Exhibit 99.f.1
EXECUTION COPY
SALE AND SERVICING AGREEMENT
Dated as of June 1, 2000
Among
MCG MASTER TRUST
(Trust)
MCG FINANCE CORPORATION II
(Seller)
and
MCG CREDIT CORPORATION
(Originator and Servicer)
MCG MASTER TRUST NOTES
TABLE OF CONTENTS
-----------------
Section Page
------- ----
ARTICLE I
DEFINITIONS
-----------
Section 1.01 Definitions............................................................................... 2
Section 1.02 Use of Words and Phrases.................................................................. 2
Section 1.03 Captions; Table of Contents............................................................... 2
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
-------------------------------------
Section 2.01 Sale and Conveyance of Trust Fund......................................................... 2
Section 2.02 Possession of Commercial Loan Files....................................................... 2
Section 2.03 Books and Records......................................................................... 3
Section 2.04 Delivery of Commercial Loan Files......................................................... 3
Section 2.05 Acceptance by Trustee of the Trust Fund; Certain Substitutions; Certification by
Indenture Trustee; Possession of Files.................................................... 6
Section 2.06 [Reserved]................................................................................ 8
Section 2.07 [Reserved]................................................................................ 8
Section 2.08 Fees and Expenses of the Owner Trustee and the Indenture Trustee.......................... 8
Section 2.09 Transfer and Conveyance of the Commercial Loans........................................... 8
Section 2.10 Optional Repurchase or Substitution of Commercial Loans................................... 10
Section 2.11 Subsequent Sales.......................................................................... 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Seller and the Servicer............................................ 11
Section 3.02 Individual Commercial Loans............................................................... 13
Section 3.03 Purchase and Substitution of Defective Commercial Loans................................... 18
(i)
ARTICLE IV
ADMINISTRATION AND SERVICING OF COMMERCIAL LOANS
------------------------------------------------
Section 4.01 Duties of the Servicer..................................................................... 20
Section 4.02 Liquidation of Commercial Loans............................................................ 23
Section 4.03 Establishment of Principal and Interest Accounts; Deposits in Principal and Interest
Accounts................................................................................... 24
Section 4.04 Permitted Withdrawals From the Principal and Interest Account.............................. 25
Section 4.05 [Intentionally Omitted].................................................................... 27
Section 4.06 Transfer of Accounts....................................................................... 27
Section 4.07 Maintenance of Hazard Insurance............................................................ 27
Section 4.08 [Intentionally Omitted].................................................................... 28
Section 4.09 Fidelity Bond.............................................................................. 28
Section 4.10 Title, Management and Disposition of Foreclosed Property................................... 28
Section 4.11 [Intentionally Omitted].................................................................... 29
Section 4.12 Collection of Certain Commercial Loan Payments............................................. 29
Section 4.13 Access to Certain Documentation and Information Regarding the Commercial Loans............. 29
ARTICLE V
PAYMENTS TO THE NOTEHOLDERS
---------------------------
Section 5.01 Establishment of Note Distribution Account; Deposits in Note Distribution Account;
Permitted Withdrawals from Note Distribution Account....................................... 30
Section 5.02 Establishment of Transferor Interest Account; Deposits in Transferor Interest
Account; Permitted Withdrawals from Transferor Interest Account............................ 31
Section 5.03 Establishment of Expense Account; Deposits in Expense Account; Permitted Withdrawals
from Expense Account....................................................................... 31
Section 5.04 Funding Account............................................................................ 32
Section 5.05 [Intentionally Omitted].................................................................... 33
Section 5.06 Investment of Accounts..................................................................... 33
Section 5.07 Allocations................................................................................ 34
Section 5.08 [Intentionally Omitted].................................................................... 36
Section 5.09 Statements................................................................................. 36
Section 5.10 Reports of Foreclosure and Abandonment..................................................... 36
(ii)
ARTICLE VI
GENERAL SERVICING PROCEDURE
---------------------------
Section 6.01 [Intentionally Omitted].................................................................... 37
Section 6.02 Satisfaction of Mortgages and Collateral and Release of Commercial Loan Files.............. 37
Section 6.03 Servicing Compensation..................................................................... 38
Section 6.04 Annual Statement as to Compliance.......................................................... 39
Section 6.05 Annual Independent Public Accountants' Servicing Report.................................... 39
Section 6.06 Indenture Trustee's Right to Examine Servicer Records and Audit Operations................. 39
Section 6.07 Reports to the Indenture Trustee; Principal and Interest Account Statements................ 39
ARTICLE VII
REPORTS TO BE PROVIDED BY SERVICER
----------------------------------
Section 7.01 Financial Statements....................................................................... 40
ARTICLE VIII
THE SERVICER
------------
Section 8.01 Indemnification; Third Party Claims........................................................ 40
Section 8.02 Merger or Consolidation of the Servicer.................................................... 41
Section 8.03 Limitation on Liability of the Servicer and Others......................................... 41
Section 8.04 Servicer Not to Resign..................................................................... 42
ARTICLE IX
SERVICER TERMINATION
--------------------
Section 9.01 Servicer Termination Events................................................................ 42
Section 9.02 Trustee to Act; Appointment of Successor................................................... 44
Section 9.03 Waiver of Defaults......................................................................... 46
Section 9.04. Control by Majority Noteholders............................................................ 46
(iii)
ARTICLE X
TERMINATION
-----------
Section 10.01 Termination................................................................................ 47
Section 10.02 Accounting Upon Termination of Servicer.................................................... 47
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
Section 11.01 Acts of Noteholders........................................................................ 48
Section 11.02 Amendment.................................................................................. 48
Section 11.03 Duration of Agreement...................................................................... 49
Section 11.04 Governing Law.............................................................................. 49
Section 11.05 Notices.................................................................................... 49
Section 11.06 Severability of Provisions................................................................. 49
Section 11.07 No Partnership............................................................................. 50
Section 11.08 Counterparts............................................................................... 50
Section 11.09 Successors and Assigns..................................................................... 50
Section 11.10 Headings................................................................................... 50
Section 11.11 Notification to Rating Agencies............................................................ 50
Section 11.12 Limitation of Liability.................................................................... 50
(iv)
APPENDIX A Definitions and Usage
EXHIBIT INDEX
-------------
EXHIBIT A Contents of Commercial Loan File
EXHIBIT B [Intentionally Omitted]
EXHIBIT C Principal and Interest Account
Letter Agreement
EXHIBIT D [Intentionally Omitted]
EXHIBIT E [Intentionally Omitted]
EXHIBIT F Initial Certification
EXHIBIT F-1 Final Certification
EXHIBIT G [Intentionally Omitted]
EXHIBIT H Commercial Loan Schedule
EXHIBIT I Request for Release of Documents
EXHIBIT J Form of Delinquency Report
EXHIBIT K Monthly Servicer's Certificate
(v)
Sale and Servicing Agreement dated as of June 1, 2000 among MCG Master
Trust (the "Trust"), MCG Finance Corporation II, as Seller (the "Seller") and
MCG Credit Corporation, as an Originator (the "Originator") and as Servicer (the
"Servicer").
PRELIMINARY STATEMENT
The Trust was formed for the purpose of issuing asset backed notes and
asset backed certificates secured by the Commercial Loans. The Issuer has
entered into a trust indenture, dated as of June 1, 2000, and will enter into
one or more Terms Supplements (collectively, the "Indenture"), each between the
Trust and the Indenture Trustee, pursuant to which the Trust intends to issue
from time to time its MCG Master Trust Notes (the "Notes"). Pursuant to the
Indenture, as security for the indebtedness represented by the Notes and any
Hedging Agreements, the Issuer is and will be pledging to the Indenture Trustee,
and granting the Indenture Trustee a security interest in, among other things,
all of its right, title and interest in and to the Commercial Loans (but not the
Retained Interest) and its rights under this Agreement.
The parties desire to enter into this Agreement to provide, among other
things, for the servicing of such Commercial Loans by the Servicer. The Seller
and the Servicer acknowledge that, in order further to secure the Notes and any
Hedging Agreements, the Trust is and will be granting to the Indenture Trustee a
security interest in, among other things, its rights under this Agreement, and
the Seller and the Servicer agree that all covenants and agreements made by the
Seller and the Servicer herein with respect to such Commercial Loans shall also
be for the benefit and security of the Indenture Trustee and the Secured
Parties. For its services hereunder, the Servicer will receive a Servicing Fee
(as defined herein) with respect to each Commercial Loan serviced hereunder. The
Owner Trustee is executing this Sale and Servicing Agreement on behalf of the
Trust on June 16, 2000 and this Sale and Servicing Agreement is effective vis-a-
vis the Trust as of such date.
ARTICLE I
DEFINITIONS
-----------
Section 1.01 Definitions. For all purposes of this Agreement, capitalized
-----------
terms used herein shall have the meanings set forth in Appendix A, unless the
context clearly indicates otherwise.
Section 1.02 Use of Words and Phrases. "Herein", "hereby", "hereunder",
------------------------
"hereof", "hereinbefore", "hereinafter" and other equivalent words refer to this
Agreement as a whole and not solely to the particular section of this Agreement
in which any such word is used.
Section 1.03 Captions; Table of Contents. The captions or headings in this
---------------------------
Agreement and the Table of Contents are for convenience only and in no way
define, limit or describe the scope and intent of any provisions of this
Agreement.
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
-------------------------------------
Section 2.01 Sale and Conveyance of Trust Fund.
---------------------------------
(a) On the terms and conditions hereinafter set forth, from time to
time prior to the Expiration Date, the Seller may, at its option, transfer to
the Trust, without recourse, and subject to the terms of the Basic Documents,
all of the right, title and interest of the Seller in and to the Commercial
Loans and all other assets included or to be included in the Trust Fund. In
partial consideration for its transfer of such Commercial Loans, on each
Transfer Date, the Seller shall receive from amounts deposited into the Funding
Account the amount determined pursuant to Section 2.09(a)(ii).
(b) The rights of the Noteholders, Certificateholders, the Hedge
Counterparties and the holder of the Transferor Interest to receive payments
with respect to the Commercial Loans in respect of the Notes, the Certificates,
the Hedging Agreement and the Transferor Interest, and all interests of such
parties in such payments, shall be as set forth in the Basic Documents.
Section 2.02 Possession of Commercial Loan Files.
-----------------------------------
(a) Upon the transfer of a Commercial Loan, the ownership of each
transferred Commercial Loan Note, the Mortgage, if applicable, and the contents
of the related Commercial Loan File will be vested in the Trust.
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(b) Pursuant to Section 2.04, two Business Days prior to each
Transfer Date, the Seller will deliver, or cause to be delivered, to the
Indenture Trustee each Commercial Loan File relating to the Commercial Loans
being transferred on such Transfer Date.
(c) The Seller also hereby assigns to the Trust all of the
Seller's right, title and interest (but none of its obligations) in each
Commercial Loan Sale Agreement, including but not limited to the Seller's right
to exercise the remedies created by each Commercial Loan Sale Agreement.
Section 2.03 Books and Records.
-----------------
The Seller shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Commercial Loan which shall be
clearly marked to reflect the ownership of each Commercial Loan by the Trust for
the benefit of the Noteholders, the Certificateholders and the Hedge
Counterparties, as their interests may appear.
Section 2.04 Delivery of Commercial Loan Files.
---------------------------------
I. On or prior to the Closing Date, the Seller will deliver or
cause to be delivered to the Indenture Trustee each of the following documents:
(a) A blanket assignment of all of Seller's right, title and
interest to all Collateral securing the Commercial Loans at any time transferred
to the Trust including without limitation, all rights under applicable
guarantees and insurance policies, such assignment shall be in the name of
Norwest Bank Minnesota, National Association, its successors and assigns, as
indenture trustee under the Indenture dated as of June 1, 2000, relating to MCG
Master Trust;
(b) Irrevocable powers of attorney of the Originator, the Seller
and the Issuer to the Indenture Trustee to execute, deliver, file or record and
otherwise deal with the Collateral for the Commercial Loans at any time
transferred to the Trust in accordance with this Agreement. The powers of
attorney will be delegable by the Indenture Trustee to the Servicer and any
successor servicer and will permit the Indenture Trustee or its delegate to
prepare, execute and file or record UCC financing statements and notices to
insurers; and
(c) Blanket UCC-1 financing statements identifying by type all
Collateral for the Commercial Loans to be transferred to the Trust as Collateral
under the Indenture and naming the Trust and the Indenture Trustee, as assignee
of the Trust, as "Secured Party" and the Seller as the "Debtor". The UCC-1
financing statements will be filed promptly following the Closing Date in
Virginia and will be in the nature of protective notice filings rather than true
financing statements.
II. By 2:00 P.M. (central time) two Business Days prior to each
Transfer Date, the Seller will deliver or cause to be delivered to the Indenture
Trustee each of the following documents for each Commercial Loan described in
clause (i) of the definition thereof that is being
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transferred on such Transfer Date (except for Commercial Loans where the
Originator or one of its Affiliates is a co-lender but not the agent):
(a) The original Commercial Loan Note, endorsed by means of an
allonge as follows: "Pay to the order of Norwest Bank Minnesota, National
Association, and its successors and assigns, not in its individual capacity but
solely as Indenture Trustee under that certain Indenture dated as of June 1,
2000, relating to MCG Master Trust, without recourse" and signed, by facsimile
or manual signature, in the name of the Seller by a Responsible Officer, with
all prior and intervening endorsements showing a complete chain of endorsement
from the originator to the Seller;
(b) A copy of the related loan agreement (which may be included
in the Commercial Loan Note if so indicated in the Commercial Loan Checklist),
together with all amendments and modifications thereto;
(c) A copy of the related security agreement signed by the
primary Obligor;
(d) A copy of the Commercial Loan Checklist; and
(e) For Commercial Loans that are Material Mortgage Loans as
identified by the Seller, the documents listed on Exhibit A hereof, as and to
the extent required thereby.
Notwithstanding the foregoing, for Additional Fundings
relating to a Commercial Loan for which the documents listed in (a) through (e)
above were previously delivered to the Indenture Trustee, the Seller need only
deliver to the Indenture Trustee by 2:00 P.M. (central time) two Business Days
prior to the related Transfer Date, a copy of the advance request received from
the related Obligor.
III. Within five Business Days after each Transfer Date, the
Seller will deliver or cause to be delivered to the Indenture Trustee each of
the following documents (as identified in the related Commercial Loan Checklist)
relating to a Commercial Loan that was transferred on such Transfer Date:
(a) For each Supplemental Interest, if the Supplemental Interest
consists of a warrant certificate, the original warrant certificate, endorsed by
means of an allonge as follows: "Pay to the order of Norwest Bank Minnesota,
National Association, and its successors and assigns, not in its individual
capacity but solely as Indenture Trustee under that certain Indenture dated as
of June 1, 2000, relating to MCG Master Trust, without recourse" and signed, by
facsimile or manual signature in the name of the Seller by a Responsible
Officer, with all prior intervening endorsements showing a complete chain of
endorsement from the original holder to the Seller; and
(b) For each Supplemental Interest, if the Supplemental Interest
consists of an option/warrant, the original option/warrant agreement.
4
(c) A copy of any related guarantees then executed in
connection with such Commercial Loan; and
(d) A copy of all UCC financing statements filed or to be
filed securing the related Collateral naming the Originator as "Secured Party"
that have been filed or that are otherwise necessary to satisfy the standard in
Section 3.02(gg);
IV. By 2:00 P.M. (central time) two Business Days prior to
each Transfer Date, the Seller will deliver or cause to be delivered to the
Indenture Trustee (x) each of the following documents for each Commercial Loan
described in clause (iii) of the definition thereof that is being transferred on
such Transfer Date and (y) the documents listed in (a) and (b) below for each
Commercial Loan being transferred on such Transfer Date that is described in
clause (i) of the definition thereof where the Originator or one of its
Affiliates is a co-lender but not the agent:
(a) The original Commercial Loan Note, endorsed by means of
an allonge as follows: "Pay to the order of Norwest Bank Minnesota, National
Association, and its successors and assigns, not in its individual capacity but
solely as Indenture Trustee under that certain Indenture dated as of June 1,
2000, relating to MCG Master Trust, without recourse" and signed, by facsimile
or manual signature, in the name of the Seller by a Responsible Officer, with
all prior and intervening endorsements showing a complete chain of endorsement
from the original holder to the Seller;
(b) A copy of the related loan agreement, together with all
amendments and modifications thereto; and
(c) If such Commercial Loan Assignment relates to a loan for
which the Originator is not the lead lender, an original assignment agreement
between the selling lender and the Originator.
V. Within ten Business Days after each Transfer Date, (x) if
the Commercial Loan Checklist for a Commercial Loan indicates that Collateral
includes a pledge of stock, the Seller will deliver or cause to be delivered to
the Indenture Trustee the original stock certificate serving as Collateral for
such Commercial Loan, along with an executed stock power executed in blank, and
(y) for Commercial Loans covered by IV above, the Seller will deliver or cause
to be delivered to the Indenture Trustee a copy of the related security
agreement.
VI. Within 120 days after each Transfer Date, the Seller will
deliver or cause to be delivered to the Indenture Trustee each of the following
documents for each Commercial Loan that was transferred on such Transfer Date:
(a) The original stamped copy (or copy thereof) of all UCC
financing statements securing the related Collateral naming the Originator as
"Secured Party"; and
5
(b) All other items listed in the related Commercial Loan
Checklist that have not previously been delivered to the Indenture Trustee, or a
certificate from a Responsible Officer of the Seller that such delivery has been
waived consistent with the prudent lending practices and the Credit and
Collection Policy of the Seller and such waiver shall not have a material
adverse effect on the Noteholders.
All Commercial Loan documents held by the Indenture Trustee as
to each Commercial Loan are referred to herein as the "Indenture Trustee's
Document File."
Although it is the intent of the parties to this Agreement
that the conveyance of the Seller's right, title and interest in and to the
Commercial Loans and other assets in the Trust Fund pursuant to this Agreement
shall constitute a purchase and sale and not a loan, in the event that such
conveyance is deemed to be a loan, it is the intent of the parties to this
Agreement that the Seller shall be deemed to have granted, and hereby does
grant, to the Trust a security interest (which will be perfected and of first
priority upon filing of a UCC-1 financing statement naming the Seller as
"Debtor" and the Indenture Trustee as "Secured Party" with the Secretary of
State of the Commonwealth of Virginia and/or the Indenture Trustee taking
possession with endorsements as agent for the Issuer) in all of the Seller's
right, title and interest in, to and under the Commercial Loans and other assets
in the Trust Fund (other than the Transferor's Interest, if any, and the
Retained Interest), and that this Agreement shall constitute a security
agreement under applicable law.
All recording required pursuant to this Section 2.04 shall be
accomplished by and at the expense of the Servicer.
Section 2.05 Acceptance by Indenture Trustee of the Trust Fund;
--------------------------------------------------
Certain Substitutions; Certification by Indenture
-------------------------------------------------
Trustee; Possession of Files.
----------------------------
(a) On or prior to the applicable Transfer Date (or, with
respect to any Qualified Substitute Commercial Loan, on or prior to the
assignment thereof), the Indenture Trustee shall review the portion of the
Indenture Trustee's Document File required to be delivered pursuant to Section
2.04 II and IV and shall deliver to the Originator, the Seller and the Servicer
a certification in the form attached hereto as Exhibit F on or prior to such
Transfer Date (or, with respect to any Qualified Substitute Commercial Loan, on
or prior to the assignment thereof). Within two Business Days after the
Indenture Trustee receives the portion of the Indenture Trustee's Document File
required to be delivered pursuant to Section 2.04 III, V and VI, the Indenture
Trustee shall deliver to the Originator, the Seller and the Servicer a
certification in the form attached hereto as Exhibit F. Within 360 days after
each Transfer Date (or, with respect to any Qualified Substitute Commercial
Loan, within 360 days after the assignment thereof), the Indenture Trustee shall
deliver to the Originator, the Servicer, the Seller and any Noteholder who
requests a copy from the Indenture Trustee a final certification in the form
attached hereto as Exhibit F-1 evidencing the completeness of the Indenture
Trustee's Document Files with respect to the Commercial Loans being transferred
on such Transfer Date.
6
(b) If the Indenture Trustee during the process of reviewing
the Indenture Trustee's Document Files finds any document constituting a part of
an Indenture Trustee's Document File which is not properly executed, has not
been received, is unrelated to a Commercial Loan identified in the Commercial
Loan Schedule, or does not conform in a material respect to the requirements of
Section 2.04 or the description thereof as set forth in the Commercial Loan
Schedule, the Indenture Trustee shall promptly so notify the Originator, the
Seller and the Servicer. In performing any such review, the Indenture Trustee
may conclusively rely on the Originator as to the purported genuineness of any
such document and any signature thereon. It is understood that the scope of the
Indenture Trustee's review of the Commercial Loan Files is limited solely to
confirming that the documents listed in Section 2.04 have been executed and
received and relate to the Commercial Loans identified in the Commercial Loan
Schedule. The Originator agrees to use reasonable efforts to remedy a material
defect in a document constituting part of a Commercial Loan File of which it is
so notified by the Indenture Trustee. If, however, within 30 days after the
Indenture Trustee's notice to it respecting such material defect the Originator
has not remedied the defect and such defect materially and adversely affects the
value of the related Commercial Loan, the Originator will (i) substitute in lieu
of such Commercial Loan a Qualified Substitute Commercial Loan in the manner and
subject to the conditions set forth in Section 3.03 or (ii) purchase such
Commercial Loan at a purchase price equal to its Repurchase Price, which
purchase price shall be deposited in the Principal and Interest Account within
such 30-day period; provided, however, if at the time the Originator would be
required to purchase a Commercial Loan the Transferor Interest exceeds $0, at
the option of the Seller, written notice of which shall be given to the
Servicer, the Indenture Trustee and the Originator, the Repurchase Price
required to be paid by the Originator and the Transferor Interest shall each be
reduced by the portion of the Transferor Interest set forth in such notice and,
provided further, if the Originator does not substitute for or repurchase a
Commercial Loan within the required time, the Transferor Interest shall be
reduced automatically, but not below $0, by the Repurchase Price of such
Commercial Loan. If the Transferor Interest equals or exceeds the Repurchase
Price, the Originator shall be deemed to have complied with its repurchase
obligation. If the Transferor Interest is less than the Repurchase Price, the
Originator shall be deemed to have breached its repurchase obligation.
Alternatively, if at the time the Originator would be required to purchase a
Commercial Loan the Subordination Amount for each Series is at least equal to
its related Minimum Subordination Amount, at the option of the Seller, written
notice of which shall be given to the Servicer, the Indenture Trustee and the
Originator, the Repurchase Price required to be paid by the Originator and the
outstanding balance of any Subordinated Notes owned by the Originator or the
Seller shall each be reduced by the amount set forth in such notice (but not
below the amount necessary so that the Subordination Amount for each Series is
at least equal to its related Minimum Subordination Amount after giving effect
to such reduction).
(c) Upon receipt by the Indenture Trustee of a certification
of a Servicing Officer of the Servicer of such purchase and the deposit of the
amounts described above in the Principal and Interest Account (which
certification shall be in the form of Exhibit I hereto), the Indenture Trustee
shall release to the Servicer for release to the Originator the related
Indenture Trustee's Document File and the Indenture Trustee and the Trust shall
execute, without recourse,
7
and deliver such instruments of transfer necessary to transfer all right, title
and interest in such Commercial Loan to the Originator and any related
Supplemental Interest free and clear of any Liens created by the Basic
Documents. All costs of any such transfer shall be borne by the Servicer.
(d) If in connection with taking any action (including,
without limitation, the amendment to documents, the revision to Collateral
and/or the sale of Supplemental Interests) the Servicer requires any item
constituting part of the Indenture Trustee's Document File, or the release from
the lien of the related Commercial Loan of all or part of any Collateral, the
Servicer shall deliver to the Indenture Trustee a certificate to such effect in
the form attached as Exhibit I hereto. Upon receipt of such certification, the
Indenture Trustee, shall deliver to the Servicer, within two Business Days of
such request (if such request was received by 2:00 P.M., central time), the
requested documentation, and the Indenture Trustee shall execute, without
recourse, and deliver such instruments of transfer necessary to release all or
the requested part of the Collateral (including any Supplemental Interests
associated with such Commercial Loan) from the lien of the related Commercial
Loan and/or the Lien under the Basic Documents.
On the Remittance Date in March of each year, commencing March
2001, the Indenture Trustee shall deliver to the Originator, the Seller, and the
Servicer a certification detailing all transactions with respect to the
Commercial Loans for which the Indenture Trustee holds an Indenture Trustee's
Document File pursuant to this Agreement during the prior calendar year. Such
certification shall list all Indenture Trustee's Document Files which were
released by or returned to the Indenture Trustee during the prior calendar year,
the date of such release or return and the reason for such release or return.
Section 2.06 [Reserved].
--------
Section 2.07 [Reserved].
--------
Section 2.08 Fees and Expenses of the Owner Trustee and the
----------------------------------------------
Indenture Trustee.
-----------------
The fees and expenses of the Owner Trustee in its individual
capacity and the Indenture Trustee including (i) the annual fees of the Owner
Trustee in its individual capacity and the Indenture Trustee and (ii) any other
fees and expenses to which the Owner Trustee in its individual capacity and the
Indenture Trustee are entitled shall be paid from the Expense Account in the
manner set forth in Section 5.03 hereof. The Servicer, the Indenture Trustee and
the Trust hereby covenant with the Noteholders, the Certificateholders and the
Hedge Counterparties that every material contract or other material agreement
entered into by the Trust, the Indenture Trustee, or the Servicer, acting as
attorney-in-fact for the Indenture Trustee or the Trust, on behalf of the Trust
Fund shall expressly state therein that no Noteholder, Certificateholder or
Hedge Counterparty shall be personally liable in connection with such contract
or agreement.
Section 2.09 Transfer and Conveyance of the Commercial Loans.
-----------------------------------------------
8
(a) (i) Subject to the conditions set forth in paragraph
(b) below, the Seller shall on any Transfer Date contribute, transfer, assign,
set over and otherwise convey, without recourse, to the Trust all right, title
and interest of the Seller in and to the funded portion of the Commercial Loans
listed on the Commercial Loan Schedule delivered by the Seller on such Transfer
Date, all its right, title and interest in and to principal collected and
interest accruing on such Commercial Loans on and after the related Transfer
Date and all its right, title and interest in and to all related insurance
policies, Supplemental Interests and Commercial Loan Assignments other than the
Transferor's Interest and the Retained Interest, if any; provided, however, that
-------- -------
the Seller reserves and retains all its right, title and interest in and to
principal (including Principal Prepayments) collected and interest accruing on
each such Commercial Loan prior to the related Transfer Date and all unused fees
and fees for managing the facility.
(ii) In consideration for the Seller transferring the
Commercial Loans pursuant to clause (i) above, on the related Transfer Date the
Indenture Trustee shall deliver to or upon the order of the Seller, from the
Funding Account, an amount equal to the aggregate Commercial Loan Cash Proceeds
for the Commercial Loans being transferred on such Transfer Date. Additionally,
on each Transfer Date on which the Commercial Loan Cash Proceeds are being
obtained through a funding of the Series 2000-1 Notes or by applying Principal
Collections transferred to the Funding Account, the Outstanding Amount of the
Series 2000-1 Notes owned by the Seller shall be increased by the excess, if
any, of (i) the increase in the Borrowing Base resulting from the addition of
the Commercial Loans being transferred on such Transfer Date over (ii) the
Commercial Loan Cash Proceeds.
(b) The Seller shall transfer to the Trust the Commercial
Loans and the other property and rights related thereto described in paragraph
(a) above only upon the satisfaction of each of the following conditions on or
prior to the related Transfer Date:
(i) the Seller shall have provided the Indenture
Trustee (by facsimile or otherwise) with a timely Addition
Notice;
(ii) the Seller shall have delivered to the Indenture
Trustee (by facsimile or otherwise) a duly executed written
assignment (including an acceptance by the Indenture Trustee)
that shall include a Commercial Loan Schedule, listing the
Commercial Loans being transferred and any other exhibits
listed thereon;
(iii) as of each Transfer Date, neither the Originator,
the Seller nor the Servicer was insolvent nor will any of them
have been made insolvent by such transfer nor are any of them
aware of any pending insolvency;
(iv) such addition will not result in a material
adverse tax consequence to the Trust Fund or the Holders of
the Notes or the Certificates;
(v) the Expiration Date shall not have occurred;
9
(vi) as of each Transfer Date, no Default shall be
occurring; and
(vii) the Seller shall have delivered to the Indenture
Trustee (by facsimile or otherwise) an Officer's Certificate
confirming the satisfaction of each condition precedent
specified in this paragraph (b).
(c) In connection with the transfer and assignment of the
Commercial Loans, the Originator and the Seller agree to satisfy the conditions
set forth in Sections 2.02, 2.03, 2.04 and 2.05.
Section 2.10 Optional Purchase or Substitution of Commercial Loans.
-----------------------------------------------------
The Seller shall have the right, but not the obligation, to
purchase, or substitute for, any Commercial Loan, or any portion thereof,
subject to the limitations set forth in this Section 2.10. In the case of a
purchase, the Seller shall deposit in the Principal and Interest Account, on the
next succeeding Determination Date, an amount equal to the Repurchase Price for
such Commercial Loan (or applicable portion thereof) as of the date of such
purchase. In the case of a substitution, the Seller shall deliver to the Trust
one or more Qualified Substitute Commercial Loans and any required Substitution
Adjustment. Any such substitution shall be made in accordance with the
provisions of Section 3.03. On the date of such substitution, the Seller shall
deliver to the Indenture Trustee a certificate stating that such Commercial Loan
is a Qualified Substitute Commercial Loan. The Servicer, the Trust and the
Indenture Trustee shall execute and deliver such instruments, consents or other
documents and perform all acts reasonably requested by the Seller in order to
effect the transfer and release of any of the Trust's interests in the
Commercial Loans (or portion thereof, including any Supplemental Interest
associated with such Commercial Loan) that is being purchased or substituted. In
no event, however, may the aggregate Principal Balance of (i) Delinquent Loans
and Charged-Off Loans purchased or substituted for pursuant to this Section 2.10
exceed, in any one year, 15% of the Facility Limit and (ii) all other Commercial
Loans purchased or substituted for pursuant to this Section 2.10 exceed, in any
one year, 15 % of the Facility Limit.
Section 2.11 Subsequent Sales.
----------------
If the Issuer desires to sell some or all of the Commercial
Loans to raise the proceeds for an Optional Redemption, on the closing date for
such Optional Redemption the Trust shall sell to the party designated by the
Seller those Commercial Loans designated by the Seller, with the consent of the
Majority Noteholders (which consent shall not be unreasonably withheld, delayed
or conditioned). Concurrently with such sale, the Seller shall cause an amount
equal to the amount described in the applicable Terms Supplement be deposited
into the Note Distribution Account. The Servicer and the Trust shall execute and
deliver such instruments, consents or other documents and perform all acts
reasonably requested by the Seller in order to effect the transfer and release
of any of the Trust's interest in such Commercial Loans.
10
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.01. Representations of the Seller and the Servicer.
----------------------------------------------
Each of the Seller and the Servicer hereby represents and
warrants to the Indenture Trustee, the Owner Trustee, the Certificateholders,
the Noteholders and each Hedge Counterparty as of each Transfer Date:
(a) Each of the Seller and the Servicer is a corporation
duly organized and validly existing under the laws of the State of Delaware and
has all licenses necessary to carry on its business as now being conducted and
is licensed and qualified in each state where the applicable laws of such state
require licensing or qualification in order to conduct business of the type
conducted by it and perform its obligations hereunder, except where the failure
to be so licensed or qualified would not reasonably be expected to have a
material adverse effect on the condition of the Seller or of the Servicer; each
of the Seller and the Servicer has all requisite corporate power and authority
to execute and deliver this Agreement and each other Basic Document to which it
is a party and to perform in accordance herewith and therewith; the execution,
delivery and performance of this Agreement and each other Basic Document to
which it is a party (including all instruments of transfer to be delivered
pursuant to this Agreement) by the Seller and the Servicer and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action; and this Agreement and each other
Basic Document to which it is a party evidence the valid, binding and
enforceable obligations of the Seller and the Servicer and all requisite
corporate action has been taken by the Seller and the Servicer to make this
Agreement and each other Basic Document to which it is a party valid, binding
and enforceable upon the Seller and the Servicer in accordance with its
respective terms, subject, in each case, 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, none of which will affect the
ownership of the Commercial Loans by the Trust.
(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 and the Servicer make
no such representation or warranty), that are necessary in connection with the
purchase and sale of the Notes and the execution and delivery by the Seller and
the Servicer of the 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 on the date
hereof, 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
11
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and each other Basic Document to which it is a
party and the other documents on the part of the Seller and the Servicer and the
performance by the Seller and the Servicer of its obligations under this
Agreement and the other Basic Documents to which it is a party;
(c) The consummation of the transactions contemplated by
this Agreement and the other Basic Documents to which the Seller or the Servicer
is a party will not result in the breach of any terms or provisions of the
articles of association or by-laws of the Seller or the Servicer or result in
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 the Servicer or its respective property is subject, or
result in the violation of any material law, rule, regulation, order, judgment
or decree to which the Seller or the Servicer or its respective property is
subject;
(d) Neither this Agreement or any other Basic Document to
which the Seller or the Servicer is a party nor any statement, report or other
document furnished or to be furnished pursuant to this Agreement or any other
Basic Document to which the Seller or the Servicer is a party or in connection
with the transactions contemplated hereby and thereby contains as of the date
thereof any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made;
(e) Neither the Seller nor the Servicer believes, that it
cannot perform each and every covenant contained in this Agreement or any other
Basic Document to which it is a party;
(f) There is no action, suit, proceeding or investigation
pending or, to the best of the Seller's or the Servicer's knowledge, threatened
against the Seller or the Servicer which, either in any one instance or in the
aggregate, (i) would be likely to result in any material adverse change in the
business, operations, financial condition, properties or assets of the Seller or
the Servicer or in any material impairment of the right or ability of the Seller
or the Servicer to carry on its business substantially as now conducted, or in
any material liability on the part of the Seller or the Servicer or of any
action taken or to be taken in connection with the obligations of the Seller or
the Servicer contemplated herein, or which would be likely to impair materially
the ability of the Seller or the Servicer to perform under the terms of this
Agreement or any other Basic Document to which the Seller or the Servicer is a
party or (ii) would draw into question the validity of this Agreement or any
other Basic Document to which the Seller or the Servicer is a party or the
Commercial Loans;
(g) The Trust will not constitute an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(h) Neither the Seller nor the Servicer is in default with
respect to any order or decree of any court or any order, regulation or demand
of any federal, state, municipal or
12
governmental agency, which default might have consequences that would materially
and adversely affect the condition (financial or other) or operations of the
Seller or the Servicer or its respective properties or might have consequences
that would materially and adversely affect its performance hereunder;
(i) The transfer, assignment and conveyance of the
Commercial Loans by the Seller pursuant to this Agreement are not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction;
(j) The origination and collection practices used with
respect to each Commercial Loan have been in all material respects legal,
proper, prudent and customary in the commercial loan origination and servicing
business and comply with the Credit and Collection Policy;
(k) The Seller will receive fair consideration and
reasonably equivalent value in exchange for the sale of the Commercial Loans;
(l) Neither the Seller nor any of its Affiliates sold, or
will sell, any interest in any Commercial Loan with any intent to hinder, delay
or defraud any of their respective creditors;
(m) The Seller is solvent, and the Seller will not be
rendered insolvent as a result of the transfer of the Commercial Loans to the
Trust or the sale of the Notes and Certificates;
(n) The chief executive office and legal name of the Seller
as of the date hereof is as set forth on the respective UCC-1 financing
statement filed on behalf of the Seller pursuant to Section 2.04, such office is
the place where the Seller is "located" for the purposes of Section 9-103(3)(d)
of the Uniform Commercial Code as in effect in the State of New York, and
neither the location of such office nor the legal name of the Seller has changed
in the past four months; and
(o) The Seller conducts its affairs such that the Trust
would not be substantively consolidated in the estate of the Seller and their
respective separate existences would not be disregarded in the event of the
Seller's bankruptcy.
Section 3.02 Individual Commercial Loans.
---------------------------
The Seller hereby represents and warrants to the Indenture
Trustee, the Noteholders, the Owner Trustee, the Certificateholders and each
Hedge Counterparty, with respect to each Commercial Loan described in clause (i)
and (iii) of the definition thereof as of the related Transfer Date for such
Commercial Loan:
13
(a) The information with respect to each Commercial Loan set
forth in the Commercial Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth
in Section 2.04 (including all material documents related thereto) with respect
to such Commercial Loan has been or will be delivered to the Indenture Trustee
on the Transfer Date or as otherwise provided in Section 2.04;
(c) Each Commercial Loan was originated and underwritten, or
purchased and re-underwritten, by the Originator and each Commercial Loan is
being serviced by the Servicer, in each case in accordance with the Credit and
Collection Policy;
(d) Each Commercial Loan is denominated in U.S. Dollars and
the related primary Obligor is located in the United States (including Puerto
Rico or the U.S. Virgin Islands);
(e) The Commercial Loan Interest Rate for each Commercial
Loan is either a fixed rate or adjusts periodically to equal the then applicable
index plus the margin set forth in the related Commercial Loan Note or the
related credit agreement;
(f) With respect to the Material Mortgage Loans, each
related Mortgage is a valid and subsisting first priority lien of record on the
Mortgaged Property subject in all cases to such exceptions that are generally
acceptable to lending institutions in connection with their regular commercial
lending activities, and such other exceptions to which similar properties are
commonly subject and which do not individually, or in the aggregate, materially
and adversely affect the benefits of the security intended to be provided by
such Mortgage;
(g) Immediately prior to the transfer and assignment
contemplated by the Commercial Loan Sale Agreement, the Originator held, and
immediately prior to the transfer and assignment herein contemplated the Seller
held, good and indefeasible title to, and was the sole owner of, the Commercial
Loans being transferred to the Seller and Trust, respectively, subject to no
liens, charges, mortgages, encumbrances or rights of others except liens which
will be released simultaneously with such transfer and assignment and liens
provided by the Basic Documents; and immediately upon the transfer and
assignment herein contemplated, the Trust will hold good and indefeasible title,
to, and be the sole owner of, each Commercial Loan subject to no liens, charges,
mortgages, encumbrances or rights of others, except the rights on liens in favor
of the Indenture Trustee, the Noteholders and the Hedge Counterparties;
(h) As of its Transfer Date, no Commercial Loan is more than
10 days delinquent in payment and, since its origination, no Commercial Loan has
ever been more than 30 days delinquent in payment, in each case after giving
effect to a 7-day grace period pursuant to the Credit and Collection Policy;
14
(i) There is no delinquent tax or assessment lien on any
Mortgaged Property which is the primary Collateral for the related Material
Mortgage Loan, and each such Mortgaged Property is free of material damage and
is in good repair;
(j) No Commercial Loan is subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Commercial Loan Note or any
related security agreement, or the exercise of any right thereunder, render
either the Commercial Loan Note or any related security agreement unenforceable
in whole or in part (except for provisions in the security agreement that if
held to be unenforceable would not have a material adverse effect on the ability
of the Servicer to realize the value of the Collateral securing the related
Commercial Loan and except for provisions of the other Commercial Loan
documentation that if held to be unenforceable would not have a material adverse
effect on the ability of the Servicer to collect the entire principal and
interest thereunder), or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto;
(k) Each Commercial Loan at the time it was made complied,
and as of its Transfer Date complies, in all material respects with applicable
state and federal laws and regulations, including, without limitation, usury,
equal credit opportunity, disclosure and recording laws;
(l) There is only one originally signed Commercial Loan
Note in effect for each Commercial Loan (which, in the case of a Commercial Loan
Assignment, relates only to the portion being assigned to the Trust), which
Commercial Loan Note has been delivered to the Indenture Trustee;
(m) The improvements upon each Mortgaged Property related
to a Material Mortgage Loan are covered by a valid and existing hazard insurance
policy with a generally acceptable carrier that provides for fire and extended
coverage representing coverage described in Section 4.07;
(n) If a Mortgaged Property related to a Material Mortgage
Loan is in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, a flood insurance policy is
in effect with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage described in Section 4.07;
(o) Each Commercial Loan Note and any agreement pursuant to
which Collateral is pledged is the legal, valid and binding obligation of the
maker thereof and is enforceable in accordance with its terms, except only as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) (except for provisions in the security
agreement that
15
if held to be unenforceable would not have a material adverse effect on the
ability of the Servicer to realize the value of the Collateral securing the
related Commercial Loan and except for provisions of the other Commercial Loan
documentation that if held to be unenforceable would not have a material adverse
effect on the ability of the Servicer to collect the entire principal and
interest thereunder), none of which will prevent the ultimate realization of the
security provided by the Collateral or other agreement, and the Obligors to each
Commercial Loan had full legal capacity to execute all Commercial Loan documents
and convey the estate therein purported to be conveyed;
(p) The Seller has caused and will cause to be performed
any and all acts reasonably required to be performed to preserve the rights and
remedies of the Indenture Trustee and the Owner Trustee in any insurance
policies applicable to the Commercial Loans including, without limitation, in
each case, any necessary notifications of insurers, assignments of policies or
interests therein, and establishments of co-insured, joint loss payee and
mortgagee rights in favor of the Indenture Trustee or the Seller, respectively;
(q) Each original Mortgage related to a Material Mortgage
Loan was recorded, and all subsequent assignments of such original Mortgage have
been recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the related
Obligor (or are in the process of being recorded);
(r) No Commercial Loan described in clauses (i) or (iii) of
the definition thereof has an original term to maturity exceeding 144 months;
(s) The terms of the Commercial Loan Note and the security
agreement pursuant to which Collateral was pledged have not been impaired,
altered or modified in any respect, except by a written instrument which has
been recorded, if necessary, to protect the interest of the Noteholders, the
Certificateholders and each Hedge Counterparty and which has been delivered to
the Indenture Trustee;
(t) There are no material defaults in complying with the
terms of any applicable Mortgage related to a Material Mortgage Loan, and all
taxes, governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable;
(u) There is no proceeding pending or threatened for the
total or partial condemnation of any Mortgaged Property related to a Material
Mortgage Loan, nor is such a proceeding currently occurring, and such property
is undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty, so as to materially adversely affect the value of
such Mortgaged Property as security for the Material Mortgage Loan or the use
for which the premises were intended;
16
(v) At the time of origination of a Material Mortgage Loan,
the related Mortgaged Property was free of contamination from toxic substances
or hazardous wastes requiring action under applicable laws or is subject to
ongoing environmental rehabilitation approved by the Servicer, and as of the
related Transfer Date, the Seller has no knowledge of any such contamination
from toxic substances or hazardous waste material on any such Mortgaged Property
unless such items are below action levels;
(w) [Reserved];
(x) There is no obligation on the part of the Seller or any
other party (except for any guarantor of a Commercial Loan) to make Scheduled
Payments in addition to those made by the Obligor;
(y) No statement, report or other document signed by the
Originator constituting a part of the Commercial Loan File as of the date hereof
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein not misleading in light
of the circumstances under which they were made;
(z) With respect to each Material Mortgage Loan, for each
related Mortgage constituting a deed of trust, a trustee, duly qualified under
applicable law to serve as such, has been properly designated and currently so
serves and is named in such Mortgage, and no fees or expenses are or will become
payable by the Noteholders, the Certificateholders and/or any Hedge
Counterparties to the trustee under the deed of trust, except in connection with
a trustee's sale after default by the Obligor;
(aa) Each Commercial Loan was originated to a business
located in the state identified in the Commercial Loan Schedule and the primary
collateral securing each Commercial Loan is located in the United States;
(bb) All parties which have had any interest in the
Commercial Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein any Collateral is located, and (2)(A) organized under the laws of
such state, or (B) qualified to do business in such state, or (C) federal
savings and loan associations or national banks having principal offices in such
state, or (D) not doing business in such state, except when the failure to be in
compliance or to be so qualified would not materially and adversely effect the
value of the Commercial Loan or the enforceability of the Commercial Loan;
(cc) With respect to each Material Mortgage Loan, any
related Mortgage contains customary and enforceable provisions, which render the
rights and remedies of the holder thereof adequate for the realization against
the Mortgaged Property of the benefits of the security, including, (i) in the
case of a Mortgage designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure. There is no homestead or other exemption
available to
17
the Obligor which would materially interfere with the right to sell
the Mortgaged Property related to a Material Mortgage Loan at a trustee's sale
or the right to foreclose the Mortgage;
(dd) As of the related Transfer Date, there is no default,
breach, violation or event of acceleration existing under the Commercial Loan
Note and no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration (except for such defaults, breaches and
violations that would not have a material adverse effect on the ability of the
Servicer to collect the entire principal and interest thereunder and would not
have a material adverse effect on the ability of the Servicer to realize the
value of the Collateral securing the related Commercial Loan).
(ee) All parties to the Commercial Loan Note and any related
Mortgage or other document pursuant to which Collateral was pledged had legal
capacity to execute the Commercial Loan Note and any such Mortgage or other
document and each Commercial Loan Note and Mortgage or other document have been
duly and properly executed by such parties;
(ff) The Commercial Loan has a Risk Rating of 7.00 or
better;
(gg) The related Commercial Loan Note, credit agreement,
security agreements, and Mortgages, if any, and UCC-1 and/or intellectual
property security agreement filed or to be filed with respect to such Collateral
creates a valid and subsisting first priority lien of record on such Collateral
subject in all cases to such exceptions that are generally acceptable to lending
institutions in connection with their regular commercial lending activities, and
such other exceptions to which similar Collateral is commonly subject and which
do not individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Commercial Loan Note,
security agreement and UCC-1;
(hh) Multiple Commercial Loans originated to the same
Obligor contain standard cross-collateralization and cross-default provisions;
(ii) Each Commercial Loan, along with the related Commercial
Loan File, constitutes either a "general intangible," an "instrument," an
"account," "investment property" or "chattel paper" within the meaning of the
UCC; and
(jj) At the time such Commercial Loan was originated, and on
its Transfer Date, the related Obligor was not subject to a bankruptcy
proceeding and was not in financial distress.
Section 3.03 Purchase and Substitution of Defective Commercial
-------------------------------------------------
Loans.
-----
It is understood and agreed that the representations and
warranties set forth in Sections 3.01 and 3.02 shall survive delivery of the
Notes to the Noteholders and the Certificates to the Certificateholders. Upon
discovery by a Responsible Officer of the Servicer, any Subservicer, a
Responsible Officer of the Owner Trustee or the Indenture Trustee of a breach of
18
any of such representations and warranties which materially and adversely
affects the value of the Commercial Loans or the interest of the Noteholders,
the Certificateholders or any Hedge Counterparty therein or which materially and
adversely affects the interests of the Noteholders, the Certificateholders or
any Hedge Counterparty in the related Commercial Loan in the case of a
representation and warranty relating to a particular Commercial Loan
(notwithstanding that such representation and warranty was made to the Seller's
best knowledge), the party discovering such breach shall give prompt written
notice to the others. Within 30 days of the earlier of its discovery or its
receipt of notice of any breach of a representation or warranty, the Seller
shall (a) promptly cure such breach in all material respects, (b) purchase the
Commercial Loan by depositing in the Principal and Interest Account, within such
30-day period, an amount in the manner specified in Section 2.05(b) (including
the provisos thereto), or (c) remove such Commercial Loan from the Trust Fund
(in which case it shall become a Deleted Commercial Loan) and substitute one or
more Qualified Substitute Commercial Loans. Any such substitution shall comply
with Section 2.10 and shall be accompanied by payment by the Seller of the
Substitution Adjustment, if any.
As to any Deleted Commercial Loan for which the Seller
substitutes a Qualified Substitute Commercial Loan or Loans, the Servicer shall
effect such substitution by delivering to the Indenture Trustee a certification
in the form attached hereto as Exhibit I, executed by a Servicing Officer, and
shall also deliver to the Indenture Trustee, the documents constituting the
Indenture Trustee's Document File for such Qualified Substitute Commercial Loan
or Loans.
The Servicer shall deposit in the Principal and Interest
Account all payments of principal received in connection with such Qualified
Substitute Commercial Loan or Loans accruing after the date of such substitution
together with all interest accruing after such date. Scheduled Payments received
with respect to Qualified Substitute Commercial Loans accruing on or before the
date of substitution will be retained by the Seller. The Trust Fund will own all
payments received with respect to the Deleted Commercial Loan accruing on or
before the date of substitution, and the Seller shall thereafter be entitled to
retain all amounts subsequently accruing and received in respect of such Deleted
Commercial Loan. The Servicer shall give written notice to the Indenture Trustee
that such substitution has taken place and shall amend the Commercial Loan
Schedule to reflect the removal of such Deleted Commercial Loan from the terms
of this Agreement and the substitution of the Qualified Substitute Commercial
Loan or Loans. Upon such substitution, such Qualified Substitute Commercial Loan
or Loans shall be subject to the terms of this Agreement in all respects,
including Sections 2.04 and 2.05, and the Seller shall be deemed to have made
with respect to such Qualified Substitute Commercial Loan or Loans, as of the
date of substitution, the covenants, representations and warranties set forth in
Sections 3.01 and 3.02. On the date of such substitution, the Seller will remit
to the Servicer, and the Servicer will deposit into the Principal and Interest
Account, an amount equal to the Substitution Adjustment, if any.
In addition to the cure, purchase and substitution obligation
in Sections 2.04, 2.05 and 3.03, the Seller shall indemnify and hold harmless
the Trust, the Indenture Trustee, the Noteholders, the Certificateholders and
any Hedge Counterparty against any loss, damages,
19
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses resulting from any claim, demand, defense
or assertion based on or grounded upon, or resulting from, a breach of the
Seller's representations and warranties contained in this Agreement.
It is understood and agreed that the obligations of the Seller
set forth in Sections 2.04, 2.05 and 3.03 to cure, purchase or substitute for a
defective Commercial Loan and to indemnify the Noteholders, the
Certificateholders, the Indenture Trustee, the Owner Trustee and any Hedge
Counterparty as provided in Sections 2.04, 2.05 and 3.03 constitute the sole
remedies of the Indenture Trustee, the Noteholders, the Certificateholders, the
Owner Trustee and any Hedge Counterparty, respecting a breach of the foregoing
representations and warranties.
Any cause of action against the Servicer or the Seller
relating to or arising out of the breach of any representations and warranties
made in Sections 2.05, 3.01 or 3.02 shall accrue as to any Commercial Loan upon
(i) discovery of such breach by any party and notice thereof to the Seller and
or notice thereof by the Seller to the Indenture Trustee, (ii) failure by the
Seller to cure such breach or purchase or substitute such Commercial Loan as
specified above, and (iii) demand upon the Seller by the Indenture Trustee for
all amounts payable hereunder in respect of such Commercial Loan.
ARTICLE IV
ADMINISTRATION AND SERVICING OF COMMERCIAL LOANS
------------------------------------------------
Section 4.01 Duties of the Servicer.
----------------------
(a) The Servicer, as independent contract servicer, shall
service and administer the Commercial 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 and the Credit and Collection
Policy. The Servicer may enter into Subservicing Agreements for any servicing
and administration of Commercial Loans with any entity provided the Rating
Agency Condition is satisfied. The Servicer shall be entitled to terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and to either itself directly service the related
Commercial 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, so long as this Agreement shall remain effective, the Servicer
shall remain obligated and primarily liable to the Indenture Trustee, for itself
and on behalf of the Noteholders, the Certificateholders and any Hedge
Counterparty for the servicing and administering of the Commercial Loans in
accordance with
20
the provisions of this Agreement and the Credit and Collection Policy, 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 Commercial Loans. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Commercial Loans when any Subservicer has received such payments.
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) Any Subservicing Agreement that may be entered into and
any transactions or services relating to the Commercial 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 the Indenture Trustee,
the Noteholders and any Hedge Counterparty shall not be deemed parties thereto
and shall have no claims, rights, obligations, duties or liabilities with
respect to the Subservicer except as set forth in Section 4.01(d).
Notwithstanding the foregoing, the Servicer shall (i) at its expense and without
reimbursement, deliver to the Indenture Trustee a copy of each Subservicing
Agreement and (ii) provide notice of the termination of any Subservicer within a
reasonable time after such Subservicer's termination to the Indenture Trustee.
(d) In the event the Servicer shall for any reason no
longer be the Servicer, the Servicer at its expense and without right of
reimbursement therefor, shall, upon request of the Indenture Trustee, deliver to
the successor servicer all documents and records relating to each Subservicing
Agreement and the Commercial Loans then being serviced hereunder and an
accounting of amounts collected and held by it hereunder and otherwise use its
best efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.
(e) So long as it is consistent with the terms of this
Agreement and the Credit and Collection Policy, the Servicer may waive, modify
or vary any term of any Commercial Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Obligor
if in the Servicer's determination such waiver, modification, postponement or
indulgence is not materially adverse to the interests of the Noteholders and any
Hedge Counterparty. No costs incurred by the Servicer or any Subservicer in
respect of Servicing Advances shall for the purposes of distributions to
Noteholders be added to the amount owing under the related Commercial Loan. Any
fees and costs imposed in connection therewith may be retained by the Servicer.
Without limiting the generality of the foregoing, so long as it is consistent
with the Credit and Collection Policy, the Servicer shall continue, and is
hereby authorized and empowered to execute and deliver on behalf of the
Indenture Trustee, the Owner Trustee, each Noteholder, each Certificateholder
and each Hedge Counterparty, all instruments of amendment, waiver, satisfaction
or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Commercial Loans and with respect to
any Collateral. Such authority shall include, but not be limited to, the
authority to substitute or release items of Collateral consistent with the
Credit and Collection Policy and sell participations
21
or assignments in Commercial Loans previously transferred to the Trust. In
connection with any such sale, the Servicer shall deposit in the Principal and
Interest Account, pursuant to Section 4.03(b), all proceeds received upon such
sale. If reasonably required by the Servicer, the Indenture Trustee, on behalf
of the Trust, shall furnish the Servicer, within 5 Business Days of receipt of
the Servicer's request, 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. Any such request to the Indenture
Trustee, on behalf of the Trust, shall be accompanied by a certification in the
form of Exhibit I attached hereto signed by a Servicing Officer. In connection
with any substitution of Collateral, the Servicer shall deliver to the Indenture
Trustee the items, and within the time frame, set forth in Section 2.04,
assuming that the date of substitution is the relevant "Transfer Date."
The Servicer, in servicing and administering the Commercial
Loans, shall employ or cause to be employed procedures (including collection,
foreclosure and Foreclosed Property and Repossessed Collateral management
procedures) and exercise the same care that it customarily employs and exercises
in servicing and administering Commercial Loans for its own account and prudent
lending standards, and in accordance with the Credit and Collection Policy,
giving due consideration to the Noteholders' reliance on the Servicer.
(f) The Servicer shall, upon request of the Indenture
Trustee but at the expense of the Servicer, deliver to any successor servicer
all documents and records (including computer tapes and diskettes) relating to
the Commercial Loans and an accounting of amounts collected and held by the
Servicer and otherwise use its best efforts to effect the orderly and efficient
transfer of servicing rights and obligations to the assuming party.
(g) The Servicer shall perform the duties of the Issuer and
the Owner Trustee under the Basic Documents. In furtherance of the foregoing,
the Servicer shall consult with the Owner Trustee as the Servicer deems
appropriate regarding the duties of the Issuer and the Owner Trustee under the
Basic Documents. The Servicer shall monitor the performance of the Issuer and
the Owner Trustee and shall advise the Owner Trustee when action is necessary to
comply with the Issuer's or the Owner Trustee's duties under the Basic
Documents. The Servicer shall prepare for execution by the Owner Trustee or
shall cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the duty
of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to the
Basic Documents.
(h) In addition to the duties of the Servicer set forth in
this Agreement or any of the Basic Documents, the Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner Trustee
or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer to prepare, file or deliver pursuant to state and
federal tax and securities laws. In accordance with the directions of the Issuer
or the Owner Trustee, the Servicer shall administer, perform or supervise the
performance of such other activities in connection with the
22
Issuer as are not covered by any of the foregoing provisions and as are
expressly requested by the Issuer or the Owner Trustee and are reasonably within
the capability of the Servicer.
(i) Notwithstanding anything in this Agreement or any of
the Basic Documents to the contrary, the Servicer shall be responsible for
promptly (upon knowledge thereof) notifying the Owner Trustee and the Paying
Agent in the event that any withholding tax is imposed on the Issuer's payments
(or allocations of income) to a Noteholder, a Certificateholder or Hedge
Counterparty. Any such notice shall be in writing and specify the amount of any
withholding tax required to be withheld by the Owner Trustee or the Paying Agent
pursuant to such provision.
(j) All tax returns will be signed by the Servicer on
behalf of the Issuer.
(k) The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be reasonably accessible for inspection by
the Owner Trustee at any time during normal business hours.
(l) Without the prior written consent of the Majority
Noteholders, the Servicer shall not agree or consent to, or otherwise permit to
occur, any amendment, modification, change, supplement or recision of or to the
Credit and Collection Policy, in whole or in part, in any manner that could have
a material adverse effect on the Commercial Loans.
For so long as any of the Notes are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) of the Securities
Act, (1) the Servicer will provide or cause to be provided to any holder of such
Notes and any prospective purchaser thereof designated by such holder, upon the
request of such a holder or prospective purchaser, the information required to
be provided to such holder or prospective purchaser by Rule 144A(d)(4) under the
Securities Act; and (2) the Servicer shall update such information from time to
time in order to prevent such information from becoming false and misleading and
will take such other actions as are necessary to ensure that the safe harbor
exemption from the registration requirements of the Securities Act under Rule
144A is and will be available for resales of such Notes conducted in accordance
with Rule 144A.
Section 4.02 Liquidation of Commercial Loans.
-------------------------------
In the event that any payment due under any Commercial Loan and not
postponed pursuant to Section 4.01 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 Commercial Loan, the Servicer in accordance with the Credit
and Collection Policy shall take such action as it shall deem to be in the best
interests of the Noteholders. The Servicer shall foreclose upon or otherwise
comparably effect the ownership of Collateral relating to defaulted Commercial
Loans for which the related Commercial Loan is still outstanding, as to which no
satisfactory arrangements can be made for collection of delinquent payments in
accordance with the
23
provisions of Section 4.10. In connection with such foreclosure or other
conversion and any other liquidation action, the Servicer shall exercise
collection and foreclosure procedures with the same degree of care and skill in
its exercise or use as it would exercise with respect to its own affairs, in
accordance with prudent servicing standards, and in accordance with the Credit
and Collection Policy. Prior to undertaking foreclosure of any Mortgaged
Property, the Servicer must investigate environmental conditions, including, in
accordance with the Credit and Collection Policy, the performance of a Phase I
and/or Phase II environmental site assessment, to ascertain the actual or
potential presence of any hazardous material on or under such property. For
purposes of this Agreement, the term hazardous material includes (1) any
hazardous substance, as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. 9601-9675, and (2) petroleum (as that
term is defined at 42 U.S.C. ss. 6991) including any derivative, fraction, by-
product, constituent or breakdown product thereof, or additive thereto. In the
event that the environmental investigation determines the existence of any
hazardous material on or under the Mortgaged Property in excess of minimum
action levels established by relevant regulatory agencies, title to such
property shall not be taken without satisfaction of the Rating Agency Condition.
After a Commercial Loan has been liquidated, the Servicer
shall promptly prepare and forward to the Indenture Trustee and upon request,
any Noteholder or Certificateholder, a report (the "Liquidation Report"), in the
form attached hereto as Exhibit J, detailing the Liquidation Proceeds received
from such Commercial Loan, expenses incurred with respect thereto, and any loss
incurred in connection therewith.
Section 4.03 Establishment of Principal and Interest Accounts;
-------------------------------------------------
Deposits in Principal and Interest Accounts.
--------------------------------------------
(a) The Servicer shall cause to be established and
maintained one or more Principal and Interest Accounts, in one or more Eligible
Deposit Accounts, in the form of time deposit or demand accounts, which may be
interest-bearing or such accounts may be trust accounts wherein the moneys
therein are invested in Permitted Instruments, titled "MCG Credit Corporation,
as Servicer, in trust for the registered holders of MCG Master Trust Notes and
Certificates." All funds in such Principal and Interest Accounts shall be
insured by the BIF or SAIF administered by the FDIC to the maximum extent
provided by law. The creation of any Principal and Interest Account shall be
evidenced by a letter agreement in the form of Exhibit C hereto.
A copy of such letter agreement shall be furnished to the
Indenture Trustee, the Owner Trustee and, upon request, any Noteholder,
Certificateholder or Hedge Counterparty.
(b) The Servicer and each Subservicer shall deposit without
duplication (within two Business Days of receipt thereof) in the applicable
Principal and Interest Account and retain therein the following amounts received
by the Servicer:
24
(i) all Principal Collections accruing and
received on or after the applicable Transfer Date;
(ii) all Interest Collection accruing and received
after the Transfer Date (net of the Servicing Fee with respect
to each Commercial Loan and other servicing compensation
payable to the Servicer as permitted herein) and all
origination and commitment fees;
(iii) all Net Liquidation Proceeds (other than
Insurance Proceeds covered under clause (iv) below);
(iv) all Insurance Proceeds (other than amounts to
be applied to restoration or repair of any related Collateral,
or to be released to the Obligor in accordance with the Credit
and Collection Policy);
(v) all Released Mortgaged Property Proceeds and
any other proceeds from any other Collateral securing the
Commercial Loans (other than amounts released to the Obligor
in accordance with the Credit and Collection Policy);
(vi) any amounts paid in connection with the
purchase or repurchase of any Commercial Loan and the amount
of any Substitution Adjustment received pursuant to any
provision of this Agreement;
(vii) any amount required to be deposited in the
Principal and Interest Account pursuant to Section 4.04 or
4.10; and
(viii) the amount of any gains and interest incurred
in connection with investments in Permitted Instruments.
(c) The foregoing requirements for deposit in the Principal
and Interest Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments with respect to the
Servicing Fee, together with the difference between any Liquidation Proceeds and
the related Net Liquidation Proceeds, may not be deposited by the Servicer in
the Principal and Interest Account.
(d) Any interest earnings on funds held in the Principal and
Interest Account paid by a Designated Depository Institution shall be deemed
part of the Available Funds.
Section 4.04 Permitted Withdrawals From the Principal and Interest
-----------------------------------------------------
Account.
-------
The Servicer shall withdraw funds from the Principal and
Interest Account for the following purposes:
25
(a) provided that each Series of Notes is in its Revolving
Period, to remit to the Indenture Trustee for deposit in the Funding Account
that portion of the Principal Collections as may be set forth in an Issuer
Request;
(b) to remit to the Indenture Trustee on each Determination
Date for deposit into the Note Distribution Account, the Available Funds for the
related Remittance Date less the amount transferred to the Funding Account
pursuant to clause (a) above;
(c) to reimburse itself for any accrued unpaid Servicing Fees
and for unreimbursed Servicing Advances to the extent deposited in the Principal
and Interest Account (and not netted from Scheduled Payments received). The
Servicer's right to reimbursement for unpaid Servicing Fees and, except as
provided in the following, Servicing Advances shall be limited to Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and such
other amounts as may be collected by the Servicer from the Obligor or otherwise
relating to the Commercial Loan in respect of which such unreimbursed amounts
are owed. The Servicer's right to reimbursement for Servicing Advances in excess
of such amounts shall be limited to any late collections of interest received on
the Commercial Loans generally, including Liquidation Proceeds, Released
Mortgaged Property Proceeds, Insurance Proceeds and any other amounts; provided,
--------
however, that the Servicer's right to such reimbursement pursuant hereto shall
-------
be subordinate to the rights of the Noteholders and the Hedge Counterparties;
(d) to withdraw any amount received from an Obligor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction;
(e) to make investments in Permitted Instruments;
(f) to withdraw any funds deposited in the Principal and
Interest Account that were not permitted or required to be deposited therein or
were deposited therein in error;
(g) to pay itself servicing compensation pursuant to Section
6.03 hereof; and
(h) to clear and terminate the Principal and Interest Account
upon the termination of this Agreement in accordance with Section 10.01.
So long as no Default or Servicer Termination Event shall have
occurred and be continuing, and consistent with any requirements of the Code,
the Principal and Interest Accounts shall either be maintained with an Eligible
Deposit Account as an interest-bearing account meeting the requirements set
forth in Section 4.03(a), or the funds held therein may be invested by the
Servicer (to the extent practicable) in Permitted Instruments, as directed in
writing by the Servicer. In either case, funds in the Principal and Interest
Account must be available for withdrawal without penalty, and any Permitted
Instruments must mature not later than the Business Day immediately preceding
the Determination Date next following the date of
26
such investment (except that if such Permitted Instrument is an obligation of
the institution that maintains such account, then such Permitted Instrument
shall mature not later than such Determination Date) and shall not be sold or
disposed of prior to its maturity. All Permitted Instruments must be held by or
registered in the name of "MCG Credit Corporation, as Servicer, in trust for the
registered holders of MCG Master Trust Notes and Certificates." All interest or
other earnings from funds on deposit in the Principal and Interest Account (or
any Permitted Instruments thereof) shall constitute part of the Available Funds
and be deemed Interest Collections. The amount of any losses incurred in
connection with the investment of funds in the Principal and Interest Account in
Permitted Instruments shall be deposited in the Principal and Interest Account
by the Servicer from its own funds immediately as realized without reimbursement
therefor.
Section 4.05 [Intentionally Omitted]
Section 4.06 Transfer of Accounts.
--------------------
The Servicer may, upon written notice to the Indenture Trustee,
transfer any Principal and Interest Account to a different Eligible Deposit
Account.
Section 4.07 Maintenance of Hazard Insurance.
-------------------------------
The Servicer shall comply with the Credit and Collection Policy
concerning the issuance and maintenance of fire and hazard insurance with
extended coverage customary in the area where the Mortgaged Property is located.
If at origination of a Commercial Loan, to the best of the Servicer's knowledge
after reasonable investigation, the related Mortgaged Property is in an area
identified in the Federal Register by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
consistent with the Credit and Collection Policy, the Servicer will require the
related Obligor or other creditors to purchase a flood insurance policy with a
generally acceptable insurance carrier, in an amount representing coverage not
less than the least of (i) the full insurable value of the Mortgaged Property,
or (ii) the maximum amount of insurance available under the National Flood
Insurance Act of 1968, as amended. The Servicer shall also maintain, to the
extent such insurance is available, and required by the Credit and Collection
Policy, on Foreclosed Property constituting real property, fire and hazard
insurance in the amounts described above and liability insurance. Any amounts
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the Mortgaged Property, or to be
released to the Obligor or other creditors in accordance with applicable law or
the governing documents) shall be deposited in the Principal and Interest
Account, subject to withdrawal pursuant to Section 4.04. It is understood and
agreed that no earthquake or other additional insurance need be required by the
Servicer of any Obligor or other creditors or maintained on Foreclosed Property,
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. All policies
required hereunder (unless the Seller is a non-agent co-lender with respect to
such Commercial Loan) shall be endorsed with standard mortgagee clauses with
losses payable to the Servicer or its affiliates.
27
Section 4.08 [Intentionally Omitted].
Section 4.09 Fidelity Bond.
-------------
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 a minimum amount equal to $1,500,000, and a maximum deductible of $250,000
(with respect to the fidelity bond) and $100,000 (with respect to the errors and
omissions insurance policy), if commercially available, with coverage on all
employees acting in any capacity requiring such persons to handle funds, money,
documents or papers relating to the Commercial Loans ("Servicer Employees"). The
fidelity bond shall insure the Indenture Trustee and the Owner Trustee, their
respective officers and employees against losses resulting from forgery, theft,
embezzlement or fraud by such Servicer Employees. The errors and omissions
policy shall insure against losses resulting from the errors, omissions and
negligent acts of such Servicer Employees. No provision of this Section 4.09
requiring such fidelity bond and errors and omissions insurance shall relieve
the Servicer from its duties as set forth in this Agreement. Upon the request of
the Indenture Trustee, the Owner Trustee or Hedge Counterparty, the Servicer
shall cause to be delivered to the Indenture Trustee, Owner Trustee, or such
Noteholder or such Certificateholder a certified true copy of such fidelity bond
and insurance policy. Notwithstanding the foregoing, the Servicer shall not be
required to obtain an errors and omissions insurance policy satisfying the
standard, described above until the first advance is made on the Series 2000-1
Notes. The current issuer of such fidelity bond is Gulf Insurance Company.
Section 4.10 Title, Management and Disposition of Foreclosed Property.
--------------------------------------------------------
In the event that title to Collateral is acquired in foreclosure or by
deed in lieu of foreclosure or by other legal process (a "Foreclosed Property"),
the deed or certificate of sale, or the repossessed Collateral shall be taken in
the name of the Trust for the benefit of the Noteholders, the
Certificateholders, and the Hedge Counterparties.
The Servicer, subject to Sections 4.01 and 4.02 hereof, shall manage,
conserve, protect and operate each Foreclosed Property or other Repossessed
Collateral for the Noteholders, the Certificateholders and any Hedge
Counterparty 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 Foreclosed Property or other
Repossessed Collateral in the same manner that it manages, conserves, protects
and operates other foreclosed or repossessed property for its own account, and
in a similar manner to that of similar property in the same locality as the
Foreclosed Property or other Repossessed Collateral is managed. The Servicer
shall attempt to sell the same (and may temporarily rent the same) on such terms
and conditions as the Servicer deems to be in the best interest of the
Noteholders, the Certificateholders and any Hedge Counterparty.
28
The Servicer shall cause to be deposited in the Principal and Interest
Account, no later than two Business Days after the receipt thereof, all revenues
received with respect to the conservation and disposition of the related
Foreclosed Property or other Repossessed Collateral net of Servicing Advances.
The Servicer shall, subject to Section 4.04, reimburse itself for any
related unreimbursed Servicing Advances and unpaid Servicing Fees, and the
Servicer shall deposit in the Principal and Interest Account the net cash
proceeds of such sale to be distributed to the Noteholders in accordance with
Section 5.07 hereof.
Section 4.11 [Intentionally Omitted].
---------------------
Section 4.12 Collection of Certain Commercial Loan Payments.
----------------------------------------------
The Servicer shall make reasonable efforts, consistent with the Credit
and Collection Policy, to collect all payments required under the terms and
provisions of the Commercial Loans. Consistent with the foregoing and the Credit
and Collection Policy, the Servicer may in its discretion waive or permit to be
waived any 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 Commercial Loan Note as provided in Section 4.01(e).
Section 4.13 Access to Certain Documentation and Information
-----------------------------------------------
Regarding the Commercial Loans.
------------------------------
The Servicer shall provide to the Owner Trustee, the Indenture Trustee,
the FDIC, the OCC, the Federal Reserve, the Office of Thrift Supervision and the
supervisory agents and examiners of the foregoing, access to the documentation
regarding the Commercial Loans required by applicable local, 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 and in a manner that does not unreasonably interfere with the
Servicer's normal operations or customer or employee relations. The Indenture
Trustee and the Owner Trustee shall and shall cause their 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 and the Owner
Trustee may reasonably determine that such disclosure is consistent with their
obligations hereunder.
29
ARTICLE V
PAYMENTS TO THE NOTEHOLDERS
---------------------------
Section 5.01 Establishment of Note Distribution Account; Deposits in
-------------------------------------------------------
Note Distribution Account; Permitted Withdrawals from
-----------------------------------------------------
Note Distribution Account.
-------------------------
(a) No later than the Closing Date, the Indenture Trustee
will establish and maintain with itself in its trust department a trust account,
which shall not be interest-bearing, titled "Note Distribution Account, Norwest
Bank Minnesota, National Association, as Indenture Trustee for the registered
holders of MCG Master Trust Notes" (the " Note Distribution Account"). The Note
Distribution Account shall be divided into separate sub-accounts for each
Series. The Indenture Trustee shall, promptly upon receipt, deposit in the
appropriate sub-account of the Note Distribution Account and retain therein:
(i) the portion of the Available Funds allocated to
such Series pursuant to Section 5.07;
(ii) the Applicable Percentage for such Series of any
amounts received in connection with an Optional Redemption pursuant
to Section 2.11; and
(iii) the Applicable Percentage for such Series of
amounts required to be paid by the Servicer pursuant to Section
5.06(e) in connection with losses on investments of amounts in the
Accounts.
(b) Amounts on deposit in each sub-account of the Note Distribution
Account shall be withdrawn on each Remittance Date by the Indenture Trustee, or
the Paying Agent, on its behalf, to effect the distribution described in the
applicable Terms Supplement and thereafter by the following parties in no
particular order of priority:
(i) by the Indenture Trustee, to invest amounts on
deposit in the Note Distribution Account in Permitted Instruments
pursuant to Section 5.06;
(ii) by the Indenture Trustee, to withdraw any amount
not required to be deposited in the Note Distribution Account or
deposited therein in error; and
(iii) by the Indenture Trustee, to clear and terminate
the Note Distribution Account upon the termination of this Agreement
in accordance with the terms of Section 10.01 hereof;
30
Section 5.02 Establishment of Transferor Interest Account; Deposits
------------------------------------------------------
in Transferor Interest Account; Permitted Withdrawals
-----------------------------------------------------
from Transferor Interest Account.
--------------------------------
(a) No later than the Closing Date, the Indenture Trustee
will establish and maintain with itself in its trust department a trust account,
which shall not be interest bearing, titled "Transferor Interest Account,
Norwest Bank Minnesota, National Association in trust for the registered holders
of the MCG Master Trust Transferor Interest" (the "Transferor Interest Account".
The Indenture Trustee shall, promptly upon receipt, deposit in the Transferor
Interest Account and retain therein:
(i) the portion of the Available Funds allocated to
the Transferor Interest pursuant to Section 5.07;
(ii) the Applicable Percentage for the Transferor
Interest of any amounts received in connection with an
Optional Redemption pursuant to Section 2.11; and
(iii) the Applicable Percentage for the Transferor
Interest of amounts required to be paid by the Servicer
pursuant to Section 5.06(e) in connection with losses on
investments of amounts in the Accounts.
(b) Amounts on deposit in the Transferor Interest Account
shall be withdrawn by the Indenture Trustee for distribution on each Remittance
Date to the holder of the Transferor Interest.
Section 5.03 Establishment of Expense Account; Deposits in Expense
-----------------------------------------------------
Account; Permitted Withdrawals from Expense Account
---------------------------------------------------
(a) No later than the Closing Date, the Indenture Trustee
will establish with itself an account (the "Expense Account"). The Expense
Account shall not constitute part of the Trust Fund and is for the benefit of
the Indenture Trustee and the Owner Trustee in its individual capacity to pay
their fees and expenses related to the Trust. The Indenture Trustee shall
deposit into the Expense Account:
(i) upon receipt (x) amounts transferred from the
applicable sub-accounts of the Note Distribution Account and
(y) amounts paid by the Originator, in each case with respect
to the fees and expenses of the Indenture Trustee and the
Owner Trustee (including expenses incurred by the Indenture
Trustee in connection with becoming a successor servicer
pursuant to Section 9.02); and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 5.06(e) in connection with losses
on investments of amounts in the Expense Account.
31
If, at any time the amount then on deposit in the Expense Account shall be
insufficient to pay in full the fees and expenses of the Indenture Trustee and
the Owner Trustee in its individual capacity then due, the Indenture Trustee and
the Owner Trustee in its individual capacity shall make demand on the Originator
to pay the amount of such insufficiency, and the Originator shall promptly pay
such amount.
(b) The Indenture Trustee may invest amounts on deposit in the
Expense Accounts in Permitted Instruments pursuant to Section 5.06 hereof, and
the Indenture Trustee shall withdraw amounts on deposit in the Expense Accounts
to:
(i) pay the Indenture Trustee's and Owner Trustee's
reasonable fees (in its individual capacity) and reasonable expenses
as described in Sections 2.08 and 9.02 hereof;
(ii) withdraw any amounts not required to be deposited in
the Expense Accounts or deposited therein in error; and
(iii) remit to the Seller any funds remaining in the Expense
Account upon the termination of this Agreement in accordance with the
terms of Section 10.01.
Section 5.04 Funding Account
---------------
(a) No later than the Closing Date, the Indenture Trustee shall
establish and maintain in its trust department a trust account, which shall not
be interest-bearing, titled "MCG Master Trust Funding Account" (the "Funding
Account"). The Funding Account shall constitute part of the Trust Fund and may
only be invested in Permitted Instruments. The Indenture Trustee shall, promptly
upon receipt, deposit in the Funding Account and retain therein:
(i) the Commercial Loan Cash Proceeds received from Series
2000-1 Noteholders;
(ii) amounts transferred from the Principal and Interest
Account pursuant to Section 4.04(a); and
(iii) amounts deposited therein pursuant to the terms of a
Terms Supplement.
(b) On each Transfer Date, the Servicer shall instruct the
Indenture Trustee to withdraw from the Funding Account the amount determined
pursuant to Section 2.09(a)(ii) and pay such amount to or upon the order of the
Seller with respect to such transfer.
32
(c) Provided that after giving effect to such payment the
Subordination Amount for each Series is at least equal to its related Minimum
Subordination Amount and no uncured Default has occurred, the Indenture Trustee
shall pay to or upon the order of the Seller the amount set forth in an Issuer
Request delivered to the Indenture Trustee.
(d) If on the Termination Date amounts still remain in the
Funding Account, the Servicer shall instruct the Indenture Trustee to withdraw
from the Funding Account no later than the Business Day preceding the
immediately following Determination Date and deposit such amounts in the
Principal and Interest Account. Any amounts so transferred shall be deemed part
of the Available Funds.
Section 5.05 [Intentionally Omitted]
Section 5.06 Investment of Accounts.
----------------------
(a) So long as no Default or Event of Default shall have
occurred and be continuing, and consistent with any requirements of the Code,
all or a portion of any Account held by the Indenture Trustee shall be invested
by the Indenture Trustee, as directed in writing by the Servicer, in one or more
Permitted Instruments in the name of the Indenture Trustee, bearing interest or
sold at a discount. Absent written directions from the Servicer, any funds on
deposit in any Account shall be invested by the Indenture Trustee in an
investment described in clause (vi) of the definition of Permitted Instrument.
No such investment in any Account shall mature later than the Business Day
immediately preceding the next Remittance Date; provided, however, the Indenture
-------- -------
Trustee or any Affiliate thereof, may be the obligor on any investment which
otherwise qualifies as a Permitted Instrument and any investment on which the
Indenture Trustee is the obligor may mature on such Remittance Date or date when
needed, as the case may be.
(b) If any amounts are needed for disbursement from any Account
held by the Indenture Trustee and sufficient uninvested funds are not available
to make such disbursement, the Indenture Trustee, as directed in writing by the
Servicer or the Issuer, shall cause to be sold or otherwise converted to cash a
sufficient amount of the investments in such Account. The Indenture Trustee
shall not be liable for any investment loss or other charge resulting therefrom
(except to the extent such loss or charge results from the Indenture Trustee's
gross negligence, willful misconduct or fraud).
(c) The Indenture Trustee shall not in any way be held liable
by reason of any insufficiency in any Account held by the Indenture Trustee
resulting from any investment loss on any Permitted Instrument included therein
(except to the extent that the Indenture Trustee is the obligor thereon or such
insufficiency or loss results from the Indenture Trustee's gross negligence,
willful misconduct or fraud).
(d) The Indenture Trustee shall invest and reinvest funds in the
Accounts held by the Indenture Trustee to the fullest extent practicable, in
such manner as the Servicer shall from time to time direct in writing, but only
in one or more Permitted Instruments.
33
(e) All income or other gain from investments in any Account
held by the Indenture Trustee shall be deposited in such Account, immediately on
receipt, and the Indenture Trustee shall notify the Servicer of any loss
resulting from such investments. The Servicer shall remit the amount of any such
loss from its own funds, without reimbursement therefor, to the Indenture
Trustee for deposit in the Account from which the related funds were withdrawn
for investment by the next Determination Date following receipt by the Servicer
of such notice.
Section 5.07 Allocations.
-----------
(a) The rights of the Noteholders, Certificateholders, holder
of the Transferor Interest and Hedge Counterparties to receive distributions
from the proceeds of the Trust Fund, and all ownership interests of such parties
in such distributions, shall be as set forth in this Agreement and the Term
Supplements. The Transferor Interest shall represent the interest in the Trust
not represented by any Notes or Certificates then outstanding including the
right to receive Available Funds and other amounts at the times and in the
amounts specified in this Article V and the other Basic Documents to be paid to
the holder of the Transferor Interest.
(b) Prior to each Remittance Date the Servicer shall allocate
the portion of the Available Funds remitted to the Note Distribution Account
pursuant to Section 4.04(b) among each Series and the Transferor Interest as
follows:
(i) first, each Series and the Transferor Interest
shall be allocated its Applicable Percentage of all Interest
Collections and Principal Collections included in such Available
Funds (the amount so allocated to a Series and the Transferor
Interest is referred to as its "Initial Allocated Amount");
(ii) if each Series is in its Revolving Period, the
Servicer, based upon an Issuer Request, shall reallocate to each
Series and the Transferor Interest the portion of the Principal
Collections set forth in such Issuer Request; provided, however,
that the Transferor Interest may not be allocated more than the
amount needed to reduce it to zero;
(iii) if one Series is in its Amortization Period and
one or more Series are in their Revolving Period, the Servicer
shall reallocate the Principal Collections from each Series in
its Revolving Period and the Transferor Interest first to the
Series in its Amortization Period until its Invested Amount is
reduced to zero and then, any remaining Principal Collections
will be reallocated pursuant to clause (ii) above;
(iv) if two or more Series are in their Amortization
Period and one or more Series are in their Revolving Period, the
Servicer shall reallocate the Principal Collections from each
Series in its Revolving Period and the Transferor Interest to
each Series in its Amortization Period (pro rata based upon the
34
Invested Amount of each such Series); provided, however, that
no Series in its Amortization Period shall be reallocated more
than the amount needed to reduce its Invested Amount to zero,
any remaining Principal Collections will be reallocated
pursuant to clause (ii) above;
(v) if every Series is in its Amortization Period,
other than as a result of an Event of Default, the Servicer
shall reallocate the Principal Collections from the Transferor
Interest to each Series (pro rata based upon the Invested
Amount of each such Series); provided, however, that no Series
shall be reallocated more than the amount needed to reduce its
Invested Amount to zero; and
(vi) if every Series is in its Amortization Period
as a result of an Event of Default, no reallocation of
Principal Collections shall be made.
Notwithstanding the foregoing, if a Potential Termination
Event is in effect with respect to a Series, for purposes of the reallocations
set forth above, such Series shall be deemed to be in its Amortization Period.
The Initial Allocated Amount for each Series and the
Transferor Interest, as adjusted pursuant to clauses (ii) through (v) above, is
referred to as the "Adjusted Allocated Amount" for each Series and the
Transferor Interest.
(c) By 11:00 A.M. New York time, on each Remittance Date,
the Indenture Trustee shall (i) credit to the applicable sub-account of the Note
Distribution Account, the Adjusted Allocated Amount for each Series and (ii)
transfer from the Note Distribution Account to the Transferor Interest Account,
the Adjusted Allocated Amount for the Transferor Interest.
(d) By 11:00 A.M. New York time, on each Remittance Date,
the Indenture Trustee shall (i) transfer the Adjusted Allocated Amount for each
Series from its sub-account of the Note Distribution Account to the applicable
Series Note Distribution Account, and distribute such amounts pursuant to the
terms of the applicable Terms Supplement and (ii) distribute from the Transferor
Interest Account to the holder of the Transferor Interest, its Adjusted
Allocated Amount.
(e) All distributions made to the Noteholders of a Series
will be made on a pro rata basis among the Noteholders of record of such Series
on the next preceding Record Date based on the Percentage Interest of such
Series represented by their respective Notes, and shall be made by check or,
upon request by a Noteholders, by wire transfer of immediately available funds
to the account of such Noteholders at a bank or other entity having appropriate
facilities therefor, and, in the case of wire transfers, at the expense of such
Noteholder unless such Noteholder shall own of record Notes which have initial
principal balances aggregating at least $1,000,000. All distributions made to
the holder of the Transferor Interest will be made by wire transfer of
immediately available funds to the account of such holders at a bank or other
entity having appropriate facilities therefor.
35
Section 5.08 [Intentionally Omitted].
----------------------
Section 5.09 Statements.
----------
(a) Each month, not later than 2:00 p.m. (central time)
on the Determination Date, the Servicer shall deliver to the Indenture Trustee,
by telecopy or electronic format in a form acceptable to the Indenture Trustee,
for distribution to the Noteholders, with hard copy thereof to be delivered on
the Business Day following the Determination Date, a certificate signed by a
Servicing Officer (a "Servicer's Certificate") in the form attached hereto as
Exhibit K.
(b) The Indenture Trustee shall forward such Servicer's
Certificate to the Noteholders, the Certificateholders, the Owner Trustee and
any Hedge Counterparty on the Remittance Date.
(c) To the extent that there are inconsistencies between
the telecopy of the Servicer's Certificate and the hard copy thereof, the
Indenture Trustee shall be entitled to rely upon the telecopy, unless and until
notified in writing to the contrary by a Responsible Officer of the Servicer.
(d) Upon reasonable advance notice in writing, the
Servicer will provide (subject to reasonable confidentiality restrictions) to
each Noteholder which is a savings and loan association, bank or insurance
company certain reports and access to information and documentation regarding
the Commercial Loans sufficient to permit such Noteholder to comply with
applicable regulations of the Office of Thrift Supervision or other regulatory
authorities with respect to investment in the Notes.
(e) The Servicer, at its expense, shall furnish to each
Noteholder (subject to reasonable confidentiality restrictions), during the term
of this Agreement, such periodic, special, or other reports or information,
whether or not provided for herein, as shall be necessary, reasonable, or
appropriate with respect to the Noteholder 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
Noteholder may reasonably require.
Section 5.10 Reports of Foreclosure and Abandonment of Mortgaged
---------------------------------------------------
Property
--------
Each year the Servicer shall make the reports of foreclosures
and abandonment of any Mortgaged Property as and to the extent required by
Section 6050J of the Code. Promptly after filing any such report with the
Internal Revenue Service, the Servicer shall provide the Indenture Trustee with
an Officer's Certificate certifying that such report has been filed.
36
ARTICLE VI
GENERAL SERVICING PROCEDURE
---------------------------
Section 6.01 [Intentionally Omitted].
Section 6.02 Satisfaction of Mortgages and Collateral and Release
-----------------------------------------------------
of Commercial Loan Files.
------------------------
The Servicer shall maintain the Fidelity Bond as provided for
in Section 4.09 insuring the Servicer against any loss it may sustain with
respect to any Commercial Loan not satisfied in accordance with the procedures
set forth herein.
Upon the payment in full of any Commercial Loan, the receipt
by the Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes or the deposit into the Principal and
Interest Account of the purchase price of any Commercial Loan acquired by the
Seller, the Servicer or another Person pursuant to this Agreement, or any other
Basic Document, the Servicer will immediately notify the Indenture Trustee by a
certification in the form of Exhibit I attached hereto (which certification
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 Principal and Interest Account pursuant to Section 4.03 or the Note
Distribution Account pursuant to Section 5.01 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Indenture
Trustee's Document File. Upon receipt of such certification and request, the
Indenture Trustee shall release, within 3 Business Days, the related Indenture
Trustee's Document File to the Servicer (and any related Supplemental Interests
unless a Default has occurred and is continuing). Expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
payable by the Servicer and shall not be chargeable to the Principal and
Interest Account or the Note Distribution Account.
From time to time and as appropriate for the servicing or
foreclosure of any Commercial Loan, the Indenture Trustee shall, upon request of
the Servicer and delivery to the Indenture Trustee of a certification in the
form of Exhibit I attached hereto signed by a Servicing Officer, release the
related Indenture Trustee's Document File to the Servicer within 3 Business
Days, and the Indenture Trustee shall execute such documents as shall be
necessary to the prosecution of any such proceedings. The Servicer shall return
the Indenture Trustee's Document File to the Indenture Trustee when the need
therefor by the Servicer no longer exists, unless the Commercial Loan has been
liquidated and the Liquidation Proceeds relating to the Commercial Loan have
been deposited in the Principal and Interest Account and remitted to the
Indenture Trustee for deposit in the Note Distribution Account or the Commercial
Loan File or such document has been delivered to an attorney, or to a
public trustee or other public official as required by law, for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure or
repossession of Collateral either judicially or non-judicially, and the Servicer
has delivered to the Indenture Trustee a certificate of a Servicing Officer
certifying as to the name and address of the Person to whom such Commercial Loan
File or such document was delivered
37
and the purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Officer stating that such Commercial Loan was liquidated, the
servicing receipt relating to such Commercial Loan shall be released by the
Indenture Trustee to the Servicer.
The Indenture Trustee shall execute and deliver to the
Servicer any court pleadings, requests for trustee's sale or other documents
provided to it necessary to the foreclosure or trustee's sale in respect of
Collateral or to any legal action brought to obtain judgment against any Obligor
on the Commercial Loan Note or other agreement securing Collateral or to obtain
a deficiency judgment, or to enforce any other remedies or rights provided by
the Commercial Loan Note or other agreement securing Collateral 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 adversely affect the lien of the agreement securing
Collateral, 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 or appropriate by any state or other jurisdiction to discharge the lien
securing Collateral 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 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 Commercial Loan has been paid in full by or on behalf of the
Obligor (or subject to a deficiency claim against such Obligor) and that such
payment has been deposited in the Principal and Interest Account.
Section 6.03 Servicing Compensation.
----------------------
As compensation for its services hereunder, the Servicer shall
be entitled to retain from Interest Collections on the Commercial Loans or
withdraw from the Principal and Interest Account (to the extent deposited
therein) the Servicer's Servicing Fee and, in accordance with Section 4.04(c),
any accrued but unreimbursed Servicing Fees. Additional servicing compensation
in the form of assumption and other administrative fees and late payment,
default or waiver charges shall be retained by or remitted to the Servicer to
the extent not required under Section 4.04 to be remitted to the Indenture
Trustee for deposit in the Note Distribution Account. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for herein.
38
Section 6.04 Annual Statement as to Compliance.
---------------------------------
The Servicer will deliver to the Indenture Trustee, on or before March
31 of each year beginning April 30, 2001, an Officer's Certificate stating that
(i) the Servicer has fully complied in all material respects with the provisions
of Articles IV, V, VI and VII, (ii) a review of the activities of the Servicer
during the preceding calendar year and of performance under this Agreement has
been made under such officer's supervision, and (iii) to the best of such
officer's knowledge, based on such review, the Servicer has fulfilled in all
material respects all its obligations under this Agreement throughout such year,
or, if there has been such a default in the fulfillment of any such obligation,
specifying each such default known to such officers and the nature and status
thereof and the action being taken by the Servicer to cure such default.
Section 6.05 Annual Independent Public Accountants' Servicing
------------------------------------------------
Report.
------
On or before May 31 of each year beginning May 31, 2001, the
Servicer, at its expense, shall cause one of the "big five" accounting firms to
furnish a letter or letters to the Indenture Trustee to the effect that such
firm has with respect to the Servicer's overall servicing operations examined
such operations in accordance with the requirements of the Uniform Single Audit
Program for Mortgage Bankers, and stating such firm's conclusions relating
thereto.
Section 6.06 Indenture Trustee's Right to Examine Service Records
-----------------------------------------------------
and Audit Operations.
--------------------
The Indenture Trustee shall have the right upon reasonable
prior notice, during normal business hours, in a manner that does not
unreasonably interfere with the Servicer's normal operations or customer or
employee relations, and as often as reasonably required, to examine and audit
any and all of the books, records or other information of the Servicer, 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. No amounts payable in respect of the
foregoing shall be paid from the Trust Fund.
Section 6.07 Reports to the Indenture Trustee; Principal and
-----------------------------------------------
Interest Account Statements.
---------------------------
Not later than 20 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 Principal and Interest 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 Principal and
Interest Account for each category of deposit specified in Section 4.03, the
aggregate of withdrawals from the Principal and Interest Account for each
category of withdrawal specified in Section 4.04 and the aggregate amount of
permitted withdrawals not made in the related Due Period.
39
ARTICLE VII
REPORTS TO BE PROVIDED BY SERVICER
----------------------------------
Section 7.01 Financial Statements.
--------------------
(a) The Servicer shall furnish to the Indenture Trustee
(i) promptly, copies of any material and adverse notices (including, without
limitation, notices of defaults, breaches, potential defaults or potential
breaches) given to or received from its other lenders, (ii) immediately, notice
of the occurrence of any Event of Default, Termination Event or Servicer
Termination Event or of any situation which the Servicer reasonably expects to
develop into an Event of Default, Termination Event or Servicer Termination
Event, (iii) copies of the Servicer's quarterly financial statements no later
than 60 days after each quarter end, and (iv) annual audited financial
statements no later than 120 days after each year-end.
(b) The Servicer also agrees to make available on a
reasonable basis to any Noteholder 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 any Noteholder upon reasonable advance notice and subject to
reasonable confidentiality restrictions to inspect the Servicer's servicing
facilities during normal business hours and in a manner that does not
unreasonably interfere with the Servicer's normal operations or customer or
employee relations for the purpose of satisfying such Noteholder that the
Servicer has the ability to service the Commercial Loans in accordance with this
Agreement.
ARTICLE VIII
THE SERVICER
------------
Section 8.01 Indemnification; Third Party Claims.
-----------------------------------
(a) The Servicer agrees to indemnify, defend, and hold
the Indenture Trustee (as such and in its individual capacity), the Owner
Trustee (as such and in its individual capacity), and each Noteholder,
Certificateholder and any Hedge Counterparty harmless from and against any and
all claims, losses, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and any other reasonable costs, fees and expenses that
the Indenture Trustee (as such or in its individual capacity), the Owner Trustee
(as such or in its individual capacity), and any Noteholder, Certificateholder
or Hedge Counterparty may sustain as a result of the failure of the Servicer to
perform its duties and service the Commercial Loans in compliance with the terms
of this Agreement, except to the extent arising from the gross negligence,
willful misconduct or fraud by the Person claiming indemnification. The Servicer
shall immediately notify the Indenture Trustee and the Owner Trustee if a claim
is made by any party with respect to this Agreement, and the Servicer shall
assume (with the consent of the indemnified party) the
40
defense and any settlement of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Indenture Trustee (as such or in its individual capacity), the Owner Trustee (as
such or in its individual capacity), and/or a Noteholder, Certificateholder or
Hedge Counterparty in respect of such claim.
(b) The Seller agrees to indemnify, defend, and hold the Indenture
Trustee (as such and in its individual capacity), the Owner Trustee (as such and
in its individual capacity), and each Noteholder, Certificateholder and any
Hedge Counterparty harmless from and against any and all claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other reasonable costs, fees and expenses that the Indenture
Trustee (as such or in its individual capacity), the Owner Trustee (as such or
in its individual capacity), and any Noteholder, Certificateholder or Hedge
Counterparty may sustain as a result of the failure of the Seller to perform its
duties in compliance with the terms of this Agreement and in the best interests
of the Noteholders, the Certificateholders and any Hedge Counterparty, except to
the extent arising from the gross negligence, willful misconduct or fraud by the
Person claiming indemnification. The Seller shall immediately notify the
Indenture Trustee and the Owner Trustee, if a claim is made by a third party
with respect to this Agreement, and the Seller shall assume (with the consent of
the indemnified party) the defense and any settlement of any such claim and pay
all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, the Seller, the Indenture Trustee (as such or in its
individual capacity), the Owner Trustee (as such or in its individual capacity),
and/or a Noteholder, Certificateholder or Hedge Counterparty in respect of such
claim.
Section 8.02 Merger or Consolidation of the Servicer.
---------------------------------------
The Servicer will keep in full effect its existence as a
corporation, bank or association and if required by applicable law will obtain
and preserve its qualification to do business as a foreign entity, in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Commercial Loans and to perform its duties under this
Agreement.
Any Person into which the Servicer may be merged or consolidated,
or any Person resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to all or substantially
all of the business of the Servicer, shall be an established commercial loan
servicing institution that on a consolidated basis has a net worth of at least
$50,000,000, and shall be the successor of the Servicer, 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, consolidation, conversion, or succession
to the Indenture Trustee and the Owner Trustee.
Section 8.03. Limitation on Liability of the Servicer and Others.
--------------------------------------------------
41
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 or persons respecting any matters arising hereunder. Subject
to the terms of Section 8.01 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 Commercial Loans in accordance
with this Agreement.
Section 8.04. Servicer Not to Resign.
----------------------
The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except (i) by mutual consent of the
Servicer, the Indenture Trustee and the Majority Noteholders, or (ii) in
connection with a merger, conversion or consolidation permitted pursuant to
Section 8.02 (in which case the Person resulting from the merger, conversion or
consolidation shall be the successor of the Servicer), or (iii) in connection
with an assignment permitted pursuant to Section 8.02 (in which case the
Assignee shall be the successor of the Servicer), or (iv) upon the good faith
determination that the Servicer's duties hereunder are no longer permissible
under applicable law or administrative determination 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
counsel for the Servicer) to such effect delivered to the Indenture Trustee,
which Opinion of Counsel shall be in form and substance reasonably acceptable to
the Indenture Trustee. No such resignation shall become effective until a
successor has assumed the Servicer's responsibilities and obligations hereunder
in accordance with Section 9.02.
ARTICLE IX
SERVICER TERMINATION
--------------------
Section 9.01 Servicer Termination Events.
---------------------------
(a) In case one or more of the following events (each a
"Servicer Termination Event") by the Servicer shall occur and be continuing,
that is to say:
(i) any failure by the Servicer to remit when due to
the Noteholders, or to the Indenture Trustee for the benefit of
the Noteholders and Hedge Counterparties, or to the Owner Trustee
for the benefit of the Certificateholders, any payment required
to be made under the terms of the Basic Documents, it being
understood that the Servicer shall not be responsible for the
failure of either the Owner Trustee or the Indenture Trustee to
remit funds that were received by the Owner Trustee or the
Indenture Trustee from the Servicer in accordance with the Basic
Documents; or
42
(ii) failure by the Servicer duly to observe or perform, in
any material respect, any other covenants, obligations or agreements of the
Servicer as set forth in the Basic Documents, or any representation or
warranty of the Servicer made in this Agreement or any other Basic Document
or in any certificate or other writing delivered thereto or in connection
therewith proves to have been incorrect when made and has a material
adverse effect on the rights of the Noteholders, which failure continues
unremedied for a period of 30 days (if such failure can be remedied) after
the earlier to occur of (A) the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to a
Responsible Officer of the Servicer by the Indenture Trustee or to a
Responsible Officer of the Servicer, and the Indenture Trustee by any
Noteholder, Certificateholder or Hedge Counterparty or (B) the date a
Responsible Officer of the Servicer receives actual knowledge of such
failure; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force, undischarged or
unstayed for a period of 30 days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all of
the Servicer's property; or
(v) the Servicer shall admit in writing its inability to pay
its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) without the prior written consent of the Majority
Noteholders, the Servicer agrees or consents to, or otherwise permits to
occur, any amendment, modification, change, supplement or recision of or to
the Servicer or the Credit and Collection Policy, in whole or in part, in
any manner that would have a material adverse effect on the Commercial
Loans; or
(vii) failure by the Servicer to observe or perform the Credit
and Collection Policy regarding the servicing of the Commercial Loans in
any manner that would have a material adverse effect on the Commercial
Loans; or
(viii) either (A) Xxxxxx X. Xxxxxxx ceases to be actively
involved in the credit decisions of the Servicer (unless waived by the
Majority Noteholders, which waiver may be granted or withheld in their sole
direction) or (B) any of the
43
following ceases to be actively involved in the management of the
Servicer (unless waived by the Majority Noteholders, which waiver
will not be unreasonably withheld): Xxxxx X. Xxxxxxxx, Xxxxxx X.
Xxxxxx or X. Xxxxx Xxxxxxx; or
(ix) the consolidated net worth of the Servicer (inclusive
of all committed capital), as measured as of the end of any
fiscal quarter of Servicer, shall be less than the greater of (a)
$115,000,000 and (b) 15% of the aggregate outstanding principal
balance of the commercial loans that are being serviced by
Servicer and are owned by Servicer or an Affiliate of Servicer
(including MCG Master Trust).
(b) then, and in each and every such case, so long as a Servicer
Termination Event shall not have been remedied, the Majority Noteholders, by
notice in writing to the Servicer (except with respect to (iii), (iv) and (v)
for which no notice is required) may, in addition to whatever rights such
Noteholders may have at law or equity including damages, injunctive relief and
specific performance, in each case, immediately be withheld in its sole
discretion) terminate all the rights and obligations of the Servicer under this
Agreement and in and to the Commercial Loans and the proceeds thereof, as
Servicer. Upon such receipt by the Servicer of a written notice from the
Majority Noteholders stating that they or it intend to terminate the Servicer as
a result of such Servicer Termination Event, all authority and power of the
Servicer under this Agreement, whether with respect to the Commercial Loans or
otherwise, shall, subject to Section 9.02, pass to and be vested in the
Indenture Trustee and the Indenture Trustee 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 Commercial Loans and related documents.
Section 9.02 Indenture Trustee to Act; Appointment of Successor
--------------------------------------------------
On and after the time of the Servicer's termination, or the
Servicer's receipt of notice if required by Section 9.01, or at any time if the
Indenture Trustee receives the resignation of the Servicer evidenced by an
Opinion of Counsel pursuant to Section 8.04 or the Servicer is removed as
Servicer pursuant to this Article IX, the Indenture Trustee shall 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 Indenture Trustee shall not be liable for any actions of any Servicer
prior to it, and that the Indenture Trustee shall only make advances or payments
hereunder from its own funds if it elects to in its sole discretion. As
compensation therefor, the Indenture Trustee shall be entitled to the Servicing
Fee, together with other servicing compensation in the form of assumption fees,
late payment charges or otherwise as provided herein; including, without
limitation, all reasonable costs (including reasonable attorneys' fees) incurred
in connection with
44
transferring the servicing obligations under this Agreement and amending this
Agreement to reflect such transfer.
Notwithstanding the above, the Indenture Trustee may, in its
discretion, or shall, if it is unable to so act or if the Majority Noteholders
request in writing to the Indenture Trustee, appoint, or petition a court of
competent jurisdiction to appoint, any established servicing institution as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. Any
collections received with respect to Commercial Loans transferred to the Trust
by the Servicer after removal or resignation that accrued prior thereto 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. As compensation, any successor servicer (including, without
limitation, the Indenture Trustee) so appointed shall be entitled to receive the
Servicing Fee, together with any other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided herein that
accrued prior thereto; including, without limitation, all reasonable costs
(including reasonable attorneys' fees) incurred in connection with transferring
the servicing obligations under this Agreement and amending this Agreement to
reflect such transfer. In the event the Indenture Trustee is required to solicit
bids as provided herein, the Indenture Trustee shall solicit, by public
announcement, bids from banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor servicer shall be entitled to the full amount of the Servicing Fee as
servicing compensation, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise that accrued prior
thereto. Within thirty days after any such public announcement, the Indenture
Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest qualifying bid. The Indenture Trustee shall deduct from
any sum received by the Indenture Trustee from the successor to the Servicer in
respect of such sale, transfer and assignment all costs and expenses of any
public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder and the amount of any unreimbursed
Servicing Advances. After such deductions, the remainder of such sum shall be
paid by the Indenture Trustee to the Servicer at the time of such sale, transfer
and assignment to the Servicer's successor. The Indenture Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Neither the Indenture Trustee nor
any other successor servicer shall be held liable by reason of any failure to
make, or any delay in making, any distribution hereunder or any portion thereof
caused by (i) the failure of the Servicer to deliver, or any delay in
delivering, cash, documents or records to it, or (ii) restrictions imposed by
any regulatory authority having jurisdiction over the Servicer hereunder. No
appointment of a successor to the Servicer hereunder shall be effective until
written notice of such proposed appointment shall have been provided by the
Indenture Trustee to each Noteholder and Certificateholder and the Indenture
Trustee shall have consented thereto. The Indenture Trustee shall not resign as
servicer until a successor servicer has been appointed and accepted such
appointment.
45
Pending appointment of a successor to the Servicer hereunder, the
Indenture Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Indenture Trustee may make
such arrangements for the compensation of such successor out of payments on
Commercial Loans as it and such successor shall agree; provided, however, that
no such compensation shall be in excess of that permitted the Servicer pursuant
to Section 6.03 or otherwise as provided in this Agreement. The Servicer, the
Indenture Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
Section 9.03. Waiver of Defaults.
------------------
The Majority Noteholders may, on behalf of all the Noteholders,
Certificateholders and any Hedge Counterparty and subject satisfying the Rating
Agency Condition, waive any events permitting removal of the Servicer pursuant
to this Article IX; provided, however, that the Majority Noteholders may not
waive a default in making a required distribution on a Note without the consent
of the holder of such Note. Upon any waiver or cure 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 or cure shall extend to any subsequent or other default or impair any
right consequent thereto except to the extent expressly so waived.
Section 9.04. Control by Majority Noteholders.
-------------------------------
The Majority Noteholders may direct the time, method and place of
conducting any proceeding relating to the Trust or the Notes or for any remedy
available to the Indenture Trustee or the Owner Trustee with respect to the
Trust or exercising any trust or power conferred on the Indenture Trustee or the
Owner Trustee with respect to the Trust provided that:
-------- ----
(i) such direction shall not be in conflict with any rule
of law or with this Agreement;
(ii) the Indenture Trustee shall have been provided with
indemnity satisfactory to it; and
(iii) the Indenture Trustee or the Owner Trustee may take
any other action deemed proper by the Indenture Trustee or the Owner
Trustee which is not inconsistent with such direction; provided,
--------
however, that the Indenture Trustee or the Owner Trustee, as the case
-------
may be, need not take any action which it determines in good faith
would be unlawful, violate the Trust Agreement, or involve it in
personal liability or may be unjustly prejudicial to the Holders not
so directing.
ARTICLE X
46
TERMINATION
-----------
Section 10.01. Termination.
-----------
This Agreement shall terminate upon notice to the Indenture Trustee of
the earlier of the following events: (a) the final payment on or the disposition
or other liquidation by the Trust of the last Commercial Loan transferred by the
Seller or the disposition of all property acquired upon foreclosure or deed in
lieu of foreclosure of any Commercial Loan transferred by the Seller and the
remittance of all funds due thereunder, or (b) mutual written consent of the
Servicer, the Seller, the Originator and all Noteholders and Certificateholders.
The Servicer may, at its option, terminate this Agreement on any date
(the "Optional Termination Date") on which the aggregate Principal Balance of
the Commercial Loans transferred by the Seller is less than 15% of the Facility
Limit by purchasing, on the next succeeding Remittance Date, all of the
remaining Commercial Loans transferred by the Seller at a price equal to the sum
of (i) the Invested Amount, (ii) the Interest Distribution Amount, (iii) the
Transferor Interest, (iv) any amounts owed to any Hedge Counterparty under any
Hedging Agreement or Hedge Transaction (including Hedge Breakage Costs) and (v)
any additional amounts set forth in a Terms Supplement (the "Termination
Price").
Notice of any termination, specifying the Remittance Date upon which
the Trust Fund will terminate and that the Noteholders shall surrender their
Notes to the Indenture Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer by letter to all
Noteholders mailed during the month of such final distribution before the
Determination Date in such month, specifying (i) the Remittance Date upon which
final payment of the Notes will be made upon presentation and surrender of Notes
at the office of the Indenture Trustee therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Remittance Date is not applicable, payments being made only upon
presentation and surrender of the Notes at the office of the Indenture Trustee
therein specified. The Servicer shall give such notice to the Indenture Trustee
at the time such notice is given to Noteholders. Any obligation of the Servicer
to pay amounts due hereunder or under the Basic Documents to the Indenture
Trustee shall survive the termination of this Agreement.
Section 10.02. Accounting Upon Termination of Servicer
---------------------------------------
Upon termination of the Servicer under Article IX hereof, the Servicer
shall:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee, the funds in any Principal and Interest
Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee, all Commercial Loan Files and related
documents and statements held by it hereunder and a Commercial Loan portfolio
computer diskette;
47
(c) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee a full accounting of all funds, including a
statement showing the Scheduled Payments collected by it and a statement of
monies held in trust by it for the payments or charges with respect to the
Commercial 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 Commercial 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
MISCELLANEOUS PROVISIONS
------------------------
Section 11.01 Acts of Noteholders.
-------------------
Except as otherwise specifically provided herein, whenever Noteholder
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 Noteholders if the Majority Noteholders agree to
take such action or give such consent or approval.
Section 11.02 Amendment.
---------
(a) This Agreement may be amended from time to time by the
Servicer and the Trust with the consent of the Indenture Trustee and any other
party set forth in a Terms Supplement, without notice to or consent of the
Noteholders, the Certificateholders or any Hedge Counterparty, to cure any
ambiguity, to correct or supplement any provisions herein, to comply with any
changes in the Code, or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Indenture Trustee, adversely
affect the interests of any Noteholder, Certificateholder or any Hedge
Counterparty and further provided that no such amendment shall reduce in any
manner the amount of, or delay the timing of, any amounts received on Commercial
Loans which are required to be distributed on any Note or Certificate without
the consent of the Holder of such Note or Certificate, or change the rights or
obligations of any other party hereto or any Hedge Counterparty without the
consent of such party.
(b) This Agreement may be amended from time to time by the
Servicer and the Trust with the consent of the Indenture Trustee, and the
consent of the Majority Noteholders, 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 Holders; provided, however, that
no such amendment shall reduce in any manner the amount of, or delay the timing
48
of, any amounts received on Commercial Loans which are required to be
distributed on any Note without the consent of the Holder of such Note or reduce
the percentage of Holders which are required to consent to any such amendment
without the consent of the Holders of 100% of the Notes and Certificates
affected thereby.
Section 11.03. Duration of Agreement.
---------------------
This Agreement shall continue in existence and effect until terminated as
herein provided.
Section 11.04. GOVERNING LAW.
-------------
EXCEPT TO THE EXTENT INCONSISTENT WITH FEDERAL LAW, IN WHICH CASE FEDERAL
LAW WILL GOVERN, 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 11.05. Notices.
-------
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at, sent by
facsimile to or mailed by overnight mail, certified mail or registered mail,
postage prepaid, to (i) in the case of the Servicer and the Originator, MCG
Credit Corporation, 0000 Xxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, XX 00000,
Attention: Chief Financial Officer and General Counsel, Facsimile: (703) 247-
7505, or such other addresses as may hereafter be furnished to the Noteholders
in writing by the Servicer and the Originator, (ii) in the case of the Seller,
MCG Finance Corporation II, 0000 Xxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, XX 00000,
Attention: Chief Financial Officer and General Counsel, Facsimile: (703) 247-
7505, or to such other address as may be furnished to the Noteholders in writing
by the Seller, (iii) in the case of the Indenture Trustee, its Corporate Trust
Office, (iv) in the case of the Owner Trustee, Wilmington Trust Company, Xxx
Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Administration, Facsimile: (000) 000-0000 and (v) in the case of the
Noteholders, as set forth in the Note 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, except that notices to the Noteholders shall be effective upon
mailing or personal delivery.
Section 11.06. 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.
49
Section 11.07. No Partnership.
--------------
Nothing herein contained shall be deemed or construed to create a co-
partnership or joint venture between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor and not as agent for the
Noteholders.
Section 11.08. 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 11.09. Successors and Assigns.
----------------------
This Agreement shall inure to the benefit of and be binding upon the
Seller, the Originator and the Servicer, the Indenture Trustee and the
Noteholders and their respective successors and assigns.
Section 11.10. 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 11.11. Notification to Rating Agencies.
-------------------------------
The Indenture Trustee shall give prompt notice to the Rating Agencies of
the occurrence of any of the following events of which a Responsible Officer has
received actual notice: (1) any modification or amendment to this Agreement, (2)
any change of the Indenture Trustee, the Servicer or Paying Agent, (3) any Event
of Default, Termination Event or Servicer Termination Event, and (4) the final
payment of all the Notes. The Servicer shall promptly deliver to the Indenture
Trustee a copy of each of the Servicer's Certificates.
Section 11.12. Limitation of Liability.
-----------------------
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee on behalf of the Issuer
under the Trust Agreement, in the exercise of the powers and authority conferred
and vested in it, (b) each of the representations, undertaking and agreements
herein made on the part of the Issuer is made and intended as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose of binding only the Issuer, (c) nothing herein
contained shall be construed as creating any liability on Wilmington Trust
Company individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived by
the parties to the
50
Agreement and by any person claiming by, through or under them and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaking by the Issuer under this Agreement or any related documents.
This Agreement is executed and delivered by Norwest Bank Minnesota,
National Association, not in its individual capacity but solely as Indenture
Trustee under the Indenture in the exercise of the powers and authority
conferred and vested in it, and Norwest Bank Minnesota, National Association, in
its individual capacity, shall not be personally liable for the acts or
omissions of the Indenture Trustee under this Agreement, other than by reason of
bad faith, negligence, or willful misconduct.
Notwithstanding anything herein to the contrary, in no event shall
Norwest Bank Minnesota, National Association, in any capacity be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee paid
hereunder and the amount necessary to induce any successor Servicer under this
Agreement and the transactions set forth or provided for by the Basic Documents.
51
IN WITNESS WHEREOF, the Seller, the Servicer, the Originator and the
Trust have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
MCG CREDIT CORPORATION
as an Originator and Servicer
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: CFO & EVP
MCG FINANCE CORPORATION II
as Seller
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: CFO & EVP
MCG MASTER TRUST,
By: Wilmington Trust Company, not in
its individual capacity but solely as Owner
Trustee on behalf of the Trust
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
52
Accepted and Agreed to:
Norwest Bank Minnesota, National Association,
not in its individual capacity, but solely as Indenture Trustee
By: /s/ Xxxxxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Assistant Vice-President
53
STATE OF Delaware )
--------
: ss.:
COUNTY OF New Castle )
----------
On the 12th day of June __________, 2000 before me, a Notary Public in
-- ----
and for said State, personally appeared Xxxxx X. Xxxxxx ___ known to me to be an
---------------
officer of Wilmington Trust Company, the trust company that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Xxxxxxxx X. Xxxxxxxx
---------------------------------------
Notary Public
My Commission expires __________
STATE OF Virginia )
--------
: ss.:
COUNTY OF Arlington )
---------
On the 15th day of June, 2000 before me, a Notary Public in
-- ----
and for the State of Virginia, personally appeared Xxxxxx X. Xxxxxx known to me
-------- ----------------
to be the COO, CFO & EVP of MCG Credit Corporation, one of the corporations that
--------------
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ [Illegible]
___________________________________
Notary Public
My Commission expires January 31, 0000
----------------
XXXXX XX Xxxxxxxx )
--------
:ss.:
COUNTY OF Arlington )
---------
On the 7th day of June, 2000 before me, a Notary Public in
- ----
and for the State of Virginia, personally appeared Xxxxxx X. Xxxxxx known to me
-------- ----------------
to be the CFO & EVP of MCG Finance Corporation II, one of the corporations that
---------
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ [Illegible]
___________________________________
Notary Public
My Commission expires January 31, 2004
----------------
EXHIBIT A
CONTENTS OF COMMERCIAL LOAN FILE
With respect to each Commercial Loan, the Commercial Loan File shall
consist of the items listed in Section 2.04 of the Sale and Servicing Agreement.
Additionally, for each Commercial Loan identified by the Seller as a
Material Mortgage Loan, by 2:00 P.M. (central time) two Business Days prior to
the related Transfer Date, the Seller will deliver or cause to be delivered to
the Indenture Trustee each of the following documents (except for Material
Mortgaged Loans where the Originator or one of its Affiliates is a co-lender but
not the agent):
(a) either: (i) the original Mortgage, with evidence of
recording thereon, (ii) a copy of the Mortgage certified as a true copy by a
Responsible Officer of the Originator where the original has been transmitted
for recording until such time as the original is returned by the public
recording office or duly licensed title or escrow officer or (iii) a copy of the
Mortgage certified by the public recording office in those instances where the
original recorded Mortgage has been lost.
(b) the original Assignment of Mortgage from the Originator
endorsed as follows: "Norwest Bank Minnesota, National Association ("Assignee")
its successors and assigns, as indenture trustee under the Indenture dated as of
June 1, 2000, relating to MCG Master Trust";
(c) either: (i) originals of all intervening assignments, if
any, showing a complete chain of title from the originator of the Commercial
Loan (where such originator was not the Originator or one of its Affiliates) to
the Originator or one of its Affiliates, including warehousing assignments, with
evidence of recording thereon if such assignments were recorded, (ii) copies of
any assignments certified as true copies by a Responsible Officer of the
Originator where the originals have been submitted for recording until such time
as the originals are returned by the public recording officer, or (iii) copies
of any assignments certified by the public recording office in any instances
where the original recorded assignments have been lost; and
(d) either: (i) a copy of all title insurance policies or a
marked title commitment relating to the title insurance policies relating to the
Mortgaged Property to the extent the Originator obtained such policies or (ii)
copies of any title insurance policies or other evidence of lien position,
including but not limited to Policy Insurance Record of Title ("PIRT") policies,
limited liability reports and lot book reports, to the extent the Originator
obtains such policies or other evidence of lien position, certified as true by
the Originator.
The Seller shall, within ten Business Days after the receipt thereof,
and in any event, within one year of the related Transfer Date, deliver or cause
to be delivered to the Indenture Trustee: (i) the original recorded Mortgage in
those instances where a copy thereof certified by the Originator was delivered
to the Indenture Trustee; and (ii) any intervening assignments of
A-1
Mortgage in those instances where copies thereof certified by the Originator
were delivered to the Indenture Trustee. In those instances where the public
recording office retains the original Mortgage or the intervening assignments of
the Mortgage after it has been recorded, the Originator shall be deemed to have
satisfied its obligations hereunder upon delivery to the Indenture Trustee of a
copy of such Mortgage or assignments of Mortgage certified by the public
recording office to be a true copy of the recorded original thereof.
Prior to the occurrence of a Default, the Indenture Trustee shall not
record the Assignments of Mortgage delivered pursuant to (b) above. Upon the
occurrence of a Default, the Indenture Trustee, upon receipt of written
instructions from the Majority Noteholders (a copy of which shall be provided to
the Servicer), shall cause to be recorded in the appropriate offices each
Assignment of Mortgage delivered to it. Each such recording shall be at the
expense of the Servicer.
A-2
EXHIBIT B
[INTENTIONALLY OMITTED]
B-1
EXHIBIT C
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
(date)
To:
(the "Depository")
As "Servicer" under the Sale and Servicing Agreement, dated as of June
1, 2000, relating to the MCG Master Trust (the "Agreement"), we hereby authorize
and request you to establish an account, as a Principal and Interest Account
pursuant to Section 4.03 of the Agreement, to be designated as "MCG Credit
Corporation, as Servicer, in trust for the registered holders of MCG Master
Trust Notes and Certificates." All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Servicer. You may refuse any deposit
which would result in violation of the requirement that the account be fully
insured as described below. This letter is submitted to you in duplicate. Please
execute and return one original to us.
MCG CREDIT CORPORATION
By:_______________________________
Name:
Title:
C-1
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number _____________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The amounts deposited at any time in the account
will be insured to the maximum amount provided by applicable law by the Federal
Deposit Insurance Corporation.
____________________
(Name of Depository)
By:______________________________
Name:
Title:
X-0
XXXXXXX X
[XXXXXXXXXXXXX XXXXXXX]
X-0
EXHIBIT E
[INTENTIONALLY OMITTED]
E-1
EXHIBIT F
FORM OF INITIAL CERTIFICATION
_______,
[Seller]
[Servicer]
Re: Sale and Servicing Agreement, MCG Master Trust
----------------------------------------------
Gentlemen:
In accordance with Section 2.05 of the above-captioned Sale and
Servicing Agreement (the "Agreement"), the undersigned, as Indenture Trustee,
hereby certifies that, except as noted on the attachment hereto, if any (the
"Loan Exception Report"), it has received each of the documents required to be
delivered to it pursuant to Section 2.04 of the Agreement with respect to each
Commercial Loan listed in the Commercial Loan Schedule and the documents
contained therein appear to bear original signatures. Capitalized but undefined
terms have the meanings set forth in the Sale and Servicing Agreement.
The Indenture Trustee has made no independent examination of any such
documents beyond the review specifically required in the above-referenced Sale
and Servicing Agreement.
F-1
The Indenture Trustee makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any such documents or
any of the Commercial Loans identified on the Commercial Loan Schedule, or (ii)
the collectibility, insurability, effectiveness or suitability of any such
Commercial Loan.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Indenture Trustee
By:______________________________
Name:
Title:
F-2
EXHIBIT F-1
FORM OF FINAL CERTIFICATION
[date]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement, MCG Master Trust
_________________________________________
_________________________________________
Gentlemen:
In accordance with Section 2.05 of the above-captioned Sale and Servicing
Agreement, the undersigned, as Indenture Trustee, hereby certifies that, except
as noted on the attachment hereto, as to each Commercial Loan listed in the
Commercial Loan Schedule (other than any Commercial Loan paid in full or listed
on the attachment hereto) it has reviewed the documents delivered to it pursuant
to Section 2.04 of the Sale and Servicing Agreement and has determined that (i)
all such documents are in its possession, (ii) such documents have been reviewed
by it and have not been mutilated, damaged, torn or otherwise physically altered
and relate to such Commercial Loan and (iii) based on its examination, and only
as to the foregoing documents, the information set forth in the Commercial Loan
Schedule respecting such Commercial Loan is correct. The Indenture Trustee has
made no independent examination or inquiry of such documents beyond the review
specifically required in the above-referenced Sale and Servicing Agreement.
The Indenture Trustee makes no representations as to: (i) the validity,
legality, enforceability or genuineness of any such documents contained in each
or any of the Commercial Loans identified on the Commercial Loan Schedule, (ii)
the collectibility, insurability, effectiveness or suitability of any such
Commercial Loan, or (iii) the compliance by such documents with statutory or
regulatory guidelines.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Indenture Trustee
By: ___________________________
Name:
Title:
F-1-1
EXHIBIT G
[INTENTIONALLY OMITTED]
G-1
EXHIBIT H
COMMERCIAL LOAN SCHEDULE
[TO BE PROVIDED BY MCG CREDIT CORPORATION]
H-1
EXHIBIT I
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minnesota, National Association
Re: Sale and Servicing Agreement - MCG Master Trust
-----------------------------------------------
In connection with the administration of the pool of Commercial Loans
held by you, we request the release, and acknowledge receipt, of the (Indenture
Trustee's Document File/[specify document]) for the Commercial Loan described
below, for the reason indicated.
Obligor's Name, Address & Zip Code:
----------------------------------
Loan Number:
-----------
Reason for Requesting Documents (check one)
-------------------------------
____ 1. Commercial Loan Paid in Full
(Servicer hereby certifies that all amounts received in
connection therewith have been credited to the Principal and
Interest Account.)
____ 2. Commercial Loan Liquidated
(Servicer hereby certifies that all proceeds of foreclosure,
insurance or other liquidation have been finally received and
credited to the Principal and Interest Account.)
____ 3. Commercial Loan in Foreclosure
_____4. Commercial Loan Repurchased Pursuant to Section 10.01
of the Sale and Servicing Agreement.
_____5. Commercial Loan Repurchased or Substituted Pursuant to Article
II or III of the Sale and Servicing Agreement (Servicer hereby
certifies that the repurchase price or Substitution
Adjustment, to the extent required, has been credited to the
Principal and Interest Account and/or remitted to the
Indenture Trustee for deposit into the Note Distribution
Account pursuant to the Sale and Servicing Agreement.)
I-1
____ 6. Collateral Being Released Pursuant to Section 4.01(e) of the
Sale and Servicing Agreement.
____ 7. Commercial Loan Collateral or associated loan document being
substituted, released, revised or subordinated.
____8. Supplemental Interest being sold, repurchased, revised or
substituted.
If box 1, 2 or 4 above is checked, and if all or part of the Indenture
Trustee's Document File was previously released to us, please release to us our
previous receipt on file with you, as well as any additional documents in your
possession relating to the above specified Commercial Loan.
If box 3, 5, 6, 7 or 8 above is checked, upon our return of all of the
above documents (or the appropriate substitutes therefor, if applicable) to you,
please acknowledge your receipt by signing in the space indicated below, and
returning this form.
MCG CREDIT CORPORATION,
as Servicer
By:____________________________
Name:
Date:
Documents returned to Indenture Trustee:
Norwest Bank Minnesota, National Association
--------------------------------------------
Indenture Trustee
By:
Date:
I-2
EXHIBIT J
FORM OF LIQUIDATION REPORT
Customer Name:
Account number:
Original Principal Balance:
1. Liquidation Proceeds
Principal Prepayment $________
Property Sale Proceeds ________
Insurance Proceeds ________
Other (Itemize) ________
2. Servicing Advances $________
3. Net Liquidation Proceeds $_______
(Line 1 minus Line 2)
4. Principal Balance of the Commercial
Loan on date of liquidation $_______
5. Realized (Loss) or Gain $_______
(Line 3 minus Line 4)
J-1
EXHIBIT K
Servicer's Certificate
To be delivered to all the Noteholders of the Master Trust Notes and the
Indenture Trustee pursuant to Section 5.09
MCG
MASTER TRUST SERVICER REPORT
---------------
Due Period ending on 4/30/2000
---------------
Facility Amount $ 150,000,000
Number of Eligible Loans 50
Largest Commitment of all Eligible Loans $ 20,000,000
Aggregate Outstanding Loan Balance (AOLB) at end of prior Due Period $ --
Aggregate Outstanding Loan Balance (AOLB) at end of current Due Period $ 100,000,000
Advances Outstanding at end of prior Due Period $ --
Advances Outstanding at end of current Due Period $ --
-----------------------------------------------------------------------------
APPLICABLE PERCENTAGE (for all Series)
-----------------------------------------------------------------------------
Series 2000-1 100.0%
Transferors Interest 0.0%
-----------------------------------------------------------------------------
SERVICER TERMINATION EVENT Covenant Actual
-----------------------------------------------------------------------------
Level Level
MINIMUM CONSOLIDATED SHAREHOLDERS EQUITY for EACH DUE PERIOD
---------------------------------------------------------------------------------------------
(a) Base level $ 115,000,000
(b) Aggregate Outstanding Principal Balance of all Loans --
(c) Minimum Percentage Applied 15%
Product of (b) and (c) --
Minimum Consolidated Shareholder's Equity (Greater of Base Level or 15%
times Aggregate Outstanding Principal Balance of all Loans) $ 115,000,000
Actual Shareholder's Equity $ ---
-----------------------------------------------------------------------------
CONCENTRATION REPORT Covenant Actual
-----------------------------------------------------------------------------
Attach supporting calculations (Based upon AOLB unless otherwise stated) Level Level
1. Geographic Concentration (Loan to Obligors in a single state may not
exceed 25%; state concentration to be determined by revenues) - NOT 25% $ -
APPLICABLE DURING THE RAMP-UP PERIOD
2. Industry Concentration (Loan to a single industry segment may not exceed
the following): NOT APPLICABLE DURING THE RAMP-UP PERIOD
Radio 40% $ -
Television 40% $ -
Publishing 40% $ -
Community Newspapers 40% $ -
Telecommunication 35% $ -
Business Information Services 30% $ -
Technology 25% $ -
Security Alarm Leasing Companies 25% $ -
Paging 25% $ -
Towers 25% $ -
Internet Service Provider 25% $ -
E-commerce 25% $ -
Other 25% $ -
Any sub-segment of Telecommunication 25% $ -
3. Single Obligor commitment may not exceed $13.3 MM during Ramp-Up period
and $20MM thereafter $13.3MM; $20MM $ -
4. Six Largest Loan Outstandings (may not exceed the greater of: $90MM or $90 MM or 40% $ -
40%)
5. Average Loan size (may not exceed $8MM) $ 8,000,000 $ -
6. Weighted Average Life (may not exceed 6.5 years) 6.560 $ -
7. Risk Rating (weighted average risk rating may not exceed 5.75) 5.75 $ -
8. Grade 7 Limit (sum of all Loans with risk rating of 7 may not exceed
17.5) 17.5%/\ $ -
---------------
9. Grade 7 Industry Limit (sum of all Loans to single industry segment with
risk rating of 7 may not exceed 10%)
NOT APPLICABLE DURING THE RAMP-UP PERIOD 10%
---------------
K-1
-----------------------------------------------------------------------------
SUBSTITUTION CALCULATION Covenant Actual
-----------------------------------------------------------------------------
Level Level
In no event may the aggregate Principal Balance of Delinquent Loans and
Charged-Off Loans purchased or substituted for pursuant to Section 2.10 of
the Sales and Servicing Agreement exceed, in any one year, 15% of the 15%
Facility Amount. --------------- ----------
In no event may the aggregate Principal Balance of all other Commercial
Loans purchased or substituted for pursuant to Section 2.10 of the Sales
and Servicing Agreement exceed, in any one year, 15% of the Facility Amount. 15%
--------------- ----------
Number and amounts of all Commercial Loans Purchased or Substituted for (or
otherwise removed from the Trust during the Due Period) $Amount
-------
Loan Name XXXX $ 1,500,000
Loan Name YYYY $ 2,000,000
Loan Name ZZZZ $ 1,750,000
Total = three loans $ 5,250,000
-----------------------------------------------------------------------------
PRINCIPAL SCHEDULE
-----------------------------------------------------------------------------
$Amount
-------
Principal Balance at beginning of current Due Period $ --
Less: Scheduled Principal payments $ --
Less: Curtailments $ --
Less: Payoffs $ --
Add: New fundings $ --
Principal Balance at end of current Due Period $ --
$Amount
-------
Number and Principal Balances of all Commercial Loans subject to
Prepayments during the Due Period
Loan Name AAAA $ 1,200,000
Loan Name AAAB $ 1,200,000
Loan Name AAAC $ 1,200,000
Total = three loans $ 3,600,000
Number and Principal Balances of all Delinquent Loans at the end of the Due $Amount
Period -------
Loan Name BBBB $ 1,200,000
Loan Name BBBC $ 1,200,000
Loan Name BBBD $ 1,200,000
Total = three loans $ 3,600,000
Number and Principal Balances of all Charged-Off Loans during the Due Period $Amount
-------
Loan Name CCCC $ 1,200,000
Loan Name CCCD $ 1,200,000
Loan Name CCCE $ 1,200,000
Total = three loans $ 3,600,000
-----------------------------------------------------------------------------
TRUST CASH RECONCILIATION REPORT for the Principal and Interest Account
-----------------------------------------------------------------------------
Xxxxxxxx $Amount
-------
Total of Billed Principal $ --
Total of Billed Interest $ --
---------------
Total Billed Interest and Principal $ --
===============
Collections
Total Collections on Principal $ --
Total Collections on Interest $ --
Total Collections on Other $ --
---------------
Total Collections $ --
===============
Difference in Collections and Xxxxxxxx* $ --
*Please provide explanation reconciling difference in xxxxxxxx and actual
collections.
-----------------------------------------------------------------------------
DELINQUENCY SCHEDULE
-----------------------------------------------------------------------------
$Amount %AOLB
Days Past Due (after applicable grace period in accordance with the MCG Credit
and Collection Policy)
1 to 30 days $ --
31 to 60 days $ --
61 to 90 days $ --
91 to 120 days $ --
121 to 180 days $ --
181 to 365 days $ --
over 365 days $ --
Foreclosure $ --
REO Property $ --
K-2
---------------
Total Delinquency $ --
===============
-----------------------------------------------------------------------------
RISK RATING MIGRATION FOR TRUST COLLATERAL Prior Period $ %AOLB
----------------------------------------------------------------------------- --------------- ---------------
Credit Grade 1 $ --
Credit Grade 2 $ --
Credit Grade 3 $ --
Credit Grade 4 $ --
Credit Grade 5 $ --
Credit Grade 6 $ --
Credit Grade 7 $ --
Credit Grade 8 $ --
Credit Grade 9 $ --
Credit Grade 10 $ --
AOLB for Prior Period $ --
Current % AOLB
Period $
--------------- ---------------
Credit Grade 1 $ --
Credit Grade 2 $ --
Credit Grade 3 $ --
Credit Grade 4 $ --
Credit Grade 5 $ --
Credit Grade 6 $ --
Credit Grade 7 $ --
Credit Grade 8 $ --
Credit Grade 9 $ --
Credit Grade 10 $ --
AOLB for Prior Period $ --
$ --
List of Grade 7 Loans - end of Prior Period Commitment Industry Segment
Balance
XX $ - -
YY 0
ZZ 0
List added to Grade 7 Loans - during Current Period Commitment Industry Segment
Balance -
NONE $ -
Loans moved out of Grade 7 Loans - during Prior Period Commitment Industry Segment
Balance -
NONE $ -
List of Grade 7 Loans - end of Current Period Commitment Industry Segment
Balance -
XX $ -
YY
ZZ
K-3
SERVICER's MONTHLY COMPUTER TAPE FORMAT
The computer tape to be delivered in electronic format shall contain the
following information for each Commercial Loan transferred to the Trust as of
the related Record Date:
1. Obligor Name and account number
2. Business Scope (National, Regional or Local
3. State
4. Industry
5. Total Commitment
6. Risk Rating
7. Principal Balance
8. Lending Type
9. Loan Type
10. Source (New, refinancing, etc...)
11. Origination Date
12. Maturity Date
13. Pricing Index
14. Margin
15. Interest Rate
16. Any additional information reasonable requested by the Indenture Trustee
K-4
EXECUTION COPY
APPENDIX A
DEFINITIONS AND USAGE
---------------------
Usage
The following rules of construction and usage shall be applicable to
any instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant thereto unless otherwise defined
therein.
(b) As used herein, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto, accounting
terms not defined in this Appendix or in any such instrument, certificate or
other document, and accounting terms partly defined in this Appendix or in any
such instrument, certificate or other document to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of such instrument. To the extent that the
definitions of accounting terms in this Appendix or in any such instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
(c) The words "hereof", "herein", "hereunder" and words of similar
import when used in an instrument refer to such instrument as a whole and not to
any particular provision or subdivision thereof; references in an instrument to
"Article", "Section" or another subdivision or to an attachment are, unless the
context otherwise requires, to an article, Section or subdivision of or an
attachment to such instrument; and the term "including" means "including without
limitation".
(d) The definitions contained in this Appendix are equally applicable
to both the singular and plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to below
or in any agreement or instrument that is governed by this Appendix means such
agreement or instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes 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.
1
Definitions
ACCOUNT: The Certificate Account, the Note Distribution Account, the
-------
Funding Account, the Expense Account, the Principal and Interest Account and any
other account set forth in a Terms Supplement.
ACCOUNT NUMBER: The number assigned to each Commercial Loan by the
--------------
Originator, as set forth in Exhibit H to the Sale and Servicing Agreement.
ACT. As defined in Section 11.03 of the Master Indenture.
---
ADDITION NOTICE: With respect to the transfer of Commercial Loans to
----------------
the Trust pursuant to Section 2.09 of the Sale and Servicing Agreement, notice,
which shall be given not later than two Business Days prior to the related
Transfer Date, of the Seller's designation of the Commercial Loans to be
contributed to the Trust and the aggregate Principal Balance of such Commercial
Loans.
ADDITIONAL FUNDINGS: With respect to any Commercial Loan, any advances
-------------------
made by the Originator to the related Obligor after the Transfer Date for such
Commercial Loan pursuant to the terms of the Commercial Loan Note and related
loan documents.
ADJUSTED ALLOCATED AMOUNT: As defined in Section 5.07(b) of the Sale
-------------------------
and Servicing Agreement.
AFFILIATE: As to any Person, any other Person controlling, controlled
---------
by or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing . Each of the Indenture
Trustee and the Owner Trustee may conclusively presume that a Person is not an
Affiliate of another Person unless a Responsible Officer of such trustee has
actual knowledge to the contrary. With respect to the Originator, the Servicer
and the Seller, "Affiliate" shall not include any Institutional Owner.
AGGREGATE INVESTED AMOUNT: As of any date of determination, the sum of
-------------------------
the Invested Amounts for all Notes then Outstanding and the Invested Amount for
any Certificates having a principal balance.
AGREEMENT: The Sale and Servicing Agreement and all amendments thereof
---------
and supplements thereto.
AMORTIZATION PERIOD: For any Series, the meaning set forth in the
-------------------
related Terms Supplement.
AOLB: The aggregate outstanding loan balance, representing, as of any
----
date of determination, the excess of (i) the aggregate outstanding Principal
Balance of all Eligible Loans
2
over (ii) the aggregate outstanding Principal Balance of all Eligible Loans that
are Delinquent Loans.
APPLICABLE PERCENTAGE: For each Series and the Transferor Interest and
---------------------
for any date of determination, the Fixed Allocation Percentage or Floating
Allocation Percentage then applicable to such Series or the Transferor Interest
Percentage then applicable to the Transferor Interest.
ASSIGNMENT OF MORTGAGE: With respect to those Commercial Loans that are
----------------------
Material Mortgage Loans, an assignment of the related Mortgage, notice of
transfer or equivalent instrument sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect of record the
transfer of the Mortgage of the related Commercial Loan to the Indenture
Trustee.
AUTHORIZED NEWSPAPER: A newspaper of general circulation in the Borough
--------------------
of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays.
AUTHORIZED OFFICER: With respect to any Person, any person who is
------------------
authorized to act for such Person in matters relating to the Basic Documents and
whose action is binding upon such Person. 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. With respect to the Seller, the Originator or
the Servicer, initially those individuals the names of whom appear on the lists
of Authorized Officers delivered on the Closing Date (as such list may be
modified or supplemented from time to time thereafter); provided, however, where
any provision of the Basic Documents requires an Authorized Officer to receive
notice or have certain knowledge, such provision will be effective with respect
to the Seller, the Originator or the Servicer only if its respective president,
chief financial officer, executive vice president or general counsel receives
such notice or has such knowledge. With respect to the Indenture Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees, the President, the Chairman of the Committee on Trust Matters, any
vice president, any assistant vice president, the Secretary, any assistant
secretary, the Treasurer, any assistant treasurer, the Cashier, any assistant
cashier, any trust officer, the Controller and any assistant controller 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.
AVAILABLE FUNDS: With respect to each Remittance Date, all Collections
---------------
received from any source by the Servicer or any Subservicer during the
immediately preceding Due Period and all investment income thereon realized from
Permitted Instruments pursuant to Section 5.06 of the Sale and Servicing
Agreement.
AVERAGE CHARGED-OFF RATIO: As of any Determination Date, the arithmetic
-------------------------
average of the Charged-Off Ratios, expressed as percentages, for the three
immediately preceding Due Periods; provided, however, that for the first and
-------- -------
second Determination Dates, the Average
3
Charged-Off Ratio shall be determined only by reference to the first Due Period
and the first two Due Periods, respectively.
AVERAGE DELINQUENCY RATIO: As of any Determination Date, the arithmetic
-------------------------
average of the Delinquency Ratios, expressed as percentages, for the three
immediately preceding Due Periods; provided, however, that for the first and
-------- -------
second Determination Dates, the Average Delinquency Ratio shall be determined
only by reference to the first Due Period and the first two Due Periods,
respectively.
AVERAGE PORTFOLIO YIELD: As of any Determination Date, the arithmetic
-----------------------
average of the Portfolio Yields, expressed as a percentage, for the three
immediately preceding Due Periods; provided, however, that for the first and
-------- -------
second Determination Dates, the Average Portfolio Yield shall be determined only
by reference to the first Due Period and the first two Due Periods,
respectively.
BASIC DOCUMENTS: The Commercial Loan Sale Agreement, the Sale and
---------------
Servicing Agreement, the Indenture, each Trust Supplement, the Trust Agreement,
and any additional document listed as a Basic Document in a Terms Supplement and
each other document entered into in connection with the foregoing, as the same
may be amended, supplemented, restated, replaced or otherwise modified from time
to time.
BIF: The Bank Insurance Fund, or any successor thereto.
---
BOOK-ENTRY NOTE means a beneficial interest in the Notes, ownership and
---------------
transfers of which shall be made through book entries by a Securities Depository
as described in Section 4.02 of the Indenture.
BORROWING BASE: As of any date of determination, an amount equal to (i)
--------------
the AOLB after giving effect to all Commercial Loans added to and removed from
the Issuer on such date, plus (ii) all Principal Collections on deposit in the
----
Principal and Interest Account or the Funding Account, minus (iii) the
-----
applicable portion of the aggregate Principal Balance of Commercial Loans
(without duplication) exceeding the Concentration and Mix Criteria.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a
------------
day on which banking institutions in the States of Virginia, North Carolina, New
York or Minnesota are authorized or obligated by law or executive order to be
closed.
BUSINESS TRUST STATUTE: Chapter 38 of Title 12 of the Delaware Code, 12
----------------------
Del. C. (S)3801, et. seq., as the same may be amended from time to time.
---- -- --------
CERTIFICATE: A Trust Certificate.
-----------
CERTIFICATE ACCOUNT: As described in Section 5.01 of the Trust
-------------------
Agreement.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Certificate
---------------------------
is registered in the Certificate Register.
4
CERTIFICATE REGISTER: The Certificate Register established and maintained
--------------------
in accordance with the Trust Agreement.
CERTIFICATE REGISTRAR: Initially, the Indenture Trustee, and thereafter,
---------------------
any successor appointed pursuant to the Trust Agreement.
CHARGED-OFF LOAN: That portion of the Principal Balance (but not less than
----------------
50%) of any Commercial Loan that is ninety (90) days or more contractually past
due with respect to any payment that the Servicer has determined to charge-off
in accordance with the Credit and Collection Policy; provided that the entire
unpaid Principal Balance of a Commercial Loan to the extent not previously
charged-off shall be deemed a Charged-Off Loan if (i) the Commercial Loan
becomes 180 days past due with respect to any payment, or (ii) the related
Obligor has tiled for bankruptcy protection or is generally unable to meet its
financial obligations or has suffered any other material adverse change that
materially affects its viability as a going concern, and where adequate
Collateral does not exist to repay the Commercial Loan (as determined by the
Servicer in accordance with the Credit and Collection Policy), or (iii) such
Commercial Loan is or should otherwise be written-off in its entirety by the
Servicer in accordance with the Credit and Collection Policy.
CHARGED-OFF RATIO: As of any Determination Date, the product of (i) 12 and
-----------------
(ii) the percentage equivalent of a fraction, the numerator of which is the
aggregate applicable portion of the Principal Balance of all Commercial Loans
that became Charged-Off Loans during the immediately preceding Due Period (net
of recoveries and gains), and the denominator of which is the AOLB as of the
first day of the immediately preceding Due Period.
CLASS: Collectively, Certificates or Notes having the same priority of
-----
payment and having the same designation.
CLOSING DATE: For any Series, the meaning set forth in the related Terms
------------
Supplement.
CODE: The Internal Revenue Code of 1986, as amended, or any successor
----
legislation thereto.
COLLATERAL: All items of property, whether real or personal, tangible or
----------
intangible, or otherwise, pledged by an Obligor or others to the Originator to
secure payment under a Commercial Loan.
COLLECTIONS: For any Due Period, means all funds that are received from any
-----------
source by the Servicer or any Subservicer during such Due Period in payment of
any amounts owed (including principal, finance charges, fees, interest, realized
gains on Supplemental Interests, and all other charges, if any, excluding the
Retained Interest in respect of any Commercial Loan or related Collateral that
has been transferred to the Trust and has not been repurchased by the Seller,
the Originator or the Servicer, or funds otherwise applied to repay or discharge
any such Commercial Loan (including insurance payments that the Servicer or
Originator apply in the ordinary course of their business to amounts owed in
respect of such Commercial Loan and the net proceeds of the sale or other
disposition of any related Collateral). Collections shall not include funds
collected by the
5
Servicer as agent on a Commercial Loan on behalf of participants and/or co-
lenders in that Commercial Loan.
COMMERCIAL LOAN: Means to the extent transferred by the Seller to the
---------------
Trust, (i) an individual loan made or purchased by the Originator to (a) a
holding or operating company whose primary business is in one of the covered
industry segments under the definition of "Concentration and Mix Criteria" or
(b) individuals, where the proceeds of such loan will be used by or in
connection with the operations and/or capitalization or recapitalization of a
holding or operating company engaged primarily in the business activities
described in clause (a) above, (ii) Supplemental Interests received by the
Originator as consideration for originating a loan described in clause (i) above
and (iii) Commercial Loan Assignments.
COMMERCIAL LOAN ASSIGNMENT: Assignments in loans that satisfy the
--------------------------
requirements of Section 3.02 of the Sale and Servicing Agreement.
COMMERCIAL LOAN CASH PROCEEDS: For Commercial Loans for which the cash
-----------------------------
portion of the purchase price was obtained through a funding of any other Series
of Notes, the meaning set forth in the related Terms Supplement .
COMMERCIAL LOAN CHECKLIST: The list delivered by the Seller to the
-------------------------
Indenture Trustee pursuant to Section 2.04 of the Sale and Servicing Agreement
that identifies the items contained in the related Commercial Loan File.
COMMERCIAL LOAN FILE: As described in Exhibit A to the Sale and
--------------------
Servicing Agreement.
COMMERCIAL LOAN INTEREST RATE: The applicable annual rate of interest
-----------------------------
borne by a Commercial Loan pursuant to its terms.
COMMERCIAL LOAN NOTE: The note or other primary evidence of
--------------------
indebtedness evidencing the indebtedness of an Obligor under a Commercial Loan.
COMMERCIAL LOAN SALE AGREEMENT: Collectively, (i) the Commercial Loan
------------------------------
Sale Agreement dated as of June 1, 2000 between MCG Credit Corporation (as
seller thereunder) and the Seller (as purchaser thereunder), along with any Sale
Assignment and all amendments thereof and supplements thereto, and (ii) any
other agreement pursuant to which the Seller acquires Commercial Loans.
COMMERCIAL LOAN SCHEDULE: The schedule of Commercial Loans attached as
------------------------
Exhibit H to the Sale and Servicing Agreement (which Schedule shall be delivered
in electronic format), as such schedule may be amended from time to time.
CONCENTRATION AND MIX CRITERIA: On any day, for purposes of determining
------------------------------
the Borrowing Base, the Eligible Loans included in the AOLB must conform to the
concentration
6
limitations set forth below:
(a) at all times following the Ramp-up Period, the aggregate Principal
Balance of Eligible Loans represented by Obligors in any one state (as allocated
by the Originator or Servicer in accordance with the Credit and Collection
Policy) shall not exceed 25% of the AOLB;
(b) at all times following the Ramp-up Period, the aggregate Principal
Balance of Eligible Loans represented by Obligors in the same industry segment
(as determined by the SIC code described below) shall not exceed the following
percentages of the AOLB:
SIC
---
Code(s)
------
Percentage or
---------- --
Segment Limit descriptions
------- ----- ------------
Radio 40% 4832
Television 40% 4833,484l
Other type of Publishing (excluding Community 40% 2721,274l
Newspapers)
Community Newspapers 40% 2711
Telecommunications 35% 4812, 4813, 4822 (excluding
Paging, ISP and
Telecommunications towers in
those codes)
Business Information Services 30% 7375,7379
Technology 25% 7371, 7372, 7373 (excluding E-
Commerce in those codes)
Security Alarm Leasing Companies 25% 7382
Paging 25% NAICS code 513321
Internet Service Providers ("ISP") 25% NAICS code 514191
Telecommunications towers 25% see definition page
E-Commerce 25% see definition page
Other 25% all other SIC codes not listed here
Any single sub-segment of Telecommunications 25% any one of the following, see
definition page:
CLEC
long-distance
ICP
ALEC (prepaid, calling
card)
Cellular and Other
Wireless Telecom
Other
Definitions
Telecommunication towers
Company involved in the leasing, construction, and/or management of
communications facilities in multi-tenant tower, antennae, rooftop facilities
over a geographic area.
7
E-Commerce
Company engaged in web-based or internet activities or providing web-based
or internet-related technology solutions to business entities.
CLEC (competitive local exchange companies)
Company providing local exchange services in competition with the incumbent
local exchange carrier (ILEC). Company may be facilities-based or may
resell local service provided by the ILEC. Company may provide other
services to complete the product offering, but the primary business is
local service.
Long distance
Company providing long distance services. The services may be facilities-
based or resold, or a combination of both. The company may provide other
services, but the primary revenue source is long distance.
ICP (integrated communications provider)
Company providing a broad range of telecommunications products to
customers. The services offered combine traditional local service, long
distance and wireless communications products. The services can be
facilities-based or resold, but most likely a combination of both.
ALEC (alternative local exchange companies)
Company providing prepaid local exchange services that are resold from the
LEC.
Cellular and other wireless telecom
See NAICS 513322
Other
All telecommunications entities not included in Paging, ISP,
Telecommunications towers, or the other identified sub-segments of the
Telecommunications.
(c) the sum of all commitments of the Originator for Commercial Loans to a
single Obligor shall not exceed $13,300,000 during the Ramp-up Period and
$20,000,000 thereafter;
(d) the aggregate Principal Balance of the six largest Eligible Loans
shall not exceed the greater of: (i) $ 90,000,000 or (ii) 40% of the AOLB;
(e) the average Principal Balance of the Eligible Loans shall not exceed
$8,000,000;
(f) the weighted average remaining term to maturity of the Eligible Loans
shall not exceed 6.5 years;
(g) the weighted average Risk Rating of the Eligible Loans shall not
exceed 5.75;
8
(h) the aggregate Principal Balance of Eligible Loans with a Risk Rating
of 7.00 shall not exceed 17.5% of the AOLB; and
(i) at all times following the Ramp-up Period, the Principal Balance
represented by Obligors in the same industry segment (as set forth in (b) above)
and having a Risk Rating of 7.00 shall not exceed 10.0% of the AOLB.
CORPORATE TRUST OFFICE: In the case of Owner Trustee: Wilmington Trust
----------------------
Company, Xxx Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention:
Corporate Trust Administration and in the case of the Indenture Trustee: Norwest
Bank Minnesota, National Association, Norwest Center, 6/th/ and Marquette
Streets, MAC# N931l-161, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Corporate
Trust Services-Asset Backed Administration, or at such other address as the
Owner Trustee or the Indenture Trustee may designate from time to time by notice
to the Issuer, or the principal corporate trust office of any successor Owner
Trustee or Indenture Trustee at the address designated by such successor by
notice to the Issuer.
CREDIT AND COLLECTION POLICY: The written credit and collection policies of
----------------------------
the Originator and the Servicer in effect on the Closing Date, as amended or
supplemented from time to time in accordance with Section 4.01(l) of the Sale
and Servicing Agreement.
CROSSOVER DATE: For each Series, the last day of its Revolving Period.
--------------
CURTAILMENT: With respect to a Commercial Loan, any payment of principal
-----------
received during a Due Period as part of a payment that is in excess of the
principal portion of the Scheduled Payment due for such Due Period and which is
not intended to satisfy the Commercial Loan in full, nor is intended to cure a
delinquency.
DEFAULT: Any occurrence which is or with the lapse of time or both would
-------
become an Event of Default as described in clauses (ii) through (vii) and (ix)
through (xi) of the definition thereof.
DEFINITIVE NOTES: Has the meaning specified in Section 4.02 of the
----------------
Indenture.
DELINQUENCY RATIO: As of any Determination Date, the percentage equivalent
-----------------
of a fraction, the numerator of which is the aggregate Principal Balance of the
Eligible Loans that are Delinquent Loans as of the last day of the immediately
preceding Due Period, and the denominator of which is the AOLB as of the first
day of the immediately preceding Due Period.
DELETED COMMERCIAL LOAN: A Commercial Loan replaced by a Qualified
-----------------------
Substitute Commercial Loan.
DELINQUENT LOAN: Any Commercial Loan (other than a Charged-Off Loan) as to
---------------
which the Obligor has failed to make any payment, or part thereof, required to
be made thereunder for sixty (60) days following the Due Date thereof (inclusive
of the 7 day grace period as allowed by the Credit and Collection Policy). If a
Delinquent Loan is restructured, it shall continue to be
9
deemed a Delinquent Loan unless and until all past due payments have been
received by the Servicer.
DESIGNATED DEPOSITORY INSTITUTION: An entity which is an institution whose
---------------------------------
deposits are insured by either the BIF or SAIF administered by the FDIC, the
unsecured and uncollateralized long-term debt obligations of which shall be
rated "A" or better by S&P and "A2" or better by Xxxxx'x, or one of the two
highest short-term ratings by S&P and the highest short-term rating by Xxxxx'x,
and which is either (i) a federal savings association duly organized, validly
existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
or (iv) a principal subsidiary of a bank holding company.
DETERMINATION DATE: That day of each month which is the second Business Day
------------------
prior to the 15th day of such month.
DTC: The Depository Trust Company, and its successors and assigns.
---
DTC CUSTODIAN: For each Series, the meaning set forth in the related Terms
-------------
Supplement.
DUE DATE: The day of the month on which the Scheduled Payment is due from
--------
the Obligor on a Commercial Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
----------
preceding the month in which such Remittance Date occurs.
ERISA: The Employee Retirement Income Security Act of 1974, as amended, or
-----
any successor legislation thereto.
ELIGIBLE LOAN: A Commercial Loan transferred to the Trust that satisfies
-------------
the requirements set forth in Section 3.02 of the Sale and Servicing Agreement.
ELIGIBLE DEPOSIT ACCOUNT: Either (a) a segregated account with a Designated
------------------------
Depository Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the States (or any domestic branch of a
foreign bank), having corporate trust powers and acting as trustee for funds
deposited in such account.
EVENT OF DEFAULT: 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) there occurs a default in the observance or performance of any
covenant or agreement of the Issuer made in the Indenture, or any
representation or warranty of the Issuer
10
made in the Indenture or any other Basic Document or in any certificate or
other writing delivered pursuant thereto or in connection therewith proving
to have been incorrect in any material respect as of the time when the same
shall have been made and such default or incorrect representation or
warranty has a material adverse effect on the rights of the Noteholders,
and such default shall continue or not be cured, or the circumstance or
condition in respect of which such representation or warranty was incorrect
shall not have been eliminated or otherwise cured, for a period of 30 days
(if such failure can be remedied) after the first to occur of (i) actual
knowledge thereof by a Responsible Officer of the Seller or (ii) there
shall have been given to the Issuer by the Indenture Trustee or to the
Issuer and the Indenture Trustee, by any Noteholder, 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
(ii) there occurs the filing of a decree or order for relief by a
court having jurisdiction in the premises in respect of the Seller, the
Issuer or any substantial part of the Trust Fund 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 Seller, the Issuer or for any substantial part of either Trust Fund,
or ordering the winding-up or liquidation of the Seller's or the Issuer's
affairs, and such decree or order shall remain unstayed and in effect for a
period of 30 consecutive days; or
(iii) there occurs the commencement by the Seller or 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
Seller or the Issuer to the entry of an order for relief in an involuntary
case under any such law, or the consent by the Seller or the Issuer to the
appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Seller or the
Issuer or for any substantial part of the assets of the Trust Fund, or the
making by the Seller or the Issuer of any general assignment for the
benefit of creditors, or the failure by the Seller or the Issuer generally
to pay its debts as such debts become due, or the taking of any action by
the Seller or the Issuer in furtherance of any of the foregoing; or
(iv) a Servicer Termination Event occurs and is continuing; or
(v) the SPC violates any provision of its Certificate of
Incorporation; or
(vi) the Transferor Interest falls below $0 and is not remedied
within 5 Business Days; or
(vii) (a) any Basic Document, or any lien or security interest granted
thereunder, shall (except in accordance with its terms), in whole or in
part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of the Seller, the Issuer, or the
Servicer, (b) the Seller, the Issuer or the Servicer shall contest in any
manner such effectiveness, validity, binding nature or enforceability or
(c) any security interest securing any obligation under any Basic Document
shall, in whole or in part, cease to be a perfected first priority security
interest except in accordance with its terms, and such failure
11
to have a perfected first priority security interest shall have a material
adverse effect on the Noteholders; or
(viii) the failure by the Seller duly to observe or perform, in any
material respect, any covenants, obligations or agreements of the Seller as
set forth in the Basic Documents, which failure continues unremedied for a
period of 30 days (if such failure can be remedied) after the earlier to
occur of (A) the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to a Responsible Officer of
the Seller by the Indenture Trustee or to a Responsible Officer of the
Seller and the Indenture Trustee by any Noteholder, Certificateholder or
Hedge Counterparty or (B) the date a Responsible Officer of the Seller
receives actual knowledge of such failure; or
(ix) the Originator or Servicer agrees or consents to, or otherwise
permits to occur, any amendment, modification, change, supplement or
recission of or to the Credit and Collection Policy, in whole or in part,
in any manner that could reasonably be expected to have a material adverse
effect on the Commercial Loans; or
(x) the Issuer shall become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or the
arrangements contemplated by the Basic Documents shall require registration
as an "investment company" within the meaning of the 40 Act.
EVENT OF PURCHASE TERMINATION: As defined in Section 6 of the Commercial
-----------------------------
Loan Sale Agreement.
EXPENSE ACCOUNT: The expense account established and maintained by the
---------------
Indenture Trustee pursuant to Section 5.03 of the Sale and Servicing Agreement.
EXPIRATION DATE: The last day on which Commercial Loans may be sold to the
---------------
Trust, which shall be the later of (i) the fifth Business Day preceding the day
on which the latest maturing Class of Notes enters its Amortization Period or
(ii) the occurrence of a Termination Event with respect to the Series 2000-l
Notes.
FACILITY LIMIT: The meaning set forth in the Terms Supplement relating to
--------------
the Series 2000-l Notes.
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 4.09 of the Sale and Servicing
-------------
Agreement.
FINAL MATURITY DATE: For any Series, the meaning set forth in the related
-------------------
Terms Supplement.
FIXED ALLOCATION PERCENTAGE: For each Series and on any date of
---------------------------
determination occurring during its Amortization Period, the percentage
equivalent of a fraction, the numerator of
12
which is the Invested Amount for such Series as of its Crossover Date, and the
denominator of which is the greater of (i) the daily weighted average Borrowing
Base during the prior Due Period or (ii) the sum of (a) the Invested Amount for
each Series in its Revolving Period, determined as of the last day of the prior
Due Period, (b) the Invested Amount for each Series in its Amortization Period,
determined as of its Crossover Date, and (c) the Transferor Interest, determined
as of the then applicable Transferor Interest Determination Date.
FLOATING ALLOCATION PERCENTAGE: For each Series and on any date of
------------------------------
determination occurring during its Revolving Period, the percentage equivalent
of a fraction, the numerator of which is the daily weighted average Invested
Amount for such Series during the prior Due Period, and the denominator of which
is the greater of (i) the daily weighted average Borrowing Base during the prior
Due Period or (ii) the sum of (a) the Invested Amount for each Series in its
Revolving Period, determined as of the last day of the prior Due Period, (b) the
Invested Amount for each Series in its Amortization Period, determined as of its
Crossover Date, and (c) the Transferor Interest, determined as of the then
applicable Transferor Interest Determination Date.
FNMA: The Federal National Mortgage Association and any successor thereto.
----
FORECLOSED PROPERTY: As described in Section 4.10 of the Sale and Servicing
-------------------
Agreement.
FORECLOSED PROPERTY DISPOSITION: The final sale of a Foreclosed Property
-------------------------------
acquired in foreclosure or by deed in lieu of foreclosure or of Repossessed
Collateral acquired by legal process. The proceeds of any Foreclosed Property
Disposition constitute part of the definition of Liquidation Proceeds.
FUNDING ACCOUNT: The Funding Account established in accordance with Section
---------------
5.04 of the Sale and Servicing Agreement and maintained by the Indenture
Trustee.
GRANT: Mortgage, pledge and xxxxx x xxxx upon and a security interest in
-----
pursuant to the Indenture. A Grant of 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, in accordance with the
Basic Documents, the immediate and continuing right to claim for, collect,
receive and give receipt for principal and interest payments in respect of such
collateral or other agreement or instrument 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.
HEDGE BREAKAGE COSTS: For any Hedge Transaction, any amount payable by the
--------------------
Issuer for the early termination of that Hedge Transaction or any portion
thereof.
HEDGE COUNTERPARTY: Any entity which (a) on the date of entering into any
------------------
Hedge Transaction is an interest rate swap dealer that has a long-term unsecured
debt rating of not less than "A" by S&P and not less than "A-2" by Moody's
("Long-term Rating Requirement") and a short-
13
term unsecured debt rating of not less than "A-l" by S&P and not less than "P-l"
by Moody's ("Short-term Rating Requirement"), (b) has executed and delivered to
the Indenture Trustee a written consent to the terms of the Basic Documents
applicable to the Hedge Counterparty, (c) in a Hedging Agreement (i) consents to
the assignment of the Issuer's rights under the Hedging Agreement to the
Indenture Trustee pursuant to the provisions of a Terms Supplement and (ii)
agrees that in the event that Moody's or S&P reduces its long-term unsecured
debt rating below the Long-term Rating Requirement, it shall transfer its rights
and obligations under each Hedging Transaction to another entity that meets the
requirements of clause (a), (b) and (c) hereof and has entered into a Hedging
Agreement with the Issuer on or prior to the date of such transfer.
HEDGE NOTIONAL AMOUNT: The aggregate notional amount in effect on any day
---------------------
under all Hedge Transactions entered into pursuant to a Terms Supplement.
HEDGE TRANSACTION: Each interest rate swap transaction between the Issuer
-----------------
and a Hedge Counterparty which is entered into pursuant to a Terms Supplement
and is governed by a Hedging Agreement.
HEDGING AGREEMENT: Each agreement between the Issuer and a Hedge
-----------------
Counterparty which governs one or more Hedge Transactions entered into pursuant
to a Terms Supplement, which agreement shall consist of a "Master Agreement" in
a form published by the International Swaps and Derivatives Association, Inc.,
together with a "Schedule" thereto in a form acceptable to the Indenture
Trustee, and each "Confirmation" thereunder confirming the specific terms of
each such Hedge Transaction.
HOLDER: Any of the Noteholders or Certificateholders.
------
INDENTURE: Collectively, the Master Indenture and any Terms Supplement,
---------
each as amended or supplemented from time to time.
INDENTURE TRUSTEE: Norwest Bank Minnesota, National Association, and its
-----------------
successors and assigns or any successor indenture trustee appointed pursuant to
the terms of the Indenture.
INDENTURE TRUSTEE'S DOCUMENT FILE: As defined in Section 2.04 on the
---------------------------------
Sale and Servicing Agreement.
INDEPENDENT: When used with respect to any specified Person, the Person (i)
-----------
is in fact independent of the Issuer, any other obligor on the Notes, the Seller
and any Affiliate of any of the foregoing Persons, (ii) 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 (iii) 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.
INDIVIDUAL NOTE: Any Note registered in the name of a holder.
---------------
14
INELIGIBLE LOAN: A Commercial Loan that does not satisfy the requirements
---------------
set forth in Section 3.02 of the Sale and Servicing Agreement.
INITIAL ALLOCATED AMOUNT: As defined in Section 5.07(b) of the Sale and
------------------------
Servicing Agreement.
INSTITUTIONAL ACCREDITED INVESTOR: Any Person meeting the requirements of
---------------------------------
Rule 501 (a) (1) - (3) or (7) of Regulation D under the Securities Act.
INSTITUTIONAL OWNER: (a) GS Capital Partner II, L.P., GS Capital Partners
-------------------
II Offshore, L.P., Xxxxxxx, Sachs & Co. Xxxxxxxxxxx, XxxX, Xxxxx Xxxxxx Xxxx
0000, L.P., and Bridge Street Fund 1998, L.P. (collectively, the "GS Owners"),
(b) Quantum Industrial Partners, L.D.C. and BFM Domestic Investments, LLC
(collectively, the "Xxxxx Owners"), (c) Vestar Capital Partners IV, L.P.
(collectively, the "Vestar Owners), (d) any pooled investment vehicle or
investment fund organized by or the investments of which are directed by Xxxxxxx
Sachs Group, L.P., Xxxxx Private Equity Partners, L.P., Vestar Capital Parners
IV, L.P. or any respective affiliate, partner, officer or employee of any
thereof, (e) First Union Corporation, (f) Xxxxxx Financial, Inc., and (g) any
successor or assignee of any such entity's equity interest in the Servicer or
Originator that is permitted under Servicer's or Originator's organic documents.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any insurance
------------------
policy covering a Commercial Loan, Collateral, Repossessed Collateral or
Foreclosed Property, including but not limited to title, hazard, life and/or
accident insurance policies.
INTEREST ACCRUAL PERIOD: With respect to each Remittance Date and each
-----------------------
Series, the period set forth in the related Trust Supplement.
INTEREST COLLECTIONS: All Collections received by the Servicer or a
--------------------
Subservicer and not constituting Principal Collections.
INTEREST DISTRIBUTION AMOUNT: With respect to each Remittance Date and any
----------------------------
Series or Class, the meaning set forth in the related Terms Supplement.
INTEREST RATE: For any Series or Class, the meaning set forth in the
-------------
related Terms Supplement.
INVESTED AMOUNT: For each Series, the Outstanding Amount of all Notes of
---------------
such Series, plus the outstanding principal balance of any Certificates issued
in connection with such Series having a principal balance.
INVESTMENT COMPANY ACT: The Investment Company Act of 1940, as amended.
----------------------
ISSUER: MCG Master Trust, a Delaware business trust.
------
15
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 or
by the Servicer on behalf of the Issuer.
LETTER OF REPRESENTATION: For each Series, the meaning set forth in
------------------------
the related Terms Supplement.
LIEN: Any mortgage, lien, pledge, charge, security interest or
----
encumbrance of any kind.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds of
--------------------
any Foreclosed Property Disposition, revenues received with respect to the
conservation and disposition of a Foreclosed Property, and any other amounts
received by the Servicer or Issuer in connection with the liquidation of
defaulted Commercial Loans, whether through trustee's sale, foreclosure sale or
otherwise.
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Certificates
---------------------------
evidencing an aggregate Percentage Interest in excess of 50%.
MAJORITY NOTEHOLDERS: The Holder or Holders of Notes evidencing an
--------------------
Outstanding Amount in excess of 50% of the Outstanding Amount of all Notes.
MASTER INDENTURE: The indenture dated as of June 1,2000, between the
----------------
Issuer and Norwest Bank Minnesota, National Association, as the same may be
amended or supplemented from time to time.
MATERIAL MORTGAGE LOAN: Any Commercial Loan for which the underlying
----------------------
Collateral consisting of real property is either (i) material to the operations
of the related business or (ii) 25% or more (measured by the book value of the
three most valuable parcels of real property as of the date of such Mortgage) of
the original commitment for such Commercial Loan.
MATURITY DATE: The latest Final Maturity Date for all Series.
-------------
MINIMUM SUBORDINATION AMOUNT: For any Series, the amount set forth in
----------------------------
the related Terms Supplement.
MOODY'S: Xxxxx'x Investors Service, Inc. or any successor thereto.
-------
MORTGAGE: The mortgage, deed of trust or other instrument creating a
--------
lien on a Mortgaged Property.
MORTGAGED PROPERTY: The underlying real property, if any, secured
------------------
under a Material Mortgage Loan, and any improvements thereon, which property
satisfies either test in the definition of Material Mortgage Loan.
NET LIOUIDATION PROCEEDS: Liquidation Proceeds net of (i) any
------------------------
reimbursements to the Servicer made therefrom pursuant to Section 4.04(b) of the
Sale and Servicing Agreement and
16
(ii) amounts required to be released to other creditors or the related Obligor
pursuant to applicable law or the governing loan documents.
1933 ACT: The Securities Act of 1933, as amended.
--------
NOTE DISTRIBUTION ACCOUNT: The note distribution account established
-------------------------
by the Indenture Trustee pursuant to Section 5.01 of the Sale and Servicing
Agreement.
NOTEHOLDER or HOLDER: Each Person in whose name a Note is registered
--------------------
in the Note Register, except that, solely for the purposes of giving any
consent, waiver, request or demand pursuant to the Indenture or the Agreement,
any Note registered in the name of the Seller, the Servicer, any Subservicer or
any Affiliate of any of them, shall be deemed not to be outstanding and the
undivided Percentage Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Notes necessary to effect any
such consent, waiver, request or demand has been obtained unless all the Notes
are then owned by the Seller, the Subservicer, any Subservicer or any Affiliate
of any of them.
NOTE DEPOSITORY AGREEMENTS means, with respect to any Series of Notes,
--------------------------
the agreement dated as of the Closing Date relating to the Notes of such Series,
in each case among the Issuer, the Indenture Trustee, and The Depository Trust
Company, as the initial Securities Depository.
NOTE OWNER means, with respect to a Book-Entry Note, the Person who is
----------
the owner of such Book-Entry Note, as reflected on the books of the Securities
Depository, or on the books of a Person maintaining an account with such
Securities Depository (directly as a Securities Depository Participant or as an
indirect participant, in each case in accordance with the rules of such
Securities Depository).
NOTE REGISTER: The Note Register established and maintained in
-------------
accordance with the Indenture.
NOTE REGISTRAR: The Indenture Trustee, in its capacity as Note
--------------
Registrar.
NOTES: Any Class or Series of Notes issued by the Issuer pursuant to
-----
the Indenture.
OBLIGOR: The borrower(s) on a Commercial Loan Note.
-------
OCC: The Office of the Comptroller of the Currency.
---
OFFICER'S CERTIFICATE: A certificate delivered to the Indenture
---------------------
Trustee signed by the Chairman of the Board, the President, an Executive Vice
President, a Senior Vice President, a Vice President, the Treasurer, the
Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the
Seller, the Servicer, or the Owner Trustee (or another Person) on behalf of the
Issuer, as required by this Agreement.
17
OPINION or OPINION OF COUNSEL: A written opinion of counsel, who may,
-----------------------------
without limitation, be counsel for the Seller or Servicer, reasonably acceptable
to the Indenture Trustee and experienced in matters relating thereto.
OPTIONAL REDEMPTION: The option of the Issuer to redeem one or more
-------------------
Series of Notes, in whole or in part, pursuant to the terms set forth in a Terms
Supplement.
OPTIONAL TERMINATION DATE: As defined in Section 10.01 of the Sale and
-------------------------
Servicing Agreement.
ORIGINATOR: MCG Credit Corporation, a Delaware corporation, and its
----------
successors and assigns.
OUTSTANDING: As of the date of determination, all Notes theretofore
-----------
executed, authenticated and delivered under the Indenture except:
(1) Notes in exchange for or in lieu of which other Notes have
been executed, authenticated and delivered pursuant to the Indenture
unless proof satisfactory to the Indenture Trustee and the Issuer is
presented that any such Notes are held by a holder in due course; and
(ii) Notes theretofore canceled by the Note Registrar or
delivered to the Indenture Trustee for cancellation.
OUTSTANDING AMOUNT: The aggregate principal amount of the Notes
------------------
Outstanding on any day of determination.
OWNER: Each Holder of a Note.
OWNER TRUST ESTATE: All right, title and interest of the Trust in and
------------------
to the property and rights assigned to the Trust pursuant to the Sale and
Servicing Agreement, all funds on deposit from time to time in the Accounts and
all other property of the Trust from time to time, including any rights of the
Owner Trustee and the Trust pursuant to the Basic Documents.
OWNER TRUSTEE: Wilmington Trust Company, a Delaware trust company, not
-------------
in its individual capacity but solely as owner trustee under the Trust
Agreement, and any successor Owner Trustee thereunder.
PAYING AGENT: With respect to the Notes, any paying agent or co-paying
------------
agent appointed pursuant to Section 3.03 of the Indenture, which initially shall
be the Indenture Trustee. With respect to the Certificates, any paying agent or
co-paying agent appointed pursuant to Section 3.09 of the Trust Agreement which
initially shall be Norwest Bank Minnesota, National Association.
PERCENTAGE INTEREST: With respect to the Notes of a Series, the
-------------------
fraction, expressed as a percentage, the numerator of which is the then current
denomination represented by such Note
18
and the denominator of which is the Outstanding Amount for the Notes of such
Series. With respect to all the Notes, the fraction, expressed as percentage,
the numerator of which is the then current denomination represented by such
Note, and the denominator of which is the Outstanding Amount for all Notes. With
respect to a Certificate, the percentage set forth on the face thereof.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments shall
---------------------
include the following:
(i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and
credit of the United States, FHA debentures, Federal Home Loan Bank
consolidated senior debt obligations, and FNMA senior debt
obligations, but excluding any of such securities whose terms do not
provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(ii) federal funds, certificates of deposit, time deposits and
banker's acceptances (having original maturities of not more than 365
days) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisition
thereof have been rated Prime-l or better by Moody's and A-l or better
by S&P;
(iii) deposits of any bank or savings and loan association which
has combined capital, surplus and undivided profits of at least
$3,000,000 which deposits are held only up to the limits insured by
the BIF or SAIF administered by the FDIC, provided that the unsecured
long-term debt obligations of such bank or savings and loan
association have been rated A2 or better by Moody's and A or better by
S&P;
(iv) commercial paper (having original maturities of not more
than 365 days) rated Prime-l or better by Moody's and A-l or better by
S&P;
(v) debt obligations rated Aaa by Moody's and AM by S&P (other
than any such obligations that do not have a fixed par value and/or
whose terms do not promise a fixed dollar amount at maturity or call
date);
(vi) investments in money market funds rated Aaa by Moody's and
AAA by S&P, the assets of which are invested solely in instruments
described in clauses (i)-(v) above including, without limitation, any
fund which the Indenture Trustee or an affiliate of the Indenture
Trustee serves as an investment advisor, administrator, shareholder,
servicing agent and/or custodian or sub-custodian, notwithstanding
that (a) the Indenture Trustee or an affiliate of the Indenture
Trustee charges and collects fees and expenses from such funds for
services rendered, (b) the Indenture Trustee charges and collects fees
and expenses for services rendered pursuant to this Agreement, and (c)
services performed for such funds and pursuant to this Agreement may
converge at any time (the parties hereto specifically authorize the
Indenture Trustee or an affiliate of the Indenture Trustee to charge
and collect all fees and expenses from such funds for services
rendered to such funds, in addition to any
19
fees and expenses the Indenture Trustee may charge and collect for services
rendered pursuant to the Indenture and the Sale and Servicing Agreement);
and
(vii) any other investment satisfying the Rating Agency Condition,
written confirmation of which shall be furnished to the Indenture Trustee
prior to any such investment.
PERSON: Any individual, corporation, partnership, limited liability
------
company, limited liability partnership, joint venture, association, joint-stock
company, trust, national banking association, unincorporated organization or
government or any agency or political subdivision thereof or any other entity.
PORTFOLIO YIELD: As of any Determination Date, the product of (i) 12 and
---------------
(ii) the percentage equivalent of a fraction, the numerator of which is equal to
the aggregate Interest Collections during the immediately preceding Due Period,
net of the Servicing Fee, the aggregate Interest Distribution Amount and any
similar amount that may be set forth in a Terms Supplement, and the denominator
of which is equal to the AOLB as of the first day of the immediately preceding
Due Period.
POTENTIAL TERMINATION EVENT: For each Series, the meaning set forth in the
---------------------------
related Terms Supplement.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
------------------------------
established by the Servicer pursuant to Section 4.03 of the Sale and Servicing
Agreement.
PRINCIPAL BALANCE: With respect to any Commercial Loan or related
-----------------
Foreclosed Property or Repossessed Collateral, at any date of determination, (i)
the principal balance of the Commercial Loan outstanding as of the date it is
transferred to the Trust, after application of principal payments received on or
before such date, plus (ii) any Additional Fundings made by the Originator with
----
respect to such Commercial Loan after the date it is transferred to the Trust,
minus (iii) the sum of (a) the principal portion of the Scheduled Payments
-----
received during each Due Period ending prior to the most recent Remittance Date,
and (b) all other Principal Collections to the extent applied by the Servicer as
recoveries of principal. The Principal Balance of a Charged-Off Loan or any
Commercial Loan that has paid off shall equal $0.
PRINCIPAL COLLECTIONS: All Collections received by the Servicer or a
---------------------
Subservicer and applied to reduce the Principal Balance of a Commercial Loan in
accordance with the Credit and Collection Policy.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
--------------------
Commercial Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a
Commercial Loan in full.
PROCEEDING: Any suit in equity, action at law or other judicial or
----------
administrative proceeding.
20
QUALIFIED INSTITUTIONAL BUYER: As used herein, has the meaning ascribed to
-----------------------------
such term in Rule 144A under the Securities Act.
QUALIFIED SUBSTITUTE COMMERCIAL LOAN: A commercial loan or commercial loans
------------------------------------
substituted for a Deleted Commercial Loan pursuant to Section 2.05, 2.10 or 3.03
of the Sale and Servicing Agreement, which (i) 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 greater than the Principal Balance as of
such date of the Deleted Commercial Loan, (ii) is an Eligible Loan and (iii)
does not cause the Subordination Amount for any Series to be less than the
Minimum Subordination Amount for such Series.
RAMP-UP PERIOD: The period beginning on the Closing Date and ending on the
--------------
earlier of (i) the date on which the AOLB first reaches $ 140,000,000 or (ii)
November 30, 2000.
RATING AGENCIES: Any nationally recognized statistical rating organization
---------------
that has been requested by the Originator to rate a Class of Notes.
RATING AGENCY CONDITION: With respect to any action, that each Rating
-----------------------
Agency rating a Class of Notes shall have notified the Seller, the Servicer, the
Owner Trustee and the Indenture Trustee in writing that such action will not
result in and of itself in a reduction or withdrawal of the then current rating
of any Class of Notes.
RECORD DATE: With respect to any Remittance Date, the close of business on
-----------
the last day of the month immediately preceding the month of the related
Remittance Date.
REDEMPTION DATE: In the case of a redemption of the Notes pursuant to
---------------
Section 10.01 of the Indenture, the Remittance Date specified by the Servicer or
the Issuer pursuant to Section 10.01 of the Indenture.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount payable
--------------------
to the Servicer and/or the Seller with respect to (i) the Servicing Advances
reimbursable pursuant to Section 4.04(b) of the Sale and Servicing Agreement,
(ii) any advances reimbursable pursuant to Section 8.01 of the Sale and
Servicing Agreement, and (iii) any other amounts reimbursable to the Servicer or
the Seller pursuant to the Sale and Servicing Agreement.
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any Commercial Loan secured by
------------------------------------
a Mortgaged Property, proceeds received by the Servicer in connection with (a) a
taking of an entire Mortgaged Property by exercise of the power of eminent
domain or condemnation or (b) any release of part of the Mortgaged Property from
the lien of the related Mortgage, whether by partial condemnation, sale or
otherwise, which is not released to the Obligor or another creditor in
accordance with applicable law, the governing documents, the Credit and
Collection Policy and the Sale and Servicing Agreement.
REMITTANCE DATE: The 15th day of any month or if such 15th day is not a
---------------
Business Day, the first Business Day immediately following, commencing the month
immediately succeeding the month the first advance is made under the Series
2000-l Notes.
21
REO PROPERTY: Real estate property taken in the name of the Trust as a
------------
result of foreclosure on a Mortgaged Property securing a Material Mortgage Loan.
REPOSSESSED COLLATERAL: Items of Collateral taken in the name of the
----------------------
Trust as a result of legal action enforcing the lien on the Collateral resulting
from a default on the related Commercial Loan.
REPURCHASE PRICE: For each Commercial Loan, the Principal Balance thereof
----------------
being repurchased as of the date of repurchase, together with the allocable
portion of all accrued but unpaid interest thereon at the applicable Commercial
Loan Interest Rate.
REPURCHASED COMMERCIAL LOAN: As defined in Exhibit B to the Commercial Loan
---------------------------
Sale Agreement.
RESPONSIBLE OFFICER: When used with respect to the Owner Trustee or the
-------------------
Indenture Trustee, any officer assigned to the Corporate Trust Office, including
any Vice President, Assistant Vice President, any Assistant Secretary, any trust
officer or any other officer of the Owner Trustee or 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
Seller or the Servicer, the President, any Vice President, Assistant Vice
President, or any Secretary or Assistant Secretary; provided, however, where any
provision of the Basic Documents requires a Responsible Officer to receive
notice or have certain knowledge, such provision will be effective with respect
to the Seller or the Servicer only if its respective president, chief financial
officer, executive vice president or general counsel receives such notice or has
such knowledge.
RETAINED INTEREST: With respect to any Commercial Loan that is transferred
-----------------
by the Originator to the Seller and/or by the Seller to the Trust, the following
interests, rights and obligations in such loan and under the associated
documentation, which are being retained by the Originator: (1) all of the
obligations, if any, to provide additional funding with respect to such
Commercial Loan, and (2) all of the rights and obligations, if any, of the
---
agent(s) under the documentation evidencing such Commercial Loan, and (3) the
---
applicable portion of the interests, rights and obligations under the
documentation evidencing such Commercial Loan that relate to such portion(s) of
the indebtedness that is owned by another lender or is being retained by the
Originator as set forth on the Commercial Loan Schedule, and (4) any unused,
---
commitment or similar fees associated with the additional funding obligations
that are not being transferred in accordance with Clause "(1)" above, and (5)
---
any agency or similar fees associated with the rights and obligations of the
agent that are not being transferred in accordance with Clause "(2)" above, and
---
(6) the right to collect as reimbursement from such Obligor(s) any amounts paid
under Sections 2.4 and 2.5 of the Note Purchase Agreement (or under similar
provisions of the other Basic Documents), and (7) the right to collect from
---
such Obligor(s) the fees and expense reimbursements associated with the
---
preparation, negotiation, execution, perfection and documentation of such
Commercial Loan, the associated Collateral therefor, and any subsequent
amendments, waivers, consents and restructuring thereof.
22
REVOLVING PERIOD: For any Series, the meaning set forth in the related
----------------
Terms Supplement.
RISK RATING: The internal rating assigned to a Commercial Loan from time to
-----------
time pursuant to the Credit and Collection Policy.
RULE 144A CERTIFICATION: A letter substantially in the form attached to the
-----------------------
Indenture as Exhibit D.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
----
SALE: As defined in Section 5.15 of the Master Indenture.
----
SALE ASSIGNMENT: Each assignment substantially in the form of Exhibit A to
---------------
the Commercial Loan Sale Agreement.
SALE AND SERVICING AGREEMENT: The Sale and Servicing Agreement, dated as
----------------------------
of June 1, 2000, among the Trust, the Seller and MCG Credit Corporation, as an
Originator and as the Servicer, as the same may be amended or supplemented from
time to time.
SCHEDULED PAYMENT: The scheduled payment of principal and/or interest
-----------------
required to be made by an Obligor on the related Commercial Loan, as adjusted
pursuant to the terms of the related Commercial Loan Note and related loan
documents.
SECURED PARTY: Any Certificateholder, any Noteholder and any Hedge
-------------
Counterparty.
SECURITIES ACT: The Securities Act of 1933, as amended.
--------------
SECURITIES DEPOSITORY: An organization registered as a "clearing agency"
---------------------
pursuant to Section 17A of the Securities Exchange-Act of 1934, as amended.
SECURITIES DEPOSITORY PARTICIPANT : A broker, dealer, bank, other
---------------------------------
financial institution or other Person for whom from time to time a Securities
Depository effects book-entry transfers and pledges of securities deposited with
the Securities Depository.
SECURITIES LEGEND: "THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
-----------------
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING
THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS
AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A
PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A (A "QIB") PURCHASING FOR ITS OWN ACCOUNT OR A
QIB PURCHASING FOR THE ACCOUNT OF A QIB,
23
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (WITHIN THE MEANING OF RULE 501(a)(l)-(3) OR (7) UNDER THE
SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE INDENTURE TRUSTEE OF A
LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE INDENTURE AND (B) THE RECEIPT
BY THE INDENTURE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE INDENTURE
TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE SKY LAWS
OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, (3)
PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (4) PURSUANT TO A VALID
REGISTRATION STATEMENT."
SELLER: MCG Finance Corporation II, a Delaware corporation, and its
------
successors and assigns.
SERIES: Any Series of Notes, each as designated in the related Terms
------
Supplement, and any Certificates having a principal balance issued in connection
with such Notes.
SERIES NOTE DISTRIBUTION ACCOUNT: For each Series, the account established
--------------------------------
in the related Terms Supplement pursuant to which distributions are made.
SERIES 2000-l NOTES: The Notes designated as such in the Terms Supplement
-------------------
dated as of June 1, 2000.
SERVICER: MCG Credit Corporation, a Delaware corporation, and its
--------
successors and assigns as Servicer under the Sale and Servicing Agreement.
SERVICER'S CERTIFICATE: The certificate as defined in Section 5.09 of the
----------------------
Sale and Servicing Agreement.
SERVICER TERMINATION EVENT: As defined in Section 9.01 of the Sale and
--------------------------
Servicing Agreement.
SERVICING ADVANCES: All reasonable and customary "out-of-pocket" costs and
------------------
expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Collateral, (ii) any enforcement or judicial
proceedings, including foreclosures, (iii) the management and liquidation of the
Foreclosed Property or Repossessed Collateral, (iv) compliance with the
obligations of Sections 4.02 and 4.07 of the Sale and Servicing Agreement, which
Servicing Advances are reimbursable to the Servicer to the extent provided in
Section 4.04(b) of the Sale and Servicing Agreement and (v) in connection with
the liquidation of a Commercial Loan, for all of which costs
24
and expenses the Servicer is entitled to reimbursement thereon up to a maximum
rate per annum equal to the related Commercial Loan Interest Rate.
SERVICING FEE: As to each Commercial Loan, the annual fee payable to the
-------------
Servicer. Such fee shall be calculated and payable monthly at the rate of 1.00%
per annum on the aggregate Principal Balance of the Commercial Loans. The
Servicing Fee includes any servicing fees owed or payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer involved in, or responsible
-----------------
for, the administration and servicing of the Commercial Loans whose name appears
on a list of servicing officers furnished to the Indenture Trustee by the
Servicer, as such list may from time to time be amended.
S&P: Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx
---
Companies, Inc., or any successor thereto.
SPC: MCG Finance Corporation II, a Delaware corporation, and its permitted
---
successors and assigns.
SUBORDINATION AMOUNT: For any Series, the amount set forth in the related
--------------------
Terms Supplement.
SUBSERVICER: Any person with whom the Servicer has entered into a
-----------
Subservicing Agreement and who satisfies any requirements set forth in Section
4.01(a) of the Sale and Servicing Agreement in respect of the qualification of a
Subservicer.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
----------------------
Subservicer relating to subservicing and/or administration of certain Commercial
Loans as provided in the Sale and Servicing Agreement, a copy of which shall be
delivered, along with any modifications thereto, to the Indenture Trustee.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
-----------------------
pursuant to Sections 2.05, 2.10 or 3.03 of the Sale and Servicing Agreement, the
amount (if any) by which the aggregate Principal Balances (after application of
principal payments received on or before the date of substitution) of any
Qualified Substitute Commercial Loans as of the date of substitution are less
than the aggregate of the Principal Balances of the related Deleted Commercial
Loans.
SUPPLEMENTAL INTERESTS: Warrants or other similar interests received by
----------------------
the Originator (other than those purchased by the Originator for fair market
value) as consideration for originating a Commercial Loan described in clause
(i) of the definition thereof and transferred to the Seller pursuant to the
Commercial Loan Sale Agreement.
TAX RETURN: The federal income tax return to be filed on behalf of the
----------
Trust together with any and all other information reports or returns that may be
required to be furnished to the Noteholders or Certificateholders or filed with
the Internal Revenue Service or any other governmental taxing authority under
any applicable provision of federal, state or local tax laws.
25
TERMINATION DATE: For any Series, the date set forth in the related Terms
----------------
Supplement.
TERMINATION EVENT: For each Series, the meaning set forth in the related
-----------------
Terms Supplement.
TERMINATION PRICE: The price defined in Section 10.01 of the Sale and
-----------------
Servicing Agreement.
TERMS SUPPLEMENT: Each supplement to the Indenture that authorizes a
----------------
particular Series of Notes, as the same may be amended or supplemented from time
to time.
TRANSFER DATE: Each date prior to the Termination Date on which the Seller
-------------
transfers Commercial Loans, or portions thereof, to the Trust.
TRANSFEREE LETTER: The letter set forth in Exhibit D to the Indenture.
-----------------
TRANSFEROR INTEREST: As of any date of determination, an amount equal to
-------------------
the Borrowing Base minus the Aggregate Invested Amount.
TRANSFEROR INTEREST ACCOUNT: The transferor interest account established
---------------------------
pursuant to Section 5.02 of the Sale and Servicing Agreement.
TRANSFEROR INTEREST DETERMINATION DATE: For purposes of calculating the
--------------------------------------
Fixed Allocation Percentage and the Floating Allocation Percentage (i) if each
Series is in its Revolving Period, the Transferor Interest Determination Date
shall be the last day of the Due Period immediately preceding the date for which
such percentages are being calculated and (ii) if one or more Series are in an
Amortization Period, the Transferor Interest Determination Date shall be the
Crossover Date for the outstanding Series that first entered its Amortization
Period.
TRANSFEROR INTEREST PERCENTAGE: For any date of determination, the
------------------------------
difference between (i) 100% and (ii) the sum of the Fixed Allocation Percentages
and the Floating Allocation Percentages for each Series as of such date.
TRUST: MCG Master Trust, a Delaware business trust.
-----
TRUST AGREEMENT: The Trust Agreement dated as of June 1, 2000 between the
---------------
Owner Trustee and the Seller, as the same may be amended or supplemented from
time to time.
TRUST CERTIFICATE: A certificate evidencing the beneficial interest of a
-----------------
Certificateholder in the Trust, substantially in the form of Exhibit A attached
to the Trust Agreement.
TRUST COMPANY: Wilmington Trust Company, a Delaware trust company (and
-------------
any successor thereto or assign thereof), in its individual capacity, and any
other Person who shall act as Owner Trustee under the Trust Agreement, in its
individual capacity.
26
TRUST FUND: The segregated pool of assets constituting the assets of
----------
the Trust, consisting of: (i) the Commercial Loans as from time to time are
subject to the Sale and Servicing Agreement, together with the Commercial Loan
Files relating thereto and all proceeds thereof, (ii) such assets (including any
Permitted Instruments) as from time to time are identified as Foreclosed
Property, Repossessed Collateral or are deposited in or constitute the Note
Distribution Account, (iii) any Insurance Proceeds under all insurance policies
with respect to the Commercial Loans required to be maintained pursuant to the
Sale and Servicing Agreement, (iv) any Liquidation Proceeds, (v) any Released
Mortgaged Property Proceeds, including all earnings thereon and proceeds
thereof, (vi) amounts on deposit in the Principal and Interest Account, Funding
Account and Note Distribution Account and (vii) all rights of the Seller under
each Commercial Loan Sale Agreement and the Issuer under the Sale and Servicing
Agreement.
TRUST INDENTURE ACT or TIA: The Trust Indenture Act of 1939, as
--------------------------
amended from time to time, as in effect on any relevant date.
UCC: The Uniform Commercial Code, as amended from time to time, as in
---
effect in any specified jurisdiction.
27
AMENDMENT NO. 1
TO
SALE AND SERVICING AGREEMENT
AMENDMENT NO. 1, dated as of September 1, 2000, among MCG Master Trust
(the "Trust"), MCG Finance Corporation II, as Seller, and MCG Credit
Corporation, as Originator and Servicer, to that certain Sale and Servicing
Agreement dated as of June 1, 2000 (the "Sale and Servicing Agreement") among
the Trust, the Seller, the Originator and the Servicer.
WHEREAS, the Trust, the Seller, the Originator and the Servicer
entered into the Sale and Servicing Agreement in connection with the issuance by
the Trust of the MCG Master Trust Notes; and
WHEREAS, Section 11.02(b) of the Sale and Servicing Agreement permits
the Sale and Servicing Agreement to be amended from time to time pursuant to the
conditions set forth therein; and
WHEREAS, the parties hereto wish to amend the Sale and Servicing
Agreement as set forth herein;
NOW THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in Appendix A to the Sale and Servicing Agreement.
2. The definition of "Borrowing Base" contained in Appendix A to the
Sale and Servicing Agreement is hereby amended by inserting the following at
the end of such definition: "and, until the first to occur of (i) the
Series 2000-1 Notes are no longer Outstanding or (ii) the Trust issues another
Series of Notes, minus the aggregate Principal Balance of all Commercial Loans
-----
with a Risk Rating of 6.00 or 7.00 that the Deal Agent (as defined in the Terms
Supplement relating to the Series 2000-1 Notes) advises the Seller and the
Servicer are to be excluded from the Borrowing Base as a result of, in the
judgment of the Deal Agent (a) such Commercial Loan having been assigned an
incorrect Risk Rating by the Originator or (b) the occurrence of an adverse
event that could reasonably be expected to have a material adverse effect on the
ability of the Servicer to collect the entire principal and interest due on such
Commercial Loan." Notwithstanding the foregoing, any principal balance excluded
from the Borrowing Base as a result of either caveat at the end of the
immediately preceding sentence may be re-included in the Borrowing Base to the
extent otherwise then permitted under this definition once the rationale for
such exclusion no longer exists.
3. Except as otherwise set forth herein, the Sale and Servicing
Agreement shall continue in full force and effect in accordance with its terms.
(1)
4. This Amendment No. 1 may be executed in one or more counterparts,
each of which, when so executed, shall be deemed an original; such counterparts,
together, shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
the Sale and Servicing Agreement as of the day and year first above written.
MCG MASTER TRUST
By: MCG CREDIT CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
______________________
Name: Xxxxxx X. Xxxxxx
Title: COO & EVP
MCG FINANCE CORPORATION II, as
Seller
By: /s/ Xxxxxx X. Xxxxxx
______________________
Name: Xxxxxx X. Xxxxxx
Title: COO & EVP
MCG CREDIT CORPORATION, as
Originator and Servicer
By: /s/ Xxxxxx X. Xxxxxx
______________________
Name: Xxxxxx X. Xxxxxx
Title: COO & EVP
(2)
CONSENTED TO:
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
formerly known as Norwest Bank Minnesota, National Association,
not in its individual capacity but solely as Indenture Trustee
By: /s/ Xxxxxx Xxxxxxxxx
______________________________
Name: Xxxxxx Xxxxxxxxx
Title: Corporate Trust Officer
FIRST UNION SECURITIES, INC.,
as Administrative Agent
By: /s/ Xxxxxxx X. Xxxxx
______________________________
Name: Xxxxxxx X. Xxxxx
Title: Vice President
VARIABLE FUNDING CAPITAL CORPORATION,
as Sole Noteholder
By: FIRST UNION SECURITIES, INC.,
As attorney-in-fact
By: /s/ Xxxxxxx X. Xxxxx
______________________________
Name: Xxxxxxx X. Xxxxx
Title: Director
(3)
AMENDMENT NO. 2
TO
SALE AND SERVICING AGREEMENT
AMENDMENT NO. 2 dated as of June 6, 2001, among MCG Master Trust (the
"Trust"), MCG Finance Corporation II, as Seller, and MCG Credit Corporation, as
Originator and Servicer, to that certain Sale and Servicing Agreement dated as
of June 1, 2000 (as amended by Amendment No. 1 thereto, the "Sale and Servicing
Agreement") among the Trust, the Seller, the Originator and the Servicer.
WHEREAS, the Trust, the Seller, the Originator and the Servicer entered
into the Sale and Servicing Agreement in connection with the issuance by the
Trust of the MCG Master Trust Notes; and
WHEREAS, Section 11.02(b) of the Sale and Servicing Agreement permits the
Sale and Servicing Agreement to be amended from time to time pursuant to the
conditions set forth therein; and
WHEREAS, the parties hereto wish to amend the Sale and Servicing Agreement
as set forth herein;
NOW THEREFORE, in consideration of the above premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed thereto in Appendix A to the Sale and Servicing Agreement.
2. Section 2.04 is hereby amended in its entirety to read as set forth
on Annex A hereto.
3. Section 2.05(a) is hereby amended by (x) deleting the phrase "and IV"
appearing in the first sentence thereof and (y) replacing the phrase "pursuant
to Section 2.04 III, V and VI" appearing in the second sentence thereof with the
phrase "pursuant to Section 2.04 III and IV".
4. Section 2.10 is hereby amended by replacing the phrase "on the next
succeeding Determination Date" appearing in the fourth line thereof with the
phrase "no later than the next succeeding Determination Date".
5. Section 3.02(h) is hereby amended by inserting after the phrase "As of
its Transfer Date" the phrase "unless the Majority Noteholders consent".
6. Section 3.02(l) is hereby amended by adding the following at the end
thereof:
; provided, however, that if the Originator funds a Commercial
Loan in multiple installments, there may be one originally signed
Commercial Loan Note for each installment;
7. Section 3.02 is hereby amended by adding the following after clause
(jj):
In addition to satisfying the foregoing representations and warranties,
each Commercial Loan described in clause (i) and (iii) of the definition thereof
that is transferred to the Trust on or after June 6, 2001, shall either (x) have
been originated on or after June 6, 2001 or (y) have a Risk Rating of 5 or
better and, in the case of this clause (y), First Union Securities, Inc. shall
have approved the transfer of such Commercial Loan to the Trust.
8. Section 9.01(a)(viii) is hereby amended in its entirety to read as
follows:
(viii)(I) prior to the date that the Servicer consummates the initial
public offering of its common stock, either (A) Xxxxxx X. Xxxxxxx ceases to be
actively involved in the credit decisions of the Servicer (which, with respect
to Xx. Xxxxxxx, shall mean involvement in credit decisions) (unless waived by
the Majority Noteholders, which waiver may be granted or withheld in their sole
discretion) or (B) any of the following ceases to be actively involved in the
management of the Servicer (unless waived by the Majority Noteholders, which
waiver will not be unreasonably withheld): Xxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx
or X. Xxxxx Xxxxxxx and (II) on and after the date that the Servicer consummates
the initial public offering of its common stock, any two of Messrs. Merrick,
Mitchell, Xxxxxx or Xxxxxxx ceases to be actively involved in the management of
the Servicer (which, with respect to Xx. Xxxxxxx, shall mean involvement in
credit decisions)(unless waived by the Majority Noteholders, which waiver may be
granted or withheld in their sole discretion, or unless within 120 days of the
date the second of such persons ceases to be actively involved in the management
of the Servicer, each of such persons is replaced by a person reasonably
acceptable to the Majority Noteholders); or
9. Appendix A is hereby amended as follows:
(a) The definition of "Average Charged-Off Ratio" is hereby amended to
read in its entirety as follows:
AVERAGE CHARGED-OFF RATIO: As of any Determination Date, the
-------------------------
percentage equivalent of a fraction, the numerator of which is the
aggregate applicable portion of the
2
Principal Balance of all Commercial Loans that became Charged-Off Loans
during the 12 immediately preceding Due Periods (net of recoveries and
gains), and the denominator of which is the quotient obtained by dividing
---
(i) the sum of the AOLB as of the first day of each of the 12 immediately
preceding Due Periods by (ii) 12.
(b) The definition of "Charged-Off Loan" is hereby amended to read in its
entirety as follows:
CHARGED-OFF LOAN: That portion of the Principal Balance (but not
----------------
less than 50%) of any Commercial Loan that (x) is ninety (90) days or
more contractually past due with respect to any payment that the
Servicer has determined to charge-off in accordance with the Credit
and Collection Policy or (y) the related Obligor has filed for
bankruptcy protection or is generally unable to meet its financial
obligations or has suffered any other material adverse change that
materially affects its viability as a going concern, and where
adequate Collateral does not exist to repay the Commercial Loan (as
determined by the Servicer in accordance with the Credit and
Collection Policy); provided that the entire unpaid Principal Balance
of a Commercial Loan to the extent not previously charged-off shall be
deemed a Charged-Off Loan if (i) the Commercial Loan becomes 180 days
past due with respect to any payment of principal or interest, or (ii)
180 days has elapsed after the related Obligor has filed for
bankruptcy protection or is generally unable to meet its financial
obligations or has suffered any other material adverse change that
materially affects its viability as a going concern (as determined by
the Servicer in accordance with the Credit and Collection Policy), or
(iii) such Commercial Loan is or should otherwise be written-off in
its entirety by the Servicer in accordance with the Credit and
Collection Policy.
(c) The definition of "Charged-Off Ratio" is hereby deleted in its
entirety.
(d) The definition of "Commercial Loan" is hereby amended by replacing the
language appearing in clause (ii) of the definition thereof with the phrase
"[intentionally omitted]".
(e) The definition of "Concentration and Mix Criteria" is hereby amended
in its entirety to read as follows:
CONCENTRATION AND MIX CRITERIA: On any day, for purposes of
------------------------------
determining the Borrowing Base, the Eligible Loans included in the
AOLB must conform to the concentration limitations set forth below:
3
(a) at all times, the aggregate Principal Balance of Eligible Loans
represented by Obligors in any one state (as allocated by the Originator or
Servicer in accordance with the Credit and Collection Policy) shall not exceed
25% of the AOLB;
(b) at all times, the aggregate Principal Balance of Eligible Loans
represented by Obligors in the same industry segment (as determined by the SIC
code described below) shall not exceed the following percentages of the AOLB:
SIC
-------
Code(s)
-------
Percentage or
---------- --
Segment Limit descriptions
------- ---------- ------------
Radio 35% 4832
Television 35% 4833, 4841
Other type of Publishing (excluding Community 35% 2721, 2741
Newspapers)
Community Newspapers 40% 2711
Telecommunications 25% 4812, 4813, 4822 (excluding Paging,
ISP and Telecommunications towers in
those codes)
Business Information Services 25% 7375, 7379
Technology 20% 7371, 7372, 7373 (excluding
E-Commerce in those codes)
Security Alarm Leasing Companies 20% 7382
Paging 15% NAICS code 513321
Internet Service Providers ("ISP") 15% NAICS code 514191
Telecommunications towers 20% see definition page
E-Commerce 15% see definition page
Other 15% all other SIC codes not listed here
Any single sub-segment of Telecommunications 15% any one of the following, see
definition page:
CLEC
long-distance
ICP
ALEC (prepaid, calling card)
Cellular and Other Wireless Telecom
Other
Definitions
Telecommunication towers
4
Company involved in the leasing, construction, and/or management
of communications facilities in multi-tenant tower, antennae,
rooftop facilities over a geographic area.
E-Commerce
Company engaged in web-based or internet activities or providing
web-based or internet-related technology solutions to business
entities.
CLEC (competitive local exchange companies)
Company providing local exchange services in competition with the
incumbent local exchange carrier (ILEC). Company may be
facilities-based or may resell local service provided by the
ILEC. Company may provide other services to complete the product
offering, but the primary business is local service.
Long distance
Company providing long distance services. The services may be
facilities-based or resold, or a combination of both. The
company may provide other services, but the primary revenue
source is long distance.
ICP (integrated communications provider)
Company providing a broad range of telecommunications products to
customers. The services offered combine traditional local
service, long distance and wireless communications products. The
services can be facilities-based or resold, but most likely a
combination of both.
ALEC (alternative local exchange companies)
Company providing prepaid local exchange services that are resold
from the LEC.
Cellular and other wireless telecom
See NAICS 513322
Other
All telecommunications entities not included in Paging, ISP,
Telecommunications towers, or the other identified sub-segments of the
Telecommunications.
5
(c) the sum of the Principal Balance for all Commercial Loans to a
single Obligor shall not exceed $20,000,000;
(d) the aggregate Principal Balance of all Eligible Loans of the six
largest Obligors (based upon aggregate Principal Balance) shall not
exceed the greater of: (i) $90,000,000 or (ii) 40% of the AOLB;
(e) the average Principal Balance of all Eligible Loans to a single
Obligor shall not exceed $8,000,000;
(f) the weighted average remaining term to maturity of the Eligible
Loans shall not exceed 6.5 years;
(g) the weighted average Risk Rating of the Eligible Loans shall not
exceed 5.75;
(h) the aggregate Principal Balance of Eligible Loans with a Risk
Rating of 7.00 shall not exceed 12.5% of the AOLB;
(i) the Principal Balance represented by Obligors in the same
industry segment (as set forth in (b) above) and having a Risk Rating
of 7.00 shall not exceed 10.0% of the AOLB;
(j) the sum of the aggregate Principal Balance of Eligible Loans with
a Risk Rating of (i) 6.00 that have undergone a material
restructuring as a result of a delinquent payment of interest or
principal or as a result of a material adverse change in the
financial condition of the related Obligor or (ii) 7.00, shall not
exceed 20.0% of the AOLB; and
(k) the aggregate Principal Balance of Eligible Loans with a Risk
Rating of 8.00, 9.00 or 10.00 shall not exceed 0% of the AOLB.
(f) The definition of "Event of Default" is hereby amended by adding the
phrase "(other than an event described in clause (viii) of the definition
thereof)" after the phrase "a Servicer Termination Event" appearing in clause
(iv) of the definition thereof.
(g) The definition of "Material Mortgage Loan" is hereby amended in its
entirety to read as follows:
MATERIAL MORTGAGE LOAN: Any Commercial Loan for which the
----------------------
underlying Collateral consisting of real property owned by the Obligor
either (i) is material to the operations of the related business or
------ --
(ii) represents 25% or more (measured by the book value of the three
most valuable parcels of such real property as of the date of such
Mortgage) of (a) the
6
original commitment for such Commercial Loan and (b) the fair value of
---
the underlying Obligor and Collateral as a whole. Notwithstanding the
--------------- ---
foregoing, parcels of real property that the Obligor is in the process
---------
of disposing of in a manner acceptable to the Servicer and/or that the
Obligor is otherwise required to dispose of within 90 calendar days
from the related Transfer Date in a manner acceptable to the Servicer
shall not be included in the determination of whether a Commercial
Loan is a Material Mortgage Loan; provided, however, that (x) the
Servicer has received a negative pledge from the Obligor with respect
to any additional encumbrances on such real property, (y) the Servicer
has received, as Collateral for such Commercial Loan, a pledge of at
least 50.1% of the voting securities of such Obligor and (z) the
Commercial Loan requires that all the net proceeds from the sale of
such real property be used either to prepay a portion of such
Commercial Loan or be used in the Obligor's business.
(h) The definition of "Supplemental Interest" is hereby amended in its
entirety to read as follows:
SUPPLEMENTAL INTERESTS: Warrants or other similar interests
----------------------
received by the Originator (other than those purchased by the
Originator for fair market value) (x) as consideration for originating
a Commercial Loan described in clause (i) of the definition thereof
(or (y) as consideration for originating certain other loans, which
loans are not being transferred to the Trust) and that are identified
on the Schedule of Supplemental Interests attached hereto, as such
Schedule may be amended from time to time as agreed upon between the
Originator and the Majority Noteholders.
10. Exhibit K to the Sale and Servicing Agreement (Servicer's
Certificate) is hereby amended in its entirety to read as set forth on the
attachment hereto.
11. This Amendment No. 2 shall become effective when satisfactory
evidence is presented to First Union Securities, Inc. that all conditions
precedent set forth under the heading "Initial Amendments" in the letter
agreement dated as of June 6, 2001 between First Union Securities, Inc. and the
Originator have been satisfied.
12. Except as otherwise set forth herein, the Sale and Servicing
Agreement shall continue in full force and effect in accordance with its terms.
13. This Amendment No. 2 may be executed in one or more
counterparts, each of which, when so executed, shall be deemed an original; such
counterparts, together, shall constitute one and the same agreement.
7
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 to the
Sale and Servicing Agreement as of the day and year first above written.
MCG MASTER TRUST
By: MCG CREDIT CORPORATION
By: ___________________________
Name:
Title:
MCG FINANCE CORPORATION II, as
Seller
By: ___________________________
Name:
Title:
MCG CREDIT CORPORATION, as
Originator and Servicer
By: ___________________________
Name:
Title:
8
CONSENTED TO:
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
formerly known as Norwest Bank Minnesota, National Association,
not in its individual capacity but solely as Indenture Trustee
By: ________________________
FIRST UNION SECURITIES, INC.,
as Administrative Agent
By: ________________________
Name:
Title:
VARIABLE FUNDING CAPITAL CORPORATION,
as Sole Noteholder
By: FIRST UNION SECURITIES, INC.,
As attorney-in-fact
By: _______________________________
Name:
Title:
9
ANNEX A
Section 2.04 Delivery of Commercial Loan Files.
I. Deliveries as of the Closing Date. On or prior to the Closing Date,
---------------------------------
the Seller will deliver or cause to be delivered to the Indenture Trustee each
of the following documents:
(a) A blanket assignment of all of Seller's right, title and interest
to all Collateral securing the Commercial Loans at any time transferred to
the Trust, including without limitation, all rights under applicable
guarantees and insurance policies, such assignment shall be in the name of
Norwest Bank Minnesota, National Association (n/k/a Xxxxx Fargo Bank
Minnesota, National Association), its successors and assigns, as indenture
trustee under the Indenture relating to MCG Master Trust;
(b) Irrevocable powers of attorney of the Originator, the Seller and
the Issuer to the Indenture Trustee to execute, deliver, file or record and
otherwise deal with the Collateral for the Commercial Loans at any time
transferred to the Trust in accordance with this Agreement. The powers of
attorney will be delegable by the Indenture Trustee to the Servicer and any
successor servicer and will permit the Indenture Trustee or its delegate to
prepare, execute and file or record UCC financing statements and notices to
insurers; and
(c) Blanket UCC-1 financing statements identifying by type all UCC
collateral for the Commercial Loans to be transferred to the Trust as
Collateral under the Indenture and naming the Trust and the Indenture
Trustee, as assignee of the Trust, as "Secured Party" and the Seller as the
"Debtor". The UCC-1 financing statements will be filed promptly following
the Closing Date in Virginia and will be in the nature of protective notice
filings rather than true financing statements.
II. Initial Deliveries for the Transfer of a Commercial Loan. By 2:00
--------------------------------------------------------
P.M. (central time) at least two Business Days prior to the initial Transfer
Date for a Commercial Loan, the Seller will deliver or cause to be delivered to
the Indenture Trustee each of the following documents, as applicable, with
respect to such Commercial Loan:
(a) Promissory Note with Endorsements. The original Commercial Loan
---------------------------------
Note, endorsed by means of an allonge as follows: "Pay to the order of
Xxxxx Fargo Bank Minnesota, National Association (f/k/a Norwest Bank
Minnesota, National Association), and its successors and assigns, not in
its individual capacity but solely as Indenture Trustee under that certain
Indenture dated as of June 1, 2000 (as amended from time to time), relating
to MCG Master Trust, without recourse" and signed, by facsimile or manual
---
signature, in the name of Trust by a Responsible Officer of the Servicer,
with all prior and intervening endorsements showing a complete chain of
endorsement from the Originator to the Trust; and
(b) Loan Agreement. A copy of the related loan agreement (which may
be included in the Commercial Loan Note if so indicated in the Commercial
Loan Checklist), together with a copy of all amendments and modifications
-------- ----
thereto as of the date of such initial transfer; and
(c) Security Agreement. If the Originator is the only lender under
------------------
the credit facility or if the Originator is the collateral agent for a
--
syndicate of lenders under the credit facility, then a copy of the related
----
security agreement signed by the primary Obligor, together with a copy of
-------- ----
all amendments and modifications thereto as of the date of such initial
transfer; and
(d) Commercial Loan Checklist. If the Originator is the only lender
-------------------------
under the credit facility or if the Originator is the collateral agent for
--
a syndicate of lenders under the credit facility, then a copy of the
----
Commercial Loan Checklist identifying the substantive credit and collateral
documents to be executed and/or delivered in connection with such
Commercial Loan; and
(e) Material Mortgage Documents. If the Originator is the only
---------------------------
lender under the credit facility or if the Originator is the collateral
--
agent for a syndicate of lenders under the credit facility, and the
---
Commercial Loan is a Material Mortgage Loan as identified by the Seller,
then the documents listed on Exhibit A hereof, as and to the extent
---- -
required thereby; and
(f) Loan Assignment Document. If the Originator acquired the
------------------------
Commercial Loan by assignment directly from another lender, then an
----
original assignment agreement between the selling lender and the
Originator.
Additional Fundings - Existing Documents. Notwithstanding the foregoing,
----------------------------------------
for Additional Fundings relating to a Commercial Loan for which the applicable
documents listed in (a) through (f) above were previously delivered to the
Indenture Trustee, the Seller need only deliver to the Indenture Trustee by 2:00
P.M. (central time) two Business Days prior to the related Transfer Date a copy
of the advance request received from the related Obligor.
Additional Fundings - Revised Documents. Further notwithstanding the
---------------------------------------
foregoing, for Additional Fundings relating to an amendment to a Commercial Loan
for which documents were previously delivered to the Indenture Trustee, the
Seller need only deliver to the Indenture Trustee by 2:00 P.M. (central time)
two Business Days prior to the related Transfer Date, a copy of the amendments,
restatements and/or replacements of those documents being amended, restated
and/or replaced that are required to be delivered by Seller to the Indenture
Trustee under (a) through (f) above.
Swingline Advances. Further notwithstanding the foregoing, with respect to
------------------
any transfer of a Commercial Loan (or an Additional Funding) that is made in
connection with repaying a Swingline Advance pursuant to Article X of the Note
Purchase Agreement, all references in this Section 2.04(II) and in Exhibit A
hereto to documents being delivered to the Indenture Trustee by 2:00 P.M.
(central time) two Business Days prior to the related Transfer Date shall
instead be deemed to mean by 2:00 P.M. (central time) one Business Day prior to
the related Transfer Date. The term "Swingline Advance" shall have the meaning
set forth in Amendment No. 1 to the Note Purchase Agreement (which agreement is
defined in the Terms Supplement relating to the Series 2000-1 Notes).
A-2
III. Supplement Deliveries within 10 Business Days of Transfer of a
--------------------------------------------------------------
Commercial Loan. Within ten Business Days after the Transfer Date for a
---------------
Commercial Loan, the Seller will deliver or cause to be delivered to the
Indenture Trustee each of the following documents (as and to the extent
identified in the related Commercial Loan Checklist) relating to a Commercial
Loan that was transferred on such Transfer Date:
(a) Supplemental Interests - Warrant Certificates. For each
---------------------------------------------
Supplemental Interest evidenced by a warrant certificate, the original
warrant certificate, endorsed by means of an allonge as follows: "Pay to
the order of Xxxxx Fargo Bank Minnesota, National Association (f/k/a
Norwest Bank Minnesota, National Association), and its successors and
assigns, not in its individual capacity but solely as Indenture Trustee
under that certain Indenture dated as of June 1, 2000 (as amended from time
to time), relating to MCG Master Trust, without recourse" and signed, by
facsimile or manual signature in the name of the Originator; and
(b) Supplemental Interests - Other Than Warrant Certificates. For
--------------------------------------------------------
each Supplemental Interest evidenced by an agreement or instrument other
than a warrant certificate, a copy of such agreement or instrument; and
(c) Guaranties. If the Originator is the only lender under the
----------
credit facility or if the Originator is the collateral agent for a
syndicate of lenders under the credit facility, then a copy of any related
----
guarantees then executed in connection with such Commercial Loan; and
(d) Financing Statements. If the Originator is the only lender
--------------------
under the credit facility or if the Originator is the collateral agent
--
for a syndicate of lenders under the credit facility, then a copy of all
----
UCC financing statements filed or to be filed securing the related
Collateral naming the Originator as "Secured Party" that have been filed or
that are otherwise necessary to satisfy the standard in Section 3.02(gg);
and
(e) Stock Certificates. If the Originator is the only lender under
------------------
the credit facility or if the Originator is the collateral agent for a
--
syndicate of lenders under the credit facility, and the Collateral includes
---
a pledge of stock, then the original stock certificate serving as
----
Collateral for such Commercial Loan, along with a stock power executed in
blank by the holder of such certificate.
IV. Final Deliveries within 120 Business Days of Transfer of a Commercial
---------------------------------------------------------------------
Loan. Within 120 days after each Transfer Date, the Seller will deliver or cause
----
to be delivered to the Indenture Trustee each of the following documents for
each Commercial Loan that was transferred on such Transfer Date:
(a) Financing Statements. If the Originator is the only lender
--------------------
under the credit facility or if the Originator is the collateral agent
--
for a syndicate of lenders under the credit facility, then the original
----
returned stamped version (or copy thereof) of all UCC financing statements
filed securing the related Collateral naming the Originator as "Secured
Party"; and
A-3
(b) Other Operative Deliverables. If the Originator is the only
----------------------------
lender under the credit facility or if the Originator is the collateral
--
agent for a syndicate of lenders under the credit facility, then all other
----
items listed in the related Commercial Loan Checklist that have not
previously been delivered to the Indenture Trustee, or a certificate from a
Responsible Officer of the Seller that such delivery has been waived
consistent with the prudent lending practices and the Credit and Collection
Policy of the Seller and such waiver shall not have a material adverse
effect on the Noteholders.
All Commercial Loan documents required to be delivered under this Section
2.04 and held by the Indenture Trustee as to each Commercial Loan (together with
any other documents relating to such Commercial Loan that are delivered to the
Indenture Trustee from time to time) are referred to herein as the "Indenture
Trustee's Document File."
Although it is the intent of the parties to this Agreement that the
conveyance of the Seller's right, title and interest in and to the Commercial
Loans and other assets in the Trust Fund pursuant to this Agreement shall
constitute a purchase and sale and not a loan, in the event that such conveyance
is deemed to be a loan, it is the intent of the parties to this Agreement that
the Seller shall be deemed to have granted, and hereby does grant, to the Trust
a security interest (which will be perfected and of first priority upon filing
of a UCC-1 financing statement naming the Seller as "Debtor" and the Indenture
Trustee as "Secured Party" with the Secretary of State of the Commonwealth of
Virginia and/or the Indenture Trustee taking possession with endorsements as
agent for the Issuer) in all of the Seller's right, title and interest in, to
and under the Commercial Loans and other assets in the Trust Fund (other than
the Transferor's Interest, if any, and the Retained Interest), and that this
Agreement shall constitute a security agreement under applicable law.
All recording required pursuant to this Section 2.04 shall be accomplished
by and at the expense of the Servicer.
A-4
EXHIBIT K - SERVICER'S CERTIFICATE
MCG
MASTER TRUST SERVICER REPORT
------------------
Due Period ending on: 1/0/00
------------------
Facility Amount
Number of Eligible Loans
3 Largest Obligor Outstandings
Aggregate Outstanding Loan Balance (AOLB) at end of prior Due Period
Aggregate Outstanding Loan Balance (AOLB) at end of current Due Period
Advances Outstanding at end of prior Due Period
Advances Outstanding at end of current Due Period
--------------------------------------------
APPLICABLE PERCENTAGE (for all Series)
--------------------------------------------
Series 2000-1
Transferors Interest
---------------------------------------------------------------------------
SERVICER TERMINATION EVENT Covenant Actual
--------------------------------------------------------------------------- Level Level
MINIMUM CONSOLIDATED SHAREHOLDER'S EQUITY for EACH DUE PERIOD
---------------------------------------------------------------------------
(a) Base level
(b) Aggregate Outstanding Principal Balance of all Loans
(c) Minimum Percentage Applied
Product of (b) and (c)
Minimum Consolidated Shareholder's Equity (Greater of Base Level or 15% times
Aggregate Outstanding Principal Balance of all Loans)
Actual Shareholder's Equity (as of 3/31/01)
---------------------------------------------------------------------------
CONCENTRATION REPORT Covenant Actual
---------------------------------------------------------------------------
Attach supporting calculations Level Level
1. Geographic Concentration (Loan to Obligors in a single state may not 25%
exceed 25%; state concentration to be determined by revenues)
2. Industry Concentration (Loans to a single industry segment may not exceed
the following):
Radio 35%
Television 35%
Publishing 35%
Community Newspapers 40%
Telecommunication 25%
Business Information Services 25%
Technology 20%
Security Alarm Leasing Companies 20%
Paging 15%
Towers 20%
Internet Service Provider 15%
E-commerce 15%
Other 15%
Any sub-segment of Telecommunication 15%
3. Single Obligor Outstanding may not exceed $20MM $20,000,000
4. Six Largest Loan Outstandings (may not exceed the greater of: $90MM or $90MM or 40%
40%)
5. Average Obligor size (may not exceed $8MM) $ 8,000,000
6. Weighted Average Life (may not exceed 6.5 years) 6.50
7. Risk Rating (weighted average risk rating may not exceed 5.75) 5.75
8. Risk Rated 7 Limit (sum of all Loans with risk rating of 7 may not exceed 12.5%
12.5%)
9. Risk Rated 7 + material restructurings of Risk Rated 6 Limit (20%) 20.0%
10. Risk Rated 7 Industry Limit (sum of all Loans to single industry segment 10%
with risk rating of 7 may not exceed 10%)
11. Risk Rated 8, 9, 10 Limit (0%) 0%
--------------
---------------------------------------------------------------------------
SUBSTITUTION CALCULATION Covenant Actual
--------------------------------------------------------------------------- Level Level
In no event may the aggregate Principal Balance of Delinquent Loans and
Charged-Off Loans purchased or substituted for pursuant to Section 2.10 of
the Sales and Servicing Agreement exceed, in any one year, 15% of the
Facility Amount 15%
--------------
In no event may the aggregate Principal Balance of all other Commercial Loans
purchased or substituted for pursuant to Section 2.10 of the Sales and
Servicing Agreement exceed, in any one year, 15% of the Facility Amount. 15%
--------------
Number and amounts of all Commercial Loans Purchased or Subsituted for (or $Amount
otherwise removed from the Trust during Due Period) --------------
Loan Name $ -
Loan Name $ -
Loan Name $ -
---------------
Total $ -
===============
------------------------------------------------------------------------------
PRINCIPAL SCHEDULE
------------------------------------------------------------------------------
$Amount
----------------
Principal Balance at beginning of current Due Period
Less: Scheduled Principal payments
Less: Curtailments
Less: Payoffs
Less: Purchases
Add: New fundings ----------------
Principal Balance at end of current Due Period
================
$Amount
----------------
Number and Principal Balances of all Commerical Loans subject to Prepayments
during the Due Period
Loan Name
Loan Name
Loan Name ----------------
Total = 0 loans
================
Number and Principal Balances of all Delinquent Loans at the end of the Due $Amount
Period ----------------
Sabot
Loan Name
Loan Name ----------------
Total = one loans
================
Number and Principal Balances of all Charged-Off Loans during the Due Period $Amount
----------------
Loan Name $ -
Loan Name $ -
Loan Name $ -
---------------
Total = zero loans $ -
===============
------------------------------------------------------------------------------
TRUST CASH RECONCILIATION REPORT for the Principal
and Interest Account
------------------------------------------------------------------------------
Xxxxxxxx $ Amount
----------------
Total of Billed Principal
Total of Billed Interest ----------------
Total Billed Interest and Principal
================
Collections
Total Collections on Principal
Total Collections on Interest
Total Collections on Other ----------------
Total Collections
================
Difference in Collections and Xxxxxxxx*
* Interest on Permitted Investments
------------------------------------------------------------------------------
DELINQUENCY SCHEDULE
------------------------------------------------------------------------------
$ Amount % AOLB
---------------- -------------
Days Past Due (after applicable grace period in accordance with the MCG
Credit and Collection Policy)
1 to 30 days
31 to 60 days
61 to 90 days
91 to 120 days
121 to 180 days
181to 365 days
over 365 days
Foreclosure
REO Property
-------------------------------
Total Delinquency
===============================
-----------------------------------------------------
RISK RATING MIGRATION FOR TRUST COLLATERAL Prior Period $ % AOLB
-------------------------------------------------------------------------------------------------------------
Credit Grade 1
Credit Grade 2
Credit Grade 3
Credit Grade 4
Credit Grade 5
Credit Grade 6
Credit Grade 7
Credit Grade 8
Credit Grade 9
Credit Grade 10
-------------------------------
AOLB for Prior Period
===============================
Current Period $ % AOLB
-------------------------------
Credit Grade 1
Credit Grade 2
Credit Grade 3
Credit Grade 4
Credit Grade 5
Credit Grade 6
Credit Grade 7
Credit Grade 8
Credit Grade 9
Credit Grade 10
-------------------------------
AOLB Current Period
===============================
Industry
List of Grade 7 or higher Loans - end of Prior Period Balance Commitment Segment
$ - -
Industry
Loans added to Grade 7 - during Current Period Balance Commitment Segment
Industry
Loans moved out of Grade 7 - during Current Period Balance Commitment Segment
$ - -
Industry
List of Grade 7 or higher Loans - end of Current Period Balance Commitment Segment
MCG Master Trust
Servicing Fee Calculation
Period Period Commercial
Start End # Of Principal Loan Loans Fee Fee
Date Date Days Payments Additions Outstanding Percentage Amount
-------------------------------------------------------------------------------------
--------
Total for April 2001 -
========
SCHEDULE OF SUPPLEMENTAL INTERESTS
Obligor Type of Supplemental Interest Value
------- ----------------------------- -----
Netplexus Corporation Preferred Stock $765,805
The Media Club LLC LLC Membership Interests $ 60,000
Talk America Holdings, Inc. Warrant for Common Stock $ 24,750
--------
Total: $850,555
========
