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EXHIBIT 1.2
FIRSTPLUS HOME LOAN OWNER TRUSTS
ASSET-BACKED SECURITIES
(Issuable in Series)
UNDERWRITING AGREEMENT
[NAME AND ADDRESS [DATE]
OF UNDERWRITER(S)]
Ladies and Gentlemen:
FIRSTPLUS INVESTMENT CORPORATION, a corporation organized and
existing under the laws of the State of Nevada (the "Company"), proposes to
cause FIRSTPLUS Home Loan Owner Trusts (each, a "Trust") to offer for sale from
time to time its Asset-Backed Securities evidencing interests in pools of
certain contracts and mortgage loans (the "Securities"). The Securities may be
issued in various series, and within each series, in one or more classes, in
one or more offerings on terms determined at the time of sale (each such
series, a "Series" and each such class, a "Class"). Each Trust may issue one
or more classes of Asset-Backed Notes (the "Notes") pursuant to an Indenture to
be dated as of the respective cut-off date (each, a "Cut-off Date") as
supplemented by one or more supplements to such Indenture (such Indenture, as
supplemented, the "Indenture") between the owner trustee named therein (the
"Owner Trustee") and the indenture trustee named therein (the "Indenture
Trustee"). Simultaneously with the issuance of the Notes, the Trust may issue
Asset-Backed Certificates (the "Certificates"), each representing a fractional
undivided ownership interest in the related Trust, pursuant to a separate Trust
Agreement (each, a "Trust Agreement") to be dated as of the respective Cut-off
Date among the Trust, the Company or one of its affiliates, as FHA Insurance
holder, if applicable, (the "FHA Insurance Holder"), FIRSTPLUS FINANCIAL, INC.,
("FFI") as transferor and servicer (the "Transferor" or "Servicer"), and the
Owner Trustee.
The assets of each Trust will consist primarily of a pool of
fixed- or adjustable-rate, fully-amortizing property improvement and/or debt
consolidation loans, and the related notes and mortgages (collectively, the
"Home Loans") having the original terms to maturity and interest rate types
specified in the related Terms Agreement referred to hereinbelow. Certain of
the Home Loans may be partially insured by the Federal Housing Administration
(the "FHA") of the United States Department of Housing and Urban Development
("HUD") pursuant to Title I of the National Housing Act of 1934, as amended
("Title I Mortgage Loans"). Unless otherwise specified in the
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related Prospectus Supplement and the related Sale and Servicing Agreement (as
defined below), the FHA Insurance Holder, will enter into an FHA claims
administration agreement (each, an "FHA Claims Agreement") with the Servicer
pursuant to which the Servicer will administer, process and submit claims (the
Servicer in such capacity, the "FHA Claims Administrator") to the FHA in
respect of Title I Mortgage Loans.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned thereto in the related sale and servicing agreement to be
dated as of the applicable Cut-off Date (the "Sale and Servicing Agreement"),
between the Company as depositor (the "Depositor") and the Servicer, or, if not
defined therein, in the respective Indenture or Trust Agreement.
If and to the extent specified in the related Sale and Servicing
Agreement, in addition to the Home Loans conveyed to the Trust on the Closing
Date (such Home Loans so conveyed to the Trust at such time, the "Initial Home
Loans"), the Depositor shall be obligated to convey to the Trust, from time to
time during the period commencing after the Closing Date and ending at the
expiration of the period specified in such Sale and Servicing Agreement (each,
a "Pre-Funding Period")(the date of any such conveyance, a "Subsequent Transfer
Date"), additional Home Loans (any such additional Home Loans so conveyed to
the Trust through the Pre-Funding Period, the "Subsequent Home Loans").
The Securities may have the benefit of one or more insurance policies
(each, a "Policy") issued by the insurer named therein (the "Insurer") pursuant
to an indemnity and insurance agreement among the Depositor, the Owner Trustee,
the Indenture Trustee, the Servicer and the Insurer (the "Insurance
Agreement").
Underwritten offerings of Securities may be made through you or
through an underwriting syndicate managed by you. The Company proposes to sell
one or more Series of the Securities to you and to each of the other several
underwriters, if any, participating in an underwriting syndicate managed by
you.
Whenever the Company determines to make an offering of Securities
(each, an "Offering") pursuant to this Agreement through you, it will enter
into an agreement (the "Terms Agreement") providing for the sale of specified
Classes of Offered Securities (as defined below) to, and the purchase and
public offering thereof by, you and such other underwriters, if any, selected
by you as have authorized you to enter into such Terms Agreement on their
behalf (the underwriters designated in any such Terms Agreement being referred
to herein as "Underwriters," which term shall include you whether acting alone
in the sale of any Offered Securities of any series or as a member of an
underwriting syndicate). Each such Certificate Offering which the Company
elects to make pursuant to this Agreement shall be governed by this Agreement,
as supplemented by the related Terms Agreement, and this Agreement and such
Terms Agreement shall inure to the benefit of and be binding upon each
underwriter participating in the offering of such Offered Securities. Each
Terms Agreement, which shall be substantially in the form of Exhibit A hereto,
shall specify, among other things, the Classes of Securities to be purchased by
the Underwriters (the "Offered Securities"),
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whether such Offered Securities constitute Notes or Certificates, the principal
balance or balances of the Offered Securities, each subject to any stated
variance, the names of the Underwriters participating in such offering (subject
to substitution as provided in Section 13 hereof) and the price or prices at
which such Offered Securities are to be purchased by the Underwriters from the
Company.
1. Representations and Warranties. (a) The Company and
FFI represent and warrant to and agree with the Underwriters, as of the date of
the related Terms Agreement, that:
(i) The registration statement specified in the related
Terms Agreement, on Form S-3, including a prospectus, has been filed
with the Securities and Exchange Commission (the "Commission") for the
registration under the Securities Act of 1933, as amended (the "Act"),
of asset-backed securities issuable in series, which registration
statement has been declared effective by the Commission. Such
registration statement, as amended to the date of the related Terms
Agreement, including any documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act which were filed under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
on or before the effective date of the Registration Statement, is
hereinafter called the "Registration Statement," and such prospectus,
as such prospectus is supplemented by a prospectus supplement relating
to the Offered Securities of the related Series, each in the form
first filed via EDGAR by a financial printer or another person
designated by the Company (the "Financial Printer") after the date of
the related Terms Agreement pursuant to Rule 424(b) under the Act,
including any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act which were filed under the Exchange
Act on or before the date of such Prospectus Supplement (other than
any such incorporated documents that relate to Collateral Term Sheets
(as defined herein)) (such prospectus supplement, including such
incorporated documents (other than those that relate to Collateral
Term Sheets), in the form first filed after the date of the related
Terms Agreement pursuant to Rule 424(b) is hereinafter called the
"Prospectus Supplement"), is hereinafter called the "Final
Prospectus". Any preliminary prospectus, including any preliminary
prospectus supplement which, as completed, is proposed to be used in
connection with the sale of a Series of Offered Securities and any
prospectus filed with the Commission pursuant to Rule 424(a) of the
Act is hereinafter referred to as a "Preliminary Prospectus." Any
reference herein to the terms "amend," "amendment" or "supplement"
with respect to the Registration Statement, the Preliminary
Prospectus, the Final Prospectus or the Prospectus Supplement shall be
deemed to refer to and include the filing of any document under the
Exchange Act after the effective date of the Registration Statement or
the issue date of the Preliminary Prospectus, the Final Prospectus or
Prospectus Supplement, as the case may be, deemed to be incorporated
therein by reference pursuant to Item 12 of Form S-3 under the Act.
(ii) The related Registration Statement, at the time it
became effective, and the prospectus contained therein, and any
amendments thereof and supplements thereto filed prior to the date of
the related Terms Agreement, conformed in all material respects to the
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requirements of the Act and the rules and regulations of the
Commission thereunder; on the date of the related Terms Agreement and
on each Closing Date (as defined in Section 3 below), the related
Registration Statement and the related Final Prospectus, and any
amendments thereof and supplements thereto, will conform in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder; such Registration Statement,
at the time it became effective, did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; such Final Prospectus, on the date of any filing pursuant
to Rule 424(b) and on each Closing Date, will not include any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading; and the Form
8-K relating to any Subsequent Home Loans, on the date of any filing
thereof, will not include any untrue statement of a material fact or
omit to state any information which such Final Prospectus states will
be included in such Form 8-K; provided, however, that the Company
makes no representations or warranties as to the information contained
in or omitted from (A) such Registration Statement or such Final
Prospectus (or any supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of the Underwriters specifically for use in the preparation
thereof or (B) any Current Report (as defined in Section 5(b) below),
or in any amendment thereof or supplement thereto, incorporated by
reference in such Registration Statement or such Final Prospectus (or
any amendment thereof or supplement thereto).
(iii) The Securities of the related Series will conform to
the description thereof contained in the related Final Prospectus; and
will each on the related Closing Date be duly and validly authorized,
and, when validly executed, countersigned, issued and delivered in
accordance with the related Indenture or Trust Agreement, as
applicable, and sold to you as provided herein and in the related
Terms Agreement, will each be validly issued and outstanding and
entitled to the benefits of such Indenture or Trust Agreement, as
applicable, and, if applicable, the related Policy.
(iv) Neither the issuance nor sale of the Securities of
the related Series nor the consummation of any other of the
transactions herein contemplated, nor the fulfillment of the terms
hereof or of the related Terms Agreement, will conflict with any
statute, order or regulation applicable to the Company of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Company or with any organizational document of
the Company or any instrument or any agreement under which the Company
is bound or to which it is a party.
(v) This Agreement and the related Terms Agreement have
been duly authorized, executed and delivered by the Company.
(vi) At or prior to the related Closing Date, the Trust
will have entered into the related Indenture, Trust Agreement and any
Insurance Agreement and, assuming the due
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authorization, execution and delivery thereof by the other parties
thereto, such Indenture, such Trust Agreement and such Insurance
Agreement (on such Closing Date) will constitute the valid and binding
agreement of the Trust enforceable in accordance with its terms,
subject as to enforceability, to bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights and
to general principles of equity (regardless of whether the
enforceability of such Indenture, such Trust Agreement or such
Insurance Agreement is considered in a proceeding in equity or at
law).
(vii) At or prior to the related Closing Date, the Company
will have entered into the related Sale and Servicing Agreement and
any related FHA Claims Agreement and, assuming the due authorization,
execution and delivery thereof by the other parties thereto, such Sale
and Servicing Agreement and such FHA Claims Agreement (on such Closing
Date) will constitute the valid and binding agreement of the Company
enforceable in accordance with its terms, subject as to
enforceability, to bankruptcy, insolvency, reorganization or other
similar laws affecting creditors' rights and to general principles of
equity (regardless of whether the enforceability of such Sale and
Servicing Agreement and such FHA Claims Agreement is considered in a
proceeding in equity or at law).
(viii) The FHA Insurance Holder and the Transferor are each
approved by the FHA as a lender under the Title I program and each
holds a valid contract of insurance or approval for insurance under
the Title I program; the FHA Insurance Holder, will have received
prior to each Closing Date or Subsequent Transfer Date, as the case
may be, all material consents, authorizations, orders and approvals
from governmental authorities, agencies or bodies and all other
material actions will have been taken prior to such Closing Date or
Subsequent Transfer Date, which are necessary to permit the FHA
Insurance Holder to obtain the benefit of the FHA Insurance in respect
of the related Title I Mortgage Loan as described in the related Final
Prospectus and will have completed prior to each Closing Date or
Subsequent Transfer Date, as the case may be, all material actions of
the Transferor and the FHA Insurance Holder that are necessary to duly
and validly effect the transfer of the FHA Insurance applicable to the
Title I Mortgage Loans into the FHA contract of insurance coverage
reserve account of the FHA Insurance Holder.
(ix) If applicable, the related Policy, when delivered,
will constitute the legal, valid and bind obligation of the Insurer,
enforceable in accordance with its terms.
(x) Any funds or accounts established from time to time
with respect to a Series of Securities in accordance with the related
Indenture, Trust Agreement or Sale and Servicing Agreement will have
been properly funded at the Closing Date by the deposit by the
Depositor of the requisite cash therein, in the manner specified by
such Indenture, Trust Agreement or Sale and Servicing Agreement.
(xi) The related Trust will have a valid and perfected
first priority security interest in, on the Closing Date, and on any
Subsequent Transfer Date, the Home Loans and any
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funds or accounts to be deposited or established with the Indenture
Trustee for the benefit and security of the holders of the related
Notes (and in any cash deposited therein), subject to no prior lien,
mortgage, pledge, charge, security interest, adverse claim or other
encumbrance.
(xii) Neither the Depositor, the Transferor, the Trust nor
any funds or accounts established thereunder is an "investment
company" (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")) or is under the "control" (as such term is defined
in the 1940 Act) of an "investment company" that is registered or
required to be registered under, or is otherwise subject to the
provisions of, the 1940 Act.
2. Purchase and Sale. Subject to the execution of the Terms
Agreement for a particular Offering and subject to the terms and conditions and
in reliance upon the representations and warranties set forth in this Agreement
and such Terms Agreement, the Company agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, the respective original principal amounts
of the related Offered Securities set forth in the related Terms Agreement
opposite the name of such Underwriter, plus any additional original principal
amount of Offered Securities which such Underwriter may be obligated to
purchase pursuant to Section 13 hereof, at the purchase price therefor set
forth in such Terms Agreement (the "Purchase Price").
The parties hereto agree that settlement for all securities sold
pursuant to this Agreement shall take place on the terms set forth herein and
not as set forth in Rule 15c6-1(a) under the Exchange Act.
3. Delivery and Payment. Delivery of and payment for the Offered
Securities of a Series shall be made at the specified offices of Andrews &
Kurth L.L.P., at 10:00 a.m. New York City time, on the Closing Date specified
in the related Terms Agreement, which date and time may be postponed by
agreement between the Underwriters and the Company (such date and time being
herein called the "Closing Date"). Delivery of such Offered Securities shall
be made to the Underwriters against payment by the Underwriters of the Purchase
Price thereof to or upon the order of the Company by wire transfer in federal
or other immediately available funds. Unless delivery is made through the
facilities of The Depository Trust Company, the Offered Securities shall be
registered in such names and in such authorized denominations as the
Underwriters may request not less than two full business days in advance of
each Closing Date.
The Company agrees to notify the Underwriters at least two business
days before each Closing Date of the exact principal balance evidenced by the
Offered Securities and to have such Offered Securities available for
inspection, checking and packaging in New York, New York, no later than 12:00
noon on the business day prior to such Closing Date.
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4. Offering by the Underwriters. It is understood that the
Underwriters propose to offer the Offered Securities of the related Series for
sale to the public as set forth in the related Final Prospectus.
5. Agreements. The Company and FFI agree with the Underwriters
that:
(a) The Company will cause the each of the Preliminary
Prospectus and the Final Prospectus as supplemented by a Prospectus
Supplement relating to the Offered Securities to be filed pursuant to
Rule 424 under the Act and will promptly advise the Underwriters when
such Preliminary Prospectus and such Final Prospectus as so
supplemented has been so filed, and prior to the termination of the
Certificate Offering to which such Preliminary Prospectus and Final
Prospectus relates also will promptly advise the Underwriters (i) when
any amendment to the related Registration Statement specifically
relating to such Offered Securities shall have become effective or any
further supplement to such Preliminary Prospectus or such Final
Prospectus has been filed, (ii) of any request by the Commission for
any amendment of such Registration Statement, Preliminary Prospectus
or Final Prospectus or for any additional information, (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of such Registration Statement or the institution or
threatening of any proceeding for that purpose and (iv) of the receipt
by the Company of any written notification with respect to the
suspension of the qualification of such Offered Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding
for such purpose. The Company will not file any amendment of the
related Registration Statement or supplement to the related
Preliminary Prospectus or Final Prospectus (other than any amendment
or supplement specifically relating to one or more Series of
asset-backed securities other than the Series that includes the
related Offered Securities) unless (i) the Company has given
reasonable notice of its intention to file any such amendment or
supplement, (ii) the Company has furnished the Underwriters with a
copy for their review within a reasonable time prior to filing, and
(iii) the Underwriters do not reasonably object to the filing of such
amendment or supplement. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof.
(b) The Company will cause any Computational Materials
and any Structural Term Sheets (each as defined in Section 8 below)
with respect to the Offered Securities of a Series that are delivered
by an Underwriter to the Company pursuant to Section 8 to be filed
with the Commission on a Current Report on Form 8-K (a "Current
Report") pursuant to Rule 13a-11 under the Exchange Act in accordance
with Section 10 on the business day immediately following the date on
which the related Terms Agreement is executed and delivered. The
Company will cause any Collateral Term Sheet (as defined in Section 9
below) with respect to the Offered Securities of a Series that is
delivered by the Underwriters to the Company in accordance with the
provisions of Section 9 to be filed with the Commission on a Current
Report pursuant to Rule 13a-11 under the Exchange Act in accordance
with Section 10 on the business day immediately following the day on
which
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such Collateral Term Sheet is delivered to counsel for the Company by
the Underwriters prior to 10:30 a.m. In addition, if at any time
prior to the availability of the related Prospectus Supplement, the
Underwriters have delivered to any prospective investor a subsequent
Collateral Term Sheet that reflects, in the reasonable judgment of the
Underwriters and the Company, a material change in the characteristics
of the Home Loans for the related Series from those on which a
Collateral Term Sheet with respect to the related Series previously
filed with the Commission was based, the Company will cause any such
Collateral Term Sheet that is delivered by the Underwriters to the
Company in accordance with the provisions of Section 9 hereof to be
filed with the Commission on a Current Report in accordance with
Section 10. Each such Current Report shall be incorporated by
reference in the related Final Prospectus and the related Registration
Statement.
(c) If, at any time when a prospectus relating to the
Offered Securities of a Series is required to be delivered under the
Act, any event occurs as a result of which the related Final
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein in light of the circumstances
under which they were made not misleading, or if it shall be necessary
at any time to amend or supplement the related Final Prospectus to
comply with the Act or the rules thereunder, the Company promptly will
prepare and file with the Commission, subject to paragraph (a) of this
Section 5, an amendment or supplement which will correct such
statement or omission or an amendment which will effect such
compliance; provided, however, that the Company will not be required
to file any such amendment or supplement with respect to any
Computational Materials, Structural Term Sheets or Collateral Term
Sheets incorporated by reference in the Final Prospectus other than
any amendments or supplements of such Computational Materials or
Structural Term Sheets that are furnished to the Company by the
Underwriters pursuant to Section 8(e) hereof or any amendments or
supplements of such Collateral Term Sheets that are furnished to the
Company by the Underwriters pursuant to Section 9(d) hereof which are
required to be filed in accordance therewith.
(d) The Company will furnish to the Underwriters and
counsel for the Underwriters, without charge, and, so long as delivery
of a prospectus by the Underwriters or a dealer may be required by the
Act, as many copies of the related Preliminary Prospectus and the
related Final Prospectus and any supplements thereto (other than
exhibits to the related Current Report) as the Underwriters may
reasonably request.
(e) The Company will furnish such information, execute
such instruments and take such actions as may be reasonably requested
by the Underwriters to qualify the Offered Securities of a Series for
sale under the laws of such jurisdictions as the Underwriters may
designate, to maintain such qualifications in effect so long as
required for the distribution of such Offered Securities and to
determine the legality of such Offered Securities for purchase by
investors; provided, however, that the Company shall not be required
to qualify to do business in any jurisdiction where it is not
qualified on the date of the related Terms
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Agreement or to take any action which would subject it to general or
unlimited service of process or corporate or franchise taxation as a
foreign corporation in any jurisdiction in which it is not, on the
date of the related Terms Agreement, subject to such service of
process.
(f) So long as the Offered Securities of a Series are
outstanding, the Company will furnish to the Underwriters copies of
the annual independent public accountants' servicing report furnished
to the Indenture Trustee pursuant to the related Sale and Servicing
Agreement.
(g) Whether or not the transactions contemplated hereby
and by the related Terms Agreement shall be consummated, the Company
shall be responsible for the payment of any costs and expenses for
which details are submitted, in connection with the performance of its
obligations under this Agreement and the related Terms Agreement,
including, without limitation, (a) the cost and expenses of printing
or otherwise reproducing the related Registration Statement, the
related Preliminary Prospectus, the related Final Prospectus, this
Agreement, the related Terms Agreement, the related Sale and Servicing
Agreement, the related Trust Agreement, the related Indenture and the
Offered Securities, and (b) the cost of delivering the related Offered
Securities to the office of the Underwriters, insured to the
satisfaction of the Underwriters, (c) the fees and disbursements of
the Depositor's and the Servicer's counsel and accountants, (d) the
qualification of the Securities under state securities or blue sky
laws, including filing fees and the fees and disbursements of counsel
for you in connection therewith and in connection with the preparation
of any blue sky survey and legal investment survey, (e) the printing,
word processing and duplicating expenses and supervision related to
preparation of and delivery to the Underwriter of copies of any
document contemplated hereunder and any blue sky survey and legal
investment survey, (f) the fees of rating agencies, (g) the fees and
expenses, if any, incurred in connection with the listing of the
Offered Securities on any national securities exchange, (h) the fees,
if any, of the National Association of Securities Dealers, Inc., and
the fees and expenses of counsel for you in connection with any
required written submission to or appearance before such entity, (i)
the fees and expenses of the Indenture Trustee, the Owner Trustee, any
custodian, the backup servicer and the Insurer, and their respective
counsel, (j) the fees and expenses of your counsel up to $25,000 per
Certificate Offering, and (k) any such other related expenses not
specified above.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Offered Securities of any
Series shall be subject to the accuracy in all material respects of the
representations and warranties on the part of the Company contained in this
Agreement, as supplemented by the related Terms Agreement, as of the respective
dates thereof and the related Closing Date, to the accuracy of the statements
of the Company made in any applicable officers' certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations under
this Agreement and such Terms Agreement and to the following additional
conditions applicable to the related Offering:
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(a) No stop order suspending the effectiveness of the
related Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) Andrews & Kurth, counsel for the Company, shall have
furnished to the Underwriters an opinion, dated the related Closing
Date, to the effect that:
(i) this Agreement and the related Terms
Agreement have been duly executed and delivered by the
Company;
(ii) each of the related Sale and Servicing
Agreement and any FHA Claims Agreement have been duly executed
and delivered by the Company and is a legal, valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms;
(iii) each of the related Indenture, Trust
Agreement and any Insurance Agreement have been duly executed
and delivered by the Trust and is a legal, valid and binding
agreement of the Trust enforceable against the Trust in
accordance with its terms;
(iv) the Notes, when duly executed and delivered
by the Owner Trustee and when authenticated by the Indenture
Trustee in accordance with the related Indenture, will be
validly issued and outstanding and entitled to the benefits of
such Indenture;
(v) the Certificates, when duly executed and
delivered by the Owner Trustee in accordance with the related
Trust Agreement, will be validly issued and outstanding and
entitled to the benefits of such Trust Agreement;
(vi) the related Trust Agreement is not required
to be qualified under the Trust Indenture Act of 1939, as
amended, (the "Trust Indenture Act") and the Trust created
thereunder is not required to be registered under the 1940
Act;
(vii) the Indenture has been duly qualified under
the Trust Indenture Act;
(viii) the related Indenture constitutes a grant by
the Trust to the Indenture Trustee of a valid and perfected
security interest in, or the Closing Date, and on any
subsequent Transfer Date, the Home Loans and any funds or
accounts to be deposited or established with such Indenture
Trustee for the benefit and security of the holders of the
related Notes (and any cash deposited therein), subject to no
prior lien, mortgage, pledge, charge, security interest,
adverse claim or other encumbrance.
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(ix) such counsel confirms that the related
Registration Statement is effective under the Act and, to the
best of such counsel's knowledge, no stop order with respect
thereto has been issued, and no proceeding for that purpose
has been instituted or threatened by the Commission under the
Act; such Registration Statement (except the financial
statements and schedules and other financial and statistical
data included therein and the documents incorporated by
reference therein), at the time it became effective and the
related Final Prospectus (except the financial statements and
schedules and the other financial and statistical data
included therein, the documents incorporated by reference
therein and the information included in the first sentence of
the last paragraph on the cover page, the information under
the heading "Underwriting" therein insofar as such information
relates to the offer and sale of the Securities by the
Underwriters, as of the date of the Prospectus Supplement,
conformed in all material respects to the requirements of the
Act and the rules and regulations thereunder; and no
information has come to the attention of such counsel that
causes it to believe that (A) such Registration Statement
(except the financial statements and schedules and the other
financial and statistical data included therein and the
documents incorporated by reference therein) at the time it
became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading or (B) such Final Prospectus or any amendment or
supplement thereto (except the financial statements and
schedules and the other financial and statistical data
included therein, the documents incorporated by reference
therein and the information included in the first sentence of
the last paragraph on the cover page, the information under
the heading "Underwriting" therein insofar as such information
relates to the offer and sale of the Securities by the
Underwriters), as of the date of the Prospectus Supplement or
at the related Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading;
(x) the statements set forth under the headings
"Description of the Transfer and Servicing Agreements" and
"Description of the Offered Securities" in the related Final
Prospectus, insofar as such statements purport to summarize
certain provisions of the related Trust Agreement, the related
Indenture, the related Sale and Servicing Agreement" and the
related Offered Securities, provide a fair summary of such
provisions;
(xi) the statements set forth in the related Final
Prospectus under the headings "Certain Legal Aspects of the
Loan Assets", "Certain Federal Income Tax Consequences"
(insofar as they relate specifically to the purchase,
ownership and disposition of the related Offered Securities)
and "ERISA Considerations" (insofar as they relate
specifically to the purchase, ownership and disposition of
such Offered
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Securities), to the extent that they constitute matters of law
or legal conclusions, provide a fair summary of such law or
conclusions;
(xii) such HUD/FHA regulatory matters as reasonably
required by the Underwriters; and
(xiii) the statements set forth in the related Final
Prospectus under the heading "Certain Federal Income Tax
Consequences" and in the related Prospectus Supplement under
the heading "Summary of Terms -- Tax Status", to the extent
such statements relate to federal income tax consequences,
accurately describe the material federal income tax
consequences to holders of the Securities.
Such opinion may express its reliance as to factual matters on the
representations and warranties made by, and on certificates or other
documents furnished by, officers of the parties to this Agreement, the
related Terms Agreement, the related Sale and Servicing Agreement, the
related Indenture, the related Trust Agreement or any related
Insurance Agreement. Such opinion may assume the due authorization,
execution and delivery of the instruments and documents referred to
therein by the parties thereto other than the Company. Such opinion
may be qualified, insofar as it concerns the enforceability of the
documents referred to therein, to the extent that such enforceability
may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights in general
and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law). Such
opinion may be further qualified as expressing no opinion as to (x)
the statements in the related Final Prospectus under the heading
"Certain Legal Aspects of the Loan Assets" except insofar as such
statements relate to the laws of the State of Texas and the laws of
the United States, and (y) the statements in such Final Prospectus
under the headings "ERISA Considerations" and "Certain Federal Income
Tax Consequences" except insofar as such statements relate to the laws
of the United States.
(c) Ronald M. Mankoff, as General Counsel for the Company
and FFI, shall have furnished to the Underwriters an opinion, dated
the related Closing Date, to the effect that:
(i) Each of the Company and FFI have been duly
incorporated and each is validly existing as a corporation in
good standing in the jurisdiction of its organization with
corporate power to own its properties, to conduct its business
as described in the related Final Prospectus and to enter into
and perform its obligations under this Agreement, the related
Terms Agreement, the related Sale and Servicing Agreement, the
related Indenture, the related Trust Agreement, the related
Insurance Agreement and the Securities of the related Series,
as applicable;
(ii) The Company has full power and authority to
deposit the related Home Loans as contemplated herein and in
the related Trust Agreement and FFI has
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13
full power and authority to transfer and service the related
Home Loans as contemplated in the related Sale and Servicing
Agreement;
(iii) No consent, approval, authorization or order
of any court or governmental agency or body is required for
the consummation by (a) the Company of the transactions
contemplated herein and in the related Sale and Servicing
Agreement, Trust Agreement and Indenture (b) by FFI of the
transactions contemplated in the related Sale and Servicing
Agreement, except such as may be required under the blue sky
laws of any jurisdiction and such other approvals as have been
obtained;
(iv) Neither the issuance of the Securities of the
related Series nor delivery of the related Offered Securities,
nor the consummation of any other of the transactions
contemplated in this Agreement, the related Terms Agreement,
the related Sale and Servicing Agreement, the related Trust
Agreement, the related Indenture or the related Insurance
Agreement, nor the fulfillment of the terms of the related
Securities, the related Sale and Servicing Agreement, the
related Indenture, the related Trust Agreement, this
Agreement, the related Terms Agreement or the related
Insurance Agreement, as applicable, will conflict with or
violate any term or provision of the articles of incorporation
or by-laws of the Company or FFI, as applicable or any
statute, order or regulation applicable to the Company of any
court, regulatory body, administrative agency or governmental
body having jurisdiction over the Company or FFI and will not
conflict with, result in a breach or violation or the
acceleration of or constitute a default under the terms of any
indenture or other agreement or instrument known to such
counsel to which the Company or FFI is a party or by which it
is bound; and
(v) There are no actions, proceedings or
investigations pending or, to the best knowledge of such
counsel, threatened before any court, administrative agency or
other tribunal (i) asserting the invalidity of this Agreement,
the related Terms Agreement, the related Sale and Servicing
Agreement, the related Trust Agreement, the related Indenture,
the related Insurance Agreement or the related Securities,
(ii) seeking to prevent the issuance of the Securities of the
related Series or the consummation by the Company or FFI, as
applicable, of any of the transactions contemplated by this
Agreement, such Terms Agreement, such Sale and Servicing
Agreement, such Indenture, such Trust Agreement or such
Insurance Agreement, or (iii) which might materially and
adversely affect the performance by the Company or FFI, as
applicable, of its obligations under, or the validity or
enforceability of, this Agreement, such Terms Agreement, such
Sale and Servicing Agreement, such Indenture, such Trust
Agreement, such Insurance Agreement or the related Securities.
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14
In rendering his opinion such counsel may rely as to matters of fact,
to the extent deemed proper and as stated therein, on certificates of
responsible officers of the Company, FFI or public officials.
(d) The Underwriters shall have received from Brown &
Wood, counsel for the Underwriters, such opinion or opinions, dated
the related Closing Date, with respect to the issuance and sale of the
Securities of the related Series, the related Registration Statement,
the related Final Prospectus and such other related matters in form
and substance that is customary and reasonably acceptable to the
Underwriters, and the Company shall have furnished to such counsel
such documents as the Underwriters may reasonably request for the
purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Underwriters
a certificate of the Company, signed by the President or any Vice
President dated the related Closing Date, to the effect that the
signers of such certificate have carefully examined the related
Registration Statement (excluding any Current Reports and any other
documents incorporated by reference therein), the related Final
Prospectus, the Form 8-K relating to the Subsequent Home Loans, this
Agreement and the related Terms Agreement and that:
(i) the representations and warranties of the
Company in this Agreement are true and correct in all material
respects on and as of the related Closing Date with the same
effect as if made on such Closing Date, and the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to such Closing Date;
(ii) no stop order suspending the effectiveness of
such Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to their knowledge,
threatened; and
(iii) nothing has come to their attention that
would lead them to believe that such Registration Statement
(excluding any Current Report) contains any untrue statement
of a material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading, that the related Final
Prospectus (excluding the related Current Report) contains any
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, or that the Form
8-K relating to the Subsequent Home Loans includes any untrue
statement of a material fact or omits to state any information
which the Final Prospectus states will be included in such
Form 8-K.
(f) Counsel for the Indenture Trustee shall have
furnished to the Underwriters an opinion, dated the related Closing
Date, in form and substance that is customary and
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15
reasonably acceptable to the Underwriters regarding certain matters
relating to the Indenture Trustee.
(g) Counsel for the Owner Trustee shall have furnished to
the Underwriters an opinion, dated the related Closing Date, in form
and substance that is customary and reasonably acceptable to the
Underwriters regarding certain matters relating to the Owner Trustee.
In addition, such counsel shall furnish to the Underwriters
such opinions as to the treatment of the Trust Fund for purposes of
state tax law where the Owner Trustee maintains possession of the
assets of the Trust Fund as are customary and reasonably satisfactory
to the Underwriters.
(h) Ernst & Young LLP shall have furnished to the
Underwriters one or more letters in form and substance that is
customary and reasonably satisfactory to the Underwriters, to the
effect that they have performed certain specified procedures requested
by the Underwriters with respect to certain information relating to
the Offered Securities and certain matters relating to the Company and
the Servicer.
(i) The Policy relating to the Offered Securities of the
related Series, if any, shall have been duly executed and issued prior
to the Closing Date, in form and substance that is customary and
reasonably satisfactory to the Underwriters, and shall conform in all
respects to the description thereof in the Prospectus.
(j) If applicable, counsel for the Insurer shall have
furnished to the Underwriters an opinion, dated the related Closing
Date, in form and substance that is customary and reasonably
acceptable to the Underwriters regarding to certain matters relating
to the Insurer.
In rendering his opinion such counsel may rely as to matters
of fact, to the extent deemed proper and as stated therein, on
certificates of responsible officers of the Insurer or public
officials.
(k) The Owner Trustee shall have received from the
Depositor all funds required to be delivered by the Depositor to be
deposited in any account required to be established in accordance with
the related Trust Agreement.
(l) If applicable, the Servicer, as FHA Claims
Administrator, and the Depositor, as FHA Insurance Holder, shall have
executed and delivered the FHA Claims Agreement in form and substance
reasonably acceptable to the Underwriters.
(m) The Offered Securities of the related Series shall
have received the ratings specified in the related Terms Agreement
(the "Required Ratings").
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16
(n) On or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (i) any intended or
possible downgrading or (ii) any review or possible changes in rating
the direction of which has not been indicated, in the rating accorded
and originally requested by the Company relating to any previously
issued asset-backed securities of the Company by any "nationally
recognized statistical rating organization" (as such terms is defined
for purposes of the Exchange Act).
(o) On or prior to the Closing Date, there has been no
downgrading, not has any notice been given of (i) any intended or
possible downgrading or (ii) any review or possible changes in rating
the direction of which has not been indicated, in the rating accorded
the Insurer's claims paying ability by any "nationally recognized
statistical rating organization" (as such terms is defined for
purposes of the Exchange Act).
(p) Subsequent to the date of the related Terms
Agreement, there shall not have been any change, or any development
involving a prospective change, in or affecting the business or
properties of (i) the Company, its parent company or any of its
subsidiaries, (ii) the Transferor or (iii) the Insurer which the
Underwriters conclude in their reasonable judgment, after consultation
with the Company, materially impairs the investment quality of the
Offered Securities of the related Series so as to make it impractical
or inadvisable to proceed with the public offering or the delivery of
such Offered Securities as contemplated by the related Final
Prospectus.
(q) Prior to the related Closing Date, the Company shall
have furnished to the Underwriters such further information,
certificates and documents as the Underwriters may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects with respect to the particular Offered
Securities of a Series when and as provided in this Agreement and the related
Terms Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement and the related Terms Agreement shall not be in all
material respects reasonably satisfactory in form and substance to the
Underwriters and their counsel, this Agreement (with respect to the related
Offered Securities) and the related Terms Agreement and all obligations of the
Underwriters hereunder (with respect to the related Offered Securities) and
thereunder may be canceled at, or at any time prior to, the related Closing
Date by the Underwriters. Notice of such cancellation shall be given to the
Company in writing, or by telephone or telegraph confirmed in writing.
7. Indemnification and Contribution. (a) The Company and FFI
jointly and severally, agree to indemnify and hold harmless each Underwriter
and each person who controls any Underwriter within the meaning of the Act or
the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Act, the Exchange Act, or other Federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise
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17
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement relating to the Offered
Securities of the applicable Series as it became effective or in any amendment
or supplement thereof, or in such Registration Statement, in the related
Preliminary Prospectus or the related Final Prospectus, or in any amendment
thereof, or in the Form 8-K referred to in such Final Prospectus or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company and FFI will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein (A) in reliance upon and in conformity with
written information furnished to the Company as herein stated by or on behalf
of any Underwriter through you specifically for use in connection with the
preparation thereof or (B) in any Computational Materials or ABS Term Sheets
furnished to prospective investors by the Underwriters or any Current Report or
any amendment or supplement thereof, except to the extent that any untrue
statement or alleged untrue statement therein or omission therefrom results
directly from an error (a "Mortgage Pool Error") in the information concerning
the characteristics of the Home Loans furnished by the Company to any
Underwriter in writing or by electronic transmission that was used in the
preparation of either (x) any Computational Materials or ABS Term Sheets (or
amendments or supplements thereof) included in such Current Report (or
amendment or supplement thereof) or (y) any written or electronic materials
furnished to prospective investors on which the Computational Materials (or
amendments or supplements) were based.
(b) Each Underwriter agrees, severally, and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement relating to the Offered
Securities of the applicable Series, and each person who controls the Company
within the meaning of the Act or the Exchange Act to the same extent as the
foregoing indemnities from the Company to each Underwriter, but only with
reference to (A) written information furnished to the Company by or on behalf
of such Underwriter through you specifically for use in the preparation of the
documents referred to in the foregoing indemnity with respect to the related
Series, or (B) any Computational Materials or ABS Term Sheets (or amendments or
supplements thereof) delivered to prospective investors by such Underwriter,
including any Computational Materials or ABS Term Sheets that are furnished to
the Company by such Underwriter pursuant to Section 8 and incorporated by
reference in such Registration Statement, the related Preliminary Prospectus or
the related Final Prospectus or any amendment or supplement thereof (except
that no such indemnity shall be available for any losses, claims, damages or
liabilities, or actions in respect thereof, resulting from any Mortgage Pool
Error, other than a Corrected Mortgage Pool Error).
(c) Promptly after receipt by an indemnified party under Section 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 7, notify such indemnifying party in writing of the commencement
thereof; but the omission so to notify such indemnifying party will not relieve
it
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18
from any liability which it may have to any indemnified party otherwise than
under this Section 7. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party or parties of the
commencement thereof, the indemnifying party or parties will be entitled to
participate therein, and to the extent that they may elect by written notice
delivered to an indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both an indemnified party and an
indemnifying party and such indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to an
indemnifying party, such indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from an indemnifying party or parties to
such indemnified party of their election so to assume the defense of such
action and approval by such indemnified party of counsel, such indemnifying
party or parties will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) such
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party
or parties shall not be liable for the expenses of more than one separate
counsel approved by the indemnified party or parties in the case of
subparagraph (a) or (b), representing the indemnified parties under
subparagraph (a) or (b), who are parties to such action), (ii) the indemnifying
party or parties shall not have employed counsel satisfactory to the
indemnified party or parties to represent such indemnified party or parties
within a reasonable time after notice of commencement of the action or (iii)
the indemnifying party or parties have authorized the employment of counsel for
an indemnified party at the expense of the indemnifying parties; and except
that, if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).
(d) If the indemnification provided for in paragraph (a) or (b) of
this Section 7 is due in accordance with its terms but is for any reason held
by a court to be unavailable from the Company, FFI or any Underwriter, on
grounds of policy or otherwise, or if an indemnified party failed to give
notice under paragraph (c) of this Section 7 in respect of a claim otherwise
subject to indemnification in accordance with paragraph (a) or (b) of this
Section 7, the Company, FFI and each Underwriter shall contribute to the
aggregate losses, claims, damages and liabilities (including legal and other
expenses reasonably incurred in connection with investigating or defending
same) to which the Company, FFI and such Underwriter may be subject in such
proportion so that such Underwriter is responsible for that portion represented
by the difference between the portion of the proceeds to the Company in respect
of the Offered Securities underwritten by such Underwriter for the related
Series and the portion of the total proceeds received by such Underwriter from
the sale of such Offered Securities (the "Underwriting Discount"), and the
Company and FFI are responsible for the balance; provided, however, that in no
case shall any such Underwriter be responsible under this subparagraph for any
amount in excess of such Underwriting Discount applicable to the Offered
Securities purchased by such Underwriter pursuant to this Agreement and the
related Terms Agreement. Notwithstanding anything to the contrary in this
Section 7(d), no person guilty of
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fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person who
controls any Underwriter within the meaning of either the Act or the Exchange
Act shall have the same rights to contribution as such Underwriter, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the immediately
preceding sentence of this paragraph (d).
8. Computational Materials and Structural Term Sheets. (a) In
accordance with Section 10, the Underwriters shall deliver to the Company one
complete copy of all materials provided by the Underwriters to prospective
investors in such Offered Securities which constitute (i) "Computational
Materials" within the meaning of the no-action letter dated May 20, 1994 issued
by the Division of Corporation Finance of the Commission to Kidder, Peabody
Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder
Structured Asset Corporation and the no-action letter dated May 27, 1994 issued
by the Division of Corporation Finance of the Commission to the Public
Securities Association (together, the "Kidder Letters") and the filing of such
material is a condition of the relief granted in such letter (such materials
being the "Computational Materials"), and (ii) "Structural Term Sheets" within
the meaning of the no-action letter dated February 17, 1995 issued by the
Division of Corporation Finance of the Commission to the Public Securities
Association (the "PSA Letter") and the filing of such material is a condition
of the relief granted in such letter (such materials being the "Structural Term
Sheets"). Each delivery of Computational Materials and Structural Term Sheets
to the Company pursuant to this paragraph (a) shall be effected in accordance
with Section 10.
(b) Each Underwriter represents and warrants to and agrees with
the Company, as of the date of the related Terms Agreement and as of the
Closing Date, that:
(i) the Computational Materials furnished to the Company
by such Underwriter pursuant to Section 8(a) constitute (either in
original, aggregated or consolidated form) all of the materials
furnished to prospective investors by such Underwriter prior to the
time of delivery thereof to the Company that are required to be filed
with the Commission with respect to the related Offered Securities in
accordance with the Kidder Letters, and such Computational Materials
comply with the requirements of the Kidder Letters;
(ii) the Structural Term Sheets furnished to the Company
by such Underwriter pursuant to Section 8(a) constitute all of the
materials furnished to prospective investors by such Underwriter prior
to the time of delivery thereof to the Company that are required to be
filed with the Commission as "Structural Term Sheets" with respect to
the related Offered Securities in accordance with the PSA Letter, and
such Structural Term Sheets comply with the requirements of the PSA
Letter; and
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20
(iii) on the date any such Computational Materials or
Structural Term Sheets with respect to such Offered Securities (or any
written or electronic materials furnished to prospective investors on
which the Computational Materials are based) were last furnished to
each prospective investor by such Underwriter and on the date of
delivery thereof to the Company pursuant to Section 8(a) and on the
related Closing Date, such Computational Materials (or such other
materials) or Structural Term Sheets did not and will not include any
untrue statement of a material fact or, when read in conjunction with
the Final Prospectus and Prospectus Supplement, omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
Notwithstanding the foregoing, each Underwriter makes no representation or
warranty as to whether any Computational Materials or Structural Term Sheets
(or any written or electronic materials on which the Computational Materials
are based) included or will include any untrue statement resulting directly
from any Mortgage Pool Error.
(c) If, at any time when a prospectus relating to the Offered
Securities of a Series is required to be delivered under the Act, it shall be
necessary to amend or supplement the related Final Prospectus as a result of an
untrue statement of a material fact contained in any Computational Materials or
Structural Term Sheets provided by any Underwriter pursuant to this Section 8
or the omission to state therein a material fact required, when considered in
conjunction with the related Final Prospectus and Prospectus Supplement, to be
stated therein or necessary to make the statements therein, when read in
conjunction with the related Final Prospectus and Prospectus Supplement, not
misleading, or if it shall be necessary to amend or supplement any Current
Report relating to any Computational Materials or Structural Term Sheets to
comply with the Act or the rules thereunder, such Underwriter promptly will
prepare and furnish to the Company for filing with the Commission an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance. Each Underwriter represents and warrants to
the Company, as of the date of delivery by it of such amendment or supplement
to the Company, that such amendment or supplement will not include any untrue
statement of a material fact or, when read in conjunction with the related
Final Prospectus and Prospectus Supplement, omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, each such Underwriter makes no representation or
warranty as to whether any such amendment or supplement will include any untrue
statement resulting directly from any Mortgage Pool Error.
9. Collateral Term Sheets. (a) Prior to the delivery of any
"Collateral Term Sheet" within the meaning of the PSA Letter, the filing of
which material is a condition of the relief granted in such letter (such
material being the "Collateral Term Sheets"), to a prospective investor in the
Offered Securities, the Underwriters shall notify the Company and its counsel
by telephone of their intention to deliver such materials and the approximate
date on which the first such delivery of such materials is expected to occur.
Not later than 10:30 a.m., New York time, on the business day immediately
following the date on which any Collateral Term Sheet was first delivered to a
prospective investor in the Offered Securities, the Underwriters shall deliver
to the Company one
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21
complete copy of all materials provided by the Underwriters to prospective
investors in such Offered Securities which constitute "Collateral Term Sheets."
Each delivery of a Collateral Term Sheet to the Company pursuant to this
paragraph (a) shall be effected in accordance with Section 10. (Collateral Term
Sheets and Structural Term Sheets are, together, referred to herein as "ABS Term
Sheets.") At the time of each such delivery, the Underwriter making such
delivery shall indicate in writing that the materials being delivered constitute
Collateral Term Sheets, and, if there has been any prior such delivery with
respect to the related Series, shall indicate whether such materials differ in
any material respect from any Collateral Term Sheets previously delivered to the
Company with respect to such Series pursuant to this Section 9(a) as a result of
the occurrence of a material change in the characteristics of the related Home
Loans.
(b) Each Underwriter represents and warrants to and agrees with
the Company as of the date of the related Terms Agreement and as of the Closing
Date, that:
(i) The Collateral Term Sheets furnished to the Company
by such Underwriter pursuant to Section 9(a) constitute all of the
materials furnished to prospective investors by such Underwriter prior
to time of delivery thereof to the Company that are required to be
filed with the Commission as "Collateral Term Sheets" with respect to
the related Offered Securities in accordance with the PSA Letter, and
such Collateral Term Sheets comply with the requirements of the PSA
Letter; and
(ii) On the date any such Collateral Term Sheets with
respect to such Offered Securities were last furnished to each
prospective investor by such Underwriter and on the date of delivery
thereof to the Company pursuant to Section 9(a) and on the related
Closing Date, such Collateral Term Sheets did not and will not include
any untrue statement of a material fact or, when read in conjunction
with the Final Prospectus and Prospectus Supplement, omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
Notwithstanding the foregoing, each Underwriter makes no representation or
warranty as to whether any Collateral Term Sheet included or will include any
untrue statement or material omission resulting directly from any Mortgage Pool
Error.
(c) If, at any time when a prospectus relating to the Offered
Securities of a Series is required to be delivered under the Act, it shall be
necessary to amend or supplement the related Final Prospectus as a result of an
untrue statement of a material fact contained in any Collateral Term Sheets
provided by any Underwriter pursuant to this Section 9 or the omission to state
therein a material fact required, when considered in conjunction with the
related Final Prospectus and Prospectus Supplement, to be stated therein or
necessary to make the statements therein, when read in conjunction with the
related Final Prospectus and Prospectus Supplement, not misleading, or if it
shall be necessary to amend or supplement any Current Report relating to any
Collateral Term Sheets to comply with the Act or the rules thereunder, such
Underwriter promptly will prepare and furnish to the Company for filing with
the Commission an amendment or supplement which will
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22
correct such statement or omission or an amendment which will effect such
compliance. Each Underwriter represents and warrants to the Company, as of the
date of delivery of such amendment or supplement to the Company, that such
amendment or supplement will not include any untrue statement of a material
fact or, when read in conjunction with the related Final Prospectus and
Prospectus Supplement, omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, each such Underwriter makes no representation or warranty as to
whether any such amendment or supplement will include any untrue statement
resulting directly from any Mortgage Pool Error.
10. Delivery and Filing of Current Reports, Collateral Term
Sheets, Structural Term Sheets.
(a) Any Current Report, Collateral Term Sheet or
Structural Term Sheet that is required to be delivered by the
Underwriter to the Company hereunder shall be effected by the delivery
of four copies to counsel for the Company and one copy in computer
readable format to the Financial Printer on or prior to 10:30 a.m. on
the date so specified herein.
(b) The Company shall cause the Financial Printer to file
with the Commission any such Current Report, Collateral Term Sheet or
Structural Term Sheet within one business day immediately following
the delivery thereof pursuant to the preceding subsection. The
Company shall use its best efforts to cause any such Current Report,
Collateral Term Sheet or Structural Term Sheet to be so filed prior to
2:00 p.m., New York time, on such business day and will promptly
advise the Underwriters of such filing.
11. Termination. This Agreement (with respect to a particular
Certificate Offering) and the related Terms Agreement shall be subject to
termination in the absolute discretion of the Underwriters, by notice given to
the Company prior to delivery of and payment for the related Offered
Securities, if prior to the related Closing Date (i) trading in securities
generally on the New York Stock Exchange shall have been suspended or
materially limited, (ii) a general moratorium on commercial banking activities
in New York shall have been declared by either federal or New York State
authorities, or (iii) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis the effect of which on
the financial markets of the United States is such as to make it, in the
reasonable judgment of the Underwriters, impracticable to market such Offered
Securities.
12. Representations and Indemnities to Survive Delivery. The
agreements, representations, warranties, indemnities and other statements of
the Company or its officers and of the Underwriters set forth in or made
pursuant to this Agreement and the related Terms Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of the
Underwriters or the Company or any of the officers, directors of controlling
persons referred to in Section 7 hereof, and will survive delivery of and
payment for the related Offered Securities. The provisions of Section 7 hereof
shall survive the termination or cancellation of this Agreement and the related
Terms Agreement.
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13. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail on the Closing Date to purchase the Offered
Securities which it or they are obligated to purchase hereunder and under the
applicable Terms Agreement (the "Defaulted Securities"), you shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth and under the applicable Terms
Agreement. If, however, you have not completed such arrangements within such
24-hour period, then:
(a) if the aggregate original Certificate Principal
Balance of Defaulted Securities does not exceed 10% of the aggregate
original Certificate Principal Balance of the Offered Securities to be
purchased pursuant to such Terms Agreement, the non-defaulting
Underwriters named in such Terms Agreement shall be obligated to
purchase the full amount thereof in the proportions that their
respective underwriting obligations thereunder bear to the
underwriting obligations of all non-defaulting Underwriters; and
(b) if the aggregate original Certificate Principal
Balance of Defaulted Securities exceeds 10% of the aggregate original
Certificate Principal Balance of the Offered Securities to be
purchased pursuant to such Terms Agreement, the applicable Terms
Agreement shall terminate without any liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section 13 and nothing in this
Agreement shall relieve any defaulting Underwriter from liability in respect of
its default.
In the event of any such default which does not result in a
termination of this Agreement or such applicable Terms Agreement, either you or
the Company shall have the right to postpone the Closing Date for a period of
time not exceeding seven days in order to effect any required changes in the
Registration Statement or in any other documents or arrangements.
14. Guarantor. RAC Financial Group, Inc., the parent of the
Company and FFI, ("RAC") shall guarantee any obligation or liability of the
Company or FFI pursuant to Section 7 hereof. RAC's acceptance of its guarantee
obligation is acknowledged by the execution of the signature page of this
Agreement by an authorized signatory of RAC.
15. Successors. This Agreement and the related Terms Agreement
will inure to the benefit of and be binding upon the parties hereto and thereto
and their respective successors and the officers, directors and controlling
persons referred to in Section 7 hereof, and their successors and assigns, and
no other person will have any right or obligation hereunder or thereunder. No
purchaser of any Offered Certificate from the Underwriters shall be deemed a
successor or assign by reason of such purchase.
16. APPLICABLE LAW. THIS AGREEMENT AND THE RELATED TERMS
AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
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THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED THEREIN.
17. Miscellaneous. This Agreement, as supplemented by the related
Terms Agreement, supersedes all prior and contemporaneous agreements and
understandings relating to the subject matter hereof. This Agreement and the
related Terms Agreement or any term of each may not be changed, waived,
discharged or terminated except by an affirmative written agreement made by the
party against whom enforcement of the change, waiver, discharge or termination
is sought. The headings in this Agreement and the related Terms Agreement are
for purposes of reference only and shall not limit or otherwise affect the
meaning hereof or thereof.
18. Notices. All communications by one party hereunder to all
other parties hereunder will be in writing and effective only on receipt by
such other parties, and will be delivered as follows: (A) to the Underwriters
at the addresses first above written; (B) to the Company at 3773 Howard Hughes
Parkway, Suite 300N, Las Vegas, Nevada 89109, Attention: Michael Orendorf; and
(C) to FFI at FIRSTPLUS FINANCIAL, INC., 1250 Mockingbird Lane, Dallas, Texas
75247- 4902, Attention: Mr. Chris Gramlich.
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25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the undersigned a counterpart hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company and the Underwriters.
Very truly yours,
FIRSTPLUS INVESTMENT CORPORATION
By:
-------------------------
Christopher J. Gramlich
Senior Vice President
FIRSTPLUS FINANCIAL INC.
By:
-------------------------
Christopher J. Gramlich
Senior Vice President
ACKNOWLEDGED BY:
RAC FINANCIAL GROUP, INC.
By:
-------------------------
Christopher J. Gramlich
Senior Vice President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
[NAME OF UNDERWRITER(S)]
By:
-------------------------
Name:
-----------------------
Title:
----------------------
26
EXHIBIT A
FIRSTPLUS HOME LOAN OWNER TRUST ___-__
ASSET-BACKED SECURITIES
TERMS AGREEMENT
(to Underwriting Agreement,
dated ______________, 199__
among the Company, FFI and the Underwriters)
FIRSTPLUS INVESTMENT CORPORATION [DATE]
3773 Howard Hughes Parkway
Suite 300N
Las Vegas, Nevada 89109
Attention: Mr. Michael Orendorf
FIRSTPLUS FINANCIAL INC.
1250 Mockingbird Lane
Dallas, Texas 75247-4902
Attention: Mr. Chris Gramlich
Each of ________________ ("______________") and
__________________ ("_____________," each an "Underwriter" and collectively the
"Underwriters") agrees, severally and not jointly, subject to the terms and
provisions herein and of the captioned Underwriting Agreement (the
"Underwriting Agreement"), to purchase such Classes of Series ____-__
Securities specified opposite its name in Section 2(a) hereof (the "Offered
Securities"). This letter supplements and modifies the Underwriting Agreement
solely as it relates to the purchase and sale of the Offered Securities
described below. The Series ____-__ Securities are registered with the
Securities and Exchange Commission by means of an effective Registration
Statement (No. _____). Capitalized terms used and not defined herein have the
meanings given them in the Underwriting Agreement.
Section 1. The Mortgage Pool: The Series _____-__
Securities shall evidence the entire beneficial ownership interest in a pool
(the "Home Loan Pool") of loans (the "Home Loans") having the characteristics
described in the Prospectus Supplement dated the date hereof.
Section 2. The Securities: The Offered Securities shall
be issued as follows:
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(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 #1 UNDERWRITER #2
----- -------------- --------------
(b) The Offered Securities shall have such other
characteristics as described in the related Final Prospectus.
Section 3. Purchase Price: The Purchase Price for each
Class of the Offered Securities shall be the Class Purchase Price Percentage
therefor (as set forth in Section 2(a) above) of the initial Class Principal
Balance thereof plus accrued interest at the applicable interest rate per annum
of each such Class from and including the Cut-off Date up to, but not
including, _____________ (the "Closing Date").
Section 4. Required Ratings: The Offered Securities
shall have received Required Ratings of at least [ ] from [ ].
Section 5. Insurer:
Section 6. Location of Closing:
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the undersigned a counterpart hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Underwriters and the Company.
Very truly yours,
[UNDERWRITER]
as Representative of the several
Underwriters
By:
-------------------------
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
FIRSTPLUS INVESTMENT CORPORATION
By:
-------------------------
Name:
Title:
FIRSTPLUS FINANCIAL INC.
By:
-------------------------
Name:
Title:
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ACKNOWLEDGED BY:
RAC FINANCIAL GROUP, INC.
By:
-------------------------
Name:
Title:
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