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: June 30, 1998
(Date of earliest event reported)
FIRSTPLUS Investment Corporation
(Exact Name of Registrant as Specified in its Charter)
Nevada 333-26527 75-2596063
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
377 Howard Hughes Parkway
Suite 300N
Las Vegas, Nevada 89101
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (702) 892-3772
No Change
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
Reference is hereby made to the Registrant's Registration Statement on
Form S-3 (File No. 333-26527) pursuant to which the Registrant
registered issuances of FIRSTPLUS Home Loan Owner Trust asset backed
securities, issuable in various series, for sale in accordance with
the provisions of the Securities Act of 1933, as amended (the "Act").
Reference is also hereby made to the Prospectus dated September 10,
1997, and the related Prospectus Supplement, dated June 18, 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 1998-4 Asset Backed
Securities, Series 1998-4, 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 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 Deutsche Bank Securities
Inc. ("Deutsche Bank"), Bear, Stearns & Co. Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and PaineWebber Incorporated
(collectively, the "Underwriters") pursuant to the terms of an
underwriting agreement dated May 13, 1998, as supplemented by a terms
agreement dated June 18, 1998, each among Deutsche Bank, as
representative (the "Representative") of the Underwriters (such
underwriting agreement, together with such terms agreement, the
"Underwriting Agreement"), the Registrant, FIRSTPLUS FINANCIAL, INC.
("FFI") and FIRSTPLUS Financial Group, Inc. A copy of the Underwriting
Agreement is filed herewith as Exhibit 1.1.
The Notes were issued pursuant to an Indenture dated as of June 1,
1998 (the "Indenture") among FIRSTPLUS Home Loan Owner Trust 1998-4
(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, debt consolidation,
cash-out, credit insurance premiums, origination costs 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 June 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). A
copy of the Loan Sale Agreement is filed herewith as Exhibit 10.1.
The Home Loans will be serviced by FFI, an affiliate of the
Registrant, pursuant to the terms of a Sale and Servicing Agreement
dated as of June 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 10.2.
Set forth below is a brief description of certain characteristics of
the Home Loans included in the Home Loan Pool as of the May 31, 1998
Cut-off Date.
The Home Loan Pool consists of 17,072 Home Loans having a Pool
Principal Balance as of the respective Cut-Off Dates of the related
Home Loans of $527,808,039.27. The Home Loans (by Pool Principal
Balance as of the applicable Cut-Off Dates) have the characteristics
set forth in the following tables:
<PAGE>
HOME LOAN RATE
<TABLE>
<CAPTION>
RANGE OF NUMBER OF PERCENT OF TOTAL
HOME LOAN HOME AGGREGATE BY AGGREGATE
RATES (%) LOANS PRINCIPAL BALANCE ($) PRINCIPAL BALANCE (%)
-------------- ----- --------------------- ---------------------
<S> <C> <C> <C> <C>
8.001 - 9.000% 1 $ 17,212 0.00%
9.001 - 10.000 62 1,621,848 0.31
10.001 - 11.000 383 12,086,009 2.29
11.001 - 12.000 3,085 101,506,255 19.23
12.001 - 13.000 3,821 119,981,436 22.73
13.001 - 14.000 4,212 132,057,377 25.02
14.001 - 15.000 3,096 91,054,822 17.25
15.001 - 16.000 1,817 53,145,349 10.07
16.001 - 17.000 496 13,885,096 2.63
17.001 - 18.000 83 2,040,445 0.39
18.001 - 19.000 16 412,190 0.08
--------- ---------------- ------------
TOTAL 17,072 $527,808,039 100.00%
====== ============ ===========
</TABLE>
The weighted average Home Loan Rate of the Home Loans as of the Cut-Off
Date was approximately 13.52% per annum.
<PAGE>
Cut-Off Date Loan Principal Balances
<TABLE>
<CAPTION>
RANGE OF PERCENT OF TOTAL
CUT-OFF DATE NUMBER OF AGGREGATE BY AGGREGATE
PRINCIPAL BALANCE ($) HOME LOANS PRINCIPAL BALANCE($) PRINCIPAL BALANCE (%)
<S> <C> <C> <C> <C> <C>
0.01 - 10,000.00 68 646,483 0.12%
10,000.01 - 20,000.00 2,566 42,186,709 7.99
20,000.01 - 30,000.00 5,936 151,992,464 28.80
30,000.01 - 40,000.00 5,735 199,568,631 37.81
40,000.01 - 50,000.00 2,153 97,931,399 18.55
50,000.01 - 60,000.00 455 24,914,777 4.72
60,000.01 - 70,000.00 137 8,897,528 1.69
70,000.01 - 80,000.00 22 1,670,048 0.32
---------- --------------- -------
TOTAL 17,072 $527,808,039 100.00%
====== ============ =======
</TABLE>
The average principal balance of the Home Loans as of the Cut-Off Date was
approximately $30,916.59.
<PAGE>
Original Loan Principal Balances
<TABLE>
<CAPTION>
PERCENT OF TOTAL
RANGE OF BY AGGREGATE
PRINCIPAL BALANCES NUMBER OF AGGREGATE PRINCIPAL BALANCE(%)
AT ORIGINATION ($) HOME LOANS PRINCIPAL BALANCE
<S> <C> <C> <C> <C> <C>
0.01 - 10,000.00 53 516,342 0.10%
10,000.01 - 20,000.00 2,541 41,548,231 7.87
20,000.01 - 30,000.00 5,924 151,255,346 28.66
30,000.01 - 40,000.00 5,766 200,260,310 37.94
40,000.01 - 50,000.00 2,166 98,385,723 18.64
50,000.01 - 60,000.00 459 25,036,702 4.74
60,000.01 - 70,000.00 141 9,135,337 1.73
70,000.01 - 80,000.00 22 1,670,048 0.32
---------- --------------- --------
Total 17,072 $527,808,039 100.00%
====== ============ -------
</TABLE>
The average principal balance of the Initial Home Loans at
origination was approximately $31,114.27.
<PAGE>
Geographic Concentration
<TABLE>
<CAPTION>
PERCENT OF TOTAL
BY AGGREGATE
NUMBER OF AGGREGATE PRINCIPAL BALANCE (%)
HOME LOANS PRINCIPAL BALANCE
STATE
<S> <C> <C> <C> <C>
Alabama 3 64,246 0.01
Alaska 42 1,516,757 0.29
Arizona 379 11,266,461 2.13
Arkansas 165 5,171,080 0.98
California 2,383 79,634,738 15.09
Colorado 311 9,631,795 1.82
Connecticut 244 7,876,474 1.49
Delaware 73 2,321,174 0.44
District of Columbia 4 89,594 0.02
Florida 1,123 33,741,365 6.39
Georgia 521 15,987,395 3.03
Hawaii 2 59,756 0.01
Idaho 154 4,576,317 0.87
Illinois 518 14,574,703 2.76
Indiana 454 13,866,090 2.63
Iowa 115 3,666,932 0.69
Kansas 311 9,301,538 1.76
Kentucky 248 7,466,540 1.41
Louisiana 234 7,106,311 1.35
Maine 156 4,736,042 0.90
Maryland 484 15,148,653 2.87
Massachusetts 472 14,862,105 2.82
Michigan 735 22,468,339 4.26
Minnesota 420 13,079,987 2.48
Mississippi 97 3,045,958 0.58
Missouri 867 25,607,472 4.85
Montana 30 877,102 0.17
Nebraska 158 4,803,466 0.91
Nevada 229 6,983,908 1.32
New Hampshire 70 2,166,563 0.41
New Jersey 505 15,333,508 2.91
New Mexico 191 6,068,231 1.15
New York 233 7,680,706 1.46
North Carolina 596 18,076,150 3.42
North Dakota 13 393,094 0.07
Ohio 879 27,775,767 5.26
Oklahoma 289 8,690,628 1.65
Oregon 131 3,984,994 0.76
Pennsylvania 932 28,503,052 5.40
Rhode Island 93 2,922,955 0.55
South Carolina 309 9,124,495 1.73
South Dakota 24 779,234 0.15
Tennessee 258 7,285,074 1.38
Texas 2 59,383 0.01
Utah 156 4,565,818 0.87
Vermont 22 691,590 0.13
Virginia 784 23,552,990 4.46
Washington 424 13,146,738 2.49
Wisconsin 197 6,467,807 1.23
Wyoming 32 1,006,965 0.19
---------- ------------- ------
Total 17,072 527,808,039 100.00
====== =========== ======
</TABLE>
<PAGE>
Remaining Term to Maturity
<TABLE>
<CAPTION>
PERCENT OF TOTAL
RANGE OF REMAINING NUMBER OF AGGREGATE BY AGGREGATE
TERM TO MATURITY (MONTHS) HOME LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE (%)
------------------------- ---------- ----------------- ---------------------
<S> <C> <C> <C> <C> <C>
0 - 30 1 8,466 0.00
31 - 60 158 3,151,248 0.60
61 - 90 73 1,658,959 0.31
91 - 120 1,015 25,455,993 4.82
121 - 150 37 979,190 0.19
151 - 180 3,247 96,353,996 18.26
181 - 210 12 358,260 0.07
211 - 240 1,657 52,212,992 9.89
241 - 270 1 32,442 0.01
271 - 300 10,871 347,596,494 65.86
------ ----------- -------
Total...................... 17,072 527,808,039 100.00
====== =========== ======
</TABLE>
The weighted average remaining term to maturity of the Home Loans as
of the Cut-Off Date was approximately 258 months.
Months Since Origination
<TABLE>
<CAPTION>
PERCENT OF TOTAL
AGE NUMBER OF AGGREGATE BY AGGREGATE
(IN MONTHS) HOME LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE (%)
----------- ---------- ----------------- ---------------------
<S> <C> <C> <C> <C> <C>
0 - 3 11,806 365,178,088 69.19
4 - 6 4,242 130,141,470 24.66
7 - 12 532 16,643,112 3.15
13 - 18 469 15,145,428 2.87
19 - 24 18 555,850 0.11
25 - 30 1 38,515 0.01
31 - 42 4 105,577 0.02
----------- --------------- ---------
Total 17,072 527,808,039 100.00
====== =========== ======
The weighted average number of months since origination of the Home
Loans as of the Cut-Off Date was approximately 3 months.
<PAGE>
CREDIT SCORES*
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE PERCENT OF TOTAL
RANGE OF NUMBER OF PRINCIPAL BY AGGREGATE
CREDIT SCORES HOME LOANS BALANCE PRINCIPAL BALANCE
------------- ---------- ------- -----------------
<S> <C> <C> <C> <C>
620 to 639............................ 451 11,388,846 2.16
640 to 659............................ 3,294 96,568,591 18.30
660 to 679............................ 3,622 110,887,214 21.01
680 to 699............................ 3,684 116,947,474 22.16
700 to 719............................ 3,280 106,075,850 20.10
720 to 739............................ 1,681 53,085,537 10.06
740 to 759............................ 768 24,380,045 4.62
760 to 779............................ 229 6,744,888 1.28
780 to 799............................ 55 1,526,307 0.29
800 or more........................... 8 203,289 0.04
---------- --------------- ----------
Total........................ 17,072 $ 527,808,039 100%
========== ================ =======
</TABLE>
- ---------------------------
*Determined prior to origination of the related Home Loan.
The weighted average Credit Score of the Home Loans as of the Cut-Off Date was
approximately 689.
DEBT-TO-INCOME RATIOS
<TABLE>
<CAPTION>
AGGREGATE PERCENT OF TOTAL
RANGE OF NUMBER OF PRINCIPAL BY AGGREGATE
DEBT-TO-INCOME RATIOS HOME LOANS BALANCE PRINCIPAL BALANCE
--------------------- ---------- --------- -----------------
<S> <C> <C> <C> <C>
Up to 10.............................. 13 $ 423,804 0.08%
11 to 15.............................. 80 2,203,519 0.42
16 to 20.............................. 506 14,624,988 2.77
21 to 25.............................. 1,284 38,850,187 7.36
26 to 30.............................. 2,634 79,971,759 15.15
31 to 35.............................. 3,825 117,507,692 22.26
36 to 40.............................. 4,395 138,207,336 26.19
41 to 45.............................. 3,113 98,626,829 18.69
46 to 50.............................. 1,210 37,080,003 7.03
51 to 55.............................. 12 311,922 0.06
--- ---------------- -------------
Total........................ 17,072 $ 527,808,039 100%
=========== ================ ============
</TABLE>
The weighted average debt-to-income ratio of the Home Loans as of the Cut-Off
Date was approximately 35.24%.
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits
Exhibit No. Description
1.1 Underwriting Agreement
1.2 Underwriting Terms Agreement
4.1 Indenture
10.1 Subsequent Transfer Agreement
10.2 Sale and Servicing Agreement
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned hereunto duly authorized.
FIRSTPLUS INVESTMENT CORPORATION
By: /s/ Lee F. Reddin
Name: Lee F. Reddin
Title: Vice President
Dated: July ___, 1998
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Underwriting Agreement
1.2 Underwriting Terms Agreement
4.1 Indenture
10.1 Subsequent Transfer Agreement
10.2 Sale and Servicing Agreement
Exhibit 1.1
Execution
FIRSTPLUS HOME LOAN OWNER TRUSTS
ASSET-BACKED SECURITIES
(Issuable in Series)
UNDERWRITING AGREEMENT
Deutsche Morgan Grenfell Inc. May 13, 1998
as Representative of the
several Underwriters
31 West 52nd Street
New York, New York 10119
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.
<PAGE>
1. Representations and Warranties. (a) The Company and
FFI represent and warrant to and agree with the Underwriters, as of the date of
the related Terms Agreement, that:
(i) The registration statement specified in the
related Terms Agreement, on Form S-3, including a prospectus,
has been filed with the Securities and Exchange Commission
(the "Commission") for the registration under the Securities
Act of 1933, as amended (the "Act"), of asset-backed
securities issuable in series, which registration statement
has been declared effective by the Commission. Such
registration statement, as amended to the date of the related
Terms Agreement, including any documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the
Act which were filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or before the
effective date of the Registration Statement, is hereinafter
called the "Registration Statement," and such prospectus, as
such prospectus is supplemented by a prospectus supplement
relating to the Offered Securities of the related Series, each
in the form first filed via EDGAR by a financial printer or
another person designated by the Company (the "Financial
Printer") after the date of the related Terms Agreement
pursuant to Rule 424(b) under the Act, including any documents
incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Act which were filed under the Exchange Act on
or before the date of such Prospectus Supplement (such
prospectus supplement, including such incorporated documents
(other than those that relate to Collateral Term Sheets), in
the form first filed after the date of the related Terms
Agreement pursuant to Rule 424(b) is hereinafter called the
"Prospectus Supplement"), is hereinafter called the "Final
Prospectus". Any preliminary prospectus, including any
preliminary prospectus supplement which, as completed, is
proposed to be used in connection with the sale of a Series of
Offered Securities and any prospectus filed with the
Commission pursuant to Rule 424(a) of the Act, is hereinafter
referred to as a "Preliminary Prospectus." Any reference
herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement, the Preliminary
Prospectus, the Final Prospectus or the Prospectus Supplement
shall be deemed to refer to and include the filing of any
document under the Exchange Act after the effective date of
the Registration Statement or the issue date of the
Preliminary Prospectus, the Final Prospectus or Prospectus
Supplement, as the case may be, deemed to be incorporated
therein by reference pursuant to Item 12 of Form S-3 under the
Act.
(ii) The related Registration Statement, at the time
it became effective, and the prospectus contained therein, and
any amendments thereof and supplements thereto filed prior to
the date of the related Terms Agreement, conformed in all
material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder; on the date of
the related Terms Agreement and on each Closing Date (as
defined in Section 3 below), the related Registration
Statement and the related Final Prospectus, and any amendments
thereof and supplements thereto, will conform in all material
respects to the requirements of the Act and the rules and
regulations of the Commission thereunder; such Registration
Statement, at the time it became effective, did not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading; such Final
Prospectus, on the date of any filing pursuant to Rule 424(b)
and on each Closing Date, will not include any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they are made, not misleading; and the Form 8-K relating
to any Subsequent Home Loans, on the date of any filing
thereof, will not include any untrue statement of a material
fact or omit to state any information which such Final
Prospectus states will be included in such Form 8-K; provided,
however, that the Company makes no representations or
warranties as to the information contained in or omitted from
(A) such Registration Statement or such Final Prospectus (or
any supplement thereto) in reliance upon and in conformity
with written information furnished to the Company by or on
behalf of the Underwriters specifically for use in the
preparation thereof or (B) any Current Report (as defined in
Section 5(b) below), or in any amendment thereof or supplement
thereto, incorporated by reference in such Registration
Statement or such Final Prospectus (or any amendment thereof
or supplement thereto).
(iii) The Securities of the related Series will
conform to the description thereof contained in the related
Final Prospectus; and will each on the related Closing Date be
duly and validly authorized, and, when validly executed,
countersigned, issued and delivered in accordance with the
related Indenture or Trust Agreement, as applicable, and, in
the case of the Offered Securities, sold to you as provided
herein and in the related Terms Agreement, will each be
validly issued and outstanding and entitled to the benefits of
such Indenture or Trust Agreement, as applicable, and, if
applicable, the related Policy.
(iv) Neither the consummation of the transactions
contemplated by the Operative Agreements to which the Company
or FFI is a party, nor the issuance and sale of the Securities
of the related Series nor the consummation of any other of the
transactions herein or therein contemplated, nor the
fulfillment of the terms hereof or of the related Terms
Agreement, will conflict with any statute, order or regulation
applicable to the Company or FFI of any court, regulatory
body, administrative agency or governmental body having
jurisdiction over the Company or FFI or with any
organizational document of the Company or FFI or any
instrument or any agreement under which the Company or FFI is
bound or to which it is a party.
(v) This Agreement and the related Terms Agreement
have been duly authorized, executed and delivered by the
Company and FFI.
(vi) At or prior to the related Closing Date, the
Trust will have entered into the related Indenture, Trust
Agreement and any Insurance Agreement and, assuming the due
authorization, execution and delivery thereof by the other
parties thereto, such Indenture, such Trust Agreement and such
Insurance Agreement (on such Closing Date) will constitute the
valid and binding agreement of the Trust enforceable in
accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights and to general principles of
equity (regardless of whether the enforceability of such
Indenture, such Trust Agreement or such Insurance Agreement is
considered in a proceeding in equity or at law).
(vii) At or prior to the related Closing Date, the
Company will have entered into the related Trust Agreement,
Sale and Servicing Agreement and any related FHA Claims
Agreement and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, such Trust
Agreement, Sale and Servicing Agreement and such FHA Claims
Agreement (on such Closing Date) will constitute valid and
binding agreements of the Company enforceable in accordance
with their respective 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
Agreement for a particular Offering and subject to the terms and conditions and
in reliance upon the representations and warranties set forth in this Agreement
and such Terms Agreement, the Company agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, the respective original principal amounts
of the related Offered Securities set forth in the related Terms Agreement
opposite the name of such Underwriter, plus any additional original principal
amount of Offered Securities which such Underwriter may be obligated to purchase
pursuant to Section 13 hereof, at the purchase price therefor set forth in such
Terms Agreement (the "Purchase Price").
The parties hereto agree that settlement for all securities
sold pursuant to this Agreement shall take place on the terms set forth herein
and not as set forth in Rule 15c6-1(a) under the Exchange Act.
3. Delivery and Payment. Delivery of and payment for the
Offered Securities of a Series shall be made at the specified offices of Brown &
Wood LLP, at 10:00 a.m. New York City time, on the Closing Date specified in the
related Terms Agreement, which date and time may be postponed by agreement
between the Underwriters and the Company (such date and time being herein called
the "Closing Date"). Delivery of such Offered Securities shall be made to the
Underwriters against payment by the Underwriters of the Purchase Price thereof
to or upon the order of the Company by wire transfer in federal or other
immediately available funds. Unless delivery is made through the facilities of
The Depository Trust Company, the Offered Securities shall be registered in such
names and in such authorized denominations as the Underwriters may request not
less than two full business days in advance of each Closing Date.
The Company agrees to notify the Underwriters at least two
business days before each Closing Date of the exact principal balance evidenced
by the Offered Securities and to have such Offered Securities available for
inspection, checking and packaging in New York, New York, no later than 12:00
noon on the business day prior to such Closing Date.
4. Offering by the Underwriters. It is understood that the
Underwriters propose to offer the Offered Securities of the related Series for
sale to the public as set forth in the related Final Prospectus.
5. Agreements. The Company and FFI agree with the Underwriters
that:
(a) The Company will cause each of the Preliminary
Prospectus and the Final Prospectus relating to the Offered Securities
to be filed pursuant to Rule 424 under the Act and will promptly advise
the Underwriters when such Preliminary Prospectus and such Final
Prospectus as so supplemented have been so filed, and prior to the
termination of the Offering to which such Preliminary Prospectus and
Final Prospectus relate also will promptly advise the Underwriters (i)
when any amendment to the related Registration Statement specifically
relating to such Offered Securities shall have become effective or any
further supplement to such Preliminary Prospectus or such Final
Prospectus has been filed, (ii) of any request by the Commission for
any amendment of such Registration Statement, Preliminary Prospectus or
Final Prospectus or for any additional information, (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of such Registration Statement or the institution or
threatening of any proceeding for that purpose and (iv) of the receipt
by the Company of any written notification with respect to the
suspension of the qualification of such Offered Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company will not file any amendment of the related
Registration Statement or supplement to the related Preliminary
Prospectus or Final Prospectus (other than any amendment or supplement
specifically relating to one or more Series of asset-backed securities
other than the Series that includes the related Offered Securities)
unless (i) the Company has given reasonable notice to the Underwriters
of its intention to file any such amendment or supplement, (ii) the
Company has furnished the Underwriters with a copy for their review
within a reasonable time prior to filing, and (iii) the Underwriters do
not reasonably object to the filing of such amendment or supplement.
The Company will use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) The Company will cause any Computational
Materials and any Structural Term Sheets (each as defined in Section 8
below) with respect to the Offered Securities of a Series that are
delivered by an Underwriter to the Company pursuant to Section 8 to be
filed with the Commission on a Current Report on Form 8-K (each such
filing of such materials and of any Collateral Term Sheets, a "Current
Report") pursuant to Rule 13a-11 under the Exchange Act in accordance
with Section 10 on the business day immediately following the date on
which the related Terms Agreement is executed and delivered. The
Company will cause any Collateral Term Sheet (as defined in Section 9
below) with respect to the Offered Securities of a Series that is
delivered by the Underwriters to the Company in accordance with the
provisions of Section 9 to be filed with the Commission on a Current
Report pursuant to Rule 13a-11 under the Exchange Act in accordance
with Section 10 on the business day immediately following the day on
which such Collateral Term Sheet is delivered to counsel for the
Company by the Underwriters prior to 10:30 a.m. In addition, if at any
time prior to the availability of the related Prospectus Supplement,
the Underwriters have delivered to any prospective investor a
subsequent Collateral Term Sheet that reflects, in the reasonable
judgment of the Underwriters and the Company, a material change in the
characteristics of the Home Loans for the related Series from those on
which a Collateral Term Sheet with respect to the related Series
previously filed with the Commission was based, the Company will cause
any such Collateral Term Sheet that is delivered by the Underwriters to
the Company in accordance with the provisions of Section 9 hereof to be
filed with the Commission on a Current Report in accordance with
Section 10. Each such Current Report shall be incorporated by reference
in the related Final Prospectus and the related Registration Statement.
(c) If, at any time when a prospectus relating to the
Offered Securities of a Series is required to be delivered under the
Act, any event occurs as a result of which the related Final Prospectus
as then amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it
shall be necessary at any time to amend or supplement the related Final
Prospectus to comply with the Act or the rules thereunder, the Company
promptly will prepare and file with the Commission, subject to
paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission or an amendment which will effect
such compliance; provided, however, that the Company will not be
required to file any such amendment or supplement with respect to any
Computational Materials, Structural Term Sheets or Collateral Term
Sheets incorporated by reference in the Final Prospectus other than any
amendments or supplements of such Computational Materials or Structural
Term Sheets as are furnished to the Company by the Underwriters
pursuant to Section 8(e) hereof or any amendments or supplements of
such Collateral Term Sheets that are furnished to the Company by the
Underwriters pursuant to Section 9(d) hereof which are required to be
filed in accordance therewith.
(d) The Company will furnish to the Underwriters and
counsel for the Underwriters, without charge, as many signed copies of
the related Registration Statement (including exhibits thereto) and, so
long as delivery of a prospectus by the Underwriters or a dealer may be
required by the Act, as many copies of the related Preliminary
Prospectus and the related Final Prospectus and any supplements thereto
(other than exhibits to the related Current Report), as the
Underwriters may reasonably request.
(e) The Company will furnish such information,
execute such instruments and take such actions as may be reasonably
requested by the Underwriters to qualify the Offered Securities of a
Series for sale under the laws of such jurisdictions as the
Underwriters may designate, to maintain such qualifications in effect
so long as required for the distribution of such Offered Securities and
to determine the legality of such Offered Securities for purchase by
investors; provided, however, that the Company shall not be required to
qualify to do business in any jurisdiction where it is not qualified on
the date of the related Terms Agreement or to take any action which
would subject it to general or unlimited service of process or
corporate or franchise taxation as a foreign corporation in any
jurisdiction in which it is not, on the date of the related Terms
Agreement, subject to such service of process or such taxation.
(f) So long as the Offered Securities of a Series are
outstanding, the Company will furnish to the Underwriters copies of the
annual independent public accountants' servicing report and officer's
compliance certificate when and as the same are so furnished to the
Indenture Trustee pursuant to the related Sale and Servicing Agreement.
In addition, the Company shall, or shall cause the Owner Trustee to,
furnish to the Representative copies of each statement to Holders of
the Offered Securities when and as the same are furnished to such
Holders pursuant to the applicable Operative Agreement, but only if
such statement is not publicly available.
(g) Whether or not the transactions contemplated
hereby and by the related Terms Agreement shall be consummated, the
Company shall be responsible for the payment of any costs and expenses
for which details are submitted, in connection with the performance of
its obligations under this Agreement and the related Terms Agreement,
including, without limitation, (i) the cost and expenses of printing or
otherwise reproducing the related Registration Statement, the related
Preliminary Prospectus, the related Final Prospectus, this Agreement,
the related Terms Agreement, the related Sale and Servicing Agreement,
the related Trust Agreement, the related Indenture and the Offered
Securities, (ii) the cost of delivering the related Offered Securities
to the office of the Underwriters, insured to the satisfaction of the
Underwriters, (iii) the fees and disbursements of the Seller's and the
Servicer's counsel and accountants, (iv) the qualification of the
Securities under state securities or blue sky laws, including filing
fees and the fees and disbursements of counsel for you in connection
therewith and in connection with the preparation of any blue sky survey
and legal investment survey, (v) the printing, word processing and
duplicating expenses and supervision related to preparation of and
delivery to the Underwriters of copies of any document contemplated
hereunder and any blue sky survey and legal investment survey, (vi) the
fees of rating agencies, (vii) the fees and expenses, if any, incurred
in connection with the listing of the Offered Securities on any
national securities exchange, (viii) the fees, if any, of the National
Association of Securities Dealers, Inc., and the fees and expenses of
counsel for you in connection with any required written submission to
or appearance before such entity, (ix) the fees and expenses of the
Indenture Trustee, the Owner Trustee, any custodian, the backup
servicer and the Securities Insurer, and their respective counsel, and
(x) any such other related expenses not specified above.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Offered Securities of any Series
shall be subject to the accuracy in all material respects of the representations
and warranties on the part of the Company contained in this Agreement, as
supplemented by the related Terms Agreement, as of the respective dates thereof
and the related Closing Date, to the accuracy of the statements of the Company
made in any applicable officers' certificates pursuant to the provisions hereof,
to the performance by the Company of its obligations under this Agreement and
such Terms Agreement and to the following additional conditions applicable to
the related Offering:
(a) No stop order suspending the effectiveness of the
related Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) Brown & Wood LLP, counsel for the Company, shall
have furnished to the Underwriters an opinion, dated the related
Closing Date, in form and substance that is customary and reasonably
acceptable to the Underwriters.
(c) General Counsel for the Company and FFI shall
have furnished to the Underwriters an opinion, dated the related
Closing Date, in form and substance reasonably acceptable to the
Underwriters, to the effect that:
(i) Each of the Company and FFI have been
duly incorporated and each is validly existing as a
corporation in good standing in the jurisdiction of its
organization, with corporate power to own its properties, to
conduct its business as described in the related Final
Prospectus and to enter into and perform its obligations under
the Operative Agreements to which it is a party and to cause
the issuance and sale of the Securities of the related Series,
as applicable;
(ii) The Company has full power and
authority to deposit the related Home Loans as contemplated
herein and in the related Trust Agreement, and FFI has full
power and authority to transfer and service the related Home
Loans as contemplated in the related Sale and Servicing
Agreement;
(iii) No consent, approval, authorization or
order of any court or governmental agency or body is required
for the consummation by (a) the Company or FFI of the
transactions contemplated in the Operative Agreements to which
it is a party or (b) the Company or FFI of the transactions
contemplated herein or in the related Sale and Servicing
Agreement, except such as may be required under the blue sky
laws of any jurisdiction and such other approvals as have been
obtained;
(iv) Neither the issuance of the Securities
of the related Series nor delivery of the related Offered
Securities, nor the consummation of any other of the
transactions contemplated in this Agreement, the related Terms
Agreement, the related Sale and Servicing Agreement, the
related Trust Agreement, the related Indenture or the related
Insurance Agreement, if any, nor the fulfillment of the terms
of the related Securities, the related Sale and Servicing
Agreement, the related Indenture, the related Trust Agreement,
this Agreement, the related Terms Agreement or the related
Insurance Agreement, as applicable, will conflict with or
violate any term or provision of the articles of incorporation
or by-laws of the Company or FFI, as applicable, or any
statute, order or regulation applicable to the Company or FFI
of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Company or FFI,
and will not conflict with, result in a breach or violation or
the acceleration of or constitute a default under the terms of
any indenture or other material agreement or instrument to
which the Company or FFI is a party or by which it is bound;
and
(v) There are no actions, proceedings or
investigations pending or, to the best knowledge of such
counsel, threatened, before any court, administrative agency
or other tribunal (i) asserting the invalidity of this
Agreement, the related Terms Agreement, the related Sale and
Servicing Agreement, the related Trust Agreement, the related
Indenture, the related Insurance Agreement, if any, or the
related Securities, (ii) seeking to prevent the issuance of
the Securities of the related Series or the consummation by
the Company or FFI, as applicable, of any of the transactions
contemplated by this Agreement, such Terms Agreement, such
Sale and Servicing Agreement, such Indenture, such Trust
Agreement or such Insurance Agreement, if any, or (iii) which
might materially and adversely affect the performance by the
Company or FFI, as applicable, of its obligations under, or
the validity or enforceability of, this Agreement, such Terms
Agreement, such Sale and Servicing Agreement, such Indenture,
such Trust Agreement, such Insurance Agreement, if any, or the
related Securities.
In rendering his opinion such counsel may rely as to matters of fact,
to the extent deemed proper and as stated therein, on certificates of
responsible officers of the Company or FFI or of public officials.
(d) The Underwriters shall have received from Stroock
& Stroock & Lavan LLP, counsel for the Underwriters, such opinion or
opinions, dated the related Closing Date, with respect to the issuance
and sale of the Securities of the related Series, the related
Registration Statement, the related Final Prospectus and such other
related matters in form and substance that is customary and reasonably
acceptable to the Underwriters, and the Company shall have furnished to
such counsel such documents as the Underwriters may reasonably request
for the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the
Underwriters a certificate of the Company, signed by the President or
any Vice President and dated the related Closing Date, to the effect
that the signer of such certificate has carefully examined the related
Registration Statement (excluding any Current Reports and any other
documents incorporated by reference therein), the related Final
Prospectus, the Form 8-K relating to the Subsequent Home Loans, this
Agreement and the related Terms Agreement and that:
(i) the representations and warranties of
the Company and FFI in this Agreement, as supplemented by the
related Terms Agreement, are true and correct in all material
respects on and as of the related Closing Date with the same
effect as if made on such Closing Date, and the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to such Closing Date;
(ii) no stop order suspending the
effectiveness of such Registration Statement has been issued
and no proceedings for that purpose have been instituted or,
to his or her knowledge, threatened; and
(iii) nothing has come to his or her
attention that would lead them to believe that such
Registration Statement (excluding any Current Report) contains
any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, that the related
Final Prospectus (excluding any related Current Report)
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading, or that the Form 8-K relating to
the Subsequent Home Loans includes any untrue statement of a
material fact or omits to state any information which the
Final Prospectus states will be included in such Form 8-K.
(f) Counsel for the Indenture Trustee shall have
furnished to the Underwriters an opinion, dated the related Closing
Date, in form and substance that is customary and reasonably acceptable
to the Underwriters regarding certain matters relating to the Indenture
Trustee.
(g) Counsel for the Owner Trustee shall have
furnished to the Underwriters an opinion, dated the related Closing
Date, in form and substance that is customary and reasonably acceptable
to the Underwriters regarding certain matters relating to the Owner
Trustee.
In addition, such counsel shall furnish to the Underwriters
such opinions as to the treatment of the Trust for purposes of
state tax law where the Owner Trustee maintains possession of
the assets of the Trust as are customary and reasonably
satisfactory to the Underwriters.
(h) Ernst & Young LLP shall have furnished to the
Underwriters one or more letters in form and substance that is
customary and reasonably satisfactory to the Underwriters to the effect
that they have performed certain specified procedures requested by the
Underwriters with respect to certain information relating to the
Offered Securities, the Home Loans and certain matters relating to the
Company and the Servicer.
(i) The Policy relating to the Offered Securities of
the related Series, if any, shall have been duly executed and issued
prior to the Closing Date, in form and substance that is customary and
reasonably satisfactory to the Underwriters, and shall conform in all
respects to the description thereof in the Prospectus.
(j) If applicable, counsel for the Securities Insurer
shall have furnished to the Underwriters an opinion, dated the related
Closing Date, in form and substance that is customary and reasonably
acceptable to the Underwriters regarding certain matters relating to
the Securities Insurer.
In rendering such opinion such counsel may rely as to matters
of fact, to the extent deemed proper and as stated therein, on
certificates of responsible officers of the Securities
Insurer, if any, or of public officials.
(k) The Owner Trustee shall have received from the
Seller all funds required to be delivered by the Seller to be deposited
in any account required to be established in accordance with the
related Trust Agreement.
(l) If applicable, the Servicer, as FHA Claims
Administrator, and the Seller, as FHA Insurance Holder, shall have
executed and delivered the FHA Claims Agreement in form and substance
reasonably acceptable to the Underwriters.
(m) The Offered Securities of the related Series
shall have received the ratings specified in the related Terms
Agreement (the "Required Ratings").
(n) On or prior to the Closing Date, there shall have
been no downgrading, nor shall any notice have been given of (i) any
intended or possible downgrading or (ii) any review or possible
changes, the direction of which has not been indicated, of the rating
accorded and originally requested by the Company relating to any
previously issued asset-backed securities of the Company by any
"nationally recognized statistical rating organization" (as such term
is defined for purposes of the Exchange Act).
(o) If applicable, on or prior to the Closing Date,
there has been no downgrading, nor shall any notice have been given of
(i) any intended or possible downgrading or (ii) any review or possible
changes, the direction of which has not been indicated, of the rating
accorded the Securities Insurer's claims paying ability by any
"nationally recognized statistical rating organization" (as such term
is defined for purposes of the Exchange Act).
(p) Subsequent to the date of the related Terms
Agreement, there shall not have been any change, or any development
involving a prospective change, in or affecting the business or
properties of (i) the Company, its parent company or any of its
subsidiaries, (ii) the Transferor or (iii) the Securities Insurer, if
any, which the Underwriters conclude, in their reasonable judgment,
after consultation with the Company, materially impairs the investment
quality of the Offered Securities of the related Series so as to make
it impractical or inadvisable to proceed with the public offering or
the delivery of such Offered Securities as contemplated by the related
Final Prospectus.
(q) Prior to the related Closing Date, the Company
shall have furnished to the Underwriters such further information,
certificates and documents as the Underwriters may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects with respect to the particular
Offered Securities of a Series when and as provided in this Agreement and the
related Terms Agreement, or if any of the opinions and certificates mentioned
above or elsewhere in this Agreement and the related Terms Agreement shall not
be in all material respects reasonably satisfactory in form and substance to the
Underwriters and their counsel, this Agreement (with respect to the related
Offered Securities) and the related Terms Agreement and all obligations of the
Underwriters hereunder (with respect to the related Offered Securities) and
thereunder may be canceled at, or at any time prior to, the related Closing Date
by the Underwriters. Notice of such cancellation shall be given to the Company
in writing, or by telephone or telegraph confirmed in writing.
7. Indemnification and Contribution. (a) The Company and FFI,
jointly and severally, agree to indemnify and hold harmless each Underwriter and
each person who controls any Underwriter within the meaning of the Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act, the
Exchange Act, or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement relating to the Offered Securities of the applicable
Series as it became effective or in any amendment thereof or supplement thereto,
(ii) the omission or alleged omission to state in such Registration Statement a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (iii) any untrue statement or alleged untrue statement
of a material fact contained in the related Preliminary Prospectus or the
related Final Prospectus or in the Form 8-K referred to in such Final
Prospectus, or any amendment thereof or supplement thereto, or (iv) the omission
or alleged omission to state in such Preliminary Prospectus, such Final
Prospectus or such Form 8-K a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and agree to reimburse each such indemnified party for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) the Company and FFI will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein (A) in reliance upon and in conformity with written
information furnished to the Company as herein stated by or on behalf of any
Underwriter through you specifically for use in connection with the preparation
thereof or (B) in any Computational Materials or ABS Term Sheets (as defined in
Section 9(a) below) furnished to prospective investors by the Underwriters or
any Current Report or any amendment or supplement thereof, except to the extent
that any untrue statement or alleged untrue statement therein or omission or
alleged omission therefrom results directly from an error (a "Home Loan Pool
Error") in the information concerning the characteristics of the Home Loans
furnished by the Company to any Underwriter in writing or by electronic
transmission that was used in the preparation of either (x) any Computational
Materials or ABS Term Sheets (or amendments or supplements thereof) included in
such Current Report (or amendment or supplement thereof) or (y) any written or
electronic materials furnished to prospective investors on which the
Computational Materials (or amendments or supplements) were based, and (ii) such
indemnity with respect to any Corrected Statement (as defined below) in such
Final Prospectus (or supplement thereto) shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any loss, claim, damage or liability purchased the Securities of the
related Series that are the subject thereof if the untrue statement or omission
of a material fact contained in such Final Prospectus (or supplement thereto)
was corrected (a "Corrected Statement") in a supplement to such Final
Prospectus, such supplement was furnished by the Company to the Underwriters
prior to the delivery of the confirmation of sale of such Securities, and the
person asserting such loss, claim, damage or liability did not receive a copy of
such supplement at or prior to the confirmation of the sale of such Securities,
and (iii) such indemnity with respect to any Home Loan Pool Error shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any loss, claim, damage or liability
received any Computational Materials (or any written or electronic materials on
which the Computational Materials are based) or ABS Term Sheets that were
prepared on the basis of such Home Loan Pool Error, if, prior to the time of
confirmation of the sale of the applicable Securities to such person, the
Company notified the Underwriters of the Home Loan Pool Error or provided in
written or electronic form information superseding or correcting such Home Loan
Pool Error (in any such case, a "Corrected Home Loan Pool Error"), and such
Underwriter failed to notify such person thereof or to deliver to such person
corrected Computational Materials (or underlying written or electronic
materials) or ABS Term Sheets. This indemnity agreement will be in addition to
any liability that the Company or FFI may otherwise have.
(b) Each Underwriter agrees, severally, and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement relating to the Offered Securities
of the applicable Series, and each person who controls the Company within the
meaning of the Act or the Exchange Act to the same extent as the foregoing
indemnities from the Company to each Underwriter, but only with reference to (A)
written information furnished to the Company by or on behalf of such Underwriter
through you specifically for use in the preparation of the documents referred to
in the foregoing indemnity with respect to the related Series, or (B) any
Computational Materials or ABS Term Sheets (or amendments or supplements
thereof) delivered to prospective investors by such Underwriter, including any
Computational Materials or ABS Term Sheets that are furnished to the Company by
such Underwriter pursuant to Section 8 and incorporated by reference in such
Registration Statement, the related Preliminary Prospectus or the related Final
Prospectus or any amendment or supplement thereof (except that no such indemnity
shall be available for any losses, claims, damages or liabilities, or actions in
respect thereof, resulting from any Home Loan Pool Error, other than a Corrected
Home Loan Pool Error). This indemnity agreement will be in addition to any
liability that each Underwriter may otherwise have. The Company acknowledges
that the Underwriter-Provided Information constitutes the only information
furnished in writing by or on behalf of the Underwriters for inclusion in the
related Preliminary Prospectus or Final Prospectus (other than any Computational
Materials or ABS Term Sheets (or amendments or supplements thereof)), and the
Underwriters confirm that such statements are correct. "Underwriter-Provided
Information" means any statements provided to the Company by the Underwriters
specifically for use in the preparation of the related Preliminary Prospectus or
Final Prospectus and designated as such in the Terms Agreement for the related
Series, and any Computational Materials or ABS Term Sheets furnished to
prospective investors in the related Securities.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 7, notify such indemnifying party in writing of the
commencement thereof; but the omission so to notify such indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 7. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party or parties of the
commencement thereof, the indemnifying party or parties will be entitled to
participate therein, and to the extent that they may elect by written notice
delivered to an indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both an indemnified party and an
indemnifying party and such indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to an
indemnifying party, such indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from an indemnifying party or parties to such
indemnified party of their election so to assume the defense of such action and
approval by such indemnified party of counsel, such indemnifying party or
parties will not be liable to such indemnified party under this Section 7 for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) such indemnified party shall have
employed separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that the indemnifying party or parties shall not be liable
for the expenses of more than one separate counsel (in addition to local
counsel, if retention of local counsel is necessary in the determination of the
indemnifying party) approved by the indemnified party or parties in the case of
subparagraph (a) or (b), representing the indemnified parties under subparagraph
(a) or (b), who are parties to such action), (ii) the indemnifying party or
parties shall not have employed counsel satisfactory to the indemnified party or
parties to represent such indemnified party or parties within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party or
parties have authorized the employment of counsel for an indemnified party at
the expense of the indemnifying parties; and except that, if clause (i) or (iii)
is applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii).
(d) If the indemnification provided for in paragraph (a) or
(b) of this Section 7 is due in accordance with its terms but is for any reason
held by a court to be unavailable from the Company, FFI or any Underwriter, on
grounds of policy or otherwise, or if an indemnified party failed to give notice
under paragraph (c) of this Section 7 in respect of a claim otherwise subject to
indemnification in accordance with paragraph (a) or (b) of this Section 7, the
Company, FFI and each Underwriter shall contribute to the aggregate losses,
claims, damages and liabilities (including legal and other expenses reasonably
incurred in connection with investigating or defending same) to which the
Company, FFI and such Underwriter may be subject in such proportion so that such
Underwriter is responsible for that portion represented by the difference
between the portion of the proceeds to the Company in respect of the Offered
Securities underwritten by such Underwriter for the related Series and the
portion of the total proceeds received by such Underwriter from the sale of such
Offered Securities (the "Underwriting Discount"), and the Company and FFI are
responsible for the balance; provided, however, that in no case shall any such
Underwriter be responsible under this subparagraph for any amount in excess of
such Underwriting Discount applicable to the Offered Securities purchased by
such Underwriter pursuant to this Agreement and the related Terms Agreement.
Notwithstanding anything to the contrary in this Section 7(d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person who
controls any Underwriter within the meaning of either the Act or the Exchange
Act shall have the same rights to contribution as such Underwriter, and each
person who controls the Company or FFI within the meaning of either the Act or
the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company or FFI shall have the
same rights to contribution as the Company or FFI, subject in each case to the
immediately preceding sentence of this paragraph (d).
8. Computational Materials and Structural Term Sheets. (a) In
accordance with Section 10, the Underwriters shall deliver to the Company one
complete copy of all materials provided by the Underwriters to prospective
investors in such Offered Securities which constitute (i) "Computational
Materials" within the meaning of the no-action letter dated May 20, 1994 issued
by the Division of Corporation Finance of the Commission to Kidder, Peabody
Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder
Structured Asset Corporation and the no-action letter dated May 27, 1994 issued
by the Division of Corporation Finance of the Commission to the Public
Securities Association (together, the "Kidder Letters"), the filing of which
material is a condition of the relief granted in such letters (such materials
being the "Computational Materials"), and (ii) "Structural Term Sheets" within
the meaning of the no-action letter dated February 17, 1995 issued by the
Division of Corporation Finance of the Commission to the Public Securities
Association (the "PSA Letter"), the filing of which material is a condition of
the relief granted in such letter (such materials being the "Structural Term
Sheets"). Each delivery of Computational Materials and Structural Term Sheets to
the Company pursuant to this paragraph (a) shall be effected in accordance with
Section 10.
(b) Each Underwriter represents and warrants to and agrees
with the Company, as of the date of the related Terms Agreement and as of the
Closing Date, that:
(i) the Computational Materials furnished to the
Company by such Underwriter pursuant to Section 8(a)
constitute (either in original, aggregated or consolidated
form) all of the materials furnished to prospective investors
by such Underwriter prior to the time of delivery thereof to
the Company that are required to be filed with the Commission
with respect to the related Offered Securities in accordance
with the Kidder Letters, such Computational Materials comply
with the requirements of the Kidder Letters, and delivery of
such Computational Materials was made to investors in a manner
in accordance with the provisions of the Kidder Letters;
(ii) the Structural Term Sheets furnished to the
Company by such Underwriter pursuant to Section 8(a)
constitute all of the materials furnished to prospective
investors by such Underwriter prior to the time of delivery
thereof to the Company that are required to be filed with the
Commission as "Structural Term Sheets" with respect to the
related Offered Securities in accordance with the PSA Letter,
such Structural Term Sheets comply with the requirements of
the PSA Letter, and delivery of such Structural Term Sheets
was made to investors in a manner in accordance with the
provisions of the PSA Letter; and
(iii) on the date any such Computational Materials or
Structural Term Sheets with respect to such Offered Securities
(or any written or electronic materials furnished to
prospective investors on which the Computational Materials are
based) were last furnished to each prospective investor by
such Underwriter and on the date of delivery thereof to the
Company pursuant to Section 8(a) and on the related Closing
Date, such Computational Materials (or such other materials)
or Structural Term Sheets did not and will not include any
untrue statement of a material fact.
Notwithstanding the foregoing, each Underwriter makes no representation or
warranty as to whether any Computational Materials or Structural Term Sheets (or
any written or electronic materials on which the Computational Materials are
based) included or will include any untrue statement resulting directly from any
Home Loan Pool Error (except any Corrected Home Loan Pool Error, with respect to
materials prepared after the receipt by the Underwriters from the Company of
materials superseding or correcting such Home Loan Pool Error).
(c) Each Underwriter acknowledges and agrees that any
Computational Materials or Structural Term Sheets with respect to any Series of
Securities furnished to prospective investors in the related Securities have
been prepared and disseminated by or on behalf of such Underwriter and not by or
on behalf of the Company, and that such materials included and shall include a
disclaimer in form satisfactory to the Company to the effect that such materials
have been prepared and disseminated by such Underwriter, and that the content
and accuracy of such materials have not been reviewed by the Company.
(d) If, at any time when a prospectus relating to the Offered
Securities of a Series is required to be delivered under the Act, it shall be
necessary to amend or supplement the related Final Prospectus as a result of an
untrue statement of a material fact contained in any Computational Materials or
Structural Term Sheets provided by any Underwriter pursuant to this Section 8,
or if it shall be necessary to amend or supplement any Current Report relating
to any Computational Materials or Structural Term Sheets to comply with the Act
or the rules thereunder, such Underwriter promptly will prepare and furnish to
the Company for filing with the Commission an amendment or supplement which will
correct such statement or an amendment which will effect such compliance. Each
Underwriter represents and warrants to the Company, as of the date of delivery
by it of such amendment or supplement to the Company, that such amendment or
supplement will not include any untrue statement of a material fact or, when
read in conjunction with the related Final Prospectus and Prospectus Supplement,
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that each such
Underwriter makes no representation or warranty as to whether any such amendment
or supplement will include any untrue statement resulting directly from any Home
Loan Pool Error (except any Corrected Home Loan Pool Error, with respect to any
such amendment or supplement prepared after the receipt by the Underwriters from
the Company of materials superseding or correcting such Corrected Home Loan Pool
Error).
9. Collateral Term Sheets. (a) Prior to the delivery of any
"Collateral Term Sheet" within the meaning of the PSA Letter, the filing of
which material is a condition of the relief granted in such letter (such
material being the "Collateral Term Sheets"), to a prospective investor in the
Offered Securities, the Underwriters shall notify the Company and its counsel by
telephone of their intention to deliver such materials and the approximate date
on which the first such delivery of such materials is expected to occur. Not
later than 10:30 a.m., New York time, on the business day immediately following
the date on which any Collateral Term Sheet was first delivered to a prospective
investor in the Offered Securities, the Underwriters shall deliver to the
Company one complete copy of all materials provided by the Underwriters to
prospective investors in such Offered Securities which constitute "Collateral
Term Sheets." Each delivery of a Collateral Term Sheet to the Company pursuant
to this paragraph (a) shall be effected in accordance with Section 10.
(Collateral Term Sheets and Structural Term Sheets are, together, referred to
herein as "ABS Term Sheets.") At the time of each such delivery, the Underwriter
making such delivery shall indicate in writing that the materials being
delivered constitute Collateral Term Sheets, and, if there has been any prior
such delivery with respect to the related Series, shall indicate whether such
materials differ in any material respect from any Collateral Term Sheets
previously delivered to the Company with respect to such Series pursuant to this
Section 9(a) as a result of the occurrence of a material change in the
characteristics of the related Home Loans.
(b) Each Underwriter represents and warrants to and agrees
with the Company, as of the date of the related Terms Agreement and as of the
Closing Date, that:
(i) The Collateral Term Sheets furnished to the Company
by such Underwriter pursuant to Section 9(a) constitute all of the
materials furnished to prospective investors by such Underwriter prior
to time of delivery thereof to the Company that are required to be
filed with the Commission as "Collateral Term Sheets" with respect to
the related Offered Securities in accordance with the PSA Letter,
such Collateral Term Sheets comply with the requirements of the
PSA Letter, and delivery of such Collateral Term Sheets was made to
investors in a manner in accordance with the provisions of the PSA
Letter; and
(ii) On the date any such Collateral Term Sheets
with respect to such Offered Securities were last furnished to each
prospective investor by such Underwriter and on the date of
delivery thereof to the Company pursuant to Section 9(a) and on the
related Closing Date, such Collateral Term Sheets did not and will
not include any untrue statement of a material fact.
Notwithstanding the foregoing, each Underwriter makes no representation or
warranty as to whether any Collateral Term Sheet included or will include any
untrue statement resulting directly from any Home Loan Pool Error (except any
Corrected Home Loan Pool Error, with respect to materials prepared after the
receipt by the Underwriters from the Company of materials superseding or
correcting such Corrected Home Loan Pool Error).
(c) Each Underwriter acknowledges and agrees that any
Collateral Term Sheets with respect to any Series of Securities furnished to
prospective investors in the related Securities have been prepared and
disseminated by or on behalf of such Underwriter and not by or on behalf of the
Company, and that such materials shall include a disclaimer in form satisfactory
to the Company to the effect set forth in Section 8(c) hereof, and to the effect
that the information contained in such materials supersedes the information
contained in any prior Collateral Term Sheet with respect to such Series of
Securities and will be superseded by the description of the related Home Loans
in the related Prospectus Supplement . Each Underwriter agrees that it will not
represent to prospective investors that any Collateral Term Sheets were prepared
or disseminated on behalf of the Company.
(d) If, at any time when a prospectus relating to the Offered
Securities of a Series is required to be delivered under the Act, it shall be
necessary to amend or supplement the related Final Prospectus as a result of an
untrue statement of a material fact contained in any Collateral Term Sheets
provided by any Underwriter pursuant to this Section 9, or if it shall be
necessary to amend or supplement any Current Report relating to any Collateral
Term Sheets to comply with the Act or the rules thereunder, such Underwriter
promptly will prepare and furnish to the Company for filing with the Commission
an amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Each Underwriter represents and
warrants to the Company, as of the date of delivery of such amendment or
supplement to the Company, that such amendment or supplement will not include
any untrue statement of a material fact or, when read in conjunction with the
related Final Prospectus and Prospectus Supplement, omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that each such Underwriter makes no
representation or warranty as to whether any such amendment or supplement will
include any untrue statement resulting directly from any Home Loan Pool Error
(except any Corrected Home Loan Pool Error, with respect to any such amendment
or supplement prepared after the receipt by the Underwriters from the Company of
materials superseding or correcting such Corrected Home Loan Pool Error).
10. Delivery and Filing of Computational Materials, Collateral
Term Sheets and Structural Term Sheets.
(a) Any delivery of Computational Materials, Collateral Term
Sheets or Structural Term Sheets that is required to be made
by an Underwriter to the Company hereunder shall be effected
by the delivery of four copies to counsel for the Company and
one copy in computer readable format to the Financial Printer
on or prior to 10:30 a.m. on the date so specified herein.
(b) The Company shall cause the Financial Printer to file with
the Commission on a Current Report on Form 8-K any such
Computational Materials, Collateral Term Sheets or Structural
Term Sheets promptly following the delivery thereof pursuant
to the preceding subsection.
11. Termination. This Agreement (with respect to a particular
Offering) and the related Terms Agreement shall be subject to termination in the
absolute discretion of the Underwriters, by notice given to the Company prior to
delivery of and payment for the related Offered Securities, if prior to the
related Closing Date (i) trading in securities generally on the New York Stock
Exchange shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking activities in New York shall have been declared
by either federal or New York State authorities, or (iii) there shall have
occurred any outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United States is such
as to make it, in the reasonable judgment of the Underwriters, impracticable to
market such Offered Securities.
12. Representations and Indemnities to Survive Delivery. The
agreements, representations, warranties, indemnities and other statements of the
Company, FFI or their officers and of the Underwriters set forth in or made
pursuant to this Agreement and the related Terms Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of the
Underwriters or the Company, FFI or any of the officers, directors or
controlling persons referred to in Section 7 hereof, and will survive delivery
of and payment for the related Offered Securities. The provisions of Section 7
hereof shall survive the termination or cancellation of this Agreement and the
related Terms Agreement.
13. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail on the Closing Date to purchase the Offered
Securities which it or they are obligated to purchase hereunder and under the
applicable Terms Agreement (the "Defaulted Securities"), you shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms set forth herein and in the applicable Terms Agreement. If,
however, you have not completed such arrangements within such 24-hour period,
then:
(a) if the aggregate original principal balance of Defaulted
Securities does not exceed 10% of the aggregate original
principal balance of the Offered Securities to be purchased
pursuant to such Terms Agreement, the non-defaulting
Underwriters named in such Terms Agreement shall be obligated
to purchase the full amount thereof in the proportions that
their respective underwriting obligations thereunder bear to
the underwriting obligations of all non-defaulting
Underwriters; and
(b) if the aggregate original principal balance of Defaulted
Securities exceeds 10% of the aggregate original principal
balance of the Offered Securities to be purchased pursuant to
such Terms Agreement, the applicable Terms Agreement shall
terminate without any liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section 13 and nothing in this
Agreement shall relieve any defaulting Underwriter from liability in respect of
its default.
In the event of any such default which does not result in a termination
of this Agreement or such applicable Terms Agreement, either you or the Company
shall have the right to postpone the Closing Date for a period of time not
exceeding seven days in order to effect any required changes in the Registration
Statement or in any other documents or arrangements.
14. Guarantor. FIRSTPLUS Financial Group, Inc., the parent of
the Company and FFI ("FFG"), shall guarantee any obligation or liability of the
Company or FFI pursuant to Section 7 hereof. FFG's acceptance of its guarantee
obligation is acknowledged by the execution of the signature page of this
Agreement by an authorized signatory of FFG.
15. Successors. This Agreement and the related Terms Agreement
will inure to the benefit of and be binding upon the parties hereto and thereto
and their respective successors and the officers, directors and controlling
persons referred to in Section 7 hereof, and their successors and assigns, and
no other person will have any right or obligation hereunder or thereunder. No
purchaser of any Offered Security from the Underwriters shall be deemed a
successor or assign by reason of such purchase.
16. APPLICABLE LAW. THIS AGREEMENT AND THE RELATED TERMS
AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
17. Miscellaneous. This Agreement, as supplemented by the
related Terms Agreement, supersedes all prior and contemporaneous agreements and
understandings relating to the subject matter hereof. This Agreement and the
related Terms Agreement or any term of each may not be changed, waived,
discharged or terminated except by an affirmative written agreement made by the
party against whom enforcement of the change, waiver, discharge or termination
is sought. The headings in this Agreement and the related Terms Agreement are
for purposes of reference only and shall not limit or otherwise affect the
meaning hereof or thereof.
18. Notices. All communications by one party hereunder to all
other parties hereunder will be in writing and effective only on receipt by such
other parties, and will be delivered as follows: (A) to the Underwriters at the
address first above written; (B) to the Company at 3773 Howard Hughes Parkway,
Suite 300N, Las Vegas, Nevada 89109, Attention: Michael Orendorf; and (C) to FFI
at FIRSTPLUS Financial, Inc., 1600 Viceroy, 7th Floor, Dallas, Texas 75235,
Attention: Christopher Gramlich.
<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
among the Company, FFI and the Underwriters.
Very truly yours,
FIRSTPLUS INVESTMENT CORPORATION
By:_________________________________
Name:
Title:
FIRSTPLUS FINANCIAL INC.
By:________________________________
Name:
Title:
Acknowledged by:
FIRSTPLUS FINANCIAL GROUP, INC.
By:________________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Deutsche Morgan Grenfell Inc.
as Representative of
the several Underwriters
By:_______________________________________
Name:
Title:
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT A
FIRSTPLUS HOME LOAN TRUST 1998-3
ASSET-BACKED SECURITIES
TERMS AGREEMENT
(to Underwriting Agreement,
dated May __________, 1998
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,
Deutsche Morgan Grenfell Inc.
as Representative of the several
Underwriters
By:____________________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
FIRSTPLUS Investment Corporation
By:____________________________________
Name:
Title:
FIRSTPLUS Financial Inc.
By:____________________________________
Name:
Title:
ACKNOWLEDGED BY:
FIRSTPLUS Financial Group, Inc.
By:_____________________________________
Name:
Title:
Exhibit 1.2
EXECUTION
FIRSTPLUS HOME LOAN TRUST 1998-4
ASSET-BACKED SECURITIES
TERMS AGREEMENT
(to Underwriting Agreement
dated May 13, 1998
among the Company, FFI and the Representative
on behalf of the Underwriter)
FIRSTPLUS Investment Corporation June 18, 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
1998-4 Securities solely as it relates to the purchase and sale of the Offered
Securities described below. The Series 1998-4 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 1998-4 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:
<TABLE>
<CAPTION>
Principal Interest Class Purchase
Class Balance Rate(1) Price Percentage
----- ------- ------- ----------------
<S> <C> <C> <C> <C>
Class A-1 Notes $173,836,000.00 (2) 99.900000%
Class A-2 Notes 37,456,000.00 6.12% 99.860067%
Class A-3 Notes 77,898,000.00 6.24% 99.823166%
Class A-4 Notes 46,039,000.00 6.32% 99.793296%
Class A-5 Notes 17,773,000.00 6.38% 99.717823%
Class A-6 Notes 52,149,000.00 6.61% 99.680443%
Class A-7 Notes 20,123,000.00 6.80% 99.636215%
Class A-8 Notes 32,256,000.00 6.99% 99.515700%
Class M-1 Notes 68,175,000.00 6.80% 99.313554%
Class M-2 Notes 37,875,000.00 7.19% 99.190518%
Class B-1 Notes 27,270,000.00 8.21% 99.097084%
</TABLE>
(1) The Interest Rate will be increased by 0.50% beginning after the
Initial Call Date, as defined in the Memorandum.
(2) Interest will accrue on the Class A-1 Notes with respect to each
Payment Date at a per annum rate equal to LIBOR for the related Accrual
Period plus 0.04%, subject to a maximum rate equal to the Net Weighted
Average Rate. Capitalized terms are as defined in the Prospectus
Supplement.
Each of the Underwriters agrees, severally and not jointly, subject to
the terms and provisions herein and of the captioned Underwriting Agreement, to
purchase the principal balances of the Classes of Series 1998-4 Securities
specified opposite its name below
<TABLE>
<CAPTION>
Merrill Lynch,
Deutsche Bank Pierce, Fenner &
Securities Inc. Smith Incorporated PaineWebber Incorporated
Class Bear, Stearns
& Co. Inc
<S> <C> <C> <C> <C> <C>
Class A-1 Notes $43,459,000 $43,459,000 $43,459,000 $43,459,000
Class A-2 Notes 9,364,000 9,364,000 9,364,000 9,364,000
Class A-3 Notes 19,474,500 19,474,500 19,474,500 19,474,500
Class A-4 Notes 11,509,750 11,509,750 11,509,750 11,509,750
Class A-5 Notes 4,443,250 4,443,250 4,443,250 4,443,250
Class A-6 Notes 13,037,250 13,037,250 13,037,250 13,037,250
Class A-7 Notes 5,030,750 5,030,750 5,030,750 5,030,750
Class A-8 Notes 8,064,000 8,064,000 8,064,000 8,064,000
Class M-1 Notes 17,043,750 17,043,750 17,043,750 17,043,750
Class M-2 Notes 9,468,750 9,468,750 9,468,750 9,468,750
Class B-1 Notes 6,817,500 6,817,500 6,817,500 6,817,500
</TABLE>
(b) The Offered Securities shall have such other
characteristics as described in the related Final Prospectus.
Section 3. Purchase Price: The Purchase Price for each Class
of the Offered Securities shall be the Class Purchase Price Percentage therefor
(as set forth in Section 2(a) above) of the initial class principal balance
thereof plus accrued interest at the applicable interest rate per annum of each
such Class from and including the Cut-off Date up to, but not including, June
24, 1998 (the "Closing Date").
Section 4. Required Ratings: The Offered Securities, other
than the 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 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.
<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,
Deutsche Bank Securities Inc.
as Representative of the several
Underwriters
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
FIRSTPLUS INVESTMENT CORPORATION
By: ____________________________________
Name:
Title:
FIRSTPLUS FINANCIAL INC.
By: ____________________________________
Name:
Title:
ACKNOWLEDGED BY:
FIRSTPLUS FINANCIAL GROUP, INC.
By: _____________________________________
Name:
Title:
Exhibit 4.1
EXECUTION
==============================================================================
INDENTURE
between
FIRSTPLUS HOME LOAN OWNER TRUST 1998-4,
as Issuer
and
U. S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
Dated as of June 1, 1998
FIRSTPLUS HOME LOAN OWNER TRUST 1998-4
Asset Backed Securities, Series 1998-4
==============================================================================
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...................................12
Section 2.10. Release of Collateral.....................................15
Section 2.11. Book-Entry Notes..........................................16
Section 2.12. Notices to Clearing Agency................................17
Section 2.13. Definitive Notes..........................................17
Section 2.14. Tax.......................................................17
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest.........................17
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..........................20
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.......................................23
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..................25
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.......................................31
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............................32
Section 5.11. Delay or Omission Not a Waiver............................32
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........34
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................................37
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.........................................39
Section 6.11. Eligibility; Disqualification.............................40
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................................42
Section 8.03. [Reserved]................................................45
Section 8.04. Servicer's Monthly Statements.............................45
Section 8.05. Release of Collateral.....................................45
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......................48
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........................................55
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 June 1, 1998, between FIRSTPLUS Home Loan Owner
Trust 1998-4, 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.
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.
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 1998-4 until a successor replaces
------
it and, thereafter, the successor and, for purposes of any provision contained
herein and required by the TIA, each other obligor on the Notes.
Issuer Order and Issuer Request: A written order or request signed in the
------------- ---------------
name of the Issuer by any one of its Authorized Officers and delivered to the
Indenture Trustee.
Majority Highest Priority Class Noteholders: On any date, Holders of
-------------------------------------------
Highest Priority Class Notes representing more than 50% of the Class Principal
Balance of the Highest Priority Class Notes then outstanding.
Maturity Date: With respect to each Class of Notes, the applicable
-------------
maturity date set forth below:
Class Maturity Date
----- -------------
A-1 January 10, 2011
A-2 July 10, 2012
A-3 May 11, 2015
A-4 March 10, 2017
A-5 January 10, 2018
A-6 August 10 2021
A-7 September 12, 2022
A-8 September 10, 2024
M-1 September 10, 2024
M-2 September 10, 2024
B-1 September 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 June 23, 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 June 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.
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 1998-4 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 Aggregate Principal Amount
----- --------------------------
A-1 $173,836,000
A-2 37,456,000
A-3 77,898,000
A-4 46,039,000
A-5 17,773,000
A-6 52,149,000
A-7 20,123,000
A-8 32,256,000
M-1 68,175,000
M-2 37,875,000
B-1 27,270,000
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 shall be issuable as registered Notes in the
minimum denominationS of, (i) in the case of the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8 Notes, $50,000
and integral multiples of $1,000 in excess thereof and, (ii) in the case of
the Class M-1, Class M-2 and Class B-1 Notes, $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 applicable minimum denomination.
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
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shall cause to be kept a register (the "Note Register") in which, subject to
such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee initially shall be the "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties
of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture
Trustee shall have the right to inspect the Note Register at all reasonable
times and to obtain copies thereof, and the Indenture Trustee shall have the
right to rely upon a certificate executed on behalf of the Note Registrar by
an Executive Officer thereof as to the names and addresses of the Holders of
the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, the
Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall be entitled to obtain from the Indenture Trustee, in the name
of the designated transferee or transferees, one or more new Notes of the same
Class in any authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of the
same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall be
entitled to obtain from the Indenture Trustee, the Notes which the Noteholder
making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Any Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Exchange Act.
No service charge shall be made to a Noteholder for any registration
of transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Notes, other
than exchanges pursuant to Section 2.04 or Section 9.06 not involving any
transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to such
Note.
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
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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
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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
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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.
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(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,
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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.
(v) 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,
(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 Duff and
Fitch and "BBB-" or the equivalent by each f 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. (a) 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 2.10. 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 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 above. Any such release pursuant to clause 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 2.11. 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
(vi) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the Notes, the
Clearing Agency shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Indenture Trustee.
Section 2.12 Notices to Clearing Agency. Whenever a notice or other
--------------------------
communication to the Noteholders 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 2.13. 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 2.14. Tax . The Issuer has entered into this Indenture, and
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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
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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,
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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,
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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 (b) and (c) above.
Section 4.02. Application of Trust Money . All moneys deposited with the
--------------------------
Indenture Trustee pursuant to Sections 3.03 and 4.01 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Notes and
this Indenture, to
the payment, either directly or through any Paying Agent, as the Indenture
Trustee may determine, to the Holders of the particular Notes for the payment
or redemption of which such moneys have been deposited with the Indenture
Trustee, of all sums due and to become due thereon for principal and interest;
but such moneys need not be segregated from other funds except to the extent
required herein or in the Sale and Servicing Agreement or required by law.
Section 4.03. Repayment of Moneys Held by Paying Agent. In connection
----------------------------------------
with the satisfaction and discharge of this Indenture with respect to the
Notes, all moneys then held by any Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes
shall, upon demand of the Issuer, be paid to the Indenture Trustee to be
held and applied according to Section 3.03 and thereupon such Paying Agent
shall be released from all further liability with respect to such 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 Outstanding
Amount of the Notes, a written notice specifying such default or
incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a notice of Default hereunder; or
(iv) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the 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 Outstanding Amount 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 Outstanding Amount 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 A IO and B-2 Components;
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 interest on, if any, and Deferred Amounts, if
any, on such Note on or after the Maturity Date (or, in the case of
redemption, on or after the Termination Date) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
Section 5.09. Restoration of Rights and Remedies . If the Indenture
----------------------------------
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had
been instituted.
Section 5.10. Rights and Remedies Cumulative . No right or remedy herein
-----------------------------
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not a Waiver. No delay or omission of the
-----------------------------
Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture
Trustee or to the Noteholders may be exercised from time to time, and as often
as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as
the case may be.
Section 5.12. Control by Noteholders. The Majority Highest Priority Class
----------------------
Noteholders shall have the right to direct the time, method and
place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred
on the Indenture Trustee; provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to the express terms of Section 5.05, any direction to
the Indenture Trustee to sell or liquidate the Collateral shall be by
Holders of Notes representing not less than 100% of the Outstanding
Amount of the Notes;
(c) if the conditions set forth in Section 5.06 have been satisfied
and the Indenture Trustee elects to retain the Collateral pursuant to
such Section, then any direction to the Indenture Trustee by Holders of
Notes representing less than 100% of the Outstanding Amount of the
Highest Priority Class Notes to sell or liquidate the Collateral shall be
of no force and effect; and
(d) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of the Noteholders set forth in this
Section, subject to Section 6.01, the Indenture Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
Section 5.13. Waiver of Past Defaults. Prior to the declaration of the
-----------------------
acceleration of the maturity of the Notes as provided in Section 5.02, the
Majority Highest Priority Class Noteholders may waive any past Default or
Event of Default and its consequences except a Default (a) in the payment of
interest on any of the Notes or (b) in respect of a covenant or provision
hereof that cannot be modified or amended without the consent of the Holder of
each Note, as applicable. In the case of any such waiver, the Issuer, the
Indenture Trustee and the Holders of the Notes shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
Section 5.14. Undertaking for Costs . All parties to this Indenture agree,
--------------------
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it
as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on
or after the respective due dates expressed in such Note and in this Indenture
(or, in the case of redemption, on or after the Termination Date).
Section 5.15. Waiver of Stay or Extension Laws. The Issuer covenants
--------------------------------
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted
to the Indenture Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
Section 5.16. Action on Notes.
----------------
The Indenture Trustee's right to seek and recover judgment on the Notes or
under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture.
Neither the lien of this Indenture nor any rights or remedies of the Indenture
Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Indenture Trustee against the Issuer or by the levy of any execution
under such judgment upon any portion of the Collateral or upon any of the
assets of the Issuer. Any money or property collected by the Indenture Trustee
shall be applied in accordance with Section 5.05(b).
Section 5.17. Performance and Enforcement of Certain Obligations.
--------------------------------------------------
(a) Promptly following a request from the Indenture Trustee to do so
and at the 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. (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-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7 and Class A-8 Notes, in that
order, in reduction of the Class Principal Balances thereof;
(iii) to the extent of the Regular Payment Amount for such
Payment Date, in the following order of priority:
(A) to the Holders of the Senior Notes, the Senior
Noteholders' Interest Payment Amount for such Payment Date,
allocated to each Class of Senior Notes, PRO RATA, based on the
amount of interest payable in respect of each such Class based
on the applicable Interest Rate;
(B) to the Holders of the Class M-1 Notes, the Class M-1
Noteholders' Interest Payment Amount for such Payment Date;
(C) to the Holders of the Class M-2 Notes, the Class M-2
Noteholders' Interest Payment Amount for such Payment Date;
(D) to the Holders of the Class B-1 Notes, the Class B-1
Noteholder's Interest Payment Amount from such Payment Date;
(E) to the Holders of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8 Notes,
in that order, until the respective Class Principal Balances
thereof 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-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8 Notes,
in that order, until the respective Class Principal Balances
thereof are reduced to zero, the amount necessary to reduce the
aggregate of the Class Principal Balances thereof to the Senior
Optimal Principal Balance for such Payment Date;
2) to the Holders of the Class M-1 Notes, the amount
necessary to reduce the Class Principal Balance thereof to the
Class M-1 Optimal Principal Balance for such Payment Date;
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 9Supplemental 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 9Supplemental 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 9Execution 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 1Redemption . 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 1Form 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 1Notes 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 1Compliance 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 (iii), 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 1Form 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 1Acts 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 1Notices, 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
1998-4, 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 1Notices 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 1[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 1Effect 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 1998-4
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 NEWCASTLE )
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 1998-4, 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 June, 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 June, 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)
A-1-8
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.
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 1998-4
CLASS A-1 ASSET BACKED NOTES
Original Principal Balance of the Class A-1 Notes:
Original Principal Balance of this Note:
Interest Rate: Variable
Cut-Off Date: May , 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-4, 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-1 Notes pursuant to Section 8.02(a) of
the Indenture dated as of June 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 January 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 a per annum rate equal
to LIBOR for the related Accrual Period plus 0.04%, 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 1998-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
Authorized Signatory
Dated: June , 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: June , 1998
FIRSTPLUS HOME LOAN OWNER TRUST 1998-4
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 and Class A-8 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 July 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 Outstanding Amount 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.
A-2-3
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 1998-4
CLASS A-2 ASSET BACKED NOTES
Original Principal Balance of the Class A-2 Notes:
Original Principal Balance of this Note:
Interest Rate: %
Cut-Off Date: May , 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-4, 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 June 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 July 2012 (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 June 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 1998-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
under the Trust Agreement
By:
Authorized Signatory
Dated: June , 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: June , 1998
[For Reverse of Class A-2 Note, see Form of Class A-1 Note]
A-3-3
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 1998-4
CLASS A-3 ASSET BACKED NOTES
Original Principal Balance of the Class A-3 Notes:
Original Principal Balance of this Note:
Interest Rate: %
Cut-Off Date: May , 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-4, 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 June 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 May 2015 (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 June 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 1998-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
under the Trust Agreement
By:
Authorized Signatory
Dated: June , 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: June , 1998
[For Reverse of Class A-3 Note, see Form of Class A-1 Note]
A-4-3
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 1998-4
CLASS A-4 ASSET BACKED NOTES
Original Principal Balance of the Class A-4 Notes:
Original Principal Balance of this Note:
Interest Rate: %
Cut-Off Date: May , 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-4, 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 June 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 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 June 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 1998-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
under the Trust Agreement
By:
Authorized Signatory
Dated: June , 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: June , 1998
[For Reverse of Class A-4 Note, see Form of Class A-1 Note]
A-5-3
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 1998-4
CLASS A-5 ASSET BACKED NOTES
Original Principal Balance of the Class A-5 Notes:
Original Principal Balance of this Note:
Interest Rate: %
Cut-Off Date: May , 1998 -------
------
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-4, 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 June 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 January 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 June 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 1998-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
under the Trust Agreement
By:
Authorized Signatory
Dated: June , 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: June , 1998
[For Reverse of Class A-5 Note, see Form of Class A-1 Note]
A-6-3
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 1998-4
CLASS A-6 ASSET BACKED NOTES
Original Principal Balance of the Class A-6 Notes:
Original Principal Balance of this Note:
Interest Rate: %
Cut-Off Date: May , 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-4, 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 June 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 August 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 June 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 1998-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
under the Trust Agreement
By:
Authorized Signatory
Dated: June , 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: June , 1998
[For Reverse of Class A-6 Note, see Form of Class A-1 Note]
A-7-3
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 1998-4
CLASS A-7 ASSET BACKED NOTES
Original Principal Balance of the Class A-7 Notes:
Original Principal Balance of this Note:
Interest Rate: %
Cut-Off Date: May , 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-4, 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 June 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 2022 (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 June 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 1998-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
under the Trust Agreement
By:
Authorized Signatory
Dated: June , 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: June , 1998
[For Reverse of Class A-7 Note, see Form of Class A-1 Note]
A-8-3
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 1998-4
CLASS A-8 ASSET BACKED NOTES
Original Principal Balance of the Class A-8 Notes:
Original Principal Balance of this Note:
Interest Rate: %
Cut-Off Date: May , 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-4, 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 $ 0 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 June 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 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 June 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 1998-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Owner Trustee
under the Trust Agreement
By:
Authorized Signatory
Dated: June , 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: June , 1998
[For Reverse of Class A-8 Note, see Form of Class A-1 Note]
A-9-3
EXHIBIT A-9
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 1998-4
CLASS M-1 ASSET BACKED NOTES
Original Principal Balance of the Class M-1 Notes:
Original Principal Balance of this Note:
Interest Rate: %
Cut-Off Date: May , 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-4, 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 June 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 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 June 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 1998-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
under the Trust Agreement
By:
Authorized Signatory
Dated: June , 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: June , 1998
[For Reverse of Class M-1 Note, see Form of Class A-1 Note]
A-10-3
EXHIBIT A-10
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 1998-4
CLASS M-2 ASSET BACKED NOTES
Original Principal Balance of the Class M-2 Notes:
Original Principal Balance of this Note:
Interest Rate: %
Cut-Off Date: May , 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-4, 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 June 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 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 June 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 1998-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Owner Trustee
under the Trust Agreement
By:
Authorized Signatory
Dated: June , 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: June , 1998
[For Reverse of Class M-2 Note, see Form of Class A-1 Note]
A-11-3
EXHIBIT A-11
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 1998-4
CLASS B-1 ASSET BACKED NOTES
Original Principal Balance of the Class B-1 Notes:
Original Principal Balance of this Note:
Interest Rate: %
Cut-Off Date: May 31, 1998
Number CUSIP:
FIRSTPLUS Home Loan Owner Trust 1998-4, 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 June 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 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 June 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 1998-4
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
under the Trust Agreement
By:
Authorized Signatory
Dated: June , 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: June , 1998
[For Reverse of Class B-1 Note, see Form of Class A-1 Note]
Exhibit 10.1
SUBSEQUENT TRANSFER AGREEMENT
This SUBSEQUENT TRANSFER AGREEMENT dated as of June 30, 1998 (this
"Agreement") is entered into by and among FIRSTPLUS FINANCIAL, INC., as
Transferor and Servicer (the "Transferor" and "Servicer"), FIRSTPLUS
Investment Corporation, as Seller (the "Seller"), and FIRSTPLUS Home Loan
Owner Trust 1998-4, 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 June 1, 1998 (the "Loan Sale Agreement") by and between
the Transferor and the Seller, and that certain Sale and Servicing Agreement
dated as of June 1, 1998 (the "Sale and Servicing Agreement") by and among the
Seller, the Transferor and Servicer, the Issuer, the Indenture Trustee and the
Co-Owner Trustee;
WHEREAS, pursuant to the Loan Sale Agreement and the Sale and Servicing
Agreement, the Transferor, the Seller, the Issuer and the Indenture Trustee
agreed to the sale by the Transferor to the Seller, the sale by the Seller to
the Issuer and the pledge by the Issuer to Indenture Trustee of additional
Home Loans following the Closing Date; and
WHEREAS, the Transferor, the Seller, the Issuer and the Indenture Trustee
desire to enter into this Subsequent Transfer Agreement to reflect the sale,
transfer, assignment, set over, conveyance and grant of certain additional
Home Loans to the Issuer and their pledge to the Indenture Trustee.
NOW, THEREFORE, in consideration of the premises herein contained and for
other good and valuable consideration, the receipt and sufficiency of which
are mutually acknowledged, the Transferor, the Seller, the Issuer and the
Indenture Trustee hereby agree as follows:
Section 1. Subsequent Home Loans. The Transferor, the Seller, the Issuer
---------------------
and the Indenture Trustee hereby agree to the sale, transfer, assignment, set
over, conveyance and grant by the Transferor to the Seller, the sale,
transfer, assignment, set over, conveyance and grant by the Seller to the
Issuer and the Grant by the Issuer to the Indenture Trustee of the additional
home loans as described on Attachment 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, or if not defined
therein, in the Indenture, dated as of June 1, 1998, between the Issuer and
the indenture Trustee (the "Indenture").
Section 2. Sale by Transferor to Seller of Subsequent Home Loans. The
-----------------------------------------------------
Transferor does hereby sell, transfer, assign, set over, convey and Grant to
the Seller:
(i) all of the right, title and interest of the Transferor in and to
each Subsequent Home Loan identified on the Home Loan Schedule,
including without limitation, the Home Loans, the Servicer's Home
Loan Files and the Debt Instruments, and all payments on, and
proceeds with respect to, such Subsequent Home Loans received on and
after the applicable Cut-Off Date;
(ii) all right, title and interest of the Transferor in the Mortgages on
the properties securing the Subsequent Home Loans, if any, including
any Mortgaged Property acquired by or on behalf of the Seller or its
successor by foreclosure or deed in lieu of foreclosure or
otherwise;
(iii) all right, title and interest of the Transferor in and to any rights
in or proceeds from any insurance policies (including title
insurance policies) covering the Subsequent Home Loans, the related
Mortgaged Properties or the related Obligors and any amounts
recovered from third parties in respect of any Liquidated Home
Loans; and
(iv) all the proceeds of each of the foregoing.
With respect to each Subsequent Home Loan, the Transferor has delivered
or caused to be delivered to the Seller, each item set forth in Section 2.02
of the Sale and Servicing Agreement. The transfer to the Seller by the
Transferor of the Subsequent Home Loans identified on the Mortgage Loan
Schedule shall be absolute and is intended by the Transferor and the Seller to
constitute and to be treated as an absolute conveyance and sale by the
Transferor. The expenses and costs relating to the delivery of the Subsequent
Home Loans, this Agreement and the Sale and Servicing Agreement shall be borne
by the Transferor. Additional terms of the sale, including the purchase price,
are set forth on Attachment 1 attached hereto.
Section 3. Sale by Seller to Issuer of Subsequent Home Loans. Upon and
-------------------------------------------------
simultaneous with the purchase by the Seller from the Transferor of the
Subsequent Home Loans, the Seller does hereby sell, transfer, assign, set
over, convey and Grant to the Issuer:
(i) all of the right, title and interest of the Seller in and to each
Subsequent Home Loan identified on the Home Loan Schedule, including
without limitation, the Home Loans, the Servicer's Home Loan Files
and the related Debt Instruments, and all payments on, and proceeds
with respect to, such Subsequent Home Loans received on and after
the applicable Cut-off Date;
(ii) all right, title and interest of the Seller in the Mortgages on the
properties securing the Subsequent Home Loans, if any, including any
Mortgaged Property acquired by or on behalf of the Issuer by
foreclosure or deed in lieu of foreclosure or otherwise;
(iii) all right, title and interest of the Seller in and to any rights in
or proceeds from any insurance policies (including title insurance
policies) covering the Subsequent Home Loans, the related Mortgaged
Properties or the related Obligors and any amounts recovered from
third parties in respect of any Liquidated Home Loans; and
(iv) all the proceeds of each of the foregoing.
With respect to each Subsequent Home Loan, the Seller has delivered or
caused to be delivered to the Issuer, each item set forth in Section 2.02 of
the Sale and Servicing Agreement. The transfer to the Issuer by the Seller of
the Subsequent Home Loans identified on the Mortgage Loan Schedule shall be
absolute and is intended by the Seller, the Transferor, the Issuer, the
Certificateholders and the Noteholders to constitute and to be treated as an
absolute conveyance and sale by the Seller. The expenses and costs relating to
the delivery of the Subsequent Home Loans, this Agreement and the Sale and
Servicing Agreement shall be borne by the Seller to the extent that the same
are not paid by the Transferor. Additional terms of the sale, including the
purchase price, are set forth on Attachment 1 attached hereto.
Section 4. Grant by Issuer to Indenture Trustee of Subsequent Home Loans.
-------------------------------------------------------------
Upon and simultaneous with the purchase by the Seller from the Transferor
of the Subsequent Home Loans and the purchase by the Issuer from the Seller of
the Subsequent Home Loans, and pursuant to the terms of the Indenture, the
Issuer does hereby Grant to the Indenture Trustee:
(i) all of the right, title and interest of the Issuer in and to each
Subsequent Home Loan identified on the Home Loan Schedule, including
without limitation, the Home Loans, the Servicer's Home Loan Files
and the Debt Instruments, and all payments on, and proceeds with
respect to, such Subsequent Home Loans received on and after the
applicable Cut-off Date;
(ii) all right, title and interest of the Issuer in the Mortgages on the
properties securing the Subsequent Home Loans, if any, including any
Mortgaged Property acquired by or on behalf of the Issuer by
foreclosure or deed in lieu of foreclosure or otherwise;
(iii) all right, title and interest of the Issuer in and to any rights in
or proceeds from any insurance policies (including title insurance
policies) covering the Subsequent Home Loans, the related Mortgaged
Properties or the related Obligors and any amounts recovered from
third parties in respect of any Liquidated Home Loans; and
(iv) all the proceeds of each of the foregoing.
Section 5. Representations and Warranties; Conditions Precedent.
----------------------------------------------------
(a) The Transferor hereby makes the representations, warranties and
covenants set forth in Sections 3.02 and 3.04 of the Sale and Servicing
Agreement with respect to the Subsequent Home Loans as of the date hereof and
the applicable Subsequent Transfer Date, and the Transferor hereby confirms
that with respect to the sale by the Transferor to the Seller of the
Subsequent Home Loans each of the conditions set forth in Sections 2.02 of the
Sale and Servicing Agreement for such sale have been satisfied as of the date
hereof and the applicable Subsequent Transfer Date. In addition, the
Transferor hereby reconfirms the accuracy of the representations and
warranties set forth in Section 3.03 of the Sale and Servicing Agreement with
respect to the Subsequent Home Loans as of the date hereof and the applicable
Subsequent Transfer Date.
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.
All terms and conditions of the Sale and Servicing Agreement are hereby
ratified and confirmed; provided however, that in the event of any conflict
the provisions of this Agreement shall control over the conflicting provisions
of the Sale and Servicing Agreement.
Section 6. Recordation of Agreement. This Agreement is subject to
------------------------
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the
Transferor, at its expense, in the event such recordation materially and
beneficially affects the interests of the Noteholders or the
Certificateholders.
Section 7. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 8. Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the Transferor, the Seller, the Issuer, the
Indenture Trustee and their respective successors and permitted assigns.
Section 9. Counterparts. This Agreement may be executed in one or more
------------
counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the Transferor, the Seller, the Issuer and the
Indenture Trustee have caused this SUBSEQUENT TRANSFER AGREEMENT to be signed
by their respective officers thereunto duly authorized, as of the day and year
first above written.
FIRSTPLUS FINANCIAL, INC.,
as Transferor
By:
-----------------------------------------------
Name:
Title:
FIRSTPLUS INVESTMENT CORPORATION,
as Seller
By:
-----------------------------------------------
Name:
Title:
FIRSTPLUS HOME LOAN OWNER TRUST 1998-4
By: Wilmington Trustee Company as Owner Trustee
By:
-----------------------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
as Indenture Trustee
By:
-----------------------------------------------
Name:
Title:
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared , known to me to be
------------------------------------
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS FINANCIAL,
INC., a Texas corporation, and that he executed the same as the act of such
corporation for the purposes and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of
-----
, 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 NEWCASTLE )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared , known to me to be
---------------------------------------
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS Home Loan
Owner Trust 1998-4, 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: FIRSTPLUS FINANCIAL, INC.
Subsequent Transfer Date: June 30, 1998
Cut-Off Date: May 31, 1998
Aggregate Outstanding Principal Balance
of Subsequent Mortgage Loans: $77,808,017.14
Purchase Price for Subsequent
Mortgage Loans: $77,808,017.14
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 10.2
EXECUTION
==============================================================================
SALE AND SERVICING AGREEMENT
among
FIRSTPLUS HOME LOAN OWNER TRUST 1998-4,
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 June 1, 1998
FIRSTPLUS HOME LOAN OWNER TRUST 1998-4
Asset Backed Securities, Series 1998-4
==============================================================================
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.......................26
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...............33
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.....................................46
Section 4.02. Liquidation of Home Loans..................................48
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................52
Section 5.02. Pre-Funding Account........................................58
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.................................................66
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......................................70
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......................73
Section 7.05. Annual Independent Public Accountants'
Servicing Report...........................................73
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.......................................74
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.........76
Section 9.04. Servicer Not to Resign; Assignment.........................76
Section 9.05. Relationship of Servicer to the Issuer and the
Indenture Trustee..........................................76
ARTICLE X
DEFAULT
Section 10.01. Events of Default..........................................77
Section 10.02. Indenture Trustee to Act; Appointment of Successor.........79
Section 10.03. Waiver of Defaults.........................................80
Section 10.04. Accounting Upon Termination of Servicer....................80
ARTICLE XI
TERMINATION
Section 11.01. Termination................................................81
Section 11.02. Optional Termination by Seller.............................81
Section 11.03. Notice of Termination......................................82
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].................................................86
Section 12.15. No Petition................................................86
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 June 1,
1998, among FIRSTPLUS Home Loan Owner Trust 1998-4, a Delaware business trust
(the "Issuer" or the "Trust"), FIRSTPLUS Investment Corporation, a Nevada
corporation, as Seller (the "Seller"), FIRSTPLUS FINANCIAL, INC., a Texas
corporation ("FFI"), as Transferor (in such capacity, the "Transferor") and
Servicer (in such capacity, the "Servicer") and U.S. Bank National
Association, a national banking association, as Indenture Trustee on behalf of
the Noteholders (in such capacity, the "Indenture Trustee") and as Co-Owner
Trustee on behalf of the Certificateholders (in such capacity, the "Co-Owner
Trustee").
PRELIMINARY STATEMENT
WHEREAS, the Issuer desires to purchase a pool of Home Loans which were
originated or purchased by the Transferor and sold to the Seller in the
ordinary course of business of the Transferor;
WHEREAS, the Seller is willing to sell such Home Loans to the Issuer; and
WHEREAS, the Servicer is willing to service such Home Loans in accordance
with the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the following
-----------
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article.
A IO 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 A IO Component's Monthly Interest Distributable
Amount for the immediately preceding Payment Date and any A IO 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.
A IO Component's Interest Distributable Amount: With respect to any
----------------------------------------------
Payment Date, the sum of the A IO Component's Monthly Interest Distributable
Amount for such date and the A IO 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, and
on each succeeding Payment Date, the amount of the A IO Component's Interest
Distributable Amount will be equal to the A IO Component's Interest
Distributable Amount calculated without giving effect to this proviso, minus
the portion of any Allocable Loss Amount that otherwise would be applied to
any Class of Notes on such Payment Date in the absence of this proviso.
A IO 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 Notional Balance of the A IO
Component immediately preceding such Payment Date.
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 June 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.
Administration Agreement: The Administration Agreement dated as of June
------------------------
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.
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 respect to each Payment Date prior to
the Payment Date on which the Initial Undercollateralization Amount is reduced
to 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 Pool Factor: With respect to each Class of Securities and any
-----------------
Payment Date, the Class Principal Balance thereof (giving effect to payments
thereon on such Payment Date) divided by the Original Class Principal Balance
of such Class.
Class Principal Balance: With respect to each Class of Securities and any
-----------------------
date of determination, the Original Class Principal Balance thereof as reduced
by (a) all amounts previously paid in respect of such Class in reduction of
the Class Principal Balance thereof and (b) in the case of the Subordinate
Securities, any Allocable Loss Amounts previously applied thereto.
Clearing Agency: An organization registered as a "clearing agency"
---------------
pursuant to Section 17A of the Exchange Act.
Clearing Agency Participant: A broker, dealer, bank, other financial
---------------------------
institution or other Person for whom from time to time a Clearing Agency
effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
Closing Date: June 24, 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
- ----------- ------------- -----------------
A IO Component 6.10%(1) (2)
B-2 Component 8.53%(3) $15,150,000.00
Excess Component (4) (5)
- -------------
(1) After the Payment Date in August 2000, the Interest Rate applicable to the
Class A IO Component will be 0.00%
(2) The A IO Component will have an initial Component Notional Balance of
$52,379,000.00.
(3) 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).
(4) The Excess Component will not have an interest rate.
(5) The Excess Component will not have a principal balance.
Component Notional Balance: With respect to any Payment Date and the A IO
--------------------------
Component, the sum of the Class Principal Balances of the Class A-7 and Class
A-8 Notes immediately prior to such date.
Component Principal Balance: With respect to each Component, other than a
---------------------------
Notional 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 June 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 May 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 June 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 August 21, 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 June 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 76.67% 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: $450,000,022.13.
------------------------------
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 (2)
A-2 6.12%
A-3 6.24%
A-4 6.32%
A-5 6.38%
A-6 6.61%
A-7 6.80%
A-8 6.99%
M-1 6.80%
M-2 7.19%
B-1 8.21%
Residual Interest Certificate (3)
(1) The Interest Rate applicable to each Class of 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) Interest will accrue on the Class A-1 Notes during each Accrual Period
at a per annum rate equal to LIBOR for the related LIBOR Determination
Date plus 0.04%, subject to a maximum rate equal to the Net Weighted
Average Rate. The Interest Rate applicable to the Class A-1 Notes for
the initial Accrual Period will be 5.69625% per annum.
(3) 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 A IO and B-2 Components 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 5.65625%.
LIBOR Business Day: Any day on which banks are open for dealing in
------------------
foreign currency and exchange in London and New York City.
LIBOR Securities: The Class A-1 Notes.
----------------
Liquidated Home Loan: A defaulted Home Loan as to which the Servicer has
--------------------
determined that all recoverable liquidation and insurance proceeds have been
received, which will be deemed to occur upon the earlier of: (a) the
liquidation of the related Mortgaged Property acquired through foreclosure or
similar proceedings, (b) the Servicer's determination in accordance with
customary servicing practices that no further amounts are collectible from the
Home Loan and any related security, or (c) the 180th day that any portion of a
scheduled monthly payment of principal and interest is past due.
Liquidation Proceeds: With respect to a Liquidated Home Loan, any cash
--------------------
amounts received in connection with the liquidation of such Liquidated Home
Loan, whether through trustee's sale, foreclosure sale or other disposition,
and any other amounts required to be deposited in the Collection Account
pursuant to Sections 4.02 or 4.04, in each case other than Post-Liquidation
Proceeds, Insurance Proceeds and Released Mortgaged Property Proceeds.
Loan Sale Agreement: Individually or collectively, as the context in
-------------------
which this term is used may require, any or all of the following: (i) the loan
sale agreement between the Transferor, as seller, and the Seller, as
purchaser, pursuant to which the Seller has acquired any of the Home Loans;
and (ii) each loan sale agreement entered into by the Transferor, as
purchaser, pursuant to which the Transferor has acquired any of the Home Loans
and which shall include all of the rights and benefits of the Transferor
thereunder with respect to such Home Loans, subject to any limitations
thereunder regarding assignment by the Transferor.
Majority Securityholders: (i) Until such time as the sum of the Class
------------------------
Principal Balances of all Classes of Notes has been reduced to zero, the
holder or holders of in excess of 50% of the aggregate Class Principal Balance
of all Classes of Notes (accordingly, the 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
July 31, 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 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
thereof immediately preceding such Payment Date.
Notional Component: The A IO Component.
------------------
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-1 $ 173,836,000.00
A-2 $ 37,456,000.00
A-3 $ 77,898,000.00
A-4 $ 46,039,000.00
A-5 $ 17,773,000.00
A-6 $ 52,149,000.00
A-7 $ 20,123,000.00
A-8 $ 32,256,000.00
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 June 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 July each year during the term of this
Agreement commencing in July 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 July 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, market-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 $149,999,977.87.
---------------------------
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 June 18, 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 aggregate of the A IO Component's Interest
Distributable Amount and 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 three payment Components having the
designations and, with respect to each of the A IO Component and the B-2
Component, the Interest Rates and Original Component Notional Balance or
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 of such Classes immediately preceding such
Payment Date.
Senior Notes: The Class A-1, the Class A-2, the Class A-3, the Class A-4,
------------
the Class A-5, the Class A-6, the Class A-7 and the Class A-8 Notes.
Senior Optimal Principal Balance: With respect to any Payment Date prior
--------------------------------
to the Overcollateralization Stepdown Date, zero; with respect to any other
Payment Date, an amount equal to the Pool Principal Balance as of the
immediately preceding Determination Date minus the greater of (a) 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 1998-4: FIRSTPLUS Asset Backed Securities, Series
-----------------------
1998-4.
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 May 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 August 21, 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 Servicing
Compensation due and unpaid, and (iii) any unreimbursed Servicing Advances
including such Servicing Advances deemed to be nonrecoverable.
Third-Party Purchaser: As defined in Section 11.02(a).
---------------------
Total Collection Amount: With respect to each Payment Date, an amount
-----------------------
equal to the sum of the Available Collection Amount and any investment
earnings on amounts in the Note Payment Account and the Certificate
Distribution Account during the related Due Period.
Transferor: FFI, in its capacity as the transferor hereunder.
----------
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 June 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, 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 76.67% 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.
Weighted Average Interest Rate: As of any date of determination, the per
------------------------------
annum rate equal to the weighted average (by Class Principal Balance) of the
Interest Rates applicable to the Classes of Securities.
Withdrawal Date: With respect to a Payment Date, the second Business Day
---------------
prior to such Payment Date.
Section 1.02. Other Definitional Provisions. (a) Capitalized terms used
-----------------------------
herein and not otherwise defined herein have the meanings assigned to them in
the Indenture and the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given
to them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement; Article, Section, Schedule and
Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
Section 1.03. Interest Calculation. Unless otherwise specified, all
--------------------
calculations of accrued interest and accrued fees shall be made on the basis
of a 360-day year consisting of twelve 30-day months, except that with respect
to the Class A-1 Notes, calculations of accrued interest shall be made on the
basis of a 360-day year and the actual number of days elapsed in each Accrual
Period.
ARTICLE II
CONVEYANCE OF THE HOME LOANS
Section 2.01. Conveyance of the Initial Home Loans. (a) As of the Closing
------------------------------------
Date, in consideration of the Issuer's delivery of the Notes 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
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last day of the Funding Period, the Seller shall convey to the Issuer, and the
Issuer shall purchase pursuant to this Section 2.02 the lesser of (calculated
by aggregate principal balance): (i) the Home Loans then in the possession of
the Seller that satisfy the requirements of this Section 2.02 and (ii) the
maximum principal balance of Home Loans that satisfy the requirements of this
Section 2.02, with respect to which the aggregate Subsequent Purchase Price
does not exceed the Pre-Funding Account Deposit. Subject to the conditions set
forth in this Section 2.02, in consideration of the Issuer's delivery on the
related Subsequent Transfer Dates to the Seller or its designee, or upon the
order of the Seller, of the Subsequent Purchase Price of the related
Subsequent Home Loans from amounts on deposit in the Pre-Funding Account, the
Seller shall, from time to time, on any Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey to the Issuer, without
recourse, but subject to the other terms and provisions of this Agreement, all
of the right, title and interest of the Seller in and to each Subsequent Home
Loan (including all interest and principal thereon received after the related
Cut-Off Date) identified on the schedule attached to the related Subsequent
Transfer Agreement and delivered by the Seller on such Subsequent Transfer
Date and all items in the related Indenture Trustee's Home Loan File. In
connection therewith, the Transferor shall amend the Home Loan Schedule to
reflect the inclusion of the applicable Subsequent Home Loans in the Home Loan
Pool. The Transferor shall promptly deliver to the Issuer, the Servicer (if
the Transferor is not then acting as such), and the Indenture Trustee a copy
of the Home Loan Schedule as so amended. The sale, transfer, assignment, set
over and conveyance by the Seller of Subsequent Home Loans to the Issuer does
not and is not intended to result in a creation or an assumption by the Issuer
of any obligation of the Seller, the Transferor or any other Person in
connection with such Subsequent Home Loans or under any agreement or
instrument relating thereto except as specifically set forth herein.
(b) If the Subsequent Purchase Price for the Subsequent Home Loans to be
conveyed to the Trust on any Subsequent Transfer Date is less than the amount
required to obtain the release of the interest of any third party (including
any lienholder therein), then the Transferor or the Seller shall cause the
delivery of immediately available funds equal to such insufficiency to the
Issuer in escrow (which funds shall not be property of the Trust) and the
Issuer, in turn, shall remit such immediately available funds, together with
funds from the Pre-Funding Account equal to the Subsequent Purchase Price, to
the third party designated by the Transferor or the Seller that is releasing
its interest in such Subsequent Home Loans.
On each Subsequent Transfer Date, the Seller shall transfer to the Issuer
the applicable Subsequent Home Loans and the other property and rights related
thereto described in (a) above only upon the satisfaction of each of the
following conditions on or prior (except in the case of clause (iii) below) to
the related Subsequent Transfer Date:
(i) 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.O3. Ownership and Possession of Home Loan Files. Upon the
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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
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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.
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(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 1998-4, 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
1998-4" 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
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Certification by Custodian. (a) The Indenture Trustee agrees to cause the
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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
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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
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and Transferor. The Servicer as such and in its capacity as the Transferor
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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 the Home Loans identified on Exhibit D hereto, has been
underwritten or re-underwritten in accordance with the Transferor's
then-current underwriting guidelines. The origination practices used by each
originator of the Home Loans and the servicing and collection practices used
by the Transferor with respect to each Home Loan have been in all material
respects legal, proper, prudent and customary with respect to the loan
origination and servicing business as applicable to the respective loan type.
To the best of the Transferor's knowledge, no fraud or misrepresentation was
committed by any Person in connection with the origination or servicing of
each Home Loan.
(y) Selection Criteria; No Bulk Transfer. The Home Loans were not
------------------------------------
selected by the Transferor for sale to the Seller or the Issuer on any basis
intended to adversely affect the Seller or the Issuer. The sale, transfer,
assignment, conveyance and grant of the Debt Instruments and the Mortgages by
the Transferor to the Seller were not subject to the bulk transfer laws or any
similar statutory provisions in effect in any applicable jurisdiction.
(z) Treasury Regulation Section 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) Fraud in Origination. 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 August 21, 2023;
(iii) Each such Subsequent Home Loan has a Home Loan Interest Rate
of not less than 9.99%;
(iv) Following the purchase of such Subsequent Home Loans by the
Trust, the Home Loans included in the Home Loan Pool (including the
Subsequent Home Loans) will have a weighted average interest rate 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;
(v) The Subsequent Home Loans have not been acquired by the Issuer
for the primary purpose of recognizing gains or decreasing losses
resulting from market value changes in such Subsequent Home Loans;
(vi) Each of the representations and warranties set forth in Section
3.03 is true and correct with respect to each of the Subsequent Home
Loans being transferred to the Issuer;
(vii) 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 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
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the Home Loans. The Servicer shall provide to the Issuer, the Indenture
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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.
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(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 1998-4". 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
1998-4." 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 76.67% 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-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7
and Class A-8 Notes, in that order, in reduction of the Class Principal
Balances thereof, or (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 A IO Component, the A IO
Component's Interest Distributable Amount for such Payment Date;
(vi) 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;
(vii) for payment pursuant to the Indenture to the holders of the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7 and Class A-8 Notes, in that order, until the respective Class
Principal Balances thereof are reduced to zero, the amount necessary to
reduce the aggregate of the Class Principal Balances of the Senior Notes
to the Senior Optimal Principal Balance for such Payment Date;
(viii) 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;
(ix) 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;
(x) 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;
(xi) 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;
(xii) 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;
(xiii) 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;
(xiv) 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;
(xv) 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;
(xvi) 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
(xvii) 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-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7 and Class A-8 Notes, in that order, until the respective
Class Principal Balances thereof are reduced to zero, the amount
necessary to reduce the aggregate of the Class Principal Balances of
the Senior Notes to the Senior Optimal Principal Balance for such
Payment Date;
(B) for payment pursuant to the Indenture to the holders of the
Class M-1 Notes, the amount necessary to reduce the Class Principal
Balance thereof to the Class M-1 Optimal Principal Balance for such
Payment Date;
(C) for payment pursuant to the Indenture to the holders of the
Class M-2 Notes, the amount necessary to reduce the Class Principal
Balance thereof to the Class M-2 Optimal Principal Balance for such
Payment Date;
(D) for 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 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 1998-4." 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 1998-4." 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 A IO
and B-2 Components, 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)(xvi); 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)(xvii) 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 A IO
Component, all accrued and unpaid interest thereon;
(ii) 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;
(iii) 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
(iv) 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 1998-4". 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 1998-4".
(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
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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 1998-4"), the series designation of the Securities (I.E., "Series
1998-4"), 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 or Component Notional 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
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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.
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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
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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
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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
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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
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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 May 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.O2. 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
1998-4, c/o Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890, Attention: James P. Lawler, 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 1998-4, 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 1998-4,
By: Wilmington Trust Company, 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 June, 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 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 June, 1998.
----
------------------------------------
Notary Public, State of Texas
My commission expires:
THE STATE OF DELAWARE )
)
COUNTY OF NEWCASTLE )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared , known to me to be the
-----------------------------
person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS HOME LOAN
OWNER TRUST 1998-4, 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 June, 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 June, 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
1998-4, 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 June
1, 1998 (the "Loan Sale Agreement") by and between the Transferor and the
Seller, and that certain Sale and Servicing Agreement dated as of June 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:
Section 1. Subsequent Home Loans. The Transferor, the Seller, the Issuer
---------------------
and the Indenture Trustee hereby agree to the sale, transfer, assignment, set
over, conveyance and grant by the Transferor to the Seller, the sale,
transfer, assignment, set over, conveyance and grant by the Seller to the
Issuer and the Grant by the Issuer to the Indenture Trustee of the additional
home loans as described on Attachment 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 2. Sale by Transferor to Seller of Subsequent Home Loans. The
-----------------------------------------------------
Transferor does hereby sell, transfer, assign, set over, convey and Grant to
the Seller:
(i) all of the right, title and interest of the Transferor in and to
each Subsequent Home Loan identified on the Home Loan Schedule, including
without limitation, the Home Loans, the Servicer's Home Loan Files and
the Debt Instruments, and all payments on, and proceeds with respect to,
such Subsequent Home Loans received on and after the applicable Cut-Off
Date;
(ii) all right, title and interest of the Transferor in the
Mortgages on the properties securing the Subsequent Home Loans, if any,
including any Mortgaged Property acquired by or on behalf of the Seller
or its successor by foreclosure or deed in lieu of foreclosure or
otherwise;
(iii) all right, title and interest of the Transferor in and to any
rights in or proceeds from any insurance policies (including title
insurance policies) covering the Subsequent Home Loans, the related
Mortgaged Properties or the related Obligors and any amounts recovered
from third parties in respect of any Liquidated Home Loans; and (iv) all
the proceeds of each of the foregoing.
With respect to each Subsequent Home Loan, the Transferor has delivered
or caused to be delivered to the Seller, each item set forth in Section 2.02
of the Sale and Servicing Agreement. The transfer to the Seller by the
Transferor of the Subsequent Home Loans identified on the Mortgage Loan
Schedule shall be absolute and is intended by the Transferor and the Seller to
constitute and to be treated as an absolute conveyance and sale by the
Transferor. The expenses and costs relating to the delivery of the Subsequent
Home Loans, this Agreement and the Sale and Servicing Agreement shall be borne
by the Transferor. Additional terms of the sale, including the purchase price,
are set forth on Attachment 1 attached hereto.
Section 3. Sale by Seller to Issuer of Subsequent Home Loans. Upon and
-------------------------------------------------
simultaneous with the purchase by the Seller from the Transferor of the
Subsequent Home Loans, the Seller does hereby sell, transfer, assign, set
over, convey and Grant to the Issuer:
(i) all of the right, title and interest of the Seller in and to
each Subsequent Home Loan identified on the Home Loan Schedule, including
without limitation, the Home Loans, the Servicer's Home Loan Files and
the related Debt Instruments, and all payments on, and proceeds with
respect to, such Subsequent Home Loans received on and after the
applicable Cut-off Date;
(ii) all right, title and interest of the Seller in the Mortgages on
the properties securing the Subsequent Home Loans, if any, including any
Mortgaged Property acquired by or on behalf of the Issuer by foreclosure
or deed in lieu of foreclosure or otherwise;
(iii) all right, title and interest of the Seller in and to any
rights in or proceeds from any insurance policies (including title
insurance policies) covering the Subsequent Home Loans, the related
Mortgaged Properties or the related Obligors and any amounts recovered
from third parties in respect of any Liquidated Home Loans; and
(iv) all the proceeds of each of the foregoing.
With respect to each Subsequent Home Loan, the Seller has delivered or
caused to be delivered to the Issuer, each item set forth in Section 2.02 of
the Sale and Servicing Agreement. The transfer to the Issuer by the Seller of
the Subsequent Home Loans identified on the Mortgage Loan Schedule shall be
absolute and is intended by the Seller, the Transferor, the Issuer, the
Certificateholders and the Noteholders to constitute and to be treated as an
absolute conveyance and sale by the Seller. The expenses and costs relating to
the delivery of the Subsequent Home Loans, this Agreement and the Sale and
Servicing Agreement shall be borne by the Seller to the extent that the same
are not paid by the Transferor. Additional terms of the sale, including the
purchase price, are set forth on Attachment 1 attached hereto.
Section 4. Grant by Issuer to Indenture Trustee of Subsequent Home Loans.
-------------------------------------------------------------
Upon and simultaneous with the purchase by the Seller from the Transferor
of the Subsequent Home Loans and the purchase by the Issuer from the Seller of
the Subsequent Home Loans, and pursuant to the terms of the Indenture, the
Issuer does hereby Grant to the Indenture Trustee:
(i) all of the right, title and interest of the Issuer in and to
each Subsequent Home Loan identified on the Home Loan Schedule, including
without limitation, the Home Loans, the Servicer's Home Loan Files and
the Debt Instruments, and all payments on, and proceeds with respect to,
such Subsequent Home Loans received on and after the applicable Cut-off
Date;
(ii) all right, title and interest of the Issuer in the Mortgages on
the properties securing the Subsequent Home Loans, if any, including any
Mortgaged Property acquired by or on behalf of the Issuer by foreclosure
or deed in lieu of foreclosure or otherwise;
(iii) all right, title and interest of the Issuer in and to any
rights in or proceeds from any insurance policies (including title
insurance policies) covering the Subsequent Home Loans, the related
Mortgaged Properties or the related Obligors and any amounts recovered
from third parties in respect of any Liquidated Home Loans; and
(iv) all the proceeds of each of the foregoing.
Section 5. Representations and Warranties; Conditions Precedent.
----------------------------------------------------
(a) The Transferor hereby makes the representations, warranties and
covenants set forth in Sections 3.02 and 3.04 of the Sale and Servicing
Agreement with respect to the Subsequent Home Loans as of the date hereof and
the applicable Subsequent Transfer Date, and the Transferor hereby confirms
that with respect to the sale by the Transferor to the Seller of the
Subsequent Home Loans each of the conditions set forth in Sections 2.02 of the
Sale and Servicing Agreement for such sale have been satisfied as of the date
hereof and the applicable Subsequent Transfer Date. In addition, the
Transferor hereby reconfirms the accuracy of the representations and
warranties set forth in Section 3.03 of the Sale and Servicing Agreement with
respect to the Subsequent Home Loans as of the date hereof and the applicable
Subsequent Transfer Date.
(b) In reliance upon the representations, warranties and covenants made
by the Transferor in the preceding subsection (a) and in the Officer's
Certificate of the Transferor dated as of the date hereof, the Seller hereby
affirms the representations, warranties and covenants set forth in Section
3.01 of the Sale and Servicing Agreement with respect to the Subsequent Home
Loans as of the date hereof and the applicable Subsequent Transfer Date, and
the Seller hereby confirms that each of the conditions set forth in Sections
2.02 and 3.04 of the Sale and Servicing Agreement are satisfied as of the date
hereof and the applicable Subsequent Transfer Date.
(c) All terms and conditions of the Sale and Servicing Agreement are
hereby ratified and confirmed; provided however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Sale and Servicing Agreement.
Section 6. Recordation of Agreement. This Agreement is subject to
------------------------
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the
Transferor, at its expense, in the event such recordation materially and
beneficially affects the interests of the Noteholders or the
Certificateholders.
Section 7. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 8. Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the Transferor, the Seller, the Issuer, the
Indenture Trustee and their respective successors and permitted assigns.
Section 9. Counterparts. This Agreement may be executed in one or more
------------
counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the Transferor, the Seller, the Issuer and the
Indenture Trustee have caused this SUBSEQUENT TRANSFER AGREEMENT to be signed
by their respective officers thereunto duly authorized, as of the day and year
first above written.
FIRSTPLUS FINANCIAL, INC.,
as Transferor
By:
------------------------------------------
Name:
Title:
FIRSTPLUS INVESTMENT CORPORATION,
as Seller
By:
------------------------------------------
Name:
Title:
FIRSTPLUS HOME LOAN OWNER TRUST 1998-4
By: Wilmington Trustee Company as Owner Trustee
By:
------------------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
as Indenture Trustee
By:
------------------------------------------
Name:
Title:
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared , known to me to be
------------------------------------
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS FINANCIAL,
INC., a Texas corporation, and that he executed the same as the act of such
corporation for the purposes and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of
-----
, 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 fore going 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 NEWCASTLE )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared , known to me to be
---------------------------------------
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS Home Loan
Owner Trust 1998-4, 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
June 1, 1998 among FIRSTPLUS Home Loan Owner Trust 1998-4, 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
