.31% 99.17782%
Class B-1 Notes 27,720,000.00 8.50% 97.91303%
(1) The Interest Rate will be increased by 0.50% beginning after the Initial
Call Date, as defined in the Memorandum.
(2) The Class A-1 Notes will be interest-only Notes. Interest will accrue on an
aggregate Class Notional Balance equal to $50,000,000.00.
(3) Interest will accrue on the Class A-2 Notes with respect to each Payment
Date at a per annum rate equal to LIBOR for the related Accrual Period plus
0.06%, 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 (or notional) balances of the Classes of Series 1998-5
Securities specified opposite its name below.
Merrill Lynch,
Pierce, Fenner
Bear, Stearns Deutsche Bank & Smith PaineWebber
Class & Co.Inc. Securities Inc. Incorporated Incorporated
----- --------- --------------- ------------ ------------
Class A-1 Notes $12,500,000 $12,500,000 $12,500,000 $12,500,000
Class A-2 Notes 37,025,000 37,025,000 37,025,000 37,025,000
Class A-3 Notes 15,125,000 15,125,000 15,125,000 15,125,000
Class A-4 Notes 21,784,000 21,782,000 21,782,000 21,782,000
Class A-5 Notes 9,500,000 9,500,000 9,500,000 9,500,000
Class A-6 Notes 5,700,000 5,700,000 5,700,000 5,700,000
Class A-7 Notes 11,964,000 11,962,000 11,962,000 11,962,000
Class A-8 Notes 5,925,000 5,925,000 5,925,000 5,925,000
Class A-9 Notes 7,364,000 7,362,000 7,362,000 7,362,000
Class M-1 Notes 17,046,000 17,043,000 17,043,000 17,043,000
Class M-2 Notes 9,471,000 9,468,000 9,468,000 9,468,000
Class B-1 Notes 6,819,000 6,817,000 6,817,000 6,817,000
(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 (or notional)
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,
August 25, 1998 (the "Closing Date").
Section 4. Required Ratings: The Offered Securities, other than the
-----------------
Class A-1, Class M-1 and Class M-2 Notes, shall have received Required Ratings
of at least "AAA" by Duff & Phelps Credit Rating Co. ("DCR"), Fitch IBCA, Inc.
("Fitch") and Standard & Poor's Rating Services, a division of the McGraw-Hill
Companies, Inc. ("S&P") and a rating of Aaa by Moody's Investors Service, Inc.
(Moody's). The Class A-1 Notes Shall have received Required Ratings of at least
"AAA" by DCR and Fitch, "AAAr" by S&P and a rating of Aaa by Moody's. The Class
M-1 and Class M-2 Notes shall have received Required Ratings of at least "AA"
and "A" respectively, from DCR, Fitch and S&P and "Aa2" and "A2" respectively
from Moody's. The Class B-1 Notes shall have received Required Ratings of at
least "BBB" from DCR and Fitch, "BBB-" from S&P and "Baa3" from Moody's.
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.
Section 6. Location of Closing: Brown & Wood LLP, 815 Connecticut
--------------------
Avenue, N.W., Washington, D.C. 20006.
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 Perkins
-------------------
Name: Matthew Perkins
Title: Managing Director
By:______________________
Name:
Title:
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: Corporate Treasurer
EXECUTION
================================================================================
INDENTURE
between
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5,
as Issuer
and
U. S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
Dated as of August 1, 1998
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
Asset Backed Securities, Series 1998-5
================================================================================
Table of Contents
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions ....................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act...............7
Section 1.03. Rules of Construction ..........................................7
ARTICLE II
THE NOTES
Section 2.01. Form ...........................................................8
Section 2.02. Execution, Authentication, Delivery and Dating .................8
Section 2.03. Registration; Registration of Transfer and Exchange ............9
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes ....................10
Section 2.05. Persons Deemed Owners .........................................11
Section 2.06. Payment of Principal and Interest; Defaulted Interest .........11
Section 2.07. Cancellation ..................................................12
Section 2.08. Authentication of Notes .......................................13
Section 2.09. Release of Collateral .........................................15
Section 2.10. Book-Entry Notes ..............................................16
Section 2.11. Notices to Clearing Agency ....................................17
Section 2.12. Definitive Notes ..............................................17
Section 2.13. Tax ...........................................................17
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest .............................18
Section 3.02. Maintenance of Office or Agency ...............................18
Section 3.03. Money for Payments To Be Held in Trust ........................18
Section 3.04. Existence .....................................................20
Section 3.05. Protection of Collateral ......................................20
Section 3.06. Annual Opinions as to Collateral ..............................21
Section 3.07. Performance of Obligations; Servicing of Home Loans ...........21
Section 3.08. Negative Covenants ............................................22
Section 3.09. Annual Statement as to Compliance .............................23
Section 3.10. Covenants of the Issuer .......................................23
Section 3.11. Servicer's Obligations ........................................23
Section 3.12. Restricted Payments ...........................................24
Section 3.13. Treatment of Notes as Debt for Tax Purposes ...................24
Section 3.14. Notice of Events of Default ...................................24
Section 3.15. Further Instruments and Acts ..................................24
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture .......................24
Section 4.02. Application of Trust Money ....................................25
Section 4.03. Repayment of Moneys Held by Paying Agent ......................26
ARTICLE V
REMEDIES
Section 5.01. Events of Default .............................................26
Section 5.02. Acceleration of Maturity; Rescission and Annulment ............27
Section 5.03. Non-Priority Classes ..........................................28
Section 5.04. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee...........................................28
Section 5.05. Remedies; Priorities ..........................................30
Section 5.06. Optional Preservation of the Collateral .......................31
Section 5.07. Limitation of Suits ...........................................32
Section 5.08. Unconditional Rights of Noteholders To Receive
Principal and Interest ........................................32
Section 5.09. Restoration of Rights and Remedies ............................32
Section 5.10. Rights and Remedies Cumulative ................................33
Section 5.11. Delay or Omission Not a Waiver ................................33
Section 5.12. Control by Noteholders ........................................33
Section 5.13. Waiver of Past Defaults .......................................33
Section 5.14. Undertaking for Costs .........................................34
Section 5.15. Waiver of Stay or Extension Laws ..............................34
Section 5.16. Action on Notes ...............................................34
Section 5.17. Performance and Enforcement of Certain Obligations ............35
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee ...................................35
Section 6.02. Rights of Indenture Trustee ...................................36
Section 6.03. Individual Rights of Indenture Trustee ........................37
Section 6.04. Indenture Trustee's Disclaimer ................................37
Section 6.05. Notice of Default .............................................37
Section 6.06. Reports by Indenture Trustee to Holders .......................37
Section 6.07. Compensation and Indemnity ....................................38
Section 6.08. Replacement of Indenture Trustee ..............................38
Section 6.09. Successor Indenture Trustee by Merger .........................39
Section 6.10. Appointment of Co-Indenture Trustee or
Separate Indenture Trustee ....................................40
Section 6.11. Eligibility; Disqualification .................................41
Section 6.12. Preferential Collection of Claims Against Issuer ..............41
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer To Furnish Indenture Trustee Names
and Addresses of Noteholders...................................41
Section 7.02. Preservation of Information; Communications to Noteholders ....41
Section 7.03. Reports by Issuer .............................................41
Section 7.04. Reports by Indenture Trustee ..................................42
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money ............................................42
Section 8.02. Payments and Distributions .....................................43
Section 8.03. [Reserved]......................................................45
Section 8.04. Servicer's Monthly Statements ..................................45
Section 8.05. Release of Collateral ..........................................46
Section 8.06. Opinion of Counsel .............................................46
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders ........46
Section 9.02. Supplemental Indentures with Consent of Noteholders ...........47
Section 9.03. Execution of Supplemental Indentures ..........................49
Section 9.04. Effect of Supplemental Indenture ..............................49
Section 9.05. Conformity with Trust Indenture Act ...........................49
Section 9.06. Reference in Notes to Supplemental Indentures .................49
Section 9.07. Amendments to Trust Agreement .................................49
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption ...................................................50
Section 10.02. Form of Redemption Notice ....................................50
Section 10.03. Notes Payable on Termination Date;
Provision for Payment of Indenture Trustee ...................50
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc ....................51
Section 11.02. Form of Documents Delivered to Indenture Trustee .............52
Section 11.03. Acts of Noteholders ..........................................53
Section 11.04. Notices, etc. to Indenture Trustee,
Issuer and Rating Agencies ...................................53
Section 11.05. Notices to Noteholders; Waiver ...............................54
Section 11.06. [Reserved]....................................................54
Section 11.07. Conflict with Trust Indenture Act ............................54
Section 11.08. Effect of Headings and Table of Contents .....................55
Section 11.09. Successors and Assigns .......................................55
Section 11.10. Severability .................................................55
Section 11.11. Benefits of Indenture and Consent of Noteholders .............55
Section 11.12. Legal Holidays ...............................................55
Section 11.13. Governing Law ................................................55
Section 11.14. Counterparts .................................................55
Section 11.15. Recording of Indenture .......................................55
Section 11.16. Issuer Obligations ...........................................56
Section 11.17. No Petition ..................................................56
Section 11.18. Inspection ...................................................56
SCHEDULE I Schedule of Home Loans
EXHIBIT A Forms of Notes
INDENTURE dated as of August 1, 1998, between FIRSTPLUS Home Loan Owner
Trust 1998-5, 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) the Trust Accounts, all amounts and property in the Trust
Accounts from time to time, and the Security Entitlements to all Financial
Assets credited to the Trust Accounts from time to time 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.
Aggregate Voting Rights: The aggregate of the Voting Rights of all or a
specified Class or Classes of Notes.
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.
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; when the Class Principal Balances of all Classes of Senior
Notes, the Class M-1 Notes and the Class M-2 Notes have been reduced to zero and
all sums payable to the Holders of the Senior Notes, Class M-1 Notes and Class
M-2 Notes have been paid in full, the Class B-1 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 1998-5 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 Aggregate Voting
Rights 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 October 10, 2000
A-2 February 10, 2009
A-3 September 10, 2011
A-4 April 10, 2014
A-5 March 10, 2017
A-6 October 10, 2018
A-7 November 10, 2021
A-8 February 10, 2023
A-9 December 10, 2024
M-1 December 10, 2024
M-2 December 10, 2024
B-1 December 10, 2024
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 August 24, 1998, 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 August 1, 1998, 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, as such may be
amended or supplemented from time to time.
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
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 Transferor 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.
Voting Rights: The portion of the voting interests of all the Notes
that is allocated to any Note for purposes of the voting provisions of this
Indenture. Prior to the Payment Date in October 2000, 1% of all Voting Rights
shall be allocated to the Class A-1 Notes, and 99% of all Voting Rights shall be
allocated to the other Classes of Notes while the Class A-1 Notes remain
outstanding. After payment in full of all amounts due on the Class A-1 Notes,
100% of all Voting Rights shall be allocated to the Classes of Notes other than
the Class A-1 Notes. Voting Rights allocated to such other Classes of Notes
shall be allocated among such Classes in proportion to the Class Principal
Balances thereof. Voting Rights allocated to any Class of Notes shall be
allocated among the Notes of such Class in the same proportion as the principal
balance (or notional balance) of such Notes bears to the Class Principal Balance
(or Class Notional Balance) of such Class.
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" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03. 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 1998-5 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.
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
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 Class Principal Balance
A-1 (1)
A-2 $148,100,000.00
A-3 60,500,000.00
A-4 37,130,000.00
A-5 38,000,000.00
A-6 22,800,000.00
A-7 47,850,000.00
A-8 23,700,000.00
A-9 29,450,000.00
M-1 68,175,000.00
M-2 37,875,000.00
B-1 27,270,000.00
(1) The Class A-1 Notes will have no principal balance but will be issued
with a Class Notional Balance of $50,000,000.
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 (other than the Class A-1 Notes) shall be issuable as
registered Notes in the minimum denomination of $100,000 and integral multiples
of $1,000 in excess thereof, except that one Note of each Class may be issued in
any denomination in excess of the minimum denomination. The Class A-1 Notes
shall be issuable as registered Notes in the minimum denomination of $1,000,000
and integral multiples of $1 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
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 (or
notional principal balance), 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 shall determine LIBOR for each applicable Accrual Period (other than the
initial 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 the
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 each Rating Agency, confirming that (i) each
of the Senior Notes have been rated "AAA" or the equivalent by
each Rating Agency (except for the rating of the Class A-1
Notes by S & P, which may be "AAAr"), (ii) the Class M-1 Notes
have been rated "AA" or the equivalent by each Rating Agency,
(iii) the Class M-2 Notes have been rated "A" or the
equivalent by each Rating Agency, and (iv) the Class B-1 Notes
have been rated at least "BBB" or the equivalent by each of
DCR and Fitch and "BBB-" or the equivalent by each of S&P and
Moody's; 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 Issuer 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
Issuer 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 monies 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.
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 1999, 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 1998), 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 and the
Securityholders 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 (i) eighteen months after payment in full of all
outstanding obligations under the Securities, (ii) the payment in full of all
unpaid Trust Fees and Expenses and (iii) 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 (a) and (b)
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 monies.
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 Aggregate Voting Rights of the
Notes, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a notice of Default hereunder; or
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the 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
(v) the commencement by the Issuer of a voluntary case under
any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the
entry of an order for relief in an involuntary case under any such law,
or the consent by the Issuer to the appointment or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the
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.
(vi) The Issuer shall deliver to the Indenture Trustee, within
five days after the occurrence thereof, written notice in the form of
an Officer's Certificate of any event which with the giving of notice
and the lapse of time would become an Event of Default under clause
(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 may, and at the direction or upon the prior written
consent of the Majority Highest Priority Class Noteholders shall 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 the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
(a) 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
(b) all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel; and (c) 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 remedies of Noteholders'
under this Article V, except to the extent otherwise expressly provided herein.
Section 5.04. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that if default is made in the
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 monies 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 monies 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 Aggregate Voting Rights of the
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
Aggregate Voting Rights of the Highest Priority Class Notes. In
determining such sufficiency or insufficiency with respect to clauses
(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, Class M-2 Notes and Class B-1
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 the Residual Interest Certificate
in respect of the B-2 Component;
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 to the Residual Interest Certificate in
respect of the Excess Component.
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/or 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 Aggregate Voting Rights 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
Aggregate Voting Rights 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 Issuer'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
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 certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee. (a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the 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 recently 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
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 from
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 5.01(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-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class
A-8 and Class A-9 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 B-1 Notes, the Class
B-1 Noteholder's Interest Payment Amount from such Payment
Date;
(E) to the Holders of the Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9
Notes, in that order, until the respective Class Principal
Balances thereof have been 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;
(F) 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;
(G) 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;
(H) to the Holders of the Class B-1 Notes, the amount
necessary to reduce the Class Principal Balance thereof to the
Class B-1 Optimal Principal Balance for such Payment Date;
(I) to the Holders of the Class M-1 Notes, the
applicable Deferred Amount, if any, until such Deferred Amount
has been paid in full;
(J) to the Holders of the Class M-2 Notes, the
applicable Deferred Amount, if any, until such Deferred Amount
has been paid in full; and
(K) to the Holders of the Class B-1 Notes, the
applicable Deferred Amount, if any, until such Deferred Amount
has been paid in full.
(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-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8 and Class A-9 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;
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;
4) to the Holders of the Class B-1 Notes,
the amount necessary to reduce the Class Principal
Balance thereof to the Class B-1 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;
(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; and
(D) to the Holders of the Class B-1 Notes, the
applicable Deferred Amount, if any, until such Deferred Amount
has been paid in full.
(b) On the Payment Date on which an early redemption or termination
pursuant to Section 11.02 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:
(i) to the Servicer, an amount equal to the Servicing
Compensation and all paid and unpaid Servicing Compensation from prior
Due Periods;
(ii) 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
(iii) to the holders of the Class M-1, Class M-2 and Class B-1
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 monies.
(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 only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01.
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 .
(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. The Seller 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 Seller 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 (x) 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, (y) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and (z)
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:
(i) a statement that each signatory of such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(ii) 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;
(iii) 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
(iv) a statement as to whether or not, in the opinion of each
such signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 11.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (i)
above, the Issuer shall also deliver to the Indenture Trustee an
Independent Certificate as to the same matters, if the fair value to
the Issuer of the securities to be so deposited and of all other such
securities made the basis of any such withdrawal or release since the
commencement of the then-current 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.
(iii) Whenever any property or securities are to be released
from the lien of this Indenture, the Issuer shall also furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities proposed
to be released and stating that in the opinion of such person the
proposed release will not impair the security under this Indenture in
contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Indenture Trustee an
Independent Certificate as to the same matters if the fair value of the
property or securities and of all other property 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
1998-5, 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 or the Servicer, or join in any institution against
the Seller or the Servicer, 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 1998-5
By: Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee
By:____________________________________________________
Name: James Lawler
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By:____________________________________________________
Name:
Title:
STATE OF DELAWARE )
)
COUNTY OF NEW CASTLE )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared James Lawler, 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 1998-5, a Delaware business trust, and that
such person executed the same as the act of said business trust for the purpose
and consideration therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of ____________,
1998.
______________________________________________
Notary Public in and for the State of Delaware
My commission expires:
______________________
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 , 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 ____ day of ____________,
1998.
______________________________________________
Notary Public in and for the State of Minnesota
My commission expires:
______________________
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
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
PRINCIPAL SHALL NOT BE PAYABLE IN RESPECT OF THIS NOTE. INTEREST IS
CALCULATED ON THIS NOTE BASED ON THE NOTIONAL AMOUNT SPECIFIED HEREIN.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS A-1 ASSET BACKED NOTES
Original Notional Balance of the Original Notional Balance of this Note: $
Class A-1 Notes: $
Interest Rate: 6.00% Cut-Off Date July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, pursuant to Section 8.02(a) of the Indenture dated as of
August 1, 1998, between the Issuer and U.S. Bank National Association, a
national banking association, as Indenture Trustee (the "Indenture Trustee"),
interest on this Class A-1 Note at the per annum rate shown above on the
notional amount of this Class A-1 Note outstanding on the immediately preceding
Payment Date up to and including the Payment Date occurring in October 2000.
Capitalized terms used but not defined herein are defined in the Indenture and
the Sale and Servicing Agreement, which Indenture also contains rules as to
construction that shall be applicable herein.
Interest on this Note will accrue for each Payment Date during the
calendar month immediately preceding such Payment Date or, in the case of the
first Payment Date, the period from the Closing Date through the end of August
1998 (each, an "Accrual Period"). Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such interest on this Note shall be paid
in the manner specified on the reverse hereof.
The interest on this Note is payable in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Owner Trustee under the Trust Agreement
By:_____________________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:___________________________________________________
Authorized Signatory
Dated: __________, 1998
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
This Note is one of a duly authorized issue of Notes of the Issuer, all
issued under the Indenture, to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. To the extent that any provision of this Note contradicts or is
inconsistent with the provisions of the Indenture, the provisions of the
Indenture shall control and supersede such contradictory or inconsistent
provision herein. This Note is subject to all terms of the Indenture.
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 and Class A-9 Notes (collectively, the "Senior Notes") are,
and will be, equally and ratably secured by the collateral pledged as security
therefor as provided in the Indenture. The rights of the Holders of the Class
M-1, Class M-2 and Class B-1 Notes and the Holder of the Residual Interest
Certificate to receive payments or distribution of interest and principal are,
and will be, subordinate to the rights of the Holders of the Senior Notes to
receive payments of interest and principal, respectively, as provided in the
Indenture. The Class Principal Balances of the Class M-1, Class M-2 and Class
B-1 Notes may be reduced by the application of Allocable Loss Amounts, as
provided in the Indenture.
"Payment Date" means the 10th day of each month or, if any such date
is not a Business Day, the next succeeding Business Day, commencing in September
1998.
Payments of interest on this Note due and payable on each Payment Date
shall be made by check mailed to the Person whose name appears as the Registered
Holder of this Note (or one or more Predecessor Notes) on the Note Register as
of the close of business on each Record Date, except that, with respect to Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payments will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Checks shall be mailed to the Person entitled thereto at the address of
such Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Note be submitted for notation of payment.
As provided in the Indenture and the Sale and Servicing Agreement, this
Note may be redeemed in whole, but not in part, at the option of the Seller, on
or after any Payment Date on which the Pool Principal Balance declines to 10% or
less of the Assumed Pool Principal Balance, in the manner and to the extent
provided in the Indenture and the Sale and Servicing Agreement.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate notional amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Each Noteholder and Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder and Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
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 the Indenture.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Collateral. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Aggregate Voting Rights of all Notes at the time Outstanding.
The Indenture also contains provisions permitting the Majority Highest Priority
Class Noteholders, on behalf of the Holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note (or any one or more Predecessor Notes) shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the amendment thereof,
in certain limited circumstances, or the waiver of certain terms and conditions
set forth in the Indenture, without the consent of Holders of the Notes issued
thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the interest on this Note at the times, place
and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
interest on this Note or performance of, or omission to perform, any of the
covenants, obligations or indemnifications contained in the Indenture. The
Holder of this Note by its acceptance hereof agrees that, except as expressly
provided in the Basic Documents, in the case of an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
______________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ________________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: ________________________________*/
Signature Guaranteed:
_______________________________________*/
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
EXHIBIT A-2
Form of Class A-2 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS A-2 ASSET BACKED NOTES
Original Principal Balance of the Class A-2 Original Principal Balance of this
Notes: Note:
Interest Rate: Variable Cut-Off Date July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of DOLLARS AND NO/100 ($ ) payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is and the denominator of which is $____________
by (ii) the aggregate amount, if any, payable from the Note Payment Account in
respect of principal on the Class A-2 Notes pursuant to Section 8.02(a) of the
Indenture dated as of August 1, 1998, between the Issuer and U.S. Bank National
Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in February 2009 (the "Maturity Date"), (ii) the Termination Date, if
any, pursuant to Section 10.01 of the Indenture, 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 of the
Indenture. Capitalized terms used but not defined herein are defined in the
Indenture and the Sale and Servicing Agreement, which Indenture also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at a per annum rate equal to
LIBOR for the related Accrual Period plus 0.06%, subject to a maximum rate equal
to the Net Weighted Average Rate, on the principal amount of this Note
outstanding on the immediately preceding Payment Date (after giving effect to
all payments of principal made on such preceding Payment Date) on each Payment
Date until the principal of this Note is paid or made available for payment in
full. The Interest Rate on this Note will increase by 0.50% with respect to each
Payment Date occurring after the date on which the Pool Principal Balance has
declined to 10% or less of the Assumed Pool Principal Balance. Interest on this
Note will accrue for each Payment Date during the period beginning on the
Payment Date in the calendar month immediately preceding such Payment Date (or,
in the case of the first Payment Date, beginning on the Closing Date), and
ending on the day immediately preceding the related Payment Date (each, an
"Accrual Period"). Interest will be computed on the basis of a 360-day year and
the actual number of days elapsed in each Accrual Period. Such principal of and
interest on this Note shall be paid in the manner specified on the reverse
hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Owner
Trustee under the Trust Agreement
By:______________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:_____________________________________
Authorized Signatory
Dated: __________, 1998
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
This Note is one of a duly authorized issue of Notes of the Issuer, all
issued under the Indenture, to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. To the extent that any provision of this Note contradicts or is
inconsistent with the provisions of the Indenture, the provisions of the
Indenture shall control and supersede such contradictory or inconsistent
provision herein. This Note is subject to all terms of the Indenture.
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 and Class A-9 Notes (collectively, the "Senior Notes") are,
and will be, equally and ratably secured by the collateral pledged as security
therefor as provided in the Indenture. The rights of the Holders of the Class
M-1, Class M-2 and Class B-1 Notes and the Holder of the Residual Interest
Certificate to receive payments or distribution of interest and principal are,
and will be, subordinate to the rights of the Holders of the Senior Notes to
receive payments of interest and principal, respectively, as provided in the
Indenture. The Class Principal Balances of the Class M-1, Class M-2 and Class
B-1 Notes may be reduced by the application of Allocable Loss Amounts, as
provided in the Indenture.
Principal of this Note will be payable on each Payment Date in an
amount described on the face hereof. "Payment Date" means the 10th day of each
month or, if any such date is not a Business Day, the next succeeding Business
Day, commencing in September 1998.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Maturity Date and the Termination
Date, if any, pursuant to Section 10.01 of the Indenture. Notwithstanding the
foregoing, the entire unpaid principal amount of the Notes shall be due and
payable on the date on which an Event of Default shall have occurred and be
continuing and the Indenture Trustee, at the direction or upon the prior written
consent of the Majority Highest Priority Class Noteholders, has declared the
Notes to be immediately due and payable in the manner provided in Section 5.02
of the Indenture. All principal payments on this Class of Notes shall be made
pro rata to the Holders of Notes of such Class entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date, except
that, with respect to Notes registered on the Record Date in the name of the
nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date or by the application of Allocable Loan Amounts shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Payment Date by notice mailed or
transmitted by facsimile prior to such Payment Date, and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of New
York.
As provided in the Indenture and the Sale and Servicing Agreement, this
Note may be redeemed in whole, but not in part, at the option of the Seller, on
or after any Payment Date on which the Pool Principal Balance declines to 10% or
less of the Assumed Pool Principal Balance, in the manner and to the extent
provided in the Indenture and the Sale and Servicing Agreement.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Each Noteholder and Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder and Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
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 the Indenture.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Collateral. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Voting Rights of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Majority Highest Priority
Class Noteholders, on behalf of the Holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note (or any one or more Predecessor Notes) shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the amendment thereof,
in certain limited circumstances, or the waiver of certain terms and conditions
set forth in the Indenture, without the consent of Holders of the Notes issued
thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
______________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ________________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: _____________________________________*/
Signature Guaranteed:
____________________________________________*/
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
EXHIBIT A-3
Form of Class A-3 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS A-3 ASSET BACKED NOTES
Original Principal Balance of the Class A-3 Original Principal Balance of
Notes: this Note:
Interest Rate: ________% Cut-Off Date: July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of DOLLARS AND NO/100 ($ ) payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ and the denominator of which is $ by (ii)
the aggregate amount, if any, payable from the Note Payment Account in respect
of principal on the Class A-3 Notes pursuant to Section 8.02(a) of the Indenture
dated as of August 1, 1998, between the Issuer and U.S. Bank National
Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in September 2011 (the "Maturity Date"), (ii) the Termination Date, if
any, pursuant to Section 10.01 of the Indenture, 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 of the
Indenture. Capitalized terms used but not defined herein are defined in the
Indenture and the Sale and Servicing Agreement, which Indenture also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the per annum rate shown
above on the principal amount of this Note outstanding on the immediately
preceding Payment Date (after giving effect to all payments of principal made on
such preceding Payment Date) on each Payment Date until the principal of this
Note is paid or made available for payment in full. The Interest Rate on this
Note will increase by 0.50% with respect to each Payment Date occurring after
the date on which the Pool Principal Balance has declined to 10% or less of the
Assumed Pool Principal Balance. Interest on this Note will accrue for each
Payment Date during the calendar month immediately preceding such Payment Date
or, in the case of the first Payment Date, the period from the Closing Date
through the end of August 1998 (each, an "Accrual Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:__________________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:_______________________________
Authorized Signatory
Dated: __________, 1998
[For Reverse of Class A-3 Note, see Form of Class A-2 Note]
EXHIBIT A-4
Form of Class A-4 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS A-4 ASSET BACKED NOTES
Original Principal Balance of the Class A-4 Original Principal Balance of this
Notes: Note:
Interest Rate: _________% Cut-Off Date July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of DOLLARS AND NO/100 ($ ) payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ and the denominator of which is $ by (ii)
the aggregate amount, if any, payable from the Note Payment Account in respect
of principal on the Class A-4 Notes pursuant to Section 8.02(a) of the Indenture
dated as of August _____, 1998, between the Issuer and U.S. Bank National
Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in April 2014 (the "Maturity Date"), (ii) the Termination Date, if
any, pursuant to Section 10.01 of the Indenture, 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 of the
Indenture. Capitalized terms used but not defined herein are defined in the
Indenture and the Sale and Servicing Agreement, which Indenture also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the per annum rate shown
above on the principal amount of this Note outstanding on the immediately
preceding Payment Date (after giving effect to all payments of principal made on
such preceding Payment Date) on each Payment Date until the principal of this
Note is paid or made available for payment in full. The Interest Rate on this
Note will increase by 0.50% with respect to each Payment Date occurring after
the date on which the Pool Principal Balance has declined to 10% or less of the
Assumed Pool Principal Balance. Interest on this Note will accrue for each
Payment Date during the calendar month immediately preceding such Payment Date
or, in the case of the first Payment Date, the period from the Closing Date
through the end of August 1998 (each, an "Accrual Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Owner
Trustee under the Trust Agreement
By:________________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:________________________________
Authorized Signatory
Dated: __________, 1998
[For Reverse of Class A-4 Note, see Form of Class A-2 Note]
EXHIBIT A-5
Form of Class A-5 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS A-5 ASSET BACKED NOTES
Original Principal Balance of the Class A-5 Original Principal Balance of this
Notes: Note:
Interest Rate: _________% Cut-Off Date: July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of DOLLARS AND NO/100 ($ ) payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ and the denominator of which is $ by (ii)
the aggregate amount, if any, payable from the Note Payment Account in respect
of principal on the Class A-5 Notes pursuant to Section 8.02(a) of the Indenture
dated as of August _____, 1998, between the Issuer and U.S. Bank National
Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in March 2017 (the "Maturity Date"), (ii) the Termination Date, if
any, pursuant to Section 10.01 of the Indenture, 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 of the
Indenture. Capitalized terms used but not defined herein are defined in the
Indenture and the Sale and Servicing Agreement, which Indenture also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the per annum rate shown
above on the principal amount of this Note outstanding on the immediately
preceding Payment Date (after giving effect to all payments of principal made on
such preceding Payment Date) on each Payment Date until the principal of this
Note is paid or made available for payment in full. The Interest Rate on this
Note will increase by 0.50% with respect to each Payment Date occurring after
the date on which the Pool Principal Balance has declined to 10% or less of the
Assumed Pool Principal Balance. Interest on this Note will accrue for each
Payment Date during the calendar month immediately preceding such Payment Date
or, in the case of the first Payment Date, the period from the Closing Date
through the end of August 1998 (each, an "Accrual Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:_______________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:___________________________________________
Authorized Signatory
Dated: __________, 1998
[For Reverse of Class A-5 Note, see Form of Class A-2 Note]
EXHIBIT A-6
Form of Class A-6 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS A-6 ASSET BACKED NOTES
Original Principal Balance of the Class A-6 Original Principal Balance of this
Notes: Note:
Interest Rate: _________% Cut-Off Date: July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of DOLLARS AND NO/100 ($ ) payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ and the denominator of which is $ by (ii)
the aggregate amount, if any, payable from the Note Payment Account in respect
of principal on the Class A-6 Notes pursuant to Section 8.02(a) of the Indenture
dated as of August _____, 1998, between the Issuer and U.S. Bank National
Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in October 2018 (the "Maturity Date"), (ii) the Termination Date, if
any, pursuant to Section 10.01 of the Indenture, 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 of the
Indenture. Capitalized terms used but not defined herein are defined in the
Indenture and the Sale and Servicing Agreement, which Indenture also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the per annum rate shown
above on the principal amount of this Note outstanding on the immediately
preceding Payment Date (after giving effect to all payments of principal made on
such preceding Payment Date) on each Payment Date until the principal of this
Note is paid or made available for payment in full. The Interest Rate on this
Note will increase by 0.50% with respect to each Payment Date occurring after
the date on which the Pool Principal Balance has declined to 10% or less of the
Assumed Pool Principal Balance. Interest on this Note will accrue for each
Payment Date during the calendar month immediately preceding such Payment Date
or, in the case of the first Payment Date, the period from the Closing Date
through the end of August 1998 (each, an "Accrual Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:__________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:____________________________
Authorized Signatory
Dated: __________, 1998
[For Reverse of Class A-6 Note, see Form of Class A-2 Note]
EXHIBIT A-7
Form of Class A-7 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS A-7 ASSET BACKED NOTES
Original Principal Balance of the Class A-7 Original Principal Balance of this
Notes: Note:
Interest Rate: ________% Cut-Off Date: July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of DOLLARS AND NO/100 ($ ) payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ and the denominator of which is $ by (ii)
the aggregate amount, if any, payable from the Note Payment Account in respect
of principal on the Class A-7 Notes pursuant to Section 8.02(a) of the Indenture
dated as of August _____, 1998, between the Issuer and U.S. Bank National
Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in November 2021 (the "Maturity Date"), (ii) the Termination Date, if
any, pursuant to Section 10.01 of the Indenture, 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 of the
Indenture. Capitalized terms used but not defined herein are defined in the
Indenture and the Sale and Servicing Agreement, which Indenture also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the per annum rate shown
above on the principal amount of this Note outstanding on the immediately
preceding Payment Date (after giving effect to all payments of principal made on
such preceding Payment Date) on each Payment Date until the principal of this
Note is paid or made available for payment in full. The Interest Rate on this
Note will increase by 0.50% with respect to each Payment Date occurring after
the date on which the Pool Principal Balance has declined to 10% or less of the
Assumed Pool Principal Balance. Interest on this Note will accrue for each
Payment Date during the calendar month immediately preceding such Payment Date
or, in the case of the first Payment Date, the period from the Closing Date
through the end of August 1998 (each, an "Accrual Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:__________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:____________________________
Authorized Signatory
Dated: __________, 1998
[For Reverse of Class A-7 Note, see Form of Class A-2 Note]
EXHIBIT A-8
Form of Class A-8 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS A-8 ASSET BACKED NOTES
Original Principal Balance of the Class A-8 Original Principal Balance of this
Notes: Note:
Interest Rate: __________% Cut-Off Date: July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of DOLLARS AND NO/100 ($ ) payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ and the denominator of which is $
by (ii) the aggregate amount, if any, payable from the Note Payment Account in
respect of principal on the Class A-8 Notes pursuant to Section 8.02(a) of the
Indenture dated as of August _____, 1998, between the Issuer and U.S. Bank
National Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in February 2023 (the "Maturity Date"), (ii) the Termination Date, if
any, pursuant to Section 10.01 of the Indenture, 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 of the
Indenture. Capitalized terms used but not defined herein are defined in the
Indenture and the Sale and Servicing Agreement, which Indenture also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the per annum rate shown
above on the principal amount of this Note outstanding on the immediately
preceding Payment Date (after giving effect to all payments of principal made on
such preceding Payment Date) on each Payment Date until the principal of this
Note is paid or made available for payment in full. The Interest Rate on this
Note will increase by 0.50% with respect to each Payment Date occurring after
the date on which the Pool Principal Balance has declined to 10% or less of the
Assumed Pool Principal Balance. Interest on this Note will accrue for each
Payment Date during the calendar month immediately preceding such Payment Date
or, in the case of the first Payment Date, the period from the Closing Date
through the end of August 1998 (each, an "Accrual Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:__________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:____________________________
Authorized Signatory
Dated: __________, 1998
[For Reverse of Class A-8 Note, see Form of Class A-2 Note]
EXHIBIT A-9
Form of Class A-9 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS A-9 ASSET BACKED NOTES
Original Principal Balance of the Class A-9 Notes: Original Principal Balance
of this Note:
Interest Rate: %
Cut-Off Date: July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of DOLLARS AND NO/100 ($ ) payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ and the denominator of which is $ by (ii)
the aggregate amount, if any, payable from the Note Payment Account in respect
of principal on the Class A-9 Notes pursuant to Section 8.02(a) of the Indenture
dated as of August _____, 1998, between the Issuer and U.S. Bank National
Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in December 2024 (the "Maturity Date"), (ii) the Termination Date, if
any, pursuant to Section 10.01 of the Indenture, 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 of the
Indenture. Capitalized terms used but not defined herein are defined in the
Indenture and the Sale and Servicing Agreement, which Indenture also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the per annum rate shown
above on the principal amount of this Note outstanding on the immediately
preceding Payment Date (after giving effect to all payments of principal made on
such preceding Payment Date) on each Payment Date until the principal of this
Note is paid or made available for payment in full. The Interest Rate on this
Note will increase by 0.50% with respect to each Payment Date occurring after
the date on which the Pool Principal Balance has declined to 10% or less of the
Assumed Pool Principal Balance. Interest on this Note will accrue for each
Payment Date during the calendar month immediately preceding such Payment Date
or, in the case of the first Payment Date, the period from the Closing Date
through the end of August 1998 (each, an "Accrual Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:__________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:____________________________
Authorized Signatory
Dated: __________, 1998
[For Reverse of Class A-9 Note, see Form of Class A-2 Note]
EXHIBIT A-10
Form of Class M-1 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN THE SALE AND
SERVICING AGREEMENT REFERRED TO HEREIN.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS M-1 ASSET BACKED NOTES
Original Principal Balance of the Class M-1 Original Principal Balance of this
Notes: Note:
Interest Rate: __________% Cut-Off Date: July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of DOLLARS AND NO/100 ($ ) payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ and the denominator of which is $
by (ii) the aggregate amount, if any, payable from the Note Payment Account in
respect of principal on the Class M-1 Notes pursuant to Section 8.02(a) of the
Indenture dated as of August _____, 1998, between the Issuer and U.S. Bank
National Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in December 2024 (the "Maturity Date"), (ii) the Termination Date, if
any, pursuant to Section 10.01 of the Indenture, 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 of the
Indenture. Capitalized terms used but not defined herein are defined in the
Indenture and the Sale and Servicing Agreement, which Indenture also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the per annum rate shown
above on the principal amount of this Note outstanding on the immediately
preceding Payment Date (after giving effect to all payments of principal made on
such preceding Payment Date) on each Payment Date until the principal of this
Note is paid or made available for payment in full. The Interest Rate on this
Note will increase by 0.50% with respect to each Payment Date occurring after
the date on which the Pool Principal Balance has declined to 10% or less of the
Assumed Pool Principal Balance. Interest on this Note will accrue for each
Payment Date during the calendar month immediately preceding such Payment Date
or, in the case of the first Payment Date, the period from the Closing Date
through the end of August 1998 (each, an "Accrual Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:__________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:____________________________
Authorized Signatory
Dated: __________, 1998
[For Reverse of Class M-1 Note, see Form of Class A-2 Note]
EXHIBIT A-11
Form of Class M-2 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN THE SALE AND
SERVICING AGREEMENT REFERRED TO HEREIN.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS M-2 ASSET BACKED NOTES
Original Principal Balance of the Class M-2 Original Principal Balance of this
Notes: Note:
Interest Rate: ________% Cut-Off Date: July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of DOLLARS AND NO/100 ($ ) payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ and the denominator of which is $
by (ii) the aggregate amount, if any, payable from the Note Payment Account in
respect of principal on the Class M-2 Notes pursuant to Section 8.02(a) of the
Indenture dated as of August _____, 1998, between the Issuer and U.S. Bank
National Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in December 2024 (the "Maturity Date"), (ii) the Termination Date, if
any, pursuant to Section 10.01 of the Indenture, 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 of the
Indenture. Capitalized terms used but not defined herein are defined in the
Indenture and the Sale and Servicing Agreement, which Indenture also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the per annum rate shown
above on the principal amount of this Note outstanding on the immediately
preceding Payment Date (after giving effect to all payments of principal made on
such preceding Payment Date) on each Payment Date until the principal of this
Note is paid or made available for payment in full. The Interest Rate on this
Note will increase by 0.50% with respect to each Payment Date occurring after
the date on which the Pool Principal Balance has declined to 10% or less of the
Assumed Pool Principal Balance. Interest on this Note will accrue for each
Payment Date during the calendar month immediately preceding such Payment Date
or, in the case of the first Payment Date, the period from the Closing Date
through the end of August 1998 (each, an "Accrual Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:__________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:____________________________
Authorized Signatory
Dated: __________, 1998
[For Reverse of Class M-2 Note, see Form of Class A-2 Note]
EXHIBIT A-12
Form of Class B-1 Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN THE SALE AND
SERVICING AGREEMENT REFERRED TO HEREIN.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
CLASS B-1 ASSET BACKED NOTES
Original Principal Balance of the Class B-1 Original Principal Balance of this
Notes: Note:
Interest Rate: ___________% Cut-Off Date: July 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-5, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of DOLLARS AND NO/100 ($ ) payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $ and the denominator of which is $
by (ii) the aggregate amount, if any, payable from the Note Payment Account in
respect of principal on the Class B-1 Notes pursuant to Section 8.02(a) of the
Indenture dated as of August _____, 1998, between the Issuer and U.S. Bank
National Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of (i) the Payment Date
occurring in December 2024 (the "Maturity Date"), (ii) the Termination Date, if
any, pursuant to Section 10.01 of the Indenture, 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 of the
Indenture. Capitalized terms used but not defined herein are defined in the
Indenture and the Sale and Servicing Agreement, which Indenture also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the per annum rate shown
above on the principal amount of this Note outstanding on the immediately
preceding Payment Date (after giving effect to all payments of principal made on
such preceding Payment Date) on each Payment Date until the principal of this
Note is paid or made available for payment in full. The Interest Rate on this
Note will increase by 0.50% with respect to each Payment Date occurring after
the date on which the Pool Principal Balance has declined to 10% or less of the
Assumed Pool Principal Balance. Interest on this Note will accrue for each
Payment Date during the calendar month immediately preceding such Payment Date
or, in the case of the first Payment Date, the period from the Closing Date
through the end of August 1998 (each, an "Accrual Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:__________________________________
Authorized Signatory
Dated: __________, 1998
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Indenture
Trustee,
By:____________________________
Authorized Signatory
Dated: __________, 1998
[For Reverse of Class B-1 Note, see Form of Class A-2 Note]
EXECUTION
================================================================================
SALE AND SERVICING AGREEMENT
among
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5,
as Issuer
FIRSTPLUS INVESTMENT CORPORATION,
as Seller
FIRSTPLUS FINANCIAL, INC.,
as Transferor and Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee and Co-Owner Trustee
Dated as of August 1, 1998
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
Asset Backed Securities, Series 1998-5
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. .............................................1
Section 1.02. Other Definitional Provisions. ..........................25
Section 1.03. Interest Calculation. ...................................25
ARTICLE II
CONVEYANCE OF THE HOME LOANS
Section 2.01. Conveyance of the Initial Home Loans. ...................25
Section 2.02. Conveyance of Subsequent Home Loans. ....................26
Section 2.03. Ownership and Possession of Home Loan Files. ............28
Section 2.04. Books and Records........................................28
Section 2.05. Delivery of Home Loan Documents..........................29
Section 2.06. Acceptance by Indenture Trustee of the
Home Loans; Initial Certification by
Custodian. ..............................................31
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Seller. ...........32
Section 3.02. Representations, Warranties and Covenants of
the Servicer and Transferor. ............................34
Section 3.03. Individual Home Loans ...................................36
Section 3.04. Subsequent Home Loans. ..................................42
Section 3.05. Purchase and Substitution. ..............................43
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 4.01. Duties of the Servicer. .................................45
Section 4.02. Liquidation of Home Loans. ..............................47
Section 4.03. Fidelity Bond; Errors and Omission Insurance. ...........48
Section 4.04. Title, Management and Disposition of Foreclosure
Property.................................................49
Section 4.05. Access to Certain Documentation and Information
Regarding the Home Loans. ...............................49
Section 4.06. Superior Liens. .........................................49
Section 4.07. Subservicing. ...........................................50
Section 4.08. Successor Servicers. ....................................51
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01. Collection Account and Note Payment Account..............51
Section 5.02. Pre-Funding Account. ....................................57
Section 5.03. [Reserved]...............................................58
Section 5.04. [Reserved]...............................................58
Section 5.05. Certificate Distribution Account. .......................58
Section 5.06. Trust Accounts; Trust Account Property. .................60
Section 5.07. Allocation of Losses.....................................65
ARTICLE VI
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
Section 6.01. Statements. .............................................65
Section 6.02. Reports of Foreclosure and Abandonment of
Mortgaged Property.......................................69
Section 6.03. Specification of Certain Tax Matters. ...................69
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01. Assumption Agreements. ..................................69
Section 7.02. Satisfaction of Mortgages and Release of
Home Loan Files..........................................70
Section 7.03. Servicing Compensation. .................................72
Section 7.04. Quarterly Statements as to Compliance. ..................72
Section 7.05. Annual Independent Public Accountants' Servicing Report..72
Section 7.06. Right to Examine Servicer Records. ......................73
Section 7.07. Reports to the Indenture Trustee; Collection
Account Statements.......................................73
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01. Financial Statements. ...................................73
ARTICLE IX
THE SERVICER
Section 9.01. Indemnification; Third Party Claims. ....................74
Section 9.02. Merger or Consolidation of the Servicer. ................75
Section 9.03. Limitation on Liability of the Servicer and Others. .....75
Section 9.04. Servicer Not to Resign; Assignment. .....................75
Section 9.05. Relationship of Servicer to the Issuer and
the Indenture Trustee....................................76
ARTICLE X
DEFAULT
Section 10.01. Events of Default........................................76
Section 10.02. Indenture Trustee to Act; Appointment of Successor.......78
Section 10.03. Waiver of Defaults.......................................80
Section 10.04. Accounting Upon Termination of Servicer. ................80
ARTICLE XI
TERMINATION
Section 11.01. Termination. ............................................80
Section 11.02. Optional Termination by Seller...........................81
Section 11.03. Notice of Termination. ..................................81
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Acts of Securityholders. ................................82
Section 12.02. Amendment. ..............................................82
Section 12.03. Recordation of Agreement. ...............................83
Section 12.04. Duration of Agreement. ..................................83
Section 12.05. Governing Law. ..........................................83
Section 12.06. Notices. ................................................83
Section 12.07. Severability of Provisions. .............................84
Section 12.08. No Partnership. .........................................84
Section 12.09. Counterparts. ...........................................84
Section 12.10. Successors and Assigns. .................................84
Section 12.11. Headings. ...............................................84
Section 12.12. Actions of Securityholders. .............................84
Section 12.13. Reports to Rating Agencies. .............................85
Section 12.14. [Reserved]...............................................85
Section 12.15. No Petition. ............................................85
EXHIBITS
EXHIBIT A Home Loan Schedule
EXHIBIT B Form of Subsequent Transfer Agreement
EXHIBIT C Form of Addition Notice
EXHIBIT D Schedule of Specified Home Loans
EXHIBIT E Form of Lost Note Affidavit
This Sale and Servicing Agreement is entered into effective as of
August 1, among FIRSTPLUS Home Loan Owner Trust 1998-5, 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 on behalf of the Custodian, the
Owner Trustee and the Indenture Trustee;
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 each Class of LIBOR Securities, 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, beginning on the Closing Date) 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 (or, in the
case of the first Payment Date, the period from the Closing Date through the end
of August 1998).
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 and each Rating Agency.
Adjusted Issue Price: With respect to the Class A-1 Notes, as of any
date of determination, an amount equal to (a) the product of (i) $50,000,000 and
(ii) 0.1175036, plus (b) the amount of any original issue discount accrued
thereon, minus (c) any payments previously made in respect of the Class A-1
Notes.
Administration Agreement: The Administration Agreement dated as of
August 1, 1998 among the Issuer, FFI, and U.S. Bank National Association, as
Administrator, as such may be amended or supplemented from time to time.
Administrator: U.S. Bank National Association, or any successor in
interest thereto, in its capacity as Administrator under the Administration
Agreement.
Aggregate Voting Rights: The aggregate of the Voting Rights of all or a
specified Class or Classes of Securities.
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 (net
of investment earnings thereon). 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 B-2 Component, the Class B-1 Notes, the Class M-2 Notes and
the Class M-1 Notes, in that order, until the respective Class Principal
Balances (or Component 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 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, (c) 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; (d) any income or gain from investment of funds on deposit in the
Collection Account and (e) any investment income on amounts in the Pre-Funding
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 (net of the Servicing Fees, to the extent previously paid or
withheld) 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 and the
documents and certificates delivered in connection therewith.
B-2 Component 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 any payments made on
such Payment Date) and (b) the Required Overcollateralization Amount for such
Payment Date.
B-2 Component's 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 B-2 Component's Monthly Interest Distributable Amount for
the immediately preceding Payment Date and any B-2 Component's 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 Component on
such immediately preceding Payment Date.
B-2 Component's Interest Distributable Amount: With respect to any
Payment Date, the sum of the B-2 Component's Monthly Interest Distributable
Amount for such date and the B-2 Component's Interest Carry-Forward Amount for
such date; provided, however, that on the Payment Date, if any, on which the
Component Principal Balance of the B-2 Component is reduced to zero through
application of the Allocable Loss Amount with respect to such Payment Date, the
amount of the B-2 Component's Interest Distributable Amount will be equal to the
B-2 Component's 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 any Class of Notes on such Payment Date in the
absence of this proviso.
B-2 Component's Monthly Interest Distributable Amount: With respect to
any Payment Date, interest accrued for the related Accrual Period at the
applicable Interest Rate on the Component Principal Balance of the B-2 Component
immediately preceding such Payment Date.
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.
Certificate: The Residual Interest Certificate issued pursuant to the
Trust Agreement.
Certificate Distribution Account: The Account established and
maintained pursuant to Section 5.05.
Certificateholder: The holder of the Residual Interest Certificate.
Class: With respect to the Notes, all Notes bearing the same class
designation.
Class B-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 B-1 Noteholders' Monthly Interest Distributable
Amount for the immediately preceding Payment Date and any Class B-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 B-1 Noteholders' Interest Payable Amount: With respect to any
Payment Date, the sum of the Class B-1 Noteholders' Monthly Interest Payable
Amount for such date and the Class B-1 Noteholders' Interest Carry-Forward
Amount for such date.
Class B-1 Noteholders' Monthly Interest Payable Amount: With respect to
any Payment Date, interest accrued for the related Accrual Period at the
applicable Interest Rate on the Class Principal Balance of the Class B-1 Notes
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
Senior Notes, the Class M-1 Notes and the Class M-2 Notes (after taking into
account payments made on such Payment Date) and (b) the greater of (i) 5.05% 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-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 Accrual 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) 26.765% 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 Accrual 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) 14.l4% 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 Notional Balance: With respect to the Class A-1 Notes,
$50,000,000.00 on or prior to the Payment Date occurring in October 2000 and $0
thereafter.
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
(other than the Class A-1 Notes) 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: August 25, 1998.
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.
Component: Any of the components of the Residual Interest Certificate
having the designations, initial Component Principal Balances and Component
Interest Rates as follows:
Original Component
Designation Interest Rate Principal Balance
B-2 Component 8.50%(1) $15,150,000.00
Excess Component (2) (3)
- ------------------
(1) The Interest Rate applicable to the B-2 Component, if the Residual
Certificate remains outstanding, will be increased by 0.50% with
respect to each Payment Date occurring after the date on which the
Seller is first permitted to exercise its option to redeem or terminate
the Securities pursuant to Section 11.02(b).
(2) The Excess Component will not have an interest rate.
(3) The Excess Component will not have a principal balance.
Component Principal Balance: With respect to each Component, and any
date of determination, the Original Component Principal Balance thereof as
reduced by (a) all amounts previously paid in respect of such Component in
reduction of the Component Principal Balance thereof and (b) any Allocable Loss
Amounts previously applied thereto.
Control: The meaning specified in Section 8-106 of the New York UCC.
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 August 1, 1998
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 July 31, 1998, 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., or any successor thereto.
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 (or the B-2 Component), the amount of Allocable Loss
Amounts previously applied in reduction of the Class Principal Balance (or
Component 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.
Deleted Home Loan: A Home Loan replaced by or to be replaced by a
Qualified Substitute Home Loan pursuant to Section 3.05 hereof.
Determination Date: 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 August 1, 1998.
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.
Entitlement Holder: The meaning specified in Section 8-102(a)(7) of the
New York UCC.
Entitlement Order: The meaning specified in Section 8-102(a)(8) of the
New York UCC (i.e., generally, orders directing the transfer or redemption of
any Financial Asset).
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.
Financial Asset: The meaning specified in Section 8-102(a)(9) of the
New York UCC.
Fitch: Fitch IBCA, Inc., or any successor thereto.
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, and (b) the close of business on October 23, 1998; provided,
however, that the Funding Period shall end upon the occurrence of an Event of
Default hereunder or under the Indenture.
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, (ix)
the remaining number of months to maturity as of the applicable Cut-Off Date and
(x) the product type.
Indenture: The Indenture dated as of August 1, 1998 between the Issuer
and the Indenture Trustee, as such may be amended or supplemented from time to
time.
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 $416.67, 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 after the Cut-Off Date, less 80.00% of amounts attributable to interest
collected during the initial Due Period. 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: $499,988,110.54.
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 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 (net of investment earnings
thereon). 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(1)
----- -------------
A-1 6.00%(2)
A-2 (3)
A-3 6.06%
A-4 6.25%
A-5 6.35%
A-6 6.42%
A-7 6.67%
A-8 6.82%
A-9 7.01%
M-1 6.92%
M-2 7.31%
B-1 8.50%
Residual Interest Certificate (4)
(1) The Interest Rate applicable to each Class of Notes (other than the
Class A-1 Notes) remaining outstanding will be increased by 0.50% with
respect to each Payment Date occurring after the date on which the
Seller is first permitted to exercise its option to redeem or terminate
the Securities pursuant to Section 11.02(b).
(2) On and after the Payment Date in October 2000, 0.00%.
(3) Interest will accrue on the Class A-2 Notes during each Accrual Period
at a per annum rate equal to LIBOR for the related LIBOR Determination
Date plus 0.06%, subject to a maximum rate equal to the Net Weighted
Average Rate. The Interest Rate applicable to the Class A-2 Notes for
the initial Accrual Period will be 5.70844% per annum.
(4) Interest will accrue on the Residual Interest Certificate during each
Accrual Period at a per annum rate calculated on the basis of the Class
Principal Balance thereof and the aggregate amount of interest accrued
on the B-2 Component during such Accrual Period.
With respect to each Component other than the Excess Component, the per annum
rate of interest applicable thereto is as specified in the definition of
Components.
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
5.64844%.
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-2 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 and all
amounts due to the Class A-1 Noteholders have been paid, the holder or holders
of in excess of 50% of the Aggregate Voting Rights of all Classes of Notes
(accordingly, the holder of the Residual Interest Certificate shall be excluded
from any rights or actions of the Majority Securityholders during such period);
and (ii) thereafter, the holder of the Residual Interest Certificate.
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.
Moody's: Moody's Investors Service, Inc., or any successor thereto.
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 1.4 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.
New York UCC: The Uniform Commercial Code as in effect in the State of
New York.
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
September 30, 1998 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 A-9 Notes, the Class M-1
Notes, the Class M-2 Notes and the Class B-1 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, the aggregate of interest accrued for the related Accrual Period
on each Class of Notes at the applicable Interest Rate on the Class Principal
Balance (or Class Notional Balance) thereof immediately preceding such Payment
Date.
Notional Certificate: The Class A-1 Notes.
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 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:
Original
Class Principal Balance
----- -----------------
A-2 $148,100,000.00
A-3 $ 60,500,000.00
A-4 $ 87,130,000.00
A-5 $ 38,000,000.00
A-6 $ 22,800,000.00
A-7 $ 47,850,000.00
A-8 $ 23,700,000.00
A-9 $ 29,450,000.00
M-1 $ 68,175,000.00
M-2 $ 37,875,000.00
B-1 $ 27,270,000.00
Residual Interest Certificate (1)
(1) The Original Class Principal Balance of the Residual Interest
Certificate is equal to the Original Component Principal Balance of the
B-2 Component, as set forth under the definition of "Component" herein.
The Original Class Principal Balance of the Residual Interest
Certificate is $15,150,000.00.
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 Residual Interest Certificate on such Payment
Date.
Overcollateralization Shortfall: 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 Residual Interest Certificate to
be made on such Payment Date pursuant to Section 5.01(c)(4).
Overcollateralization Stepdown Date: The first Payment Date occurring
after August 2001 as to which the aggregate of the Class Principal Balances 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) 49.49% of the Pool Principal
Balance as of such immediately preceding Determination Date plus the greater of
(x) 7.0% of the Pool Principal Balance as of the immediately preceding
Determination Date and (y) the Net Delinquency Calculation Amount for such
Payment Date, 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 August each year during the term of
this Agreement commencing in August 1999; 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 September 1998 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 ratings 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:
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 ratings;
(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 ratings);
(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.
Pool Principal Balance: As of any Determination Date, the aggregate of
the Principal Balances as of the close of business on the last day of the
immediately preceding Due Period of all Home Loans in the Home Loan Pool as of
the close of such Due Period.
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 $100,011,889.46.
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.
Prospectus: The final Prospectus, dated September 10, 1997, as
supplemented by the Prospectus Supplement.
Prospectus Supplement: The Prospectus Supplement dated August 19, 1998,
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 not more than 0.50% lower than the Home Loan Interest
Rate for the Deleted Home Loan, (ii) matures or mature not more than one year
later than and not more than one year earlier than the Deleted Home Loan, (iii)
has or have a principal balance or principal balances (after application of all
payments received on or prior to the date of substitution) equal to or less than
the Principal Balance of the Deleted Home Loan as of such date, (iv) has or have
a lien priority no lower than the Deleted Home Loan, (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 30 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 620. 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 DCR, Fitch, Moody's and S&P 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 calendar 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 B-2 Component's 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
the greater of (x) 3.5% of the Assumed Pool Principal Balance as of the end of
the related Due Period and (y) the Net Delinquency Calculation Amount for such
Payment Date; with respect to any other Payment Date, an amount equal to the
greater of (x) 7.0% of the Pool Principal Balance as of the immediately
preceding Determination Date and (y) the Net Delinquency Calculation Amount for
such Payment Date; provided, however, that the Required Overcollateralization
Amount with respect to a Payment Date will in no event be less than 0.5% of the
Assumed Pool Principal Balance as of the end of the related Due Period.
Residual Interest Certificate: The residual interest certificate issued
pursuant to the Trust Agreement which, for purposes of calculating distributions
of interest and principal and of allocating Allocable Loss Amounts, will be
composed of the two payment Components having the designations and, with respect
to the B-2 Component, the Interest Rate and Original Component Principal Balance
as set forth under "Component" herein.
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.
Securities Intermediary: The Person acting as Securities Intermediary
under this Agreement (which is U.S. Bank National Association), its successor in
interest, and any successor Securities Intermediary appointed pursuant to
Section 5.06(d).
Security or Securities: Any Notes or the Residual Interest Certificate,
as applicable.
Security Entitlement: The meaning specified in Section 8-102(a)(17) of
the New York UCC.
Securityholder: A holder of a Note or the Residual Interest
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, the aggregate of interest accrued for the related Accrual
Period on each Class of Senior Notes at the applicable Interest Rates on the
respective Class Principal Balances (or Class Notional Balance) 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, the Class A-8 and the Class
A-9 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) 49.49% 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 1998-5: FIRSTPLUS Asset Backed Securities, Series
1998-5.
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 (or, in
the case of the first Payment Date, the Principal Balance as of the July 31,
1998 Cut-Off 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 61 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
Note or Residual Interest 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 October 23, 1998.
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 aggregate of the
Principal Balances after application of principal payments received through the
close of the preceding Due Period of any Qualified Substitute Home Loans plus
any accrued and unpaid interest thereon that is scheduled to be paid during the
Due Period in which such substitution occurs, is less than (b) the aggregate of
the Principal Balances, together with accrued and unpaid interest scheduled to
be paid during the Due Period in which such substitution occurs, 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
Deferred Amounts, (iii) the Adjusted Issue Price of the Class A-1 Notes, (iv)
any Servicing Compensation due and unpaid, and (v) 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.
Trust: The Issuer.
Trust Account Property: The Trust Accounts, the Certificate
Distribution Account, all amounts and investments held from time to time in any
Trust Account or in the Certificate Distribution Account and all proceeds of the
foregoing.
Trust Accounts: The Note Payment Account, the Collection Account and
the Pre-Funding Account.
Trust Agreement: The Trust Agreement dated as of August 1, 1998 among
the Seller as Depositor, the Co-Owner Trustee and the Owner Trustee, as such may
be amended or supplemented from time to time.
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 and the related Trust Receipts,
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 after the applicable Cut-Off Dates, less 80.00% of amounts attributable to
interest collected during the initial Due Period, (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.
Trust Receipt: Any one of the trust receipts issued by the Custodian
pursuant to the Custodial Agreement and representing the entire beneficial
interest in the related Home Loans.
Voting Rights: The portion of the voting interests of all the
Securities that is allocated to any Security for purposes of the voting
provisions of the Indenture. Prior to the Payment Date in October 2000, 1% of
all Voting Rights shall be allocated to the Class A-1 Notes, and 99% of all
Voting Rights shall be allocated to the other Classes of Securities while such
Securities remain outstanding. On and after the Payment Date in October 2000,
100% of all Voting Rights shall be allocated to the Classes of Securities other
than the Class A-1 Notes. Voting Rights allocated to such other Classes of
Securities shall be allocated among such Classes in proportion to the Class
Principal Balances thereof. Voting Rights allocated to any Class of Securities
shall be allocated among the Securities of such Class in the same proportion as
the principal balance (or notional balance) of such Securities bears to the
Class Principal Balance (or Class Notional Balance) of such Class.
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 LIBOR Securities, 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 and the
Residual Interest Certificate 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 and the Certificate Distribution Account. 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 Residual Interest Certificate to the Seller or its designee,
upon the order of the Seller.
Section 2.02. Conveyance of 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 less, in the case of
Subsequent Home Loans with a July 31, 1998 Cut-off Date, 80.00% of interest
received during August 1998) 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) 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 (y) no Subsequent Home Loan
shall be 31 or more 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 1998-5, 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 1998-5" 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.
Notwithstanding the foregoing, if the original Debt Instrument with
respect to a Home Loan cannot be located, the Seller and Transferor may
deliver a lost note affidavit substantially in the form attached as
Exhibit E hereto; provided, that the aggregate of Home Loans as to
which lost note affidavits are delivered shall not exceed 1.0% (by
aggregate principal balance) of the Home Loans.
(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;
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) On the Payment Date in December of each year commencing in 1998,
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 30 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,
other than (i) the Home Loans identified on Exhibit D hereto and (ii) certain
other Home Loans with respect to which a Responsible Officer of the Transferor
has determined to make an exception to the Transferor's then current
underwriting guidelines, has been underwritten or re-underwritten in accordance
with the Transferor's then-current underwriting guidelines. With respect to the
Home Loans identified on Exhibit D hereto, the Transferor will have received a
representation from the third-party originator of such Home Loans that such Home
Loans have been 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. 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 ss.301.7701. 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
ss.301.7701 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) [Reserved].
(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 Relevant UCC. No Debt
Instrument constitutes or is comprised of "chattel paper" as such term is
defined in Section 9-105(1)(b) of the Relevant 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
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.
(ai) Lack of Intention to Repay. Each Obligor has not commenced, and
will not commence within six months following origination of the related Home
Loan, any bankruptcy or similar insolvency proceeding.
Section 3.04. Subsequent Home Loans. With respect to the Subsequent
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 Loan is more than 30 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 October
23, 2023;
(iii) Each such Subsequent Home Loan has a Home Loan Interest
Rate of not less than 9.75%;
(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 as of
each respective Cut-Off Date not more than 0.15% lower than the
weighted average interest rate of the Initial Home Loans included in
the initial Home Loan Pool and a weighted average remaining term to
maturity as of each respective Cut-Off Date comparable to the weighted
average remaining maturity 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
684.
Section 3.05. Purchase and Substitution. (a) It is understood and
agreed that the representations and warranties set forth in Sections 3.03 and
3.04 shall survive the conveyance of the Home Loans to the Issuer, 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).
If a loss has been incurred with respect to any Home Loan and such loss
is attributable to the failure of the Seller or the Transferor to deliver to the
Indenture Trustee (or its Custodian) the related original Debt Instrument, the
Seller shall cause the Transferor to (i) remove such Home Loan from the Trust
Estate and substitute one or more Qualified Substitute Home Loans therefor or
(ii) purchase such Home Loan, in each case in accordance with the provisions of
the immediately preceding paragraph.
Any substitution of Home Loans pursuant to this Section 3.05(a) 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 any Home Loan that is
delinquent or is in foreclosure or default or as to which default is imminent;
provided that any repurchase pursuant to this paragraph is conducted in the same
manner as the repurchase of a Defective Home Loan pursuant to this Section 3.05.
(c) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Home Loan or Loans on or
after the beginning of the Due Period in which such substitution occurs. All
payments received with respect to Qualified Substitute Home Loans on or before
the beginning of the Due Period in which such substitution occurs will be
retained by the Transferor. The Issuer will be entitled to all payments received
on the Deleted Home Loan on or before the beginning of the Due Period in which
such substitution occurs, 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
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
establishment of a forebearance plan with the related Obligor and 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. In connection with any
partial prepayment, the Servicer may recalculate the amortization schedule of
the related Home Loan to provide for reduced monthly payments over the remaining
term to maturity.
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
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
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 Servicer shall have the
power and authority, exercisable in its sole discretion at any time, to reach a
negotiated settlement with a borrower. 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 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
Property. The deed or certificate of sale in respect of each Foreclosure
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
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 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.
(a)(1) Establishment of Collection Account. The Servicer shall cause to
be established and maintained in the name of the Securities Intermediary one or
more Collection Accounts which shall be pledged to the Indenture Trustee for the
benefit of Securityholders, 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 1998-5". 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 Closing
Date, the Servicer shall cause to be established and maintained in the name of
the Securities Intermediary one or more Note Payment Accounts which shall be
pledged to the Indenture Trustee for the benefit of Securityholders, 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 1998-5."
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 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 (or within two Business Days following
the Closing Date, in the case of amounts received prior to such date) 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
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, (x) pay the portion thereof representing
80.00% of amounts attributable to interest collected during the initial Due
Period to the Transferor, (y) 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 (z) deposit the remainder in the Note Payment Account and (ii)
make withdrawals from the Pre-Funding Account 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),
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 (and Component Principal Balance) of each Class of
Securities (and the B-2 Component) 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-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9 Notes, in
that order, in reduction of the Class Principal Balances thereof, or (z) 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
Residual Interest Certificate, 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 payment pursuant to the Indenture to the holders of
the Class B-1 Notes, the Class B-1 Noteholders' Interest Payable Amount
for such Payment Date;
(v) for distribution pursuant to Section 5.05 to the holder of
the Residual Interest Certificate, in respect of the B-2 Component, the
B-2 Component's Interest Distributable Amount for such Payment Date;
(vi) for payment pursuant to the Indenture to the holders of
the Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8 and Class A-9 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 payment pursuant to the Indenture to the holders of
the Class B-1 Notes, 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 holder of
the Residual Interest Certificate, in respect of the B-2 Component, the
amount necessary to reduce the Component Principal Balance thereof to
the B-2 Component Optimal Principal Balance for such Payment Date;
(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 payment pursuant to the Indenture to the holders of
the Class B-1 Notes, 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 holder
of the Residual Interest Certificate, in respect of the B-2 Component,
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 distribution pursuant to Section 5.05 to the
holder of the Residual Interest Certificate, in respect of the Excess
Component.
(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
Residual Interest Certificate, 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 Shortfall,
if any, as follows:
(A) for payment pursuant to the Indenture to
the holders of the Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8 and Class
A-9 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 payment pursuant to the Indenture to
the holders of the Class B-1 Notes, 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 holder of the Residual Interest
Certificate, in respect of the B-2 Component, the
amount necessary to reduce the Component Principal
Balance thereof to the B-2 Component Optimal
Principal Balance for such Payment Date;
(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 payment pursuant to the Indenture to the holders of
the Class B-1 Notes, 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 holder of
the Residual Interest Certificate, in respect of the B-2 Component, the
applicable Deferred Amount, if any, until such Deferred Amount has been
paid in full; and
(vi) for distribution pursuant to Section 5.05 to the holder
of the Residual Interest Certificate, in respect of the Excess
Component, any amount remaining in the Certificate Distribution
Account.
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
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
Redemption or Termination. No later than 11:00 a.m. (New York City time) on 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 (or, in the case of
the Class A-1 Notes, the Adjusted Issue Price) of each Class of Notes; (ii) to
deposit in the Certificate Distribution Account for distribution pursuant to
Section 5.05 to the Certificateholder, all accrued and unpaid interest on the
Residual Interest Certificate and an amount equal to the aggregate of the then
outstanding Class Principal Balance of the Residual Interest Certificate; (iii)
to retain in the Note Payment Account for payment pursuant to the Indenture to
the holders of the Class M-1, Class M-2 and Class B-1 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 Residual Interest Certificate, in
respect of the B-2 Component, 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 Residual Interest Certificate, in respect of the
Excess Component.
Section 5.02. Pre-Funding Account. (a) Establishment and Withdrawals.
No later than the Closing Date, the Servicer shall establish and maintain with
the Indenture Trustee in the name of the Securities Intermediary one or more
separate Eligible Accounts which shall be pledged to the Indenture Trustee for
the benefit of Securityholders, entitled "Pre-Funding Account, U.S. Bank
National Association, as Indenture Trustee, in trust for the FIRSTPLUS Asset
Backed Securities, Series 1998-5." 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 each Payment Date, all interest and any other
investment earnings on funds held in the Pre-Funding Account shall be deposited
into the Note Payment Account.
(b) [Reserved]
(c) Remaining Balance. If the Pre-Funding Account has not been reduced
to zero by the close of business on the date on which the Funding Period ends,
the Servicer shall direct the Indenture Trustee to deposit any amounts remaining
in the Pre-Funding Account into the Note Payment Account, on the Withdrawal Date
with respect to the Pre-Funding Termination Payment Date, for payment or
distribution of such remaining amount (net of reinvestment earnings) 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 (and Component Principal
Balance) of the Securities (and the B-2 Component), pro rata on the
basis of their respective Class Principal Balances (or Component
Principal Balance);
(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 on the basis of the Class Principal Balance of each
Class of Notes. Section 5.03. [Reserved].
Section 5.04. [Reserved].
Section 5.05. Certificate Distribution Account. (a) Establishment. No
later than the Closing Date, the Servicer, for the benefit of the
Certificateholder, will establish and maintain in the name of the Securities
Intermediary with U.S. Bank National Association for the benefit of the Owner
Trustee or Co-Owner Trustee on behalf of the Certificateholder 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 1998-5." 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 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 the Certificateholder in
respect of the Residual Interest Certificate to the extent of amounts due and
unpaid on the Residual Interest Certificate 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) to the Residual Interest Certificate, in respect
of the B-2 Component;
(ii) to the Residual Interest Certificate, in respect of the
B-2 Component, 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 Residual Interest Certificate, in respect of the
Excess Component, 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 Residual Interest Certificate shall
be made by wire transfer of immediately available funds to the account of such
Certificateholder. 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 the Certificateholder of such final
distribution.
(e) Distributions Following Early Redemption or Termination. No later
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 the Certificateholder in respect of the Residual Interest Certificate
to the extent of amounts due and unpaid on the Residual Interest Certificate for
principal and interest and to the other parties specified below the following
amounts:
(i) to the Residual Interest Certificate, in respect of the
B-2 Component, an amount equal to the Component Principal Balance of
the B-2 Component and all accrued and unpaid interest thereon;
(ii) to the Residual Interest Certificate, in respect of the
B-2 Component, the amount, if any, deposited in the Certificate
Distribution Account pursuant to Section 5.01(e)(2)(iv); and
(iii) to the Residual Interest Certificate, in respect of the
Excess Component, the amount, if any, 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
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 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, 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, the Certificate Distribution Account
established hereunder also shall be subject to and established and maintained in
accordance with the Trust Agreement. 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. If, at any time, the Certificate Distribution Account ceases to be an
Eligible Account, the Issuer (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 Certificate
Distribution Account as an Eligible Account, (ii) terminate the ineligible
Certificate Distribution Account, and (iii) transfer any cash and investments
from such ineligible Certificate Distribution Account to such new Certificate
Distribution Account. 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.
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 and the Certificate
Distribution Account for the purpose of permitting the Servicer to carry out its
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 have
occurred and be continuing, the funds held in any Trust Account or in the
Certificate Distribution 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
Transferor, in the case of each other Trust Account and the Certificate
Distribution Account, in each case in writing or by telephone or facsimile
transmission confirmed in writing by the Servicer or the Transferor, as
applicable. In any case, funds in any Trust Account or in the Certificate
Distribution 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 or in the Certificate Distribution Account shall be deposited into
such 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 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 1998-5". 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 1998-5".
(b)(2) Insufficiency and Losses in Trust Accounts. If any amounts are
needed for disbursement from any Trust Account or the Certificate Distribution
Account 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
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 or in the Certificate Distribution Account pursuant to this
Agreement and the Indenture, then the Servicer, with respect to the Collection
Account, and the Transferor, with respect to each other such account, shall
deposit the amount of such losses (to the extent not offset by income from other
investments in such account) in such account immediately upon the realization of
such loss or, to the extent that the Servicer or the Transferor, as applicable,
fails to deposit any portion of such amount, the Transferor or the Servicer, as
applicable, shall deposit any insufficiency from such failure in such account.
All interest and any other investment earnings on amounts held in any Trust
Account or in the Certificate Distribution 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 and of the Certificate Distribution 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) The Issuer and the Indenture Trustee hereby appoint U.S. Bank
National Association as Securities Intermediary with respect to the Trust
Accounts and the Certificate Distribution Account. The Issuer has, pursuant to
the Indenture, granted to the Indenture Trustee, as collateral agent for the
benefit of the Securityholders, a security interest to secure all amounts due
Noteholders hereunder in and to the Trust Accounts and the Security Entitlements
to all Financial Assets credited to the Trust Accounts, and the Seller hereby
grants to the Issuer, as collateral agent for the benefit of Certificateholders,
a security interest to secure all mounts due Certificateholders hereunder in and
to the Certificate Distribution Account and the Security Entitlements and all
Financial Assets credited to the Certificate Distribution Account, including in
each case without limitation all amounts, securities, investments, Financial
Assets, investment property and other property from time to time deposited in or
credited to such accounts and all proceeds thereof. Amounts held from time to
time in the Trust Accounts will continue to be held by the Securities
Intermediary for the benefit of the Indenture Trustee, as collateral agent, for
the benefit of the Securityholders, and amounts held from time to time in the
Certificate Distribution Account will continue to be held by the Securities
Intermediary for the benefit of the Issuer, as collateral agent, for the benefit
of the Certificateholders. Upon the termination of the Trust or the discharge of
the Indenture, the Indenture Trustee shall inform the Securities Intermediary of
such termination. By acceptance of their Securities or interests therein, the
Securityholders shall be deemed to have appointed U.S. Bank National Association
as Securities Intermediary. U.S. Bank National Association hereby accepts such
appointment as Securities Intermediary.
(1) With respect to the Trust Account Property credited to the
Trust Accounts and the Certificate Distribution Account, the Securities
Intermediary agrees that:
(i) with respect to any Trust Account Property that
is held in deposit accounts, each such deposit account shall
be subject to the exclusive custody and control of the
Securities Intermediary, and the Securities Intermediary shall
have sole signature authority with respect thereto;
(ii) the sole assets permitted in the Trust Accounts
and the Certificate Distribution Account shall be those as the
Securities Intermediary agrees to treat as Financial Assets;
and (iii) any such Trust Account Property that is, or is
treated as, a Financial Asset shall be physically delivered
(accompanied by any required endorsements) to, or credited to
an account in the name of, the Securities Intermediary or
other eligible institution maintaining any Trust Account or
the Certificate Distribution Account in accordance with the
Securities Intermediary's customary procedures such that the
Securities Intermediary or such other institution establishes
a Security Entitlement in favor of the Indenture Trustee (or
the Issuer, in the case of the Certificate Distribution
Account) with respect thereto over which the Securities
Intermediary or such other institution has Control;
(2) The Securities Intermediary hereby confirms that (A) each
Trust Account and the Certificate Distribution Account is an account to
which Financial Assets are or may be credited, and the Securities
Intermediary shall, subject to the terms of this Agreement, treat the
Indenture Trustee, as collateral agent, as entitled to exercise the
rights that comprise any Financial Asset credited to any Trust Account,
and the Issuer, as collateral agent, as entitled to exercise the rights
that comprise any Financial Asset credited to the Certificate
Distribution Account, (B) all Trust Account Property in respect of any
Trust Account or the Certificate Distribution Account will be promptly
credited by the Securities Intermediary to such account, and (C) all
securities or other property underlying any Financial Assets credited
to any Trust Account or the Certificate Distribution Account shall be
registered in the name of the Securities Intermediary, endorsed to the
Securities Intermediary or in blank or credited to another securities
account maintained in the name of the Securities Intermediary and in no
case (x) will any Financial Asset credited to any Trust Account be
registered in the name of the Seller or the Issuer, payable to the
order of the Seller or the Issuer or specially endorsed to the Seller
or the Issuer, or (y) will any Financial Asset credited to the
Certificate Distribution Account be registered in the name of the
Seller, payable to the order of the Seller or specially endorsed to the
Seller, except to the extent the foregoing have been specially endorsed
to the Securities Intermediary or in blank;
(3) The Securities Intermediary hereby agrees that each item
of property (whether investment property, Financial Asset, security,
instrument or cash) credited to any Trust Account or the Certificate
Distribution Account shall be treated as a Financial Asset;
(4) If at any time the Securities Intermediary shall receive
any order from the Indenture Trustee directing transfer or redemption
of any Financial Asset relating to any Trust Account, the Securities
Intermediary shall comply with such entitlement order without further
consent by the Seller, the Issuer or any other Person. If at any time
the Indenture Trustee notifies the Securities Intermediary in writing
that the Trust has been terminated or the Indenture discharged in
accordance herewith and with the Trust Agreement or the Indenture, as
applicable, and the security interest granted pursuant to the Indenture
has been released, then thereafter if the Securities Intermediary shall
receive any order from the Seller or the Issuer directing transfer or
redemption of any Financial Asset relating to any Trust Account, the
Securities Intermediary shall comply with such entitlement order
without further consent by the Indenture Trustee or any other Person;
If at any time the Securities Intermediary shall receive any
order from the Issuer directing transfer or redemption of any Financial
Asset relating to the Certificate Distribution Account, the Securities
Intermediary shall comply with such entitlement order without further
consent by the Seller or any other Person. If at any time the Issuer
notifies the Securities Intermediary in writing that the Trust has been
terminated in accordance herewith and with the Trust Agreement and the
security interest granted above has been released, then thereafter if
the Securities Intermediary shall receive any order from the Seller
directing transfer or redemption of any Financial Asset relating to the
Certificate Distribution Account, the Securities Intermediary shall
comply with such entitlement order without further consent by the
Issuer or any other Person;
(5) In the event that the Securities Intermediary has or
subsequently obtains by agreement, operation of law or otherwise a
security interest in any Trust Account or the Certificate Distribution
Account or any Financial Asset credited thereto, the Securities
Intermediary hereby agrees that such security interest shall be
subordinate to the security interest of the Indenture Trustee, in the
case of the Trust Accounts, or of the Issuer, in the case of the
Certificate Distribution Account. The Financial Assets credited to the
Trust Accounts or the Certificate Distribution Account will not be
subject to deduction, set-off, banker's lien, or any other right in
favor of any Person other than the Indenture Trustee, in the case of
the Trust Accounts, or the Issuer, in the case of the Certificate
Distribution Account (except that the Securities Intermediary may set
off (i) all amounts due to it in respect of its customary fees and
expenses for the routine maintenance and operation of the Trust
Accounts and the Certificate Distribution Account, and (ii) the face
amount of any checks which have been credited to any Trust Account or
the Certificate Distribution Account but are subsequently returned
unpaid because of uncollected or insufficient funds);
(6) There are no other agreements entered into between the
Securities Intermediary in such capacity and the Seller or the Issuer
with respect to any Trust Account, or the Seller with respect to the
Certificate Distribution Account. In the event of any conflict between
this Agreement (or any provision of this Agreement) and any other
agreement now existing or hereafter entered into, the terms of this
Agreement shall prevail;
(7) The rights and powers granted under the Indenture and
herein to (x) the Indenture Trustee have been granted in order to
perfect its security interest in the Trust Accounts and the Security
Entitlements to the Financial Assets credited thereto, and (y) the
Issuer have been granted in order to perfect its security interest in
the Certificate Distribution Account and the Security Entitlements to
the Financial Assets credited thereto, and are powers coupled with an
interest and will neither be affected by the bankruptcy of the Seller
(or the Issuer, in the case of the Trust Accounts) nor by the lapse of
time. The obligations of the Securities Intermediary hereunder shall
continue in effect until the security interest of the Indenture Trustee
in the Trust Accounts or of the Issuer in the Certificate Distribution
Account, and in such Security Entitlements, has been terminated
pursuant to the terms of this Agreement and the Indenture Trustee or
the Issuer, as applicable, has notified the Securities Intermediary of
such termination in writing; and
(8) Notwithstanding anything else contained herein, the Seller
and the Issuer agree that the Trust Accounts and the Certificate
Distribution Account will be established only with the Securities
Intermediary or another institution meeting the requirements of this
Section, which by acceptance of its appointment as Securities
Intermediary agrees substantially as follows: (1) it will comply with
Entitlement Orders related to the Trust Accounts issued by the
Indenture Trustee, as collateral agent, without further consent by the
Seller or the Issuer, and with Entitlement Orders related to the
Certificate Distribution Account issued by the Issuer, as collateral
agent, without further consent by the Seller; (2) until termination of
the Trust or discharge of the Indenture, it will not enter into any
other agreement related to such accounts pursuant to which it agrees to
comply with Entitlement Orders of any Person other than the Indenture
Trustee, as collateral agent with respect to the Trust Accounts, or the
Issuer, as collateral agent with respect to the Certificate
Distribution Account; and (3) all assets delivered or credited to it in
connection with such accounts and all investments thereof will be
promptly credited to the applicable account.
(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 in respect of principal and interest
first, to payment of delinquent Monthly Payments thereon, in chronological order
by Due Date (and as to each such Monthly Payment, first to accrued interest and
second to principal), second, to interest accrued at the applicable Home Loan
Interest Rate on the remaining unpaid balance of such Home Loan, and third, to
payment of the remaining unpaid principal thereof.
(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.
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 1998-5"), the
series designation of the Securities (i.e., "Series 1998-5"), 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
on such Payment Date;
(iii) the Class Principal Balance of each Class of Securities
(and the Component Principal Balance, as applicable, of the Components
of the Residual Interest Certificate), 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, carried to seven decimal places;
(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;
(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 and
the B-2 Component of the Residual Interest Certificate, the amount of
any applicable Deferred Amounts remaining unreimbursed after giving
effect to payments made on such Payment Date;
(xi) the weighted average remaining term to 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 last 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 last 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 last 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 and (B) that became Deleted Home Loans pursuant
to Section 3.05 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;
(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 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 Home Loans remaining in the Home Loan Pool;
and
(xxi) 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 holder of the Residual Interest Certificate a copy of the Servicer's
Monthly Statement in respect of such Payment Date and a statement setting forth
the amounts actually distributed to the holder of the Residual Interest
Certificate 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 the holder of the
Residual Interest Certificate, 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 the holder of the Residual Interest Certificate. 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 the Residual Interest Certificate 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, during the term of this
Agreement, such periodic, special, or other reports, including information tax
returns or reports required with respect to the Securities, 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 Certificate, 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 Certificate, 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 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 1998 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,
prepayment penalties 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 1998, 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.
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
(1) has experienced a material adverse change in its
business, assets, liabilities, operations, condition
(financial or otherwise) or prospects,
(2) has defaulted on any of its material obligations,
or
(3) has ceased to conduct its business in the
ordinary course; or
(vii) as of any Determination Date, the total Expected Loan
Loss Percentage (as defined below) exceeds (1) up to the fifth (5th)
anniversary of the July 31, 1998 Cut-Off Date, 20.5%, or (2)
thereafter, 30.75% (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 61 days
delinquent divided by the Assumed Pool Principal Balance, plus (C) 50%
of the aggregate Principal Balance of the Home Loans which are then 61
or more but less than 91 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 intent 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 Seller.
(a) [Reserved].
(b) The Seller 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 Seller 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 Seller pursuant to
Section 11.02(b) shall be accomplished by depositing the Termination Price into
the Collection Account on the Determination Date immediately preceding the
Payment Date on which the early redemption or termination is to occur. 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 Seller. 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 Certificateholder 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: Russ Ungerman, 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
1998-5, c/o Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration,
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 1998-5, 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 the final
distribution with respect to the Residual Interest Certificate;
(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 Moody's, 99 Church Street, 4th Floor, New York, New York
10007, (ii) if to Fitch, One State Street Plaza, New York, New York 10004, (iii)
if to DCR, 55 East Monroe Street, 38th Floor, Chicago, Illinois 60603,
Attention: RMBS Monitoring and (iv) if to S&P, 26 Broadway, 15th Floor, New
York, New York 10004-1064, Attention: Asset-Backed Monitoring Department.
Section 12.14. [Reserved].
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 1998-5,
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee
By:________________________________________
Name:
Title:
FIRSTPLUS INVESTMENT CORPORATION, as Seller
By:________________________________________
Name: Lee F. Reddin
Title: Vice President
FIRSTPLUS FINANCIAL, INC., as Transferor and
Servicer
By:_________________________________________
Name: Lee F. Reddin
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION, as Indenture
Trustee and Co-Owner 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 ________,
1998.
______________________________________
Notary Public, State of Texas
My commission expires:
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 _________,
1998.
_______________________________
Notary Public, State of Texas
My commission expires:
THE STATE OF DELAWARE )
)
COUNTY OF NEW CASTLE )
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 1998-5, 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 _________,
1998.
________________________________
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 ________,
1998.
_________________________________
Notary Public, State of Minnesota
My commission expires:
________________________.
(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 _____________, 199_
(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
1998-5, 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 August
_____, 1998 (the "Loan Sale Agreement") by and between the Transferor and the
Seller, and that certain Sale and Servicing Agreement dated as of August 1, 1998
(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:
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 1
attached hereto (the "Subsequent Home Loans") and the Home Loan Schedule
attached hereto as Attachment 2 (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 1. 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 1 attached hereto.
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 1 attached hereto.
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.
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) 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.
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.
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.
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.
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 LOAN OWNER TRUST 1998-5
By: Wilmington Trust Company, not in its
individual capacity but solely 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
___________________, 199_.
Notary Public, State of Texas
My commission expires:
______________________
(printed name)
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
___________________, 199_.
Notary Public, State of Texas
My commission expires:
______________________
(printed name)
THE STATE OF DELAWARE )
)
COUNTY OF NEW CASTLE )
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 1998-5, 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
___________________, 199_.
________________________________
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
__________________, 199_.
_________________________________
Notary Public, State of Minnesota
My commission expires:
______________________
(printed name)
ATTACHMENT 1
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 2
Home Loan Schedule
EXHIBIT C
Form of Addition Notice
Pursuant to Section 2.02 of the Sale and Servicing Agreement dated as
of August 1, 1998 among FIRSTPLUS Home Loan Owner Trust 1998-5, 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 1 attached hereto will be sold to
the Issuer pursuant to a Subsequent Transfer Agreement dated as of
_____________, 199_ (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 1, with respect to the
source of the Seller is set forth on the Schedules attached hereto as Attachment
2.
FIRSTPLUS INVESTMENT CORPORATION,
as Seller
By:______________________________
Name:
Title:
FIRSTPLUS FINANCIAL, INC.,
as Transferor
By:_______________________________
Name:
Title:
EXHIBIT D
Schedule of Specified Home Loans
EXHIBIT E
Form of Lost Note Affidavit
