Exhibit 4.1
This INDENTURE, dated as of March 1, 1999 (as amended or supplemented
from time to time as permitted hereby, this "Indenture"), is between ABFS
MORTGAGE LOAN TRUST 1999-1, a Delaware business trust (together with its
permitted successors and assigns, the "Trust"), and THE BANK OF NEW YORK, a New
York banking corporation, as indenture trustee (together with its permitted
successors in the trusts hereunder, the "Indenture Trustee").
Preliminary Statement
The Trust has duly authorized the execution and delivery of this
Indenture to provide for its Mortgage Backed Notes, Series 1999-1 (the "Notes"),
issuable as provided in this Indenture. All covenants and agreements made by the
Trust herein are for the benefit and security of the Holders of the Notes and
the Note Insurer. The Trust is entering into this Indenture, and the Indenture
Trustee is accepting the trusts created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Trust in accordance with its terms have been done.
Granting Clause
The Trust hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Notes and the Note Insurer, all of the Trust's
right, title and interest in and to (a) the Mortgage Loans in both Pool I and
Pool II listed in the Mortgage Loan Schedule attached as Schedule I to this
Indenture (including property that secures a Mortgage Loan that becomes an REO
Property), including the related Mortgage Files delivered or to be delivered to
the Collateral Agent, on behalf of the Indenture Trustee, pursuant to the Sale
and Servicing Agreement, including all payments of principal received, collected
or otherwise recovered after the Cut-Off Date for each Mortgage Loan, all
payments of interest due on each Mortgage Loan after the Cut-Off Date therefor
whenever received and all other proceeds received in respect of such Mortgage
Loans, any Subsequent Mortgage Loans and any Qualified Substitute Mortgage Loan,
(b) the Unaffiliated Seller's Agreement and the Sale and Servicing Agreement,
(c) the Insurance Policies, (d) all cash, instruments or other property held or
required to be deposited in the Collection Account, the Distribution Accounts,
the Note Insurance Payment Account, the Pre-Funding Accounts, the Capitalized
Interest Accounts and the Cross-collateralization Reserve Accounts, including
all investments made with funds in such Accounts (but not including any income
on funds deposited in, or investments made with funds deposited in, such
Accounts other than the Pre-Funding Accounts, which income shall belong to and
be for the account of the Servicer), and (e) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
assets, including, without limitation, all insurance proceeds and condemnation
awards. Such Grants are made, however, in trust, to secure the Notes equally and
ratably without prejudice, priority or distinction between any Note and any
other Note by reason of difference in time of issuance or otherwise, and for the
benefit of the Note Insurer to secure (x) the payment of all amounts due on the
Notes in accordance with their terms, (y) the payment of all other sums payable
under this Indenture and (z) compliance with the provisions of this Indenture,
all as provided in this Indenture. All terms used in the foregoing granting
clauses that are defined in Appendix I are used with the meanings given in said
Appendix I.
The Indenture Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions of this Indenture and agrees to
perform the duties herein required to the end that the interests of the Holders
of the Notes may be adequately and effectively protected. The Indenture Trustee
agrees that it will hold the Note Insurance Policy in trust and that it will
hold any proceeds of any claim upon the Note Insurance Policy, solely for the
use and benefit of the Noteholders in accordance with the terms hereof and the
Note Insurance Policy. In addition, the Indenture Trustee agrees that it will
acknowledge the Grant on each Subsequent Transfer Date of the related Subsequent
Mortgage Loans pursuant to the terms of the related Subsequent Pledge Agreement,
provided that the conditions precedent to the pledge of such Subsequent Mortgage
Loans contained in this Indenture and in the Sale and Servicing Agreement are
satisfied on or prior to such Subsequent Transfer Date.
ARTICLE I
DEFINITIONS
Section 1.01. General Definitions. Except as otherwise specified or as
the context may otherwise require, the following terms have the respective
meanings set forth in Appendix I for all purposes of this Indenture, and the
definitions of such terms are applicable to the singular as well as to the
plural forms of such terms and to the masculine as well as to the feminine
genders of such terms. Whenever reference is made herein to an Event of Default
or a Default known to the Indenture Trustee or of which the Indenture Trustee
has notice or knowledge, such reference shall be construed to refer only to an
Event of Default or Default of which the Indenture Trustee is deemed to have
notice or knowledge pursuant to Section 6.01(d). All other terms used herein
that are defined in the Trust Indenture Act (as hereinafter defined), either
directly or by reference therein, have the meanings assigned to them therein.
ARTICLE II
THE NOTES; PLEDGE OF SUBSEQUENT MORTGAGE LOANS
Section 2.01. Forms Generally. The Notes shall be substantially in the
form set forth as Exhibit A attached hereto. Each Note may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange
on which the Notes may be listed, or as may, consistently herewith, be
determined by the Trust, as evidenced by its execution thereof. Any portion of
the text of any Note may be set forth on the reverse thereof with an appropriate
reference on the face of the Note.
The Definitive Notes may be produced in any manner determined by the
Trust, as evidenced by its execution thereof.
Section 2.02. Form of Certificate of Authentication. The form of the
Authenticating Agent's certificate of authentication is as set forth on the
signature page of the form of the Note attached hereto as Exhibit A.
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Section 2.03. General Provisions With Respect to Principal and Interest
Payment. The Notes shall be designated generally as the "ABFS Mortgage Loan
Trust 1999-1, Mortgage Backed Notes, Series 1999-1".
The Notes shall be issued in the form specified in Section 2.01 hereof.
The Notes shall be issued in two Classes, the Class A-1 Notes and the Class A-2
Notes. The aggregate Original Note Principal Balance of Notes that may be
authenticated and delivered under the Indenture is limited to $100,000,000 of
Class A-1 Notes and $84,075,000 of Class A-2 Notes, except for the Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Sections 2.06, 2.07, or 9.06 of this
Indenture.
Subject to the provisions of Sections 3.01, 5.07, 5.09 and 8.02(a) of
this Indenture, the principal of each Class of Notes shall be payable in
installments ending no later than the related Final Stated Maturity Date, unless
the unpaid principal of such Notes become due and payable at an earlier date by
declaration of acceleration or call for redemption or otherwise.
All payments made with respect to any Note shall be applied first to
the interest then due and payable on such Note and then to the principal
thereof. All computations of interest accrued on any Note shall be made on the
basis of a year of 360 days and twelve 30-day months.
Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Notes, if the Notes have become or
been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on the Notes shall be made
in accordance with Section 5.07 hereof.
Section 2.04. Denominations. The Notes shall be issuable only as
registered Notes in the denominations equal to the Authorized Denominations.
Section 2.05. Execution, Authentication, Delivery and Dating. The Notes
shall be executed on behalf of the Trust by an Authorized Officer of the Owner
Trustee. The signature of such Authorized Officer of the Owner Trustee on the
Notes may be manual or by facsimile.
Notes bearing the manual or facsimile signature of an individual who
was at any time an Authorized Officer of the Owner Trustee shall bind the Trust,
notwithstanding that such individual has ceased to be an Authorized Officer of
the Owner Trustee prior to the authentication and delivery of such Notes or was
not an Authorized Officer of the Owner Trustee at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Trust may deliver Notes executed on behalf of the Trust to
the Authenticating Agent for authentication, and the Authenticating Agent shall
authenticate and deliver such Notes as provided in this Indenture and not
otherwise.
Each Note authenticated on the Closing Date shall be dated the Closing
Date. All other Notes that are authenticated after the Closing Date for any
other purpose hereunder shall be dated the date of their authentication.
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No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for in Section
2.02 hereof, executed by the Authenticating Agent by the manual signature of one
of its Authorized Officers or employees, and such certificate of authentication
upon any Note shall be conclusive evidence, and the only evidence, that such
Note has been duly authenticated and delivered hereunder.
Section 2.06. Registration, Registration of Transfer and Exchange. The
Trust shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Trust shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee is hereby initially appointed "Note Registrar" for the purpose
of registering Notes and transfers of Notes as herein provided. The Indenture
Trustee shall remain the Note Registrar throughout the term hereof. Upon any
resignation of the Indenture Trustee, the Servicer, on behalf of the Trust,
shall promptly appoint a successor, with the approval of the Note Insurer, or,
in the absence of such appointment, the Servicer, on behalf of the Trust, shall
assume the duties of Note Registrar.
Upon surrender for registration of transfer of any Note at the office
or agency of the Trust to be maintained as provided in Section 3.02 hereof, the
Owner Trustee on behalf of the Trust, shall execute, and the Authenticating
Agent shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denominations and of a
like aggregate initial Note Principal Balance.
At the option of the Holder, Notes may be exchanged for other Notes of
any authorized denominations, and of a like aggregate Note Principal Balance,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange, the Owner Trustee shall execute, and
the Authenticating Agent shall authenticate and deliver, the Notes that the
Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Trust, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in the form included in Exhibit A attached hereto, duly executed by the
Holder thereof or its attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Note Registrar, on behalf of the Trust, may require
payment of a sum sufficient to cover any tax or other governmental charge as may
be imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 2.07 hereof not involving any transfer
or any exchange made by the Note Insurer.
No transfer of a Note shall be made to the Unaffiliated Seller or, to
the actual knowledge of a Responsible Officer of the Indenture Trustee, to any
of the Unaffiliated Seller's Affiliates, successors or assigns.
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The Note Registrar shall not register the transfer of a Note unless the
Note Registrar has received a representation letter from the transferee to the
effect that either (i) the transferee is not, and is not acquiring the Note on
behalf of or with the assets of, an employee benefit plan or other retirement
plan or arrangement that is subject to Title I of the Employee Retirement Income
Security Act or 1974, as amended, or Section 4975 of the Code or (ii) the
acquisition and holding of the Note by the transferee qualifies for exemptive
relief under a Department of Labor Prohibited Transaction Class Exemption. Each
Beneficial Owner of a Note which is a Book-Entry Note shall be deemed to make
one of the foregoing representations.
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes. If (1) any
mutilated Note is surrendered to the Note Registrar or the Note Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (2) there is delivered to the Note Registrar such security or
indemnity as may be required by the Note Registrar to save each of the Trust,
the Note Insurer and the Note Registrar harmless, then, in the absence of notice
to the Note Registrar that such Note has been acquired by a bona fide purchaser,
the Owner Trustee on behalf of the Trust shall execute and upon its request the
Note Registrar shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Note, a new Note or Notes of the same
tenor and aggregate initial principal amount bearing a number not
contemporaneously outstanding. If, after the delivery of such new Note, a bona
fide purchaser of the original Note in lieu of which such new Note was issued
presents for payment such original Note, the Note Registrar, shall be entitled
to recover such new Note from the person to whom it was delivered or any person
taking therefrom, except a bona fide purchaser, and shall be entitled to recover
upon the security or indemnity provided therefor to the extent of any loss,
damage, cost or expenses incurred by the Trust or the Note Registrar in
connection therewith. If any such mutilated, destroyed, lost or stolen Note
shall have become or shall be about to become due and payable, or shall have
become subject to redemption in full, instead of issuing a new Note, the Trust
may pay such Note without surrender thereof, except that any mutilated Note
shall be surrendered.
Upon the issuance of any new Note under this Section 2.07, the Note
Registrar, may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Trust, the Indenture
Trustee or the Note Registrar) connected therewith.
Every new Note issued pursuant to this Section 2.07 in lieu of any
destroyed, lost or stolen Note shall constitute an original contractual
obligation of the Trust, whether or not the destroyed, lost or stolen Note shall
be at any time enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Section 2.07 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.08. Payments of Principal and Interest. (a) Payments on Notes
issued as Book-Entry Notes will be made by or on behalf of the Indenture Trustee
to the Clearing Agency or its nominee. Any installment of interest or principal
payable on any Definitive Notes
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that is punctually paid or duly provided for by the Trust on the applicable
Distribution Date shall be paid to the Person in whose name such Note (or one or
more Predecessor Notes) is registered at the close of business on the Record
Date for such Class of Notes and such Distribution Date by either (i) check
mailed to such Person's address as it appears in the Note Register on such
Record Date, or (ii) by wire transfer of immediately available funds to the
account of a Noteholder, if such Noteholder (A) is the registered holder of
Definitive Notes having an initial principal amount of at least $1,000,000 and
(B) has provided the Indenture Trustee with wiring instructions in writing by
five (5) Business Days prior to the related Record Date or has provided the
Indenture Trustee with such instructions for any previous Distribution Date,
except for the final installment of principal payable with respect to such Note
(or the Redemption Price for any Note called for redemption, if such redemption
will result in payment of the then entire unpaid Note Principal Balance of such
Note), which shall be payable as provided in subsection (b) of this Section
2.08. A fee may be charged by the Indenture Trustee to a Holder of Definitive
Notes for any payment made by wire transfer. Any installment of interest or
principal not punctually paid or duly provided for shall be payable as soon as
funds are available to the Indenture Trustee for payment thereof, or if Section
5.07 applies, pursuant to Section 5.07.
(b) All reductions in the Note Principal Balance of a Note (or one or
more Predecessor Notes) effected by payments of installments of principal made
on any Distribution Date shall be binding upon all Holders of such Note and of
any Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, whether or not such payment is noted on such Note.
The final installment of principal of each Note (including the Redemption Price
of any Note called for optional redemption, if such optional redemption will
result in payment of the entire unpaid Note Principal Balance of such Note)
shall be payable only upon presentation and surrender thereof on or after the
Distribution Date therefor at the Corporate Trust Office of the Indenture
Trustee located within the United States of America pursuant to Section 3.02.
Whenever the Indenture Trustee expects that the entire unpaid Note
Principal Balance of any Note will become due and payable on the next
Distribution Date, other than pursuant to a redemption pursuant to Article X, it
shall, no later than two (2) Business Days prior to such Distribution Date,
telecopy or hand deliver to each Person in whose name a Note to be so retired is
registered at the close of business on such otherwise applicable Record Date a
notice to the effect that:
(i) the Indenture Trustee expects that funds sufficient to pay
such final installment will be available in the related Distribution
Account on such Distribution Date; and
(ii) if such funds are available, (A) such final installment
will be payable on such Distribution Date, but only upon presentation
and surrender of such Note at the office or agency of the Note
Registrar maintained for such purpose pursuant to Section 3.02 (the
address of which shall be set forth in such notice) and (B) no interest
shall accrue on such Note after such Distribution Date.
A copy of such form of notice shall be sent to the Note Insurer by the
Indenture Trustee.
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Notices in connection with redemptions of Notes shall be mailed to
Noteholders in accordance with Section 10.02 hereof.
(c) Subject to the foregoing provisions of this Section 2.08, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to unpaid principal and
interest that were carried by such other Note. Any checks mailed pursuant to
subsection (a) of this Section 2.08 and returned undelivered shall be held in
accordance with Section 3.03 hereof.
(d) Each (i) Indenture Trustee's Remittance Report, prepared by the
Indenture Trustee, based solely on the Servicer Remittance Report delivered to
the Indenture Trustee pursuant to the Sale and Servicing Agreement, and (ii)
each report regarding the Mortgage Loans delivered to the Indenture Trustee by
the Servicer pursuant to Section 5.16(b) of the Sale and Servicing Agreement,
shall be delivered by the Indenture Trustee to the Note Insurer, the Rating
Agencies, the Servicer, the Owner Trustee, the Depositor and each Noteholder as
the statements required pursuant to Section 8.06 hereof. Neither the Indenture
Trustee nor the Collateral Agent shall have any responsibility to recalculate,
verify or recompute information contained in any such tape, electronic data file
or disk or any such Servicer Remittance Report except to the extent necessary to
satisfy all obligations under this Section 2.08(d).
Within ninety (90) days after the end of each calendar year, the
Indenture Trustee will be required to furnish to each Person who at any time
during the calendar year was a Noteholder, if requested in writing by such
person, a statement containing the information set forth in subclauses (a), (b)
and (c) in the definition of "Indenture Trustee's Remittance Report," aggregated
for such calendar year or the applicable portion thereof during which such
person was a Noteholder. Such obligation will be deemed to have been satisfied
to the extent that substantially comparable information is provided pursuant to
any requirements of the Code as are from time to time in force.
From time to time (but no more than once per calendar month), upon the
written request of the Depositor, the Servicer or the Note Insurer, the
Indenture Trustee shall report to the Depositor, the Servicer and the Note
Insurer the amount then held in each Account (including investment earnings
accrued) held by the Indenture Trustee and the identity of the investments
included therein. From time to time, at the request of the Note Insurer, the
Indenture Trustee shall report to the Note Insurer with respect to the actual
knowledge of a Responsible Officer, without independent investigation, of any
breach of any of the representations or warranties relating to individual
Mortgage Loans set forth in Section 3.03 of the Unaffiliated Seller's Agreement.
The Indenture Trustee shall also provide the Note Insurer such other information
within its control as may be reasonably requested by it.
Section 2.09. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, any agent on behalf of the Trust including
but not limited to the Indenture Trustee, or the Note Insurer, may treat the
Person in whose name any Note is registered as the owner of such Note (a) on the
applicable Record Date for the purpose of receiving payments of the principal of
and interest on such Note and (b) on any other date for all other purposes
whatsoever, and none of the Trust, the Indenture Trustee or any other agent of
the Trust, or the Note Insurer shall be affected by notice to the contrary.
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Section 2.10. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Note Registrar, be delivered to the Note Registrar and
shall be promptly canceled by it. The Owner Trustee, on behalf of the Trust, may
at any time deliver to the Note Registrar for cancellation any Note previously
authenticated and delivered hereunder which the Owner Trustee, on behalf of the
Trust may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly canceled by the Note Registrar. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section 2.10, except as expressly permitted by this Indenture. All
cancelled Notes held by the Note Registrar shall be held by the Note Registrar
in accordance with its standard retention policy, unless the Owner Trustee, on
behalf of the Trust shall direct by a Trust Order that they be destroyed or
returned to it.
Section 2.11. Authentication and Delivery of Notes. The Notes shall be
executed by an Authorized Officer of the Owner Trustee, on behalf of the Trust,
and delivered to the Authenticating Agent for authentication, and thereupon the
same shall be authenticated and delivered by the Authenticating Agent, upon a
Trust Request and upon receipt by the Authenticating Agent of all of the
following:
(a) A Trust Order authorizing the execution, authentication
and delivery of the Notes and specifying the Note Principal Balance and
the Percentage Interest of such Notes to be authenticated and
delivered.
(b) A Trust Order authorizing the execution and delivery of
this Indenture and the Sale and Servicing Agreement.
(c) One or more Opinions of Counsel (which opinion shall not
be at the expense of the Indenture Trustee or the Trust) addressed to
the Authenticating Agent and the Note Insurer or upon which the
Authenticating Agent and the Note Insurer are expressly permitted to
rely, complying with the requirements of Section 11.01, reasonably
satisfactory in form and substance to the Authenticating Agent and the
Note Insurer.
In rendering the opinions set forth above, such counsel may
rely upon Officer's Certificates of the Trust, the Owner Trustee, the
Unaffiliated Seller, the Originators, the Depositor, the Servicer and
the Indenture Trustee, without independent confirmation or verification
with respect to factual matters relevant to such opinions. In rendering
the opinions set forth above, such counsel need express no opinion as
to (A) the existence of, or the priority of the security interest
created by the Indenture against, any liens or other interests that
arise by operation of law and that do not require any filing or similar
action in order to take priority over a perfected security interest or
(B) the priority of the security interest created by this Indenture
with respect to any claim or lien in favor of the United States or any
agency or instrumentality thereof (including federal tax liens and
liens arising under Title IV of ERISA).
The acceptability to the Note Insurer of the Opinion of
Counsel delivered to the Authenticating Agent and the Note Insurer at
the Closing Date shall be conclusively evidenced by the delivery on the
Closing Date of the Note Insurance Policy.
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(d) An Officer's Certificate of the Trust complying with the
requirements of Section 11.01 and stating that:
(i) the Trust is not in Default under this Indenture
and the issuance of the Notes will not result in any breach of
any of the terms, conditions or provisions of, or constitute a
default under, the Trust's Certificate of Trust or any
indenture, mortgage, deed of trust or other agreement or
instrument to which the Trust is a party or by which it is
bound, or any order of any court or administrative agency
entered in any proceeding to which the Trust is a party or by
which it may be bound or to which it may be subject, and that
all conditions precedent provided in this Indenture relating
to the authentication and delivery of the Notes have been
complied with;
(ii) the Trust is the owner of each Mortgage Loan,
free and clear of any lien, security interest or charge, has
not assigned any interest or participation in any such
Mortgage Loan (or, if any such interest or participation has
been assigned, it has been released) and has the right to
Grant each such Mortgage Loan to the Indenture Trustee;
(iii) the information set forth in the Mortgage Loan
Schedule attached as Schedule I to this Indenture is correct;
(iv) the Trust has Granted to the Indenture Trustee
all of its right, title and interest in each Mortgage Loan;
and
(v) as of the Closing Date, no lien in favor of the
United States described in Section 6321 of the Code, or lien
in favor of the Pension Benefit Guaranty Corporation described
in Section 4068(a) of the ERISA, has been filed as described
in subsections 6323(f) and 6323(g) of the Code upon any
property belonging to the Trust.
(e) An executed counterpart of the Sale and Servicing
Agreement.
(f) An executed counterpart of the Unaffiliated Seller's
Agreement.
(g) An executed counterpart of the Trust Agreement.
(h) An executed copy of the Insurance Agreement.
(i) An original executed copy of the Note Insurance Policy.
(j) A copy of a letter from Xxxxx'x that is has assigned a
rating of "Aaa" to the Notes and a copy of a letter from S&P that it
has assigned a rating of "AAA" to the Notes.
Section 2.12. Book-Entry Note. The Notes will be issued initially as
one or more certificates in the name of Cede & Co., as nominee for the Clearing
Agency maintaining book-entry records with respect to ownership and transfer of
such Notes, and registration of the
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Notes may not be transferred by the Note Registrar except upon Book-Entry
Termination. In such case, the Note Registrar shall deal with the Clearing
Agency as representative of the Beneficial Owners of such Notes for purposes of
exercising the rights of Noteholders hereunder. Each payment of principal of and
interest on a Book-Entry Note shall be paid to the Clearing Agency, which shall
credit the amount of such payments to the accounts of its Clearing Agency
Participants in accordance with its normal procedures. Each Clearing Agency
Participant shall be responsible for disbursing such payments to the Beneficial
Owners of the Book-Entry Notes that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Beneficial Owners of the Book-Entry Notes that it
represents. All such credits and disbursements are to be made by the Clearing
Agency and the Clearing Agency Participants in accordance with the provisions of
the Notes. None of the Indenture Trustee, the Note Registrar, if any, the Trust
or the Note Insurer shall have any responsibility therefor except as otherwise
provided by applicable law. Requests and directions from, and votes of, such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Beneficial Owners.
Section 2.13. Termination of Book Entry System. (a) The book-entry
system through the Clearing Agency with respect to the Book-Entry Notes may be
terminated upon the happening of any of the following:
(i) The Clearing Agency advises the Indenture Trustee that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities as nominee and depositary with respect to the Notes
and the Indenture Trustee is unable to locate a qualified successor
Clearing Agency satisfactory to the Servicer, on behalf of the Trust;
(ii) The Majority Certificateholders, on behalf of the Trust,
in their sole discretion, elects to terminate the book-entry system by
notice to the Clearing Agency and the Indenture Trustee; or
(iii) After the occurrence of an Event of Default (at which
time the Indenture Trustee shall use all reasonable efforts to promptly
notify each Beneficial Owner through the Clearing Agency of such Event
of Default), the Beneficial Owners of no less than 51% of the Note
Principal Balance of the Book-Entry Notes advise the Indenture Trustee
in writing, through the related Clearing Agency Participants and the
Clearing Agency, that the continuation of a book-entry system through
the Clearing Agency to the exclusion of any Definitive Notes being
issued to any person other than the Clearing Agency or its nominee is
no longer in the best interests of the Beneficial Owners.
(b) Upon the occurrence of any event described in subsection (a) of
this Section 2.13, the Indenture Trustee shall use all reasonable efforts to
notify all Beneficial Owners, through the Clearing Agency, of the occurrence of
such event and of the availability of Definitive Notes to Beneficial Owners
requesting the same, in an aggregate outstanding Note Principal Balance
representing the interest of each, making such adjustments and allowances as it
may find necessary or appropriate as to accrued interest and previous calls for
redemption. Definitive Notes shall be issued only upon surrender to the
Indenture Trustee of the global Note
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by the Clearing Agency, accompanied by registration instructions for the
Definitive Notes. Neither the Trust nor the Indenture Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon issuance of the
Definitive Notes, all references herein to obligations imposed upon or to be
performed by the Clearing Agency shall cease to be applicable and the provisions
relating to Definitive Notes shall be applicable.
Section 2.14. Pledge of Subsequent Mortgage Loans. (a) Subject to the
satisfaction of the conditions set forth in paragraph (b) of this Section 2.14,
in consideration of the Indenture Trustee's delivery on the related Subsequent
Transfer Dates to or upon the order of the Servicer, on behalf of the Trust, of
all or a portion of the balance of funds in either Pre-Funding Account, the
Trust shall on any Subsequent Transfer Date pledge, without recourse, to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, all
right, title and interest of the Trust in and to the related Subsequent Mortgage
Loans, including the outstanding principal of, and interest due on, such
Subsequent Mortgage Loans, and all other assets in the Trust Estate relating to
the Subsequent Mortgage Loans. In connection with such pledge, and pursuant to
Section 2.07 of the Unaffiliated Seller's Agreement and Section 2.09 of the Sale
and Servicing Agreement, the Trust does hereby also irrevocably pledge to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, all
of its rights under the Sale and Servicing Agreement, the Unaffiliated Seller's
Agreement, the related Subsequent Contribution Agreement and the related
Subsequent Transfer Agreement, including, without limitation, its right to
exercise the remedies created by Sections 2.06 and 3.05 of the Unaffiliated
Seller's Agreement for defective documentation and for breaches of
representations and warranties, agreement and covenants of the Unaffiliated
seller contained in Section 3.01, 3.02 and 3.03 of the Unaffiliated Seller's
Agreement.
The amount released from either Pre-Funding Account with respect to a
transfer of Subsequent Mortgage Loans shall be one-hundred percent (100%) of the
Aggregate Principal Balances of the Subsequent Mortgage Loans so pledged, as of
the related Subsequent Cut-Off Date.
(b) The Subsequent Mortgage Loans and the other property and rights
related thereto described in paragraph (a) of this Section 2.14 shall be pledged
by the Trust to the Indenture Trustee, for the benefit of the Noteholders and
the Note Insurer, only upon the satisfaction of each of the following conditions
on or prior to the related Subsequent Transfer Date:
(i) the Unaffiliated Seller shall have provided the Trust, the
Depositor, the Indenture Trustee, the Collateral Agent, the Rating
Agencies and the Note Insurer with an Addition Notice at least two (2)
Business Days prior to the Subsequent Transfer Date, which shall
include a Mortgage Loan Schedule listing the Subsequent Mortgage Loans,
and shall have provided any other information reasonably requested by
any of the foregoing parties with respect to the Subsequent Mortgage
Loans;
(ii) the Unaffiliated Seller shall have caused the Servicer to
deposit in the Collection Account all collections of (x) principal in
respect of the Subsequent Mortgage
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Loans received after the related Subsequent Cut-Off Date and (y)
interest due on the Subsequent Mortgage Loans after the related
Subsequent Cut-Off Date;
(iii) as of each Subsequent Transfer Date, neither the
Unaffiliated Seller nor the Depositor shall be insolvent, neither shall
be made insolvent by such transfer and neither shall be aware of any
pending insolvency;
(iv) such Subsequent Transfer shall not result in a material
adverse tax consequence to the Trust or the Holders of the Notes;
(v) the related Pre-Funding Period shall not have terminated;
(vi) the Unaffiliated Seller shall have delivered to the
Indenture Trustee an Officer's Certificate confirming the satisfaction
of each condition precedent specified in this paragraph (b) and each
complies with the terms of the Unaffiliated Seller's Agreement,
including each of the representations and warranties made with respect
thereto in Section 3.03 of the Unaffiliated Seller's Agreement;
provided, that each representation in Section 3.03(tt) (other than
clause (v)) may be waived or modified with the prior written consent of
the Note Insurer;
(vii) there shall have been delivered to the Note Insurer, the
Trust, the Collateral Agent, the Rating Agencies and the Indenture
Trustee, Independent Opinions of Counsel with respect to the transfer
of the Subsequent Mortgage Loans substantially in the form of the
Opinions of Counsel delivered to the Depositor, the Note Insurer, the
Trust, the Collateral Agent, the Rating Agencies and the Indenture
Trustee on the Closing Date (i.e. bankruptcy, corporate and tax
opinions);
(viii) the Indenture Trustee shall have received a written
consent from the Note Insurer in the form of Exhibit C hereto;
(ix) the Originators, the Unaffiliated Seller and the
Depositor shall have delivered to the Indenture Trustee an executed
copy of a Subsequent Transfer Agreement, substantially in the form of
Exhibit A to the Unaffiliated Seller's Agreement;
(x) the Depositor and the Trust shall have delivered to the
Indenture Trustee an executed copy of a Subsequent Contribution
Agreement, substantially in the form of Exhibit G to the Sale and
Servicing Agreement, and
(xi) the Trust and the Indenture Trustee shall have executed a
Subsequent Pledge Agreement, substantially in the form of Exhibit B
hereto.
(c) In connection with the transfer, assignment and pledge of the
Subsequent Mortgage Loans, the Unaffiliated Seller shall satisfy the document
delivery requirements set forth in Section 2.05 of the Sale and Servicing
Agreement.
(d) On each Subsequent Transfer Date upon written instruction from the
Unaffiliated Seller, the Indenture Trustee shall withdraw from the related
Capitalized Interest Account and pay to the Unaffiliated Seller on such
Subsequent Transfer Date the Overfunded
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Interest Amount for such Subsequent Transfer Date, as calculated by the
Indenture Trustee with the cooperation of the Unaffiliated Seller and subject to
the approval of the Note Insurer.
ARTICLE III
COVENANTS
Section 3.01. Payment of Notes. The Trust will pay or cause to be duly
and punctually paid the principal of, and interest on, the Notes in accordance
with the terms of the Notes and this Indenture. The Notes shall be non-recourse
obligations of the Trust and shall be limited in right of payment to amounts
available from the Trust Estate as provided in this Indenture and the Trust
shall not otherwise be liable for payments on the Notes. No person shall be
personally liable for any amounts payable under the Notes. If any other
provision of this Indenture conflicts or is deemed to conflict with the
provisions of this Section 3.01, the provisions of this Section 3.01 shall
control.
Section 3.02. Maintenance of Office or Agency. The Owner Trustee, at
the direction of the Majority Certificateholder, on behalf of the Trust, will
cause the Note Registrar to maintain its corporate trust office at a location in
the United States of America where Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Trust in
respect of the Notes and this Indenture may be served. Such location shall be
the Corporate Trust Office of the Indenture Trustee.
The Owner Trustee, at the direction of the Majority Certificateholder,
on behalf of the Trust may also from time to time, at its own expense, designate
one or more other offices or agencies within the United States of America where
the Notes may be presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however, any designation
of an office or agency for payment of Notes shall be subject to Section 3.03
hereof. The Owner Trustee, at the direction of the Majority Certificateholder,
on behalf of the Trust will give prompt written notice to the Indenture Trustee
and the Note Insurer of any such designation or rescission and of any change in
the location of any such other office or agency.
Section 3.03. Money for Note Payments to Be Held In Trust. All payments
of amounts due and payable with respect to any Notes that are to be made from
amounts withdrawn from the related Distribution Account pursuant to Sections
8.02(a) or 5.07 hereof shall be made on behalf of the Trust by the Indenture
Trustee, and no amounts so withdrawn from the related Distribution Account for
payments on the Notes shall be paid over to the Trust under any circumstances
except as provided in this Section 3.03 or in Sections 5.07 or 8.02 hereof.
With respect to Definitive Notes, if the Trust shall have a Note
Registrar that is not also the Indenture Trustee, such Note Registrar shall
furnish, no later than the fifth (5th) calendar day after each Record Date, a
list, in such form as such Indenture Trustee may reasonably require, of the
names and addresses of the Holders of Notes and of the number of Individual
Notes held by each such Holder.
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Whenever the Trust shall have a Paying Agent other than the Indenture
Trustee, the Servicer, on behalf of the Trust, will, on or before the Business
Day next preceding each Distribution Date, direct the Indenture Trustee to
deposit with such Paying Agent an aggregate sum sufficient to pay the amounts
then becoming due (to the extent funds are then available for such purpose in
the related Distribution Account), such sum to be held in trust for the benefit
of the Persons entitled thereto. Any moneys deposited with a Paying Agent in
excess of an amount sufficient to pay the amounts then becoming due on the Notes
with respect to which such deposit was made shall, upon Trust Order, be paid
over by such Paying Agent to the Indenture Trustee for application in accordance
with Article VIII hereof.
Subject to the prior written consent of the Note Insurer, any Paying
Agent other than the Indenture Trustee may be appointed by Trust Order and at
the expense of the Trust. The Trust shall not appoint any Paying Agent (other
than the Indenture Trustee) that is not, at the time of such appointment, a
depository institution or trust company whose obligations would be Permitted
Investments pursuant to clause (b) of the definition of the term "Permitted
Investments". The Servicer, on behalf of the Trust, will cause each Paying Agent
other than the Indenture Trustee to execute and deliver to the Indenture Trustee
and the Owner Trustee, on behalf of the Trust, an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
(a) allocate all sums received for payment to the Holders of
Notes on each Distribution Date among such Holders in the proportion
specified in the applicable Indenture Trustee's Remittance Report, in
each case to the extent permitted by applicable law;
(b) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(c) if such Paying Agent is not the Indenture Trustee,
immediately resign as a Paying Agent and forthwith pay to the Indenture
Trustee all sums held by it in trust for the payment of the Notes if at
any time the Paying Agent ceases to meet the standards set forth above
required to be met by a Paying Agent at the time of its appointment;
(d) if such Paying Agent is not the Indenture Trustee, give
the Indenture Trustee notice of any Default by the Trust (or any other
obligor upon the Notes) in the making of any payment required to be
made with respect to any Notes for which it is acting as Paying Agent;
(e) if such Paying Agent is not the Indenture Trustee, at any
time during the continuance of any such Default, upon the written
request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent; and
(f) comply with all requirements of the Code, and all
regulations thereunder, with respect to withholding from any payments
made by it on any Notes of any applicable
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withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith; provided, however, that
with respect to withholding and reporting requirements applicable to
original issue discount (if any) on any of the Notes, the Servicer, on
behalf of the Trust, has provided the calculations pertaining thereto
to the Indenture Trustee and the Paying Agent.
The Trust may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Trust
Order direct any Paying Agent, if other than the Indenture Trustee, to pay to
the Indenture Trustee all sums held in trust by such Paying Agent, such sums to
be held by the Indenture Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and upon such payment by any Paying Agent
to the Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money held by the Indenture Trustee or any Paying Agent in trust
for the payment of any amount due with respect to any Note and remaining
unclaimed for two and one-half years after such amount has become due and
payable to the Holder of such Note (or if earlier, three months before the date
on which such amount would escheat to a governmental entity under applicable
law) shall be discharged from such trust and paid to the Trust; and the Holder
of such Note shall thereafter, as an unsecured general creditor, look only to
the Trust for payment thereof (but only to the extent of the amounts so paid to
the Trust), and all liability of the Indenture Trustee or such Paying Agent with
respect to such trust money shall thereupon cease. The Indenture Trustee may
adopt and employ, at the expense of the Trust, any reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or any Paying Agent, at the last address of record for each such
Holder).
Section 3.04. Existence of Trust. (a) Subject to clauses (b) and (c) of
this Section 3.04, the Trust will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware or under
the laws of any other state of the United States of America, and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes and the other Basic Documents.
(b) Subject to Section 3.09(g) hereof, and with the prior written
consent of the Note Insurer, any entity into which the Trust may be merged or
with which it may be consolidated, or any entity resulting from any merger or
consolidation to which the Trust shall be a party, shall be the successor issuer
under this Indenture without the execution or filing of any paper, instrument or
further act to be done on the part of the parties hereto, anything in any
agreement relating to such merger or consolidation, by which any such Trust may
seek to retain certain powers, rights and privileges therefore obtaining for any
period of time following such merger or consolidation to the contrary
notwithstanding (other than Section 3.09(g)).
(c) Upon any consolidation or merger of or other succession to the
Trust in accordance with this Section 3.04, the Person formed by or surviving
such consolidation or
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merger (if other than the Trust) may exercise every right and power of, and
shall have all of the obligations of, the Trust under this Indenture with the
same effect as if such Person had been named as the issuer herein.
Section 3.05. Protection of Trust Estate. (a) The Trust will, from time
to time, execute and deliver all such supplements and amendments hereto and all
such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action as may be
necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust
Estate as made by this Indenture;
(ii) maintain or preserve the lien of this Indenture or carry
out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Mortgage Loans, the Sale and Servicing
Agreement, or the Unaffiliated Seller's Agreement; or
(v) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee, the Noteholders and the Note Insurer
in the Mortgage Loans and the other property held as part of the Trust
Estate against the claims of all Persons and parties.
(b) The Indenture Trustee shall not, and shall not permit the
Collateral Agent to, remove any portion of the Trust Estate that consists of
money or is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the Closing Date or cause or permit
ownership or the pledge of any portion of the Trust Estate that consists of
book-entry securities to be recorded on the books of a Person located in a
different jurisdiction from the jurisdiction in which such ownership or pledge
was recorded at such time unless the Indenture Trustee shall have first received
an Opinion of Counsel to the effect that the lien and security interest created
by this Indenture with respect to such property will continue to be maintained
after giving effect to such action or actions.
Section 3.06. Opinions as to the Trust Estate. On or before April 30th
in each calendar year, beginning in 2000, the Servicer, on behalf of the Trust,
shall furnish to the Indenture Trustee and the Note Insurer an Opinion of
Counsel reasonably satisfactory in form and substance to the Indenture Trustee
and the Note Insurer either stating that, in the opinion of such counsel, such
action has been taken as is necessary to maintain the lien and security interest
created by this Indenture and reciting the details of such action or stating
that in the opinion of such counsel no such action is necessary to maintain such
lien and security interest. Such Opinion of Counsel shall also describe all such
action, if any, that will, in the opinion of such counsel, be required to be
taken to maintain the lien and security interest of this Indenture with respect
to the Trust Estate until May 1st in the following calendar year.
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Section 3.07. Performance of Obligations. (a) The Trust shall
punctually perform and observe all of its obligations under this Indenture and
the other Basic Documents.
(b) The Trust shall not take any action and will use its Best Efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's covenants or obligations under any of the Mortgage
Files or under any instrument included in the Trust Estate, or that would result
in the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any of the documents or instruments
contained in the Mortgage Files, except as expressly permitted in this
Indenture, the other Basic Documents or such document included in the Mortgage
File or other instrument or unless such action will not adversely affect the
interests of the Noteholders and the Note Insurer.
(c) If the Servicer or the Owner Trustee, on behalf of the Trust, shall
have knowledge of the occurrence of a default under the Sale and Servicing
Agreement or the Unaffiliated Seller's Agreement, the Servicer or the Owner
Trustee, as applicable, shall promptly notify the Indenture Trustee, the Note
Insurer and the Rating Agencies thereof, and, in the case of the Servicer, shall
specify in such notice the action, if any, the Servicer is taking with respect
to such default.
(d) Upon any termination of the Servicer's rights and powers pursuant
to the Sale and Servicing Agreement, the Indenture Trustee shall promptly notify
the Note Insurer and the Rating Agencies. As soon as any successor Servicer is
appointed, the Indenture Trustee shall notify the Note Insurer and the Rating
Agencies, specifying in such notice the name and address of such successor
Servicer.
Section 3.08. Investment Company Act. The Trust shall at all times
conduct its operations so as not to be subject to, or shall comply with, the
requirements of the Investment Company Act of 1940, as amended (or any successor
statute), and the rules and regulations thereunder.
Section 3.09. Negative Covenants. The Trust shall not:
(a) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate, except as expressly permitted by this
Indenture and the other Basic Documents;
(b) claim any credit on, or make any deduction from, the
principal of, or interest on, any of the Notes by reason of the payment
of any taxes levied or assessed upon any portion of the Trust Estate;
(c) engage in any business or activity other than as permitted
by the Trust Agreement or other than in connection with, or relating
to, the issuance of the Notes pursuant to this Indenture, or amend the
Trust Agreement, as in effect on the Closing Date, other than in
accordance with Section 11.01 of the Trust Agreement;
(d) incur, issue, assume or otherwise become liable for an
indebtedness other than the Notes;
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(e) incur, assume, guaranty or agree to indemnify any Person
with respect to any indebtedness of any Person, except for such
indebtedness as may be incurred by the Trust in connection with the
issuance of the Notes pursuant to this Indenture;
(f) subject to Article IX of the Trust Agreement, dissolve or
liquidate in whole or in part (until the Notes are paid in full);
(g) (i) permit the validity or effectiveness of this Indenture
or any Grant to be impaired, or permit the lien of this Indenture to be
impaired, amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations under this Indenture, except as may be expressly permitted
hereby, (ii) permit any lien, charge, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created
on or extend to or otherwise arise upon or burden the Trust Estate or
any part thereof or any interest therein or the proceeds thereof, or
(iii) permit the lien of this Indenture not to constitute a valid
perfected first priority security interest in the Trust Estate; or
(h) take any other action that should reasonably be expected
to, or fail to take any action if such failure should reasonably be
expected to, cause the Trust to be taxable as (x) an association
pursuant to Section 7701 of the Code or (y) a taxable mortgage pool
pursuant to Section 7701(i) of the Code.
Section 3.10. Annual Statement as to Compliance. On or before April 30,
2000, and each April 30 thereafter, the Servicer, on behalf of the Trust, shall
deliver to the Indenture Trustee, the Note Insurer and the Depositor a written
statement, signed by an Authorized Officer of the Servicer, on behalf of the
Trust, stating that:
(a) a review of the fulfillment by the Trust during such year
of its obligations under this Indenture has been made under such
Authorized Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based
on such review, the Trust has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a Default in the fulfillment of any such covenant or condition,
specifying each such Default known to such Authorized Officer and the
nature and status thereof.
Section 3.11. Restricted Payments. The Trust shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the Trust
or otherwise with respect to any ownership or equity interest or security in or
of the Trust or to the Servicer, (ii) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or (iii) set
aside or otherwise segregate any amounts for any such purpose; provided,
however, that the Trust may make, or cause to be made, distributions to the
Servicer, the Indenture Trustee, the Owner Trustee, the Note Insurer and the
Certificateholders as contemplated by, and to the extent funds are available for
such purpose under this Indenture and the other Basic Documents and the Trust
will not, directly or
18
indirectly, make or cause to be made payments to or distributions from any
Distribution Account except in accordance with this Indenture.
Section 3.12. Treatment of Notes as Debt for Tax Purposes. For purposes
of federal, state and local income, franchise and any other income taxes, the
Trust will treat the Notes as indebtedness, and hereby instructs the Indenture
Trustee, Payee Agent and the Servicer, on behalf of the Trust to treat the Notes
as indebtedness for all applicable tax reporting purposes.
Section 3.13. Notice of Events of Default. The Servicer, on behalf of
the Trust, shall give the Indenture Trustee, the Note Insurer, the Rating
Agencies and the Depositor prompt written notice of each Event of Default
hereunder, each default on the part of the Servicer of its obligations under the
Sale and Servicing Agreement and each default on the part of the Unaffiliated
Seller of its obligations under the Unaffiliated Seller's Agreement.
Section 3.14. Further Instruments and Acts. Upon written request of the
Indenture Trustee or the Note Insurer, the Owner Trustee, on behalf of the
Trust, will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. Whenever the
following conditions shall have been satisfied:
(a) either
(i) all Notes theretofore authenticated and delivered (other
than (x) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.07 hereof, and (y) Notes
for whose payment money has theretofore been deposited in trust and
thereafter repaid to the Trust, as provided in Section 3.03 hereof)
have been delivered to the Note Registrar for cancellation; or
(ii) all Notes not theretofore delivered to the Note Registrar
for cancellation,
(A) have become due and payable, or
(B) will become due and payable at the Final Stated Maturity
Date within one (1) year, or
(C) are to be called for redemption pursuant to Section
10.01 hereof within one (1) year under irrevocable
arrangements satisfactory to the Indenture Trustee for
the giving of notice of redemption by the Indenture
Trustee in the name, and at the expense, of the
Servicer,
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and the Servicer, in the case of clauses (ii)(A),
(ii)(B) or (ii)(C) above, has irrevocably deposited or
caused to be deposited with the Indenture Trustee, in
trust for such purpose, an amount sufficient to pay and
discharge the entire unpaid Note Principal Balance such
Notes not theretofore delivered to the Indenture Trustee
for cancellation, for principal and interest to the
Final Stated Maturity Date or to the applicable
Redemption Date, as the case may be, and in the case of
Notes that were not paid at the Final Stated Maturity
Date of their entire unpaid Note Principal Balance, for
all overdue principal and all interest payable on such
Notes to the next succeeding Distribution Date therefor;
(b) the Servicer, on behalf of the Trust, has paid or caused to be paid
all other sums payable hereunder by the Trust (including, without limitation,
amounts due the Note Insurer); and
(c) the Servicer, on behalf of the Trust, has delivered to the
Indenture Trustee and the Note Insurer an Officers' Certificate and an Opinion
of Counsel satisfactory in form and substance to the Indenture Trustee and the
Note Insurer each stating that all conditions precedent herein providing for the
satisfaction and discharge of this Indenture have been complied with;
then, upon a Trust Request, this Indenture and the lien, rights and interests
created hereby and thereby shall cease to be of further effect, and the
Indenture Trustee and each co-trustee and separate trustee, if any, then acting
as such hereunder shall, at the expense of the Trust (or of the Servicer in the
case of a redemption by the Servicer pursuant to Section 10.01 hereof), execute
and deliver all such instruments as may be necessary to acknowledge the
satisfaction and discharge of this Indenture and shall pay, or assign or
transfer and deliver, to the Trust or upon Trust Order all cash, securities and
other property held by it as part of the Trust Estate remaining after
satisfaction of the conditions set forth in clauses (a) and (b) above.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Indenture Trustee and any Paying Agent to the Trust and the
Holders of Notes under Section 3.03 hereof, the obligations of the Indenture
Trustee to the Holders of Notes under Section 4.02 hereof and the provisions of
Section 2.07 hereof with respect to lost, stolen, destroyed or mutilated Notes,
registration of transfers of Notes and rights to receive payments of principal
of and interest on the Notes shall survive.
Section 4.02. Application of Trust Money. All money deposited with the
Indenture Trustee pursuant to Sections 3.03 and 4.01 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Persons entitled thereto, of the
principal and interest for whose payment such money has been deposited with the
Indenture Trustee.
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ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Event of Default. "Event of Default", wherever used
herein, means, with respect to Notes issued hereunder, 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):
(a) if the Trust shall fail to distribute or cause to be
distributed to the Indenture Trustee, for the benefit of the holders of
the Notes, on any Distribution Date, all or part of any Interest
Distribution Amount and any Net Mortgage Loan Interest Shortfalls due
on the Notes on such Distribution Date;
(b) if the Trust shall fail to distribute or cause to be
distributed to the Indenture Trustee, for the benefit of the holders of
the Notes, (x) on any Distribution Date, an amount equal to the
Principal Distribution Amount due on the Notes on such Distribution
Date, to the extent that sufficient funds are on deposit in the
Collection Account or (y) on the Final Stated Maturity Date for any
Class of Notes, the aggregate outstanding Note Principal Balance of
such Class of Notes;
(c) if the Trust shall breach or default in the due observance
of any one or more of the covenants set forth in clauses (a) through
(h) of Section 3.09 hereof;
(d) if the Trust shall consent to the appointment of a
custodian, receiver, trustee or liquidator (or other similar official)
of itself, or of a substantial part of its property, or shall admit in
writing its inability to pay its debts generally as they come due, or a
court of competent jurisdiction shall determine that the Trust is
generally not paying its debts as they come due, or the Trust shall
make a general assignment for the benefit of creditors;
(e) if the Trust shall file a voluntary petition in bankruptcy
or a voluntary petition or an answer seeking reorganization in a
proceeding under any bankruptcy laws (as now or hereafter in effect) or
an answer admitting the material allegation of a petition filed against
the Trust in any such proceeding, or the Trust shall, by voluntary
petition, answer or consent, seek relief under the provisions of any
now existing or future bankruptcy or other similar law providing for
the reorganization or winding-up of debtors, or providing for an
agreement, composition, extension or adjustment with its creditors;
(f) if an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without
the consent (express or legally implied) of the Trust, a custodian,
receiver, trustee or liquidator (or other similar official) of the
Trust or any substantial part of its property, or sequestering any
substantial part of its respective property, and any such order,
judgment or decree or appointment or sequestration shall remain in
force undismissed, unstayed or unvacated for a period of ninety (90)
days after the date of entry thereof; or
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(g) if a petition against the Trust in a proceeding under
applicable bankruptcy laws or other insolvency laws, as now or
hereafter in effect, shall be filed and shall not be stayed, withdrawn
or dismissed within ninety (90) days thereafter, or if, under the
provisions of any law providing for reorganization or winding-up of
debtors which may apply to the Trust, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Trust
or any substantial part of its property, and such jurisdiction, custody
or control shall remain in force unrelinquished, unstayed or
unterminated for a period of ninety (90) days.
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default occurs and is continuing, then and in every such case, but with
the consent of the Note Insurer in the absence of a Note Insurer Default, the
Indenture Trustee may, and on request of the Note Insurer, in the absence of a
Note Insurer Default, or, with the prior written consent of the Note Insurer,
the Holders of Notes representing not less than 50% of the Note Principal
Balance of the Outstanding Notes of both Classes, shall, declare all the Notes
to be immediately due and payable by a notice in writing to the Trust (and to
the Indenture Trustee if given by Noteholders), and upon any such declaration
such Notes, in an amount equal to the entire unpaid Note Principal Balance of
such Notes, together with accrued and unpaid interest thereon to the date of
such acceleration, shall become immediately due and payable, all subject to the
prior written consent of the Note Insurer in the absence of a Note Insurer
Default.
At any time after such a declaration of acceleration of maturity of the
Notes has been made and before a judgment or decree for payment of the money due
has been obtained by the Indenture Trustee as hereinafter provided in this
Article V, the Note Insurer, in the absence of a Note Insurer Default, or the
Holders of Notes representing more than 50% of the Note Principal Balance of the
Outstanding Notes of both Classes, with the prior written consent of the Note
Insurer, by written notice to the Trust and the Indenture Trustee, may rescind
and annul such declaration and its consequences if:
(a) the Trust has paid or deposited with the Indenture Trustee
a sum sufficient to pay:
(i) all payments of principal of, and interest on,
all Outstanding Notes and all other amounts that would then be
due hereunder or upon such Notes if the Event of Default
giving rise to such acceleration had not occurred; and
(ii) all sums paid or advanced by the Indenture
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its
agents and counsel; and
(b) all Events of Default, other than the nonpayment of the
principal of Notes that have become due solely by such acceleration,
have been cured or waived as provided in Section 5.14 hereof.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
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Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. Subject to the provisions of Section 3.01 hereof and the
following sentence, if an Event of Default occurs and is continuing, the
Indenture Trustee may, with the prior written consent of the Note Insurer,
proceed to protect and enforce its rights and the rights of the Noteholders and
the Note Insurer by any Proceedings the Indenture Trustee deems appropriate to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or enforce any other proper remedy. Any Proceedings brought by
the Indenture Trustee, on behalf of the Noteholders and the Note Insurer, or any
Noteholder against the Trust shall be limited to the preservation, enforcement
and foreclosure of the liens, assignments, rights and security interests under
the Indenture and no attachment, execution or other unit or process shall be
sought, issued or levied upon any assets, properties or funds of the Trust,
other than the Trust Estate relative to the Notes in respect of which such Event
of Default has occurred. If there is a foreclosure of any such liens,
assignments, rights and security interests under this Indenture, by private
power of sale or otherwise, no judgment for any deficiency upon the indebtedness
represented by the Notes may be sought or obtained by the Indenture Trustee or
any Noteholder against the Trust. The Indenture Trustee shall be entitled to
recover the costs and expenses expended by it pursuant to this Article V
including reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel.
Section 5.04. Remedies. If an Event of Default shall have occurred and
be continuing and the Notes been declared due and payable and such declaration
and its consequences have not been rescinded and annulled, the Indenture
Trustee, at the direction of the Note Insurer (subject to Section 5.17 hereof,
to the extent applicable) may, for the benefit of the Noteholders and the Note
Insurer, do one or more of the following:
(a) institute Proceedings for the collection of all amounts
then payable on the Notes, or under this Indenture, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Trust moneys adjudged due, subject in all cases to the
provisions of Sections 3.01 and 5.03 hereof;
(b) in accordance with Section 5.17 hereof, sell the Trust
Estate or any portion thereof or rights or interest therein, at one or
more public or private Sales called and conducted in any manner
permitted by law;
(c) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate;
(d) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee or the Holders
of the Notes and the Note Insurer hereunder; and
(e) refrain from selling the Trust Estate and apply all funds
on deposit in each of the Accounts pursuant to Section 5.07 hereof.
Section 5.05. Indenture Trustee May File Proofs of Claim. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement,
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composition or other judicial Proceeding relative to the Trust or any other
obligor upon any of the Notes or the property of the Trust or of such other
obligor or their creditors, the Indenture Trustee (irrespective of whether the
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Indenture Trustee shall have made any
demand on the Trust for the payment of any overdue principal or interest) shall,
with the prior written consent of the Note Insurer, be entitled and empowered,
by intervention in such Proceeding or otherwise to:
(a) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Notes and file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel), the Noteholders and the
Note Insurer allowed in such Proceeding, and
(b) collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such Proceeding is hereby authorized by each
Noteholder and the Note Insurer to make such payments to the Indenture
Trustee and, in the event that the Indenture Trustee shall consent to
the making of such payments directly to the Noteholders and the Note
Insurer, to pay to the Indenture Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel.
Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting any of the Notes or the rights of any Holder
thereof, or the Note Insurer, or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder or the Note Insurer in any such
Proceeding.
Section 5.06. Indenture Trustee May Enforce Claims Without Possession
of Notes. All rights of action and claims under this Indenture or any of the
Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any Proceeding
relating thereto, and any such Proceeding instituted by the Indenture Trustee,
at the direction of the Note Insurer, shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall be for the
ratable benefit of the Holders of the Notes and the Note Insurer in respect of
which such judgment has been recovered after payment of amounts required to be
paid pursuant to clause (a) of Section 5.07 hereof.
Section 5.07. Application of Money Collected. If the Notes have been
declared due and payable following an Event of Default and such declaration and
its consequences have not been rescinded and annulled, any money collected by
the Indenture Trustee with respect to each Class of Notes pursuant to this
Article V or otherwise and any other monies that may then be held or thereafter
received by the Indenture Trustee as security for such Class of Notes shall be
applied in the following order, at the date or dates fixed by the Indenture
Trustee and, in case of the payment of the entire amount due on account of
principal of, and interest on, such Class of Notes, upon presentation and
surrender thereof:
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(a) first, to the Indenture Trustee, any unpaid Indenture
Trustee Fees with respect to such Class then due and any other amounts
payable and due to the Indenture Trustee with respect to such Class
under this Indenture, including any costs or expenses incurred by it in
connection with the enforcement of the remedies provided for in this
Article V;
(b) second, to the Servicer, any amounts required to pay the
Servicer for any unpaid Servicing Fees with respect to such Class then
due and to reimburse the Servicer for Periodic Advances with respect to
such Class previously made by, and not previously reimbursed to or
retained by, the Servicer and, upon the final liquidation of the
related Mortgage Loan or the final liquidation of the Trust Estate,
Servicing Advances with respect to such Class previously made by, and
not previously reimbursed to or retained by, the Servicer;
(c) third, to the payment of Interest Distribution Amounts
then due and unpaid upon the Outstanding Notes of such Class through
the day preceding the date on which such payment is made;
(d) fourth, to the payment of the Note Principal Balance of
each of the Outstanding Notes of such Class, up to the amount of their
respective unpaid Note Principal Balance, ratably, without preference
or priority of any kind;
(e) fifth, to the Note Insurer, as subrogee to the rights of
the Noteholders, (x) the aggregate amount necessary to reimburse the
Note Insurer for any unreimbursed Reimbursement Amounts for such Class
paid by the Note Insurer on prior Distribution Dates, together with
interest thereon at the "Late Payment Rate" specified in the Insurance
Agreement from the date such Reimbursement Amounts were due to the Note
Insurer to such Distribution Date, (y) the amount of any unpaid Premium
Amount for such Class then due, together with interest thereon at the
"Late Payment Rate" specified in the Insurance Agreement from the date
such amounts were due to such Distribution Date and (z) any other
amounts due and owing to the Note Insurer for such Class under the
Insurance Agreement;
(f) sixth, to the payment of any Net Mortgage Loan Interest
Shortfalls of such Class through the day preceding the date on which
such payment is made;
(g) seventh, for payment in respect of the other Class of
Notes, in the priority set forth in this Section 5.07, to the extent of
any shortfall in the payment of the amounts described in clauses (a)
through (f) with respect to such other Class;
(h) eighth, the remainder to the Holder of Trust Certificate
relating to such Class.
Section 5.08. Limitation on Suits. No Holder of a Note shall have any
right to institute any Proceedings, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(a) such Holder has previously given written notice to the
Indenture Trustee and the Note Insurer of a continuing Event of
Default;
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(b) the Holders of Notes representing not less than 25% of the
Note Principal Balance of the Outstanding Notes of both Classes shall
have made written request to the Indenture Trustee to institute
Proceedings in respect of such Event of Default in its own name as
Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture
Trustee indemnity in full against the costs, expenses and liabilities
to be incurred in compliance with such request;
(d) the Indenture Trustee, for sixty (60) days after its
receipt of such notice, request and offer of indemnity, has failed to
institute any such Proceeding;
(e) no direction inconsistent with such written request has
been given to the Indenture Trustee during such sixty (60) day period
by the Holders of Notes representing more than 50% of the Note
Principal Balance of the Outstanding Notes of both Classes; and
(f) the consent of the Note Insurer shall have been obtained;
it being understood and intended that no one or more Holders of Notes
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders of Notes or to obtain or to
seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders of
Notes.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than 50% of the Note Principal Balances of the
Outstanding Notes of both Classes, the Indenture Trustee shall take the action
prescribed by the group representing a greater percentage of the Note Principal
Balances of the Outstanding Notes of both Classes.
Section 5.09. Unconditional Rights of Noteholders to Receive Principal
and Interest. Subject to the provisions in this Indenture (including Sections
3.01 and 5.03 hereof) limiting the right to recover amounts due on a Note to
recovery from amounts in the portion of the Trust Estate relating to such Note,
the Holder of any Note shall have the right, to the extent permitted by
applicable law, which right is absolute and unconditional, to receive payment of
each installment of interest on such Note on the respective Distribution Date
for such installments of interest, to receive payment of each installment of
principal of such Note when due (or, in the case of any Note called for
redemption, on the date fixed for such redemption) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
Section 5.10. Restoration of Rights and Remedies. If the Indenture
Trustee, the Note Insurer or any Noteholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason, or has been determined to be adverse
to the Indenture Trustee, the Note Insurer or to such Noteholder, then and in
every such case the Indenture Trustee, the Note Insurer and the Noteholders
shall, subject to any determination in such Proceeding, be restored severally
and
26
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee, the Note Insurer and the Noteholders shall
continue as though no such Proceeding had been instituted.
Section 5.11. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Note Insurer or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.12. Delay or Omission Not Waiver. No delay or omission of the
Indenture Trustee, the Note Insurer or of any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee, the Note Insurer or to the Noteholders may be exercised from
time to time, and as often as may be deemed expedient, by the Indenture Trustee,
the Note Insurer or by the Noteholders with the prior consent of the Note
Insurer, as the case may be.
Section 5.13. Control by Noteholders. The Holders of Notes representing
more than 50% of the Note Principal Balance of the Outstanding Notes of both
Classes on the applicable Record Date shall, with the consent of the Note
Insurer, have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee or exercising any
trust or power conferred on the Indenture Trustee; provided that:
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) any direction to the Indenture Trustee to undertake a Sale
of the Trust Estate shall be by the Holders of Notes representing the
percentage of the Note Principal Balance of the Outstanding Notes
specified in Section 5.17(b)(i) hereof, unless Section 5.17(b)(ii)
hereof is applicable; and
(c) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction; provided, however, that, subject to Section 6.01 hereof, the
Indenture Trustee need not take any action that it determines might
involve it in liability or be unjustly prejudicial to the Noteholders
not consenting.
Section 5.14. Waiver of Past Defaults. The Holders of Notes
representing more than 50% of the Note Principal Balance of the Outstanding
Notes of both Classes on the applicable Record Date may on behalf of the Holders
of all the Notes, and with the consent of the Note Insurer, waive any past
Default hereunder and its consequences, except a Default:
(a) in the payment of principal or any installment of interest
on any Note; or
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(b) in respect of a covenant or provision hereof that under
Section 9.02 hereof cannot be modified or amended without the consent
of the Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 5.15. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.15 shall not apply to any suit instituted by the
Indenture Trustee, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate Notes representing more than 10% of the
Note Principal Balance of the Outstanding Notes of both Classes, or to any suit
instituted by any Noteholder for the enforcement of the payment of any Interest
Distribution Amount or Principal Distribution Amount on any Note on or after the
related Distribution Date or for the enforcement of the payment of principal of
any Note on or after the Final Stated Maturity Date (or, in the case of any Note
called for redemption, on or after the applicable Redemption Date).
Section 5.16. Waiver of Stay or Extension Laws. The Trust covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension of law wherever enacted, now or at any time hereafter in
force, that may affect the covenants in, or the performance of, this Indenture;
and the Trust (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 5.17. Sale of Trust Estate. (a) The power to effect any sale (a
"Sale") of any portion of the Trust Estate pursuant to Section 5.04 hereof shall
not be exhausted by any one or more Sales as to any portion of the Trust Estate
remaining unsold, but shall continue unimpaired until the entire Trust Estate
shall have been sold or all amounts payable on the Notes and under this
Indenture with respect thereto shall have been paid. The Indenture Trustee may
from time to time postpone any public Sale by public announcement made at the
time and place of such Sale.
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(b) To the extent permitted by law, the Indenture Trustee shall not in
any private Sale sell or otherwise dispose of the Trust Estate, or any portion
thereof, unless:
(i) the Holders of Notes representing not less than 50% of the
Note Principal Balance of the Notes of both Classes then Outstanding
consent to or direct the Indenture Trustee to make such Sale; or
(ii) the proceeds of such Sale would be not less than the
entire amount that would be payable to the Holders of the Notes, in
full payment thereof in accordance with Section 5.07 hereof, on the
Distribution Date next succeeding the date of such Sale.
The purchase by the Indenture Trustee of all or any portion of the
Trust Estate at a private Sale shall not be deemed a Sale or disposition thereof
for purposes of this Section 5.17(b). In the absence of a Note Insurer Default,
no Sale hereunder shall be effective without the consent of the Note Insurer.
(c) Unless the Holders of all Outstanding Notes have otherwise
consented or directed the Indenture Trustee, at any public Sale of all or any
portion of the Trust Estate at which a minimum bid equal to or greater than the
amount described in paragraph (ii) of subsection (b) of this Section 5.17 has
not been established by the Indenture Trustee and no Person bids an amount equal
to or greater than such amount, the Indenture Trustee, acting in its capacity as
Indenture Trustee (i) on behalf of the Noteholders and the Note Insurer, shall
prevent such Sale and bid an amount (which shall include the Indenture Trustee's
right, in its capacity as Indenture Trustee, to credit bid) at least $1.00 more
than the highest other bid in order to preserve the Trust Estate on behalf of
the Noteholders and the Note Insurer.
(d) In connection with a Sale of all or any portion of the Trust
Estate:
(i) any Holder or Holders of Notes may bid for and purchase
the property offered for Sale, and upon compliance with the terms of
sale may hold, retain and possess and dispose of such property, without
further accountability, and may, in paying the purchase money therefor,
deliver any Outstanding Notes or claims for interest thereon in lieu of
cash up to the amount that shall, upon distribution of the net proceeds
of such Sale, be payable thereon, and such Notes, in case the amounts
so payable thereon shall be less than the amount due thereon, shall be
returned to the Holders thereof after being appropriately stamped to
show such partial payment;
(ii) the Indenture Trustee may bid for and acquire the
property offered for Sale in connection with any public Sale thereof,
and, in lieu of paying cash therefor, may make settlement for the
purchase price by crediting the gross Sale price against the sum of (A)
the amount that would be payable to the Holders of the Notes as a
result of such Sale in accordance with Section 5.07 hereof on the
Distribution Date next succeeding the date of such Sale and (B) the
expenses of the Sale and of any Proceedings in connection therewith
which are reimbursable to it, without being required to produce the
Notes in order to complete any such Sale or in order for the net Sale
price to be credited against such Notes, and any property so acquired
by the Indenture Trustee shall be held and dealt with by it in
accordance with the provisions of this Indenture;
29
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Estate in connection with a Sale thereof,
(iv) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Trust to transfer and convey its
interest in any portion of the Trust Estate in connection with a Sale
thereof, and to take all action necessary to effect such Sale; and
(v) no purchaser or transferee at such a Sale shall be bound
to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any moneys.
Section 5.18. Action on Notes. The Indenture Trustee's right to seek
and recover judgment under this Indenture shall not be affected by the seeking,
obtaining or application of any other relief under or with respect to this
Indenture. Neither the lien of this Indenture nor any rights or remedies of the
Indenture Trustee, the Note Insurer or the Holders of Notes shall be impaired by
the recovery of any judgment by the Indenture Trustee against the Trust or by
the levy of any execution under such judgment upon any portion of the Trust
Estate.
Section 5.19. No Recourse to Other Trust Estates or Other Assets of the
Trust. The Trust Estate Granted to the Indenture Trustee as security for the
Notes serves as security only for the Notes. Holders of the Notes shall have no
recourse against the trust estate granted as security for any other series of
Notes issued by the Trust, and no judgment against the Trust for any amount due
with respect to the Notes may be enforced against either the trust estate
securing any other series or any other assets of the Trust, nor may any
prejudgment lien or other attachment be sought against any such other trust
estate or any other assets of the Trust. The Noteholders shall have no recourse
against the Owner Trustee, the Indenture Trustee, Note Registrar, Authenticating
Agent, Collateral Agent, the Depositor, the Unaffiliated Seller, the Servicer or
any of their respective Affiliates, or to the assets of any of the foregoing
entities.
Section 5.20. Application of the Trust Indenture Act. Pursuant to
Section 316(a) of the TIA, all provisions automatically provided for in Section
316(a) are hereby expressly excluded.
Section 5.21. Note Insurer Default. Notwithstanding anything elsewhere
in this Indenture or in the Notes to the contrary, if a Note Insurer Default
exists, the provisions of this Article V and all other provisions of this
Indenture which (a) permit the Note Insurer to exercise rights of the
Noteholders, (b) restrict the ability of the Noteholders or the Indenture
Trustee to act without the consent or approval of the Note Insurer, (c) provide
that a particular act or thing must be acceptable to the Note Insurer, (d)
permit the Note Insurer to direct (or otherwise to require) the actions of the
Indenture Trustee or the Noteholders, (e) provide that any action or omission
taken with the consent, approval or authorization of the Note Insurer shall be
authorized hereunder or shall not subject the party taking or omitting to take
such action to any liability hereunder or (f) which have a similar effect, shall
be of no further force and effect and the Indenture Trustee shall administer the
Trust Estate and perform its obligations hereunder solely for the benefit of the
Holders of the Notes. Nothing in the foregoing sentence, nor any action
30
taken pursuant thereto or in compliance therewith, shall be deemed to have
released the Note Insurer from any obligation or liability it may have to any
party or to the Noteholders hereunder, under any other agreement, instrument or
document (including, without limitation, the Note Insurance Policy) or under
applicable law.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee. (a) If an Event of Default
has occurred and is continuing, the Indenture Trustee shall exercise such of the
rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee need perform only those duties that
are specifically set forth in this Indenture and no others and no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may request and conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture. The Indenture Trustee
shall, however, examine such certificates and opinions to determine
whether they conform on their face to the requirements of this
Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of subsection (b)
of this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Sections 5.13 or 5.17
hereof or exercising any trust or power or remedy conferred upon the
Indenture Trustee under this Indenture.
(d) Except with respect to duties of the Indenture Trustee prescribed
by the TIA, as to which this Section 6.01(d) shall not apply, for all purposes
under this Indenture, the Indenture Trustee shall not be deemed to have notice
or knowledge of any Event of Default described in Sections 5.01(e) or 5.01(f)
hereof or any Default described in Sections 5.01(c) or
31
5.01(d) hereof or of any event described in Section 3.05 hereof unless a
Responsible Officer assigned to and working in the Indenture Trustee's corporate
trust department and having direct responsibility for this Indenture has actual
knowledge thereof or unless written notice of any event that is in fact such an
Event of Default or Default is received by the Indenture Trustee at the
Corporate Trust Office, and such notice references the Notes generally, the
Trust, the Trust Estate or this Indenture.
(e) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it under this Indenture or the other Basic Documents.
(f) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to the provisions of this Section 6.01.
(g) Notwithstanding any extinguishment of all right, title and interest
of the Trust in and to the Trust Estate following an Event of Default and a
consequent declaration of acceleration of the maturity of the Notes, whether
such extinguishment occurs through a Sale of the Trust Estate to another Person,
the acquisition of the Trust Estate by the Indenture Trustee or otherwise, the
rights, powers and duties of the Indenture Trustee with respect to the Trust
Estate (or the proceeds thereof), the Noteholders and the Note Insurer and the
rights of Noteholders and the Note Insurer shall continue to be governed by the
terms of this Indenture.
(h) The Indenture Trustee, the Collateral Agent or any successor
Collateral Agent appointed pursuant to Section 9.08 of the Sale and Servicing
Agreement shall at all times retain possession of the Indenture Trustee's
Mortgage Files in the State of Delaware or the State of New York (or, with
respect to the Chase Bank of Texas, N.A., as initial Collateral Agent, in the
State of Texas), except for those Indenture Trustee's Mortgage Files or portions
thereof released to the Servicer or the Note Insurer pursuant to this Indenture,
the Unaffiliated Seller's Agreement or the Sale and Servicing Agreement.
(i) Subject to the other provisions of this Indenture and without
limiting the generality of this Section 6.01, the Indenture Trustee shall have
no duty (A) to see to any recording, filing, or depositing of this Indenture or
any agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording, filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Estate from funds available in the Distribution
Accounts or (D) to confirm or verify the contents of any reports or certificates
of the Servicer delivered to the Indenture Trustee pursuant to this Indenture
believed by the Indenture Trustee to be genuine and to have been signed or
presented by the proper party or parties.
Section 6.02. Notice of Default. Immediately after the occurrence of
any Default known to the Indenture Trustee, the Indenture Trustee shall transmit
by mail to the Note
32
Insurer and the Depositor notice of each such Default and, within ninety (90)
days after the occurrence of any Default known to the Indenture Trustee, the
Indenture Trustee shall transmit by mail to all Holders of Notes notice of each
such Default, unless such Default shall have been cured or waived; provided,
however, that in no event shall the Indenture Trustee provide notice, or fail to
provide notice of a Default known to the Indenture Trustee in a manner contrary
to the requirements of the Trust Indenture Act. Concurrently with the mailing of
any such notice to the Holders of the Notes, the Indenture Trustee shall
transmit by mail a copy of such notice to the Rating Agencies.
Section 6.03. Rights of Indenture Trustee. (a) Except as otherwise
provided in Section 6.01 hereof, the Indenture Trustee may rely on, and be
protected in acting or refraining to act upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Indenture
Trustee need not investigate any fact or matter stated in any such document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on any such Officer's Certificate or Opinion of Counsel.
(c) With the consent of the Note Insurer, which consent shall not be
unreasonably withheld, the Indenture Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith that it believes to be authorized or within its
rights or powers.
(e) The Indenture Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Indenture or to institute, conduct
or defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Noteholders or the Note Insurer, pursuant to the
provisions of this Indenture, unless such Noteholders or the Note Insurer shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or thereby.
(f) The Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the Noteholders
or the Note Insurer; provided, however, that if the payment within a reasonable
time to the Indenture Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Indenture Trustee, not reasonably assured to the Indenture Trustee by the
security afforded to it by the terms of this Indenture, the Indenture Trustee
may require reasonable indemnity against such cost, expense or liability as a
condition to taking any such action.
(g) The right of the Indenture Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty, and the Indenture
Trustee shall not
33
be answerable for anything other than its negligence or willful misconduct in
the performance of such act.
Section 6.04. Not Responsible for Recitals or Issuance of Notes. The
recitals contained herein and in the Notes, except, with respect to the
Indenture Trustee, the certificates of authentication on the Notes, shall be
taken as the statements of the Trust, and the Owner Trustee, the Indenture
Trustee and the Authenticating Agent assume no responsibility for their
correctness. The Owner Trustee and Indenture Trustee make no representations
with respect to the Trust Estate or as to the validity or sufficiency of this
Indenture or of the Notes. Neither the Indenture Trustee nor the Owner Trustee
shall be accountable for the use or application by the Trust of the Notes or the
proceeds thereof or any money paid to the Trust or upon a Trust Order pursuant
to the provisions hereof.
Section 6.05. May Hold Notes. The Indenture Trustee, any Agent, or any
other agent of the Trust, in its individual or any other capacity, may become
the owner or pledgee of Notes and, subject to Sections 6.07 and 6.13 hereof, may
otherwise deal with the Trust or any Affiliate of the Trust with the same rights
it would have if it were not Indenture Trustee, Agent or such other agent.
Section 6.06. Money Held in Trust. Money held by the Indenture Trustee
in trust hereunder need not be segregated from other funds except to the extent
required by this Indenture or by law. The Indenture Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Trust and except to the extent of income or other gain on
investments that are obligations of the Indenture Trustee, in its commercial
capacity, and income or other gain actually received by the Indenture Trustee on
investments, which are obligations of others.
Section 6.07. Eligibility, Disqualification. Irrespective of whether
this Indenture is qualified under the TIA, this Indenture shall always have an
indenture trustee who satisfies the requirements of TIA Sections 310(a)(1) and
310(a)(5). The Indenture Trustee shall always have a combined capital and
surplus as stated in Section 6.08 hereof. The Indenture Trustee shall be subject
to TIA Section 310(b).
Section 6.08. Indenture Trustee's Capital and Surplus. The Indenture
Trustee shall at all times (a)(i) have a combined capital and surplus of at
least $50,000,000, or (ii) be a member of a bank holding company system, the
aggregate combined capital and surplus of which is at least $100,000,000 and (b)
be rated (or have long-term debt rated) "BBB" or better by S&P and "Baa2" by
Xxxxx'x; provided, however, that the Indenture Trustee's separate capital and
surplus shall at all times be at least the amount required by TIA Section
310(a)(2). If the Indenture Trustee publishes annual reports of condition of the
type described in TIA Section 310(a)(1), its combined capital and surplus for
purposes of this Section 6.08 shall be as set forth in the latest such report.
If at any time the Indenture Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.08 and TIA Section 310(a)(2), it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article VI.
Section 6.09. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Indenture Trustee and no appointment of a
successor Indenture
34
Trustee pursuant to this Article VI shall become effective until the acceptance
of appointment by the successor Indenture Trustee under Section 6.10 hereof.
(b) The Indenture Trustee may resign at any time by giving written
notice thereof to the Trust, the Note Insurer and each Rating Agency. If an
instrument of acceptance by a successor Indenture Trustee shall not have been
delivered to the Indenture Trustee within thirty (30) days after the giving of
such notice of resignation, the resigning Indenture Trustee may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee.
(c) The Indenture Trustee may be removed at any time by the Note
Insurer or, with the consent of the Note Insurer, by Act of the Holders
representing more than 50% of the Note Principal Balance of the Outstanding
Notes of both Classes, by written notice delivered to the Indenture Trustee and
to the Trust.
(d) If at any time:
(i) the Indenture Trustee shall have a conflicting interest
prohibited by Section 6.07 hereof and shall fail to resign or eliminate
such conflicting interest in accordance with Section 6.07 hereof after
written request therefor by the Trust or by any Noteholder; or
(ii) the Indenture Trustee shall cease to be eligible under
Section 6.08 hereof or shall become incapable of acting or shall be
adjudged bankrupt or insolvent, or a receiver of the Indenture Trustee
or of its property shall be appointed, or any public officer shall take
charge or control of the Indenture Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation;
then, in any such case, (x) the Owner Trustee, on behalf of the Trust, by a
Trust Order, with the consent of the Note Insurer, may remove the Indenture
Trustee, and the Owner Trustee, on behalf of the Trust by a Trust Order, shall
join with the Indenture Trustee in the execution, delivery and performance of
all instruments and agreements necessary or proper to appoint a successor
Indenture Trustee acceptable to the Note Insurer and to vest in such successor
Indenture Trustee any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Indenture; provided, however,
if the Owner Trustee, on behalf of the Trust and the Note Insurer do not join in
such appointment within fifteen (15) days after the receipt by it of a request
to do so, or in case an Event of Default has occurred and is continuing, the
Indenture Trustee may petition a court of competent jurisdiction to make such
appointment, or (y) subject to Section 5.15 hereof, and, in the case of a
conflicting interest as described in clause (i) above, unless the Indenture
Trustee's duty to resign has been stayed as provided in TIA Section 310(b), the
Note Insurer or any Noteholder who has been a bona fide Holder of a Note for at
least six (6) months may, on behalf of himself and all others similarly
situated, with the consent of the Note Insurer, petition any court of competent
jurisdiction for the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Indenture
Trustee for any cause, the Owner Trustee, on behalf of the Trust, by a Trust
Order shall promptly appoint a successor Indenture
35
Trustee acceptable to the Note Insurer. If within one (1) year after such
resignation, removal or incapability or the occurrence of such vacancy a
successor Indenture Trustee shall be appointed by the Note Insurer or, with the
consent of the Note Insurer, by Act of the Holders of Notes representing more
than 50% of the Note Principal Balance of the Outstanding Notes of both Classes
delivered to the Trust and the retiring Indenture Trustee, the successor
Indenture Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Indenture Trustee and supersede the
predecessor Indenture Trustee appointed by the Trust. If no successor Indenture
Trustee shall have been so appointed by the Trust, the Note Insurer or
Noteholders and shall have accepted appointment in the manner hereinafter
provided, any Noteholder who has been a bona fide Holder of a Note for at least
six (6) months may, on behalf of himself and all others similarly situated, with
the consent of the Note Insurer, petition any court of competent jurisdiction
for the appointment of a successor Indenture Trustee.
(f) The Servicer, on behalf of the Trust, shall give notice of each
resignation and each removal of the Indenture Trustee and each appointment of a
successor Indenture Trustee to the Holders of Notes and the Note Insurer. Each
notice shall include the name of the successor Indenture Trustee and the address
of its Corporate Trust Office.
Section 6.10. Acceptance of Appointment by Successor Indenture Trustee.
Every successor Indenture Trustee appointed hereunder shall execute, acknowledge
and deliver to the Trust, the Note Insurer and the retiring Indenture Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Indenture Trustee shall become effective and such successor
Indenture Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Indenture
Trustee. Notwithstanding the foregoing, on request of the Owner Trustee, on
behalf of the Trust, or the successor Indenture Trustee, such retiring Indenture
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Indenture Trustee all the rights, powers and
trusts of the retiring Indenture Trustee, and shall duly assign, transfer and
deliver to such successor Indenture Trustee all property and money held by such
retiring Indenture Trustee hereunder. Upon request of any such successor
Indenture Trustee, the Owner Trustee, on behalf of the Trust, shall, with the
written consent of the Note Insurer, execute and deliver any and all instruments
for more fully and certainly vesting in and confirming to such successor
Indenture Trustee all such rights, powers and trusts.
No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be qualified
and eligible under this Article VI.
Section 6.11. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee. Any corporation or banking association into which
the Indenture Trustee may be merged or converted or with which it may be
consolidated, or any corporation or banking association resulting from any
merger, conversion or consolidation to which the Indenture Trustee shall be a
party, or any corporation or banking association succeeding to all or
substantially all of the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee hereunder; provided, that such
corporation or banking association shall be otherwise qualified and eligible
under this Article VI, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Notes have
been
36
authenticated, but not delivered, by the Indenture Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating
Indenture Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Indenture Trustee had
authenticated such Notes.
Section 6.12. Preferential Collection of Claims Against Trust. The
Indenture Trustee (and any co-trustee or separate trustee) shall be subject to
TIA Section 311(a), excluding any creditor relationship listed in TIA Section
31l(b), and an Indenture Trustee (and any co-trustee or separate trustee) who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.13. Co-Indenture Trustees and Separate Indenture Trustees. At
any time or times, for the purpose of meeting the legal requirements of the TIA
or of any jurisdiction in which any of the Trust Estate may at the time be
located, the Indenture Trustee shall have power to appoint, and, upon the
written request of the Indenture Trustee, the Note Insurer or of the Holders of
Notes representing more than 50% of the Note Principal Balance of the
Outstanding Notes of both Classes with respect to which a co-trustee or separate
trustee is being appointed, with the written consent of the Note Insurer, the
Owner Trustee, on behalf of the Trust, shall for such purpose join with the
Indenture Trustee in the execution, delivery and performance of all instruments
and agreements necessary or proper to appoint, one or more Persons approved by
the Indenture Trustee either to act as co-trustee, jointly with the Indenture
Trustee, of all or any part of the Trust Estate, or to act as separate trustee
of any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section 6.13. If the Owner Trustee, on
behalf of the Trust, does not join in such appointment within fifteen (15) days
after the receipt by it of a request to do so, or in case an Event of Default
has occurred and is continuing, the Indenture Trustee alone shall have power to
make such appointment. All fees and expenses of any co-trustee or separate
trustee shall be payable by the Trust.
Should any written instrument from the Trust be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Owner Trustee, on behalf of the Trust, with the written consent of the Note
Insurer.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:
(a) The Notes shall be authenticated and delivered and all
rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Indenture Trustee
hereunder, shall be exercised, solely by the Indenture Trustee.
(b) The rights, powers, duties and obligations hereby
conferred or imposed upon the Indenture Trustee in respect of any
property covered by such appointment shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee or by the
37
Indenture Trustee and such co-trustee or separate trustee jointly, as
shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the
Indenture Trustee shall be incompetent or unqualified to perform such
act, in which event such rights, powers, duties and obligations shall
be exercised and performed by such co-trustee or separate trustee.
(c) The Indenture Trustee at any time, by an instrument in
writing, executed by it, with the concurrence of the Owner Trustee, on
behalf of the Trust, evidenced by a Trust Order, may accept the
resignation of or remove any co-trustee or separate trustee appointed
under this Section 6.13, and, in case an Event of Default has occurred
and is continuing, the Indenture Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee
without the concurrence of the Trust, but upon the written request of
the Indenture Trustee, the Owner Trustee, on behalf of the Trust, shall
join with the Indenture Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to
effectuate such resignation or removal. A successor to any co-trustee
or separate trustee so resigned or removed may be appointed in the
manner provided in this Section 6.13.
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Indenture
Trustee, or any other such trustee hereunder.
(e) Any Act of Noteholders delivered to the Indenture Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
Section 6.14. Authenticating Agents. The Owner Trustee, acting at the
direction of the Majority Certificateholders, shall appoint an Authenticating
Agent with power to act on the Trust's behalf and subject to the direction of
the Majority Certificateholders in the authentication and delivery of the Notes
designated for such authentication and, containing provisions therein for such
authentication (or with respect to which the Owner Trustee acting at the
direction of the Majority Certificateholders, has made other arrangements,
satisfactory to the Indenture Trustee and such Authenticating Agent, for
notation on the Notes of the authority of an Authenticating Agent appointed
after the initial authentication and delivery of such Notes) in connection with
transfers and exchanges under Section 2.06 hereof, as fully to all intents and
purposes as though the Authenticating Agent had been expressly authorized by
Section 2.06 hereof to authenticate and deliver Notes. For all purposes of this
Indenture (other than in connection with the authentication and delivery of
Notes pursuant to Sections 2.05 and 2.11 hereof in connection with their initial
issuance), the authentication and delivery of Notes by the Authenticating Agent
pursuant to this Section 6.14 shall be deemed to be the authentication and
delivery of Notes "by the Indenture Trustee." Such Authenticating Agent shall at
all times be a Person that both meets the requirements of Section 6.07 hereof
for the Indenture Trustee hereunder and has an office for presentation of Notes
in the United States of America. The Indenture Trustee shall initially be the
Authenticating Agent and shall be the Note Registrar as provided in Section 2.06
hereof. The office from which the Indenture Trustee shall perform its duties as
Note Registrar and Authenticating Agent shall be its Corporate Trust Office. Any
Authenticating Agent appointed pursuant to the terms of this Section 6.14 or
pursuant to the
38
terms of any supplemental indenture shall deliver to the Indenture Trustee as a
condition precedent to the effectiveness of such appointment an instrument
accepting the trusts, duties and responsibilities of Authenticating Agent and of
Note Registrar or co-Note Registrar and indemnifying the Indenture Trustee for
and holding the Indenture Trustee harmless against, any loss, liability or
expense (including reasonable attorneys' fees) incurred without negligence or
bad faith on its part, arising out of or in connection with the acceptance,
administration of the trust or exercise of authority by such Authenticating
Agent, Note Registrar or co-Note Registrar.
Any corporation or banking association into which any Authenticating
Agent may be merged or converted or with which it may be consolidated, or any
corporation or banking association resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any
corporation or banking association succeeding to the corporate trust business of
any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 6.14, without the execution or filing of any further act on the part of
the parties hereto or the Authenticating Agent or such successor corporation or
banking association.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trust. The Owner Trustee, acting at the direction
of the Majority Certificateholders, may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and the Indenture Trustee. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section 6.14, the
Owner Trustee, acting at the direction of the Majority Certificateholders, shall
promptly appoint a successor Authenticating Agent, shall give written notice of
such appointment to the Indenture Trustee, and shall mail notice of such
appointment to all Holders of Notes.
The Indenture Trustee agrees, subject to Section 6.01(e) hereof, to pay
to any Authenticating Agent from time to time reasonable compensation for its
services and the Indenture Trustee shall be entitled to be reimbursed for such
payments pursuant to Section 6.16 hereof. The provisions of Sections 2.09, 6.04
and 6.05 hereof shall be applicable to any Authenticating Agent.
Section 6.15. Review of Mortgage Files. (a) The Indenture Trustee
shall, on or prior to the Closing Date, execute and deliver the acknowledgement
of receipt of the Note Insurance Policy required by Section 2.06(a) of the Sale
and Servicing Agreement.
(b) The Indenture Trustee shall cause the Collateral Agent to (i) on or
prior to the Closing Date, execute and deliver the acknowledgement of receipt of
the Mortgage Loans required by Section 2.06(b)(i) of the Sale and Servicing
Agreement, (ii) on or prior to thirty (30) days following the Closing Date,
execute and deliver the Initial Certificate required by Section 2.06(b)(ii) of
the Sale and Servicing Agreement, and (iii) on or prior to ninety (90) days
following the Closing Date, execute and deliver the Final Certification required
by Section 2.06(b)(iii) of the Sale and Servicing Agreement.
(c) In giving each of the acknowledgements, the Initial Certification
and the Final Certification referred to in clauses (a) and (b) of this Section
6.15, neither the Indenture Trustee
39
nor the Collateral Agent shall be under any duty or obligation (i) to inspect,
review or examine any such documents, instruments, securities or other papers to
determine that they or the signatures thereto are genuine, enforceable, or
appropriate for the represented purpose or that they have actually been recorded
or that they are other than what they purport to be on their face or (ii) to
determine whether any Mortgage File should include a flood insurance policy, any
rider, addenda, surety or guaranty agreement, power of attorney, buy down
agreement, assumption agreement, modification agreement, written assurance or
substitution agreement.
(d) In the event that the Mortgage Loans are required to be recorded in
accordance with the provisions of Article II of the Sale and Servicing
Agreement, no later than the fifth Business Day of each third month, commencing
in June 1999, the Indenture Trustee shall cause the Collateral Agent to deliver
to the Servicer and the Note Insurer a recordation report dated as of the first
day of such month, identifying those Mortgage Loans for which it has not yet
received (i) an original recorded Mortgage or a copy thereof certified to be
true and correct by the public recording office in possession of such Mortgage
or (ii) an original recorded Assignment of Mortgage to the Indenture Trustee and
any required intervening Assignments of Mortgage or a copy thereof certified to
be a true and correct copy by the public recording office in possession of such
Assignment of Mortgage.
Section 6.16. Indenture Trustee Fees and Expenses. The Indenture
Trustee shall be entitled to receive the Indenture Trustee Fee on each
Distribution Date as provided herein. The Indenture Trustee also shall be
entitled to (i) payment of or reimbursement for expenses, disbursements and
advances incurred or made by the Indenture Trustee in accordance with any of the
provisions of this Indenture (including, but not limited to, the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ), and (ii) indemnification against losses,
liability and expenses, including reasonable attorney's fees, incurred, arising
out of or in connection with this Indenture, the Notes and the Sale and
Servicing Agreement. The Indenture Trustee and any director, officer, employee
or agent of the Indenture Trustee shall be indemnified by the Trust and held
harmless against any loss, liability or reasonable expense incurred in
connection with this Indenture or the Notes, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance by the Indenture Trustee of its duties hereunder. The
obligations of the Servicer and the Trust under this Section 6.16 shall survive
termination of the Trust and payment of the Notes, and shall extend to any
co-Indenture Trustee or separate-Indenture Trustee appointed pursuant to this
Article VI.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Note Registrar to Furnish Indenture Trustee Names and
Addresses of Noteholders. (a) The Note Registrar shall furnish or cause to be
furnished to the Indenture Trustee (i) semiannually, not less than forty-five
(45) days nor more than sixty (60) days after the Distribution Date occurring
closest to six (6) months after the Closing Date and each Distribution Date
occurring at six (6) month intervals thereafter, all information in the
possession or control of the Note Registrar, in such form as the Indenture
Trustee may reasonably require, as to names and addresses of the Holders of
Notes, and (ii) at such other times, as the Indenture Trustee may
40
request in writing, within thirty (30) days after receipt by the Note Registrar
of any such request, a list of similar form and content as of a date not more
than ten (10) days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
(b) In addition to furnishing to the Indenture Trustee the Noteholder
lists, if any, required under clause (a) of this Section 7.01, the Note
Registrar shall also furnish all Noteholder lists, if any, required under
Section 3.03 hereof at the times required by such Section 3.03.
Section 7.02. Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list, if any, furnished to the Indenture Trustee as
provided in Section 7.01 hereof and the names and addresses of the Holders of
Notes received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in Section
7.01 hereof upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Trust, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
Section 7.03. Reports by Indenture Trustee. (a) Within sixty (60) days
after December 31 of each year (the "reporting date"), commencing with the year
after the issuance of the Notes, (i) the Indenture Trustee shall, if required by
TIA Section 313(a), mail to all Holders a brief report dated as of such
reporting date that complies with TIA Section 313(a); (ii) the Indenture Trustee
shall, to the extent not set forth in the Indenture Trustee's Remittance Report
pursuant to Section 2.08(d) hereof, also mail to Holders of Notes and the Note
Insurer with respect to which it has made advances, any reports with respect to
such advances that are required by TIA Section 313(b)(2); and, the Indenture
Trustee shall also mail to Holders of Notes and the Note Insurer any reports
required by TIA Section 313(b)(1). For purposes of the information required to
be included in any such reports pursuant to TIA Sections 313(a)(2), 313(b)(1)
(if applicable), or 313(b)(2), the principal amount of indenture securities
outstanding on the date as of which such information is provided shall be the
Note Principal Balance of the then Outstanding Notes covered by the report.
(b) A copy of each report required under this Section 7.03 shall, at
the time of such transmission to Holders of Notes and the Note Insurer be filed
by the Indenture Trustee with the Commission and with each securities exchange
upon which the Notes are listed. The Servicer, on behalf of the Trust, will
notify the Indenture Trustee when the Notes are listed on any securities
exchange.
Section 7.04. Reports by Trust. The Servicer, on behalf of the Trust,
(a) shall deliver to the Indenture Trustee within fifteen (15) days after the
Trust is required to file the same with the Commission copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may by rules
41
and regulations prescribe) that the Trust is required to file with the
Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, and (b) shall also comply with the other provisions of TIA
Section 314(a).
ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.01. Accounts; Investment; Collection of Moneys. (a) The Trust
hereby directs the Indenture Trustee to establish, on or before the Closing
Date, for each Class of Notes, at its Corporate Trust Office, one or more
Eligible Accounts that shall collectively be the "Distribution Account" for such
Class. The Indenture Trustee shall promptly deposit in the related Distribution
Account (i) the Servicer Remittance Amount for the related Pool received by it
from the Servicer on the Servicer Distribution Date pursuant to the Sale and
Servicing Agreement, (ii) any other funds from any deposits for such Pool to be
made by the Servicer pursuant to the Sale and Servicing Agreement, (iii) any
amount for such Pool required to be deposited in such Distribution Account
pursuant to this Section 8.01, (iv) all amounts for such Pool received pursuant
to Section 8.03 hereof, (v) any amount for such Pool required to be deposited
pursuant to Section 8.05 hereof, (vi) on each Distribution Date, in accordance
with the Servicer Remittance Report, the Shortfall Amount for the related Class,
until paid in full, first, from the Distribution Account relating to the other
Class of Notes, to the extent of the Net Monthly Excess Cashflow from the other
Pool of Mortgage Loans remaining after payment of any Net Mortgage Loan Interest
Shortfalls for such other Pool, second, from the Cross-collateralization Reserve
Account relating to this Class of Notes, and third, from the
Cross-collateralization Reserve Account relating to the other Class of Notes,
and (vii) all other amounts for such Pool received for deposit in such
Distribution Account, including the payment of any Loan Repurchase Price for a
Mortgage Loan in such Pool received by the Indenture Trustee. All amounts that
are deposited from time to time in a Distribution Account are subject to
withdrawal by the Indenture Trustee for the purposes set forth in Sections 8.02
hereof. All funds withdrawn from a Distribution Account pursuant to Section 8.02
hereof for the purpose of making payments to the Holders of Notes shall be
applied in accordance with Sections 3.03 and 8.02 hereof.
(b) The Trust hereby directs the Indenture Trustee to establish for
each Class of Notes, at its Corporate Trust Office, an Eligible Account which
shall be the "Pre-Funding Account" for such Class of Notes. On the Closing Date,
the Indenture Trustee shall deposit the Original Pre-Funded Amount for each
Class of Notes in the related Pre-Funding Account from the proceeds of the sale
of the related Class of Notes. The Indenture Trustee shall withdraw and
distribute or cause to be distributed funds on deposit therein only at the times
specified below, based on written instructions provided by the Servicer or other
party as indicated:
(i) on any Subsequent Transfer Date, the Unaffiliated Seller
shall instruct in writing the Indenture Trustee to withdraw from the
related Pre-Funding Account an amount equal to 100% of the aggregate
Principal Balances as of the related Subsequent Cut-Off Date of the
Subsequent Mortgage Loans sold to the Trust in respect of the related
Pool and pledged to the Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer, on such Subsequent Transfer Date and
pay such amount to or upon the order of the Unaffiliated Seller upon
satisfaction of the conditions set forth in Section 2.14 hereof
42
with respect to such transfer; the Indenture Trustee may conclusively
rely on such written instructions from the Unaffiliated Seller;
(ii) if the Pre-Funding Amount for a Class of Notes (exclusive
of Pre-Funding Earnings for such Class) has been reduced to $100,000 or
less by the April 1999 Distribution Date, then, on such Distribution
Date, after giving effect to any reductions in the related Pre-Funding
Account on such date, the Indenture Trustee shall withdraw, from the
related Pre-Funding Account on such date and deposit in the
Distribution Account relating to such Class, the amount on deposit in
such Pre-Funding Account, other than any Pre-Funding Earnings, for
payment to the related Noteholders as a prepayment of principal on such
Distribution Date;
(iii) if any amounts remain on deposit in either Pre-Funding
Account at the close of business on April 30, 1999, the Indenture
Trustee shall withdraw, from such Pre-Funding Account on the following
Distribution Date and deposit in the Distribution Account relating to
the related Class, the amount on deposit in such Pre-Funding Account,
other than any Pre-Funding Earnings, for payment to the related
Noteholders as a prepayment of principal on such Distribution Date; and
(iv) on the April 1999 and May 1999 Distribution Dates, the
Indenture Trustee shall transfer from each Pre-Funding Account to the
related Distribution Account, the Pre-Funding Earnings, if any,
applicable to such Distribution Date.
(c) The Trust hereby directs the Indenture Trustee to establish for
each Class of Notes, at its Corporate Trust Office, an Eligible Account which
shall be the "Capitalized Interest Account" for such Class of Notes. On the
Closing Date, the Indenture Trustee shall deposit the Original Capitalized
Interest Amount for each Class of Notes in the related Capitalized Interest
Account from the proceeds of the sale of the related Class of Notes. The
Indenture Trustee shall withdraw and distribute or cause to be distributed funds
on deposit therein only at the times specified below, based on written
instructions provided by the Servicer or other party as indicated:
(i) on the April 1999 and the May 1999 Distribution Dates, the
Indenture Trustee shall transfer from each Capitalized Interest Account
to the related Distribution Account, the applicable Capitalized
Interest Requirement, if any, for such Class and such Distribution
Date; and
(ii) on the Distribution Date immediately following, or on
which, the amount on deposit in the related Pre-Funding Account is
reduced to zero, any amounts remaining in either Capitalized Interest
Account, after taking into account the transfers in respect of the
Distribution Date described in clause (i) above, shall be paid to the
Unaffiliated Seller.
(d) The Trust hereby directs the Indenture Trustee to establish, on or
before the Closing Date, for each Class of Notes, at its Corporate Trust Office,
an Eligible Account that shall be the "Cross-collateralization Reserve Account"
for such Class. The Indenture Trustee
43
shall deposit and withdraw funds in each Cross-collateralization Reserve Account
in accordance with the provisions of Sections 8.01(a) and 8.02(a) hereof.
(e) So long as no Default or Event of Default shall have occurred and
be continuing, amounts held in the Accounts, other than the Note Insurance
Payment Account, shall be invested in Permitted Investments, which Permitted
Investments shall mature no later than the Business Day preceding the
immediately following Distribution Date.
All income or other gains, if any, from investment of moneys deposited
in the Distribution and Collection Accounts shall be for the benefit of the
Servicer and on each Distribution Date, any such amounts may be released from
the Accounts and paid to the Servicer as part of its compensation for acting as
Servicer. Any loss resulting from such investment of moneys deposited in an
Account shall be reimbursed immediately as incurred to the related Account by
the Servicer. Subject to Section 6.01 hereof and the preceding sentence, neither
the Indenture Trustee nor the Servicer shall in any way be held liable by reason
of any insufficiency in the Accounts.
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 Investment included therein (except to the
extent that the Indenture Trustee is the obligor and has defaulted thereon).
(f) Except as otherwise expressly provided herein, the Indenture
Trustee may demand payment or delivery of, and shall receive and collect,
directly and without intervention or assistance of any fiscal agent or other
intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall hold
all such money and property received by it as part of the Trust Estate and shall
apply it as provided in this Indenture.
If the Indenture Trustee shall not have received the Servicer
Remittance Amount by close of business on any related Servicer Distribution
Date, the Indenture Trustee shall, unless the Servicer shall have made
provisions satisfactory to the Indenture Trustee for delivery to the Indenture
Trustee of an amount equal to such Servicer Remittance Amount, deliver a notice,
with a copy to the Note Insurer, to the Servicer of its failure to remit such
Servicer Remittance Amount and that such failure, if not remedied by the close
of business on the Business Day after the date upon which such notice is
delivered to the Servicer, shall constitute a Servicer Event of Default under
the Sale and Servicing Agreement. If the Indenture Trustee shall subsequently
receive any such Servicer Remittance Amount by the close of business on such
Business Day, such Servicer Event of Default shall not be deemed to have
occurred. Notwithstanding any other provision hereof, the Indenture Trustee
shall deliver to the Servicer, or its designee or assignee, any Servicer
Remittance Amount received with respect to a Mortgage Loan after the related
Servicer Distribution Date to the extent that the Servicer previously made
payment or provision for payment with respect to such Servicer Remittance Amount
in accordance with this Section 8.01, and any such Servicer Remittance Amount
shall not be deemed part of the Trust Estate.
Except as otherwise expressly provided in this Indenture and the Sale
and Servicing Agreement, if, following delivery by the Indenture Trustee of the
notice described
44
above, the Servicer shall fail to remit the Servicer Remittance Amount on any
Servicer Distribution Date, the Indenture Trustee shall deliver a second notice
to the Servicer, the Trust and the Note Insurer by the close of business on the
third Business Day prior to the related Distribution Date indicating that a
Servicer Event of Default occurred and is continuing under the Sale and
Servicing Agreement. Thereupon, the Indenture Trustee shall take such actions as
are required of the Indenture Trustee under Article VII of the Sale and
Servicing Agreement. In addition, if a default occurs in any other performance
required under the Sale and Servicing Agreement, the Indenture Trustee may, and
upon the request of the Note Insurer or, with the consent of the Note Insurer,
the Holders of Notes representing more than 50% of the Note Principal Balance of
the Outstanding Notes of both Classes shall, take such action as may be
appropriate to enforce such payment or performance including the institution and
prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and to proceed thereafter as provided in Article V hereof.
Section 8.02. Distributions; Statements. On each Distribution Date,
unless the Notes have been declared due and payable pursuant to Section 5.02
hereof and moneys collected by the Indenture Trustee are being applied in
accordance with Section 5.07 hereof, Available Funds on deposit in each
Distribution Account on any Distribution Date or Redemption Date shall be
withdrawn from such Distribution Account, in the amounts required (based solely
on the Servicer's Remittance Report delivered to the Indenture Trustee on or
before such Distribution Date), for application on such Distribution Date in
respect of payments relating to the applicable Pool of Mortgage Loans and the
related Class of Notes as follows:
(i) to the Indenture Trustee, an amount equal to the Indenture
Trustee Fees then due to it with respect to the related Class of Notes;
(ii) from amounts then on deposit in the related Distribution
Account (excluding any Insured Payments), to the Note Insurer, the
lesser of (x) the excess of (i) the amount then on deposit in such
Distribution Account over (ii) the Insured Distribution Amount for such
Pool on such Distribution Date and (y) the sum of the amount of all
Reimbursement Amounts relating to such Class of Notes which have not
been previously paid as of such Distribution Date and any other amounts
relating to such Class then due to the Note Insurer pursuant to the
Insurance Agreement;
(iii) from amounts then on deposit in the related Distribution
Account, to the Holders of the related Class of Notes, the Distribution
Amount for such Class;
(iv) from amounts then on deposit in the related Distribution
Account, to the Holders of the related Class of Notes, the amount of
any Net Mortgage Loan Interest Shortfalls for such Class;
(v) from amounts then on deposit in the related Distribution
Account, to the Cross-collateralization Reserve Account relating to the
other Class of Notes, the Reserve Payment Amount for such Class;
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(vi) following the making by the Indenture Trustee of all
allocations, transfers and disbursements described above, from amounts
then on deposit in the related Distribution Account, the Indenture
Trustee shall distribute to the Holders of the related Trust
Certificates, the amount remaining on such Distribution Date, if any.
Section 8.03. Claims against the Note Insurance Policy. (a) Within two
(2) Business Days of receipt of each Servicer Remittance Report, the Indenture
Trustee shall determine with respect to the immediately following Distribution
Date, the amount to be on deposit in each Distribution Account on such
Distribution Date as a result of the (i) Servicer's remittance of the Servicer
Remittance Amount on the related Servicer Distribution Date, and (ii) any
transfers to each Distribution Account made from the related Capitalized
Interest Account and/or the related Pre-Funding Account relating to such
Distribution Date pursuant to Section 8.01 hereof, excluding the amount of any
Insured Payment and prior to the application of the amounts described in clauses
(i) through (vi) of Section 8.02 hereof for the related Distribution Date.
(b) If on any Distribution Date there is an Available Funds Shortfall
for either Pool, the Indenture Trustee shall complete a Notice in the form of
Exhibit A to the Note Insurance Policy and submit such notice to the Note
Insurer no later than 12:00 noon New York City time on the second Business Day
preceding such Distribution Date as a claim for an Insured Payment in an amount
equal to such Available Funds Shortfall for such Pool.
(c) The Indenture Trustee shall establish a separate Eligible Account
for the benefit of Holders of the Notes and the Note Insurer referred to herein
as the "Note Insurance Payment Account" over which the Indenture Trustee shall
have exclusive control and sole right of withdrawal. The Indenture Trustee shall
deposit upon receipt any amount paid under the Note Insurance Policy in the Note
Insurance Payment Account and distribute such amount only for purposes of
payment to the Noteholders of the related Pool of the Insured Distribution
Amount for such Pool for which a claim was made and such amount may not be
applied to satisfy any costs, expenses or liabilities of the Servicer, the
Indenture Trustee or the Trust. Amounts paid under the Note Insurance Policy, to
the extent needed to pay the Insured Distribution Amount shall be transferred to
the related Distribution Account on the related Distribution Date and disbursed
by the Indenture Trustee to the Noteholders in accordance with Section 8.02. It
shall not be necessary for such payments to be made by checks or wire transfers
separate from the checks or wire transfers used to pay the Insured Distribution
Amount with other funds available to make such payment. However, the amount of
any payment of principal or of interest on the Notes to be paid from funds
transferred from the Note Insurance Payment Account shall be noted as provided
in subsection (d) of this Section 8.03 in the Note Register and in the Indenture
Trustee's Remittance Report. Funds held in the Note Insurance Payment Account
shall not be invested. Any funds remaining in the Note Insurance Payment Account
on the first Business Day following a Distribution Date shall be returned to the
Note Insurer pursuant to the written instructions of the Note Insurer by the end
of such Business Day.
(d) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Note from moneys
received under the Note Insurance Policy. The Note Insurer shall have the right
to inspect such records at
46
reasonable times during normal business hours upon one (1) Business Day's prior
notice to the Indenture Trustee.
(e) In the event that the Indenture Trustee has received a certified
copy of an order of the appropriate court that any Insured Payment has been
voided in whole or in part as a preference payment under applicable bankruptcy
law, the Indenture Trustee shall so notify the Note Insurer, shall comply with
the provisions of the Note Insurance Policy to obtain payment by the Note
Insurer of such voided Insured Payment, and shall, at the time it provides
notice to the Note Insurer, notify, by mail to the Noteholders of the affected
Notes that, in the event any Noteholder's Insured Payment is so recovered, such
Noteholder will be entitled to payment pursuant to the Note Insurance Policy, a
copy of which shall be made available through the Indenture Trustee, the Note
Insurer or the Note Insurer's fiscal agent, if any, and the Indenture Trustee
shall furnish to the Note Insurer or its fiscal agent, if any, its records
evidencing the payments which have been made by the Indenture Trustee and
subsequently recovered from the Noteholders, and dates on which such payments
were made.
(f) The Indenture Trustee shall promptly notify the Note Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Indenture Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any distribution made with respect to the
Notes. Each Noteholder, by its purchase of Notes, the Servicer and the Indenture
Trustee agree that, the Note Insurer (so long as no Note Insurer Default exists)
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim,
including, without limitation, (i) the direction of any appeal of any order
relating to such Preference Claim and (ii) the posting of any surety,
supersedeas or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the Note Insurer shall be subrogated to, and each
Noteholder, the Servicer and the Indenture Trustee hereby delegate and assign to
the Note Insurer, to the fullest extent permitted by law, the rights of the
Servicer, the Indenture Trustee and each Noteholder in the conduct of any such
Preference Claim, including, without limitation, all rights of any party to any
adversary proceeding or action with respect to any court order issued in
connection with any such Preference Claim.
(g) The Indenture Trustee shall, upon retirement of the Notes, furnish
to the Note Insurer a notice of such retirement, and, upon retirement of the
Notes and the expiration of the term of the Note Insurance Policy, surrender the
Note Insurance Policy to the Note Insurer for cancellation.
(h) Unless a Note Insurer Default exists and is continuing, the
Indenture Trustee and the Trust shall cooperate in all respects with any
reasonable request by the Note Insurer for action to preserve or enforce the
Note Insurer's rights or interests hereunder without limiting the rights or
affecting the interests of the Noteholders as otherwise set forth herein.
(i) Each Noteholder, by its purchase of Notes, and the Indenture
Trustee hereby agree that, unless a Note Insurer Default exists and is
continuing, the Note Insurer shall have the right to direct all matters relating
to the Notes in any proceeding in a bankruptcy of the Trust,
47
including without limitation any proceeding relating to a Preference Amount and
the posting of any surety or Note pending any such appeal.
(j) Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Notes which is made with moneys
received pursuant to the terms of the Note Insurance Policy shall not be
considered payment of the Notes from the Trust. The Trust and the Indenture
Trustee acknowledge, and each Holder by its acceptance of a Note agrees, that
without the need for any further action on the part of the Note Insurer, the
Trust, the Indenture Trustee or the Note Registrar (x) to the extent the Note
Insurer makes payments, directly or indirectly, on account of principal of or
interest on the Notes to the Holders of such Notes, the Note Insurer will be
fully subrogated to, and each Noteholder, the Trust and the Indenture Trustee
hereby delegate and assign to the Note Insurer, to the fullest extent permitted
by law, the rights of such Holders to receive such principal and interest from
the Trust, including, without limitation, any amounts due to the Noteholders in
respect of securities law violations arising from the offer and sale of the
Notes, and (y) the Note Insurer shall be paid such amounts from the sources and
in the manner provided herein for the payment of such amounts.
Section 8.04. General Provisions Regarding the Distribution Accounts
and Mortgage Loans. (a) Each Distribution Account shall relate solely to the
Notes of the related Class and to the Mortgage Loans in the related Pool,
Permitted Investments and other property securing the related Notes. Funds and
other property in each Distribution Account shall not be commingled with the
other Distribution Account or any other moneys or property of the Trust or any
Affiliate thereof. Notwithstanding the foregoing, the Indenture Trustee may hold
any funds or other property received or held by it as part of a Distribution
Account in collective accounts maintained by it in the normal course of its
business and containing funds or property held by it for other Persons (which
may include the Trust or an Affiliate); provided, that such accounts are under
the sole control of the Indenture Trustee and the Indenture Trustee maintains
adequate records indicating the ownership of all such funds or property and the
portions thereof held for credit to the related Distribution Account.
(b) If any amounts are needed for payment from a Distribution Account
and sufficient uninvested funds are not available therein to make such payment,
the Indenture Trustee shall cause to be sold or otherwise converted to cash a
sufficient amount of the investments in such Distribution Account.
(c) The Indenture Trustee shall, at all times while any Notes are
Outstanding, maintain in its possession, or in the possession of an agent whose
actions with respect to such items are under the sole control of the Indenture
Trustee, all certificates or other instruments, if any, evidencing any
investment of funds in the Distribution Accounts. The Indenture Trustee shall
relinquish possession of such items, or direct its agent to do so, only for
purposes of collecting the final payment receivable on such investment or
certificate or, in connection with the sale of any investment held in the
Distribution Accounts, against delivery of the amount receivable in connection
with any sale.
(d) The Indenture Trustee shall not invest any part of the Trust Estate
in Permitted Investments that constitute uncertificated securities (as defined
in Section 8-102 of the Uniform Commercial Code, as enacted in the relevant
jurisdiction) or in any other book-entry securities
48
unless it has received an Opinion of Counsel reasonably satisfactory in form and
substance to the Indenture Trustee setting forth, with respect to each type of
security for which authority to invest is being sought, the procedures that must
be followed to maintain the lien and security interest created by this Indenture
with respect to the Trust Estate.
Section 8.05. Releases of Deleted Mortgage Loans. Upon notice or
discovery by a Responsible Officer of the Indenture Trustee that any of the
representations or warranties of the Unaffiliated Seller set forth in Section
3.03 of the Unaffiliated Seller's Agreement was materially incorrect or
otherwise misleading with respect to any Mortgage Loan as of the time made, the
Indenture Trustee shall direct the Unaffiliated Seller to either cure,
repurchase or substitute for such Mortgage Loan as provided in Section 3.05 of
the Unaffiliated Seller's Agreement. Upon any purchase of or substitution for a
Deleted Mortgage Loan by the Unaffiliated Seller in accordance with Section 3.05
of the Unaffiliated Seller's Agreement, the Indenture Trustee shall cause the
Collateral Agent to deliver the Indenture Trustee's Mortgage File relating to
such Deleted Mortgage Loan to the Unaffiliated Seller, and the Trust, the
Collateral Agent and the Indenture Trustee shall execute such instruments of
transfer as are necessary to convey title to such Deleted Mortgage Loan to the
Unaffiliated Seller from the lien of this Indenture.
Section 8.06. Reports by Indenture Trustee to Noteholders; Access to
Certain Information. On each Distribution Date, the Indenture Trustee shall
deliver the written reports required by Section 2.08(d) to Noteholders of record
as of the related Record Date (including the Clearing Agency, if any).
The Indenture Trustee shall make available at its Corporate Trust
Office, during normal business hours, for review by any Noteholder or any person
identified to the Indenture Trustee as a prospective Noteholder, originals or
copies of the following items: (a) the Indenture and any amendments thereto, (b)
all Indenture Trustee's Remittance Reports and other reports delivered since the
Closing Date pursuant to Section 2.08(d) hereof, (c) any Officers' Certificates
delivered to the Indenture Trustee since the Closing Date as described in the
Indenture and (d) any Accountants' reports delivered to the Indenture Trustee
since the Closing Date as required under the Sale and Servicing Agreement.
Copies of any and all of the foregoing items will be available from the
Indenture Trustee upon request; however, the Indenture Trustee will be permitted
to require payment of a sum sufficient to cover the reasonable costs and
expenses of providing such copies and shall not be required to provide such
copies without reasonable assurances that such sum will be paid.
Section 8.07. Release of Trust Estate. The Indenture Trustee shall, at
such time as there are no Notes Outstanding, release all of the Trust Estate to
the Trust (other than any cash held for the payment of the Notes pursuant to
Section 3.03 or 4.02 hereof).
Section 8.08. Amendment to Sale and Servicing Agreement. The Indenture
Trustee may, without the consent of any Holder, enter into or consent to any
amendment or supplement to the Sale and Servicing Agreement for the purpose of
increasing the obligations or duties of any party other than the Indenture
Trustee or the Holders of the Notes. The Indenture Trustee may, in its
discretion, decline to enter into or consent to any such supplement or
amendment: (i) unless the Indenture Trustee receives an Opinion of Counsel that
the position of the Holders would not be materially adversely affected or
written confirmation of satisfaction of
49
the Rating Agency Condition or (ii) if its own rights, duties or immunities
would be adversely affected.
Section 8.09. Delivery of the Mortgage Files Pursuant to Sale and
Servicing Agreement. As is appropriate for the servicing or foreclosure of any
Mortgage Loan, the Indenture Trustee shall cause the Collateral Agent to deliver
to the Servicer the Mortgage Files for such Mortgage Loan upon receipt by the
Indenture Trustee and the Collateral Agent on or prior to the date such release
is to be made of:
(a) such Officer's Certificates, if any, as are required by
the Sale and Servicing Agreement; and
(b) a Request for Release, executed by the Servicer, providing
that the Servicer will hold or retain the Indenture Trustee's Mortgage
Files in trust for the benefit of the Indenture Trustee, the Note
Insurer and the Holders of Notes.
Section 8.10. Servicer as Agent. In order to facilitate the servicing
of the Mortgage Loans by the Servicer of such Mortgage Loans, the Servicer of
the Mortgage Loans has been appointed by the Trust to retain, in accordance with
the provisions of the Sale and Servicing Agreement and this Indenture, all
Servicer Remittance Amounts on such Mortgage Loans prior to their deposit into
the related Distribution Account on or prior to the related Servicer
Distribution Date.
Section 8.11. Termination of Servicer. In the event of an event of the
occurrence of a Servicer Event of Default specified in Section 7.01 of the Sale
and Servicing Agreement, the Indenture Trustee may, with the consent of the Note
Insurer or, with the prior written consent of the Note Insurer, the Holder of
Notes representing not less than 50% of the Note Principal Balance of the
Outstanding Notes of both Classes, and shall, upon the direction of the Note
Insurer (or as otherwise provided in the Sale and Servicing Agreement),
terminate the Servicer as provided in Section 7.01 of the Sale and Servicing
Agreement. If the Indenture Trustee terminates the Servicer, the Indenture
Trustee shall, pursuant to Section 7.02 of the Sale and Servicing Agreement,
assume the duties of the Servicer or appoint a successor Servicer acceptable to
the Trust, the Note Insurer and the Rating Agencies and meeting the requirements
set forth in the Sale and Servicing Agreement.
Section 8.12. Opinion of Counsel. The Indenture Trustee shall be
entitled to receive at least five (5) Business Days' notice of any action to be
taken pursuant to Sections 8.08 and 8.09 hereof (other than in connection with
releases of Mortgage Loans that were subject to a prepayment in full),
accompanied by copies of any instruments involved, and the Indenture Trustee
shall be entitled to receive an Opinion of Counsel, in form and substance
reasonably satisfactory to the Indenture Trustee, stating the legal effect of
any such action, outlining the steps required to complete the same, and
concluding that all conditions precedent to the taking of such action have been
complied with. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
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Section 8.13. Appointment of Collateral Agents. The Indenture Trustee
may, at no additional cost to the Trust or to the Indenture Trustee, with the
consent of the Note Insurer, appoint one or more Collateral Agents to hold all
or a portion of the Indenture Trustee Mortgage Files, as Agent for the Indenture
Trustee. Such Collateral Agent shall meet the requirements of Article IX of the
Sale and Servicing Agreement. Matters concerning the Collateral Agents shall be
governed by said Article IX. Chase Bank of Texas, N.A. is hereby appointed as
the initial Collateral Agent hereunder.
Section 8.14. Rights of the Note Insurer to Exercise Rights of
Noteholders. By accepting its Notes, each Noteholder agrees that unless a Note
Insurer Default exists, the Note Insurer shall have the right to exercise all
rights of the Noteholders under this Indenture, without any further consent of
the Noteholders, including, without limitation:
(a) the right to require the Servicer to effect foreclosures
upon Mortgage Loans upon failure of the Servicer to do so;
(b) the right to require the Unaffiliated Seller to repurchase
or substitute for Deleted Mortgage Loans pursuant to Section 8.05;
(c) the right to direct the actions of the Indenture Trustee
during the continuance of an Event of Default; and
(d) the right to vote on proposed amendments to this
Indenture.
In addition, each Noteholder agrees that, unless a Note Insurer Default
exists, the rights specifically set forth above may be exercised by the
Noteholders only with the prior written consent of the Note Insurer.
Except as otherwise provided in Section 8.03 hereof and notwithstanding
any provision in this Indenture to the contrary, so long as a Note Insurer
Default has occurred and is continuing, the Note Insurer shall have no rights to
exercise any voting rights of the Noteholders hereunder, nor shall the Indenture
Trustee be required to obtain the consent of, or act at the direction of, the
Note Insurer.
All notices, statements, reports, certificates or opinions required by
this Indenture to be sent to any other party hereto or to the Noteholders shall
also be sent to the Note Insurer.
Section 8.15. Trust Estate and Accounts Held for Benefit of the Note
Insurer. The Collateral Agent, on behalf of the Indenture Trustee, shall hold
the Trust Estate and the Indenture Trustee's Mortgage Files, for the benefit of
the Noteholders and the Note Insurer, and all references in this Indenture and
in the Notes to the benefit of Holders of the Notes shall be deemed to include
the Note Insurer (provided there does not exist a Note Insurer Default).
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
With the consent of the Note Insurer and without the consent of the Holders of
any Notes, the Trust and the Indenture Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(a) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(b) to add to the conditions, limitations and restrictions on
the authorized amount, terms and purposes of the issuance,
authentication and delivery of any Notes, as herein set forth,
additional conditions, limitations and restrictions thereafter to be
observed;
(c) to evidence the succession of another Person to the Trust
to the extent permitted herein, and the assumption by any such
successor of the covenants of the Trust herein and in the Notes
contained;
(d) to add to the covenants of the Trust, for the benefit of
the Holders of all Notes and the Note Insurer, or to surrender any
right or power herein conferred upon the Trust;
(e) to cure any ambiguity, to correct or supplement any
provision herein that may be defective or inconsistent with any other
provision herein, or to amend any other provisions with respect to
matters or questions arising under this Indenture, which shall not be
inconsistent with the provisions of this Indenture, provided that such
action shall not adversely affect in any material respect the interests
of the Holders of the Notes or the Holders of the Trust Certificates;
provided, that the amendment shall not be deemed to adversely affect in
any material respect the interests of the Holders of the Notes and the
Note Insurer if the Person requesting the amendment obtains written
confirmation of the satisfaction of the Rating Agency Condition; or
(f) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted, and to add to this Indenture such
other provisions as may be expressly required by the TIA.
Section 9.02. Supplemental Indentures With Consent of Noteholders. With
the consent of the Note Insurer and with the consent of Holders of Notes
representing not less than a majority of the Note Principal Balance of all
Outstanding Notes of both Classes by Act of said Holders delivered to the Trust
and the Indenture Trustee, the Trust and the Indenture Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture;
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provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(a) change any Distribution Date or the Final Stated Maturity
Date of the Notes or, with respect to the Notes, reduce the Note
Principal Balance thereof, the Note Rate thereon or the Redemption
Price with respect thereto, change the earliest date on which any Note
may be redeemed at the option of the Servicer, change any place of
payment where, or the coin or currency in which, any Note or any
interest thereon is payable, or impair the right to institute suit for
the enforcement of the payment of any installment of interest due on
any Note on or after the Final Stated Maturity Date thereof or for the
enforcement of the payment of the entire remaining unpaid principal
amount of any Note on or after the Final Stated Maturity Date (or, in
the case of redemption, on or after the applicable Redemption Date);
(b) reduce the percentage of the Note Principal Balance of the
Outstanding Notes, the consent of the Holders of which is required for
any such supplemental indenture, or the consent of the Holders of which
is required for any waiver of compliance with provisions of this
Indenture or Defaults hereunder and their consequences provided for in
this Indenture;
(c) modify any of the provisions of this Section 9.02 or
Sections 5.13 or 5.17(b) hereof, except to increase any percentage
specified therein or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Note affected thereby;
(d) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(e) permit the creation of any lien other than the lien of
this Indenture with respect to any part of the Trust Estate or
terminate the lien of this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security
afforded by the lien of this Indenture;
(f) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the Interest Distribution Amount
or Principal Distribution Amount for any Distribution Date and any
Class (including the calculation of any of the individual components of
such amounts) or to affect rights of the Holders of the Notes to the
benefits of any provisions for the mandatory redemption of Notes
contained herein; or
(g) incur any indebtedness, other than the Notes, that would
cause the Trust or the Trust Estate to be treated as a "taxable
mortgage pool" within the meaning of Code Section 7701(i).
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
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It shall not be necessary for any Act of Noteholders under this Section
9.02 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Trust and the Indenture Trustee of
any supplemental indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Holders of the Notes to which such supplemental indenture
relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article IX or the modifications thereby of the trusts created by this
Indenture, the Indenture Trustee shall be entitled to receive, and (subject to
Section 6.01 hereof) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties or immunities under this Indenture or
otherwise. The Servicer, on behalf of the Trust, shall cause executed copies of
any supplemental indentures to be delivered to the Note Insurer and the Rating
Agencies.
Section 9.04. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article IX, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Notes to which such
supplemental indenture relates that have theretofore been or thereafter are
authenticated and delivered hereunder shall be bound thereby.
Section 9.05. Conformity With Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article IX shall conform to the requirements
of the TIA as then in effect so long as this Indenture shall then be qualified
under the TIA.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Owner Trustee, acting at the
direction of the Majority Certificateholders, shall so determine, new Notes so
modified as to conform, in the opinion of the Indenture Trustee and the Owner
Trustee, acting at the direction of the Majority Certificateholders, to any such
supplemental indenture may be prepared by the Servicer and executed by the Owner
Trustee, acting at the direction of the Majority Certificateholders, on behalf
of the Trust, and authenticated and delivered by the Indenture Trustee in
exchange for Outstanding Notes.
Section 9.07. Amendments to Governing Documents. The Indenture Trustee
shall, upon a Trust Request, consent to any proposed amendment to the Trust's
governing documents, or an amendment to or waiver of any provision of any other
document relating to the
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Trust's governing documents, such consent to be given without the necessity of
obtaining the consent of the Holders of any Notes upon receipt by the Indenture
Trustee of:
(a) an Officer's Certificate, to which such proposed amendment
or waiver shall be attached, stating that such attached copy is a true
copy of the proposed amendment or waiver and that all conditions
precedent to such consent specified in this Section 9.07 have been
satisfied; and
(b) written confirmation of the satisfaction of the Rating
Agency Condition with respect to such proposed amendment.
Notwithstanding the foregoing, the Indenture Trustee may decline to
consent to a proposed waiver or amendment that adversely affects its own rights,
duties or immunities under this Indenture or otherwise.
Nothing in this Section 9.07 shall be construed to require that any
Person obtain the consent of the Indenture Trustee to any amendment or waiver or
any provision of any document where the making of such amendment or the giving
of such waiver without obtaining the consent of the Indenture Trustee is not
prohibited by this Indenture or by the terms of the document that is the subject
of the proposed amendment or waiver.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption. (a) At the option of the Servicer, and at
its sole cost and expense, (x) this Indenture may be terminated and all the
Notes may be redeemed in whole, but not in part, on any Redemption Date after
the Clean-Up Call Date by purchase of all of the outstanding Mortgage Loans and
REO Properties at a price equal the Termination Price or (y) the Class A-1 Notes
or the Class A-2 Notes may be redeemed in whole, but not in part, on any
Redemption Date after the related Note Clean-Up Call Date at the applicable Note
Termination Price.
(b) Any such purchase or redemption shall be accomplished by deposit
into the related Distribution Account or Accounts of the applicable Redemption
Price on the Servicer Distribution Date preceding the Redemption Date. The
amounts on deposit therein shall be distributed by the Indenture Trustee on such
Redemption Date in accordance with the priority set forth in Section 8.02
hereof. No termination or redemption is permitted without the prior written
consent of the Note Insurer if it would result in a draw on the Note Insurance
Policy.
(c) Notice of the election to redeem any Notes pursuant to subsection
(a) of this Section 10.01 shall be furnished to the Indenture Trustee not later
than thirty (30) days prior to the Distribution Date selected for such
redemption. Upon receiving such notice, the Indenture Trustee shall notify each
Holder of such Notes and Note Insurer of such election pursuant to Section 10.02
hereof. Any expenses associated with the compliance of the provisions hereof in
connection with a redemption of the Notes shall be paid by the Servicer.
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(d) Upon the redemption of all of the Notes, the Mortgage Loans in the
Trust Estate shall be released and delivered to the Servicer. In the case of a
redemption of the Class A-2 Notes only, the Mortgage Loans in Pool II will not
be released from the lien of the Indenture until such time as the Class A-1
Notes are either redeemed or terminated. In such case, the Pool II Mortgage
Loans will continue to be pledged to the Indenture Trustee, on behalf of the
Noteholders and the Note Insurer, to secure the obligations of the Trust with
respect to the Class A-1 Notes. In the case of a redemption of the Class A-1
Notes only, the Mortgage Loans in Pool I will not be released from the lien of
the Indenture until such time as the Class A-2 Notes are either redeemed or
terminated. In such case, the Pool I Mortgage Loans will continue to be pledged
to the Indenture Trustee, on behalf of the Noteholders and the Note Insurer, to
secure the obligations of the Trust with respect to the Class A-2 Notes.
(e) Upon receipt of the notice from the Servicer of its election to
redeem any Notes pursuant to Section 10.01(a) hereof, the Indenture Trustee
shall prepare and deliver to the Trust, the Servicer and the Note Insurer, no
later than the related Redemption Date, an Indenture Trustee's Remittance Report
stating therein that it has determined that the conditions to redemption at the
option of the Servicer have been satisfied and setting forth the amount, if any,
to be withdrawn from each Distribution Account and paid to the Servicer as
reimbursement for Nonrecoverable Advances in respect of the related Mortgage
Loans and such other information as may be required to accomplish such
redemption.
Section 10.02. Form of Redemption Notice. Notice of redemption shall be
given by the Indenture Trustee in the name of and at the expense of the Trust by
first class mail, postage prepaid, mailed not less than ten days prior to the
Redemption Date to each Holder of Notes to be redeemed, such Holders being
determined as of the Record Date for such Distribution Date, and to the Note
Insurer.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price at which the Notes of such Class will be
redeemed; and
(c) the fact of payment in full on such Notes, the place where such
Notes are to be surrendered for payment of the Redemption Price (which shall be
the office or agency of the Trust to be maintained as provided in Section 3.02
hereof), and that no interest shall accrue on such Note for any period after the
date fixed for redemption.
Failure to give notice of redemption, or any defect therein, to any
Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Note.
Section 10.03. Notes Payable on Optional Redemption. Notice of
redemption having been given as provided in Section 10.02 hereof, the Notes to
be redeemed shall, on the applicable Redemption Date, become due and payable at
the Redemption Price and (unless the Trust shall default in the payment of the
Redemption Price) no interest shall accrue on such Redemption Price for any
period after such Redemption Date; provided, however, that if such
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Redemption Price is not paid on the Redemption Date, the Note Principal Balance
shall, until paid, bear interest from the Redemption Date at the applicable Note
Rate.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions. (a) Upon any
application or request by any Person to the Indenture Trustee to take any action
under any provision of this Indenture, such Person shall furnish to the
Indenture Trustee an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel, if requested by the
Indenture Trustee, stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
(b) Every certificate, opinion or letter with respect to compliance
with a condition or covenant provided for in this Indenture, including one
furnished pursuant to specific requirements of this Indenture relating to a
particular application or request (other than certificates provided pursuant to
TIA Section 314(a)(4)) shall include and shall be deemed to include (regardless
of whether specifically stated therein) the following:
(i) a statement that each individual signing such certificate,
opinion or letter has read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate, opinion or letter are based;
(iii) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of the Trust may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer
57
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of Counsel may be
based on the written opinion of other counsel, in which event such Opinion of
Counsel shall be accompanied by a copy of such other counsel's opinion and shall
include a statement to the effect that such counsel believes that such counsel
and the Indenture Trustee may reasonably rely upon the opinion of such other
counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Trust
shall deliver any document as a condition of the granting of such application,
or as evidence of the Trust's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Trust to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Section 6.01(b)(ii) hereof.
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Indenture Trustee at the request or
direction of the Trust, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Trust's right to make such request or
direction, the Indenture Trustee shall be protected in acting in accordance with
such request or direction if it does not have knowledge of the occurrence and
continuation of such Default or Event of Default as provided in Section 6.01(d)
hereof.
Section 11.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee, and,
where it is hereby expressly required, to the Trust. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Noteholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Indenture
Trustee and the Trust, if made in the manner provided in this Section 11.03.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution
58
thereof. Whenever such execution is by an officer of a corporation or a member
of a partnership on behalf of such corporation or partnership, such certificate
or affidavit shall also constitute sufficient proof of his authority.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Trust in reliance thereon, whether or not notation
of such action is made upon such Notes.
Section 11.04. Notices, etc., to Indenture Trustee, the Note Insurer
and Trust. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Indenture Trustee by any Noteholder or by the Trust
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with and received by the Indenture
Trustee at its Corporate Trust Office; or
(b) the Trust by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder (except as provided in
Section 5.01(c) and (d)) hereof if in writing and mailed, first-class
postage prepaid, to the Trust addressed to it at ABFS Mortgage Loan
Trust 1999-1, in care of First Union Trust Company, National
Association, One Xxxxxx Square, 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx, 00000, Attention: Corporate Trust Administration, or at any
other address previously furnished in writing to the Indenture Trustee
by the Trust.
(c) the Note Insurer by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder if in
writing and mailed, first-class, postage prepaid, to Financial Security
Assurance Inc. addressed to it at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
00000, Attention: Surveillance Department (in each case in which notice
or other communication to the Note Insurer refers to an Event of
Default, a claim on the Note Insurance Policy or with respect to which
failure on the part of the Note Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of each of the
General Counsel and the Head--Financial Guaranty Group and shall be
marked to indicate "URGENT MATERIAL ENCLOSED"), or at any other address
previously furnished in writing to the Indenture Trustee by the Note
Insurer; or
(d) the Depositor by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder if in
writing and mailed, first-class, postage paid, to Prudential Securities
Secured Financing Corporation c/o Prudential Securities Incorporated,
Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attention: Managing
Director - Asset-Backed Finance Group, or at any other address
previously furnished in writing to the Indenture Trustee by the
Depositor; or
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(e) the Unaffiliated Seller or the Servicer by the Indenture
Trustee or by any Noteholder shall be sufficient for every purpose
hereunder if in writing and mailed, first-class, postage paid, to such
party, in care of American Business Financial Services, Inc.,
XxxxXxxxxx Xxxxxx Xxxxxx, 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxx
Xxxxxx, Xxxxxxxxxxxx, 00000, Attention: General Counsel or at any other
address previously furnished in writing to the Indenture Trustee by the
Unaffiliated Seller or the Servicer; or
(f) the Underwriter by any party or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to Prudential Securities Incorporated,
Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Managing
Director - Asset-Backed Finance, or at any other address previously
furnished in writing to the Indenture Trustee by the Underwriter.
Notices required to be given to the Rating Agencies by the Trust or the
Indenture Trustee shall be in writing, personally delivered or mailed
first-class postage pre-paid, to (i) in the case of Moody's, at the following
address: Xxxxx'x Investors Service, Inc., Residential Mortgage Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (ii) in the case of
S&P, at the following address: Standard & Poor's Ratings Services, 00 Xxxxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Asset-Backed Surveillance
Department; or as to each of the foregoing, at such other address as shall be
designed by written notice to the other parties.
Section 11.05. Notices and Reports to Noteholders; Waiver of Notices.
Where this Indenture provides for notice to Noteholders of any event or the
mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder as
it appears on the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report,
nor any defect in any notice or report so mailed, to any particular Noteholder
shall affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
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Section 11.06. Rules by Indenture Trustee. The Indenture Trustee may
make reasonable rules for any meeting of Noteholders.
Section 11.07. Conflict With Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the TIA,
such required provision shall control.
Section 11.08. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 11.09. Successors and Assigns. All covenants and agreements in
this Indenture by the Trust shall bind its successors and assigns, whether so
expressed or not.
Section 11.10. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 11.11. Benefits of Indenture. Nothing in this Indenture or in
the Notes, expressed or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, any separate trustee or
co-trustee appointed under Section 6.14 hereof and the Noteholders, any benefit
or any legal or equitable right, remedy or claim under this Indenture.
Section 11.12. Legal Holidays. In any case where the date of any
Distribution Date, Redemption Date or any other date on which principal of or
interest on any Note is proposed to be paid shall not be a Business Day, then
(notwithstanding any other provision of the Notes or this Indenture) payment
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the nominal date of any such
Distribution Date, Redemption Date or other date for the payment of principal of
or interest on any Note and no interest shall accrue for the period from and
after any such nominal date, provided such payment is made in full on such next
succeeding Business Day.
Section 11.13. Governing Law. IN VIEW OF THE FACT THAT NOTEHOLDERS ARE
EXPECTED TO RESIDE IN MANY STATES AND OUTSIDE THE UNITED STATES AND THE DESIRE
TO ESTABLISH WITH CERTAINTY THAT THIS INDENTURE WILL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF A STATE HAVING A
WELL-DEVELOPED BODY OF COMMERCIAL AND FINANCIAL LAW RELEVANT TO TRANSACTIONS OF
THE TYPE CONTEMPLATED HEREIN, THIS INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
Section 11.14. Counterparts. This instrument may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
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Section 11.15. Recording of Indenture. This Indenture is subject to
recording in any appropriate public recording offices, such recording to be
effected by the Servicer, on behalf of the Trust, and at its expense in
compliance with any Opinion of Counsel delivered pursuant to Sections 2.11(c) or
3.06 hereof.
Section 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Trust, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Trust or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Trust, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Trust
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of the Trust Agreement.
Section 11.17. No Petition. The Indenture Trustee, by entering into
this Indenture, and each Noteholder and Beneficial Owner, by accepting a Note,
hereby covenant and agree that they will not at any time institute against the
Unaffiliated Seller or the Trust, or join in any institution against the
Unaffiliated Seller or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the Basic
Documents. In addition, the Indenture Trustee will on behalf of the Holders of
the Notes, (a) file a written objection to any motion or other proceeding
seeking the substantive consolidation of any Originator with the Unaffiliated
Seller or the Trust, (b) file an appropriate memorandum of points and
authorities or other brief in support of such objection, or (c) endeavor to
establish at the hearing on such objection that the substantive consolidation of
such entity would be materially prejudicial to the Noteholders.
This Section 11.17 will survive for one year and one day following the
termination of this Indenture.
Section 11.18. Inspection. The Trust agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee and the Note
Insurer, during the Trust's normal business hours, to examine all of books of
account, records, reports and other papers of the Trust, to make copies and
extracts therefrom, to cause such books to be audited by Independent Accountants
selected by the Indenture Trustee or the Note Insurer, as the case may be, and
to discuss its affairs, finances and accounts with its officers, employees and
Independent Accountants (and by this provision the Trust hereby authorizes its
Accountants to discuss with such representatives such affairs, finances and
accounts), all at such reasonable times and as
62
often as may be reasonably requested. Any expense incident to the exercise by
the Indenture Trustee of any right under this Section 11.18 shall be borne by
the Trust.
Section 11.19. Usury. The amount of interest payable or paid on any
Note under the terms of this Indenture shall be limited to an amount that shall
not exceed the maximum nonusurious rate of interest allowed by the applicable
laws of the United States or the State of New York (whichever shall permit the
higher rate), that could lawfully be contracted for, charged or received (the
"Highest Lawful Rate"). In the event any payment of interest on any Note exceeds
the Highest Lawful Rate, the Trust stipulates that such excess amount will be
deemed to have been paid as a result of an error on the part of both the
Indenture Trustee, acting on behalf of the Holder of such Note, and the Trust,
and the Holder receiving such excess payment shall promptly, upon discovery of
such error or upon notice thereof from the Trust or the Indenture Trustee,
refund the amount of such excess or, at the option of the Indenture Trustee,
apply the excess to the payment of principal of such Note, if any, remaining
unpaid. In addition, all sums paid or agreed to be paid to the Indenture Trustee
for the benefit of Holders of Notes for the use, forbearance or detention of
money shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Notes.
Section 11.20. Note Insurer Default. Any right conferred to the Note
Insurer shall be suspended during any period in which a Note Insurer Default
exists. At such time as the Notes are no longer Outstanding under this
Indenture, and no amounts owed to the Note Insurer under the Basic Documents
remain unpaid, the Note Insurer's rights under this Indenture shall terminate.
Section 11.21. Third-Party Beneficiary. The Note Insurer is intended as
a third- party beneficiary of this Indenture which shall be binding upon and
inure to the benefit of the Note Insurer; provided, that, notwithstanding the
foregoing, for so long as a Note Insurer Default is continuing with respect to
its obligations under the Note Insurance Policy, the Noteholders shall succeed
to the Note Insurer's rights hereunder. Without limiting the generality of the
foregoing, all covenants and agreements in this Indenture that expressly confer
rights upon the Note Insurer shall be for the benefit of and run directly to the
Note Insurer, and the Note Insurer shall be entitled to rely on and enforce such
covenants to the same extent as if it were a party to this Indenture.
[Remainder of Page Intentionally Left Blank]
63
IN WITNESS WHEREOF, the Trust and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.
ABFS MORTGAGE LOAN TRUST 1999-1
By: FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee
under the Trust Agreement
By: ____________________________________
Name:
Title:
THE BANK OF NEW YORK,
as Indenture Trustee
By: ____________________________________
Name:
Title:
[Signature Page to Indenture]
+++
EXECUTED COPY
INDENTURE
dated as of March 1, 1999
by and between
ABFS MORTGAGE LOAN TRUST 1999-1,
as Issuer
and
THE BANK OF NEW YORK,
as Indenture Trustee
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS ...................................................... 2
Section 1.01. General Definitions ................................. 2
ARTICLE II THE NOTES; PLEDGE OF SUBSEQUENT MORTGAGE LOANS .................. 2
Section 2.01. Forms Generally ..................................... 2
Section 2.02. Form of Certificate of Authentication ............... 2
Section 2.03. General Provisions With Respect to Principal
and Interest Payment ............................. 3
Section 2.04. Denominations ....................................... 3
Section 2.05. Execution, Authentication, Delivery and Dating ...... 3
Section 2.06. Registration, Registration of Transfer and
Exchange ......................................... 4
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes .......... 5
Section 2.08. Payments of Principal and Interest .................. 5
Section 2.09. Persons Deemed Owner ................................ 7
Section 2.10. Cancellation ........................................ 8
Section 2.11. Authentication and Delivery of Notes ................ 8
Section 2.12. Book-Entry Note ..................................... 9
Section 2.13. Termination of Book Entry System .................... 10
Section 2.14. Pledge of Subsequent Mortgage Loans ................. 11
ARTICLE III COVENANTS ...................................................... 13
Section 3.01. Payment of Notes .................................... 13
Section 3.02. Maintenance of Office or Agency ..................... 13
Section 3.03. Money for Note Payments to Be Held In Trust ......... 13
Section 3.04. Existence of Trust .................................. 15
Section 3.05. Protection of Trust Estate .......................... 16
Section 3.06. Opinions as to the Trust Estate ..................... 16
Section 3.07. Performance of Obligations .......................... 17
Section 3.08. Investment Company Act .............................. 17
Section 3.09. Negative Covenants .................................. 17
Section 3.10. Annual Statement as to Compliance ................... 18
Section 3.11. Restricted Payments ................................. 18
Section 3.12. Treatment of Notes as Debt for Tax Purposes ......... 19
Section 3.13. Notice of Events of Default ......................... 19
Section 3.14. Further Instruments and Acts ........................ 19
ARTICLE IV SATISFACTION AND DISCHARGE ...................................... 19
Section 4.01. Satisfaction and Discharge of Indenture ............. 19
Section 4.02. Application of Trust Money .......................... 20
ARTICLE V DEFAULTS AND REMEDIES ............................................ 21
Section 5.01. Event of Default .................................... 21
Section 5.02. Acceleration of Maturity; Rescission and
Annulment ........................................ 22
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee ................. 23
Section 5.04. Remedies ............................................ 23
Section 5.05. Indenture Trustee May File Proofs of Claim .......... 23
Section 5.06. Indenture Trustee May Enforce Claims Without
Possession of Notes .............................. 24
Section 5.07. Application of Money Collected ...................... 24
Section 5.08. Limitation on Suits ................................. 25
Section 5.09. Unconditional Rights of Noteholders to Receive
Principal and Interest ........................... 26
Section 5.10. Restoration of Rights and Remedies .................. 26
Section 5.11. Rights and Remedies Cumulative ...................... 27
Section 5.12. Delay or Omission Not Waiver ........................ 27
Section 5.13. Control by Noteholders .............................. 27
Section 5.14. Waiver of Past Defaults ............................. 27
Section 5.15. Undertaking for Costs ............................... 28
Section 5.16. Waiver of Stay or Extension Laws .................... 28
Section 5.17. Sale of Trust Estate ................................ 28
Section 5.18. Action on Notes ..................................... 30
Section 5.19. No Recourse to Other Trust Estates or Other
Assets of the Trust .............................. 30
Section 5.20. Application of the Trust Indenture Act .............. 30
Section 5.21. Note Insurer Default ................................ 30
ARTICLE VI THE INDENTURE TRUSTEE ........................................... 31
Section 6.01. Duties of Indenture Trustee ......................... 31
Section 6.02. Notice of Default ................................... 32
Section 6.03. Rights of Indenture Trustee ......................... 33
Section 6.04. Not Responsible for Recitals or Issuance of
Notes ............................................ 34
Section 6.05. May Hold Notes ...................................... 34
Section 6.06. Money Held in Trust ................................. 34
Section 6.07. Eligibility, Disqualification ....................... 34
Section 6.08. Indenture Trustee's Capital and Surplus ............. 34
Section 6.09. Resignation and Removal; Appointment of
Successor ........................................ 34
Section 6.10. Acceptance of Appointment by Successor
Indenture Trustee ................................ 36
Section 6.11. Merger, Conversion, Consolidation or Succession
to Business of Indenture Trustee ................. 36
Section 6.12. Preferential Collection of Claims Against
Trust ............................................ 37
Section 6.13. Co-Indenture Trustees and Separate Indenture
Trustees ......................................... 37
Section 6.14. Authenticating Agents ............................... 38
Section 6.15. Review of Mortgage Files ............................ 39
Section 6.16. Indenture Trustee Fees and Expenses ................. 40
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS ................................. 40
Section 7.01. Note Registrar to Furnish Indenture Trustee
Names and Addresses of Noteholders ............... 40
Section 7.02. Preservation of Information; Communications
to Noteholders ................................... 41
Section 7.03. Reports by Indenture Trustee ........................ 41
Section 7.04. Reports by Trust .................................... 41
ARTICLE VIII ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL,
AND RELEASES ............................................................ 42
Section 8.01. Accounts; Investment; Collection of Moneys .......... 42
Section 8.02. Distributions; Statements ........................... 45
Section 8.03. Claims against the Note Insurance Policy ............ 46
Section 8.04. General Provisions Regarding the Distribution
Accounts and Mortgage Loans ...................... 48
Section 8.05. Releases of Deleted Mortgage Loans .................. 49
Section 8.06. Reports by Indenture Trustee to Noteholders;
Access to Certain Information .................... 49
Section 8.07. Release of Trust Estate ............................. 49
Section 8.08. Amendment to Sale and Servicing Agreement ........... 49
Section 8.09. Delivery of the Mortgage Files Pursuant to Sale
and Servicing Agreement .......................... 50
Section 8.10. Servicer as Agent ................................... 50
Section 8.11. Termination of Servicer ............................. 50
Section 8.12. Opinion of Counsel .................................. 50
Section 8.13. Appointment of Collateral Agents .................... 51
Section 8.14. Rights of the Note Insurer to Exercise Rights
of Noteholders ................................... 51
Section 8.15. Trust Estate and Accounts Held for Benefit of
the Note Insurer ................................. 51
ARTICLE IX SUPPLEMENTAL INDENTURES ......................................... 52
Section 9.01. Supplemental Indentures Without Consent of
Noteholders ...................................... 52
Section 9.02. Supplemental Indentures With Consent of
Noteholders ...................................... 52
Section 9.03. Execution of Supplemental Indentures ................ 54
Section 9.04. Effect of Supplemental Indentures ................... 54
Section 9.05. Conformity With Trust Indenture Act ................. 54
Section 9.06. Reference in Notes to Supplemental Indentures ....... 54
Section 9.07. Amendments to Governing Documents ................... 54
ARTICLE X REDEMPTION OF NOTES .............................................. 55
Section 10.01. Redemption .......................................... 55
Section 10.02. Form of Redemption Notice ........................... 56
Section 10.03. Notes Payable on Optional Redemption ................ 56
ARTICLE XI MISCELLANEOUS ................................................... 57
Section 11.01. Compliance Certificates and Opinions ................ 57
Section 11.02. Form of Documents Delivered to Indenture
Trustee .......................................... 57
Section 11.03. Acts of Noteholders ................................. 58
Section 11.04. Notices, etc., to Indenture Trustee, the Note
Insurer and Trust ................................ 59
Section 11.05. Notices and Reports to Noteholders; Waiver of
Notices .......................................... 60
Section 11.06. Rules by Indenture Trustee .......................... 61
Section 11.07. Conflict With Trust Indenture Act ................... 61
Section 11.08. Effect of Headings and Table of Contents ............ 61
Section 11.09. Successors and Assigns .............................. 61
Section 11.10. Separability ........................................ 61
Section 11.11. Benefits of Indenture ............................... 61
Section 11.12. Legal Holidays ...................................... 61
Section 11.13. Governing Law ....................................... 61
Section 11.14. Counterparts ........................................ 61
Section 11.15. Recording of Indenture .............................. 62
Section 11.16. Trust Obligation .................................... 62
Section 11.17. No Petition ......................................... 62
Section 11.18. Inspection .......................................... 62
Section 11.19. Usury ............................................... 63
Section 11.20. Note Insurer Default ................................ 63
Section 11.21. Third-Party Beneficiary ............................. 63
APPENDICES, SCHEDULES AND EXHIBITS
Appendix I Defined Terms
Schedule l Mortgage Loan Schedule
Exhibit A Form of Note
Exhibit B Form of Subsequent Pledge Agreement
Exhibit C Form of Note Insurer Consent for Subsequent Mortgage Loans
CROSS-REFERENCE TABLE
Cross-reference sheet showing the location in the Indenture of the
provisions inserted pursuant to Sections 310 through 318(a) inclusive of the
Trust Indenture Act of 1939.*
Trust Indenture Act of 1939 Indenture Section
--------------------------- -----------------
Section 310
(a)(1)................................. 6.07
(a)(2)................................. 6.07, 6.08
(a)(3)................................. 6.13
(a)(4)................................. Not Applicable
(a)(5)................................. 6.07
(b).................................... 6.07, 6.09
(c).................................... Not Applicable
Section 311
(a).................................... 6.12
(b).................................... 6.12
(c).................................... Not Applicable
Section 312
(a).................................... 7.01(a), 7.02(a)
(b).................................... 7.02(b)
(c).................................... 7.02(c)
Section 313
(a).................................... 7.03(a)
(b).................................... 7.03(a)
(c).................................... 11.05
(d).................................... 7.03(b)
Section 314
(a)(1)................................. 7.04
(a)(2)................................. 7.04
(a)(3)................................. 7.04
(a)(4)................................. 7.04
(b)(1)................................. 2.11(c), 11.01
(b)(2)................................. 3.06
(c)(1)................................. 2.11(d), 4.01,
8.02(d), 11.01
(c)(2)................................. 2.11(c), 4.01,
8.02(d), 11.01
(c)(3)................................. 8.02(d)
(d)(1)................................. 11.01(a)
(d)(2)................................. 11.01(a)
(d)(3)................................. 11.01(a)
(e).................................... 11.01(b)
----------
* This Cross-Reference Table is not part of the Indenture.
Section 315
(a).................................... 6.01(b), 6.01(c)(1)
(b).................................... 6.02, 11.05
(c).................................... 6.01(a)
(d)(1)................................. 6.01(b), 6.01(c)
(d)(2)................................. 6.01(c)(2)
(d)(3)................................. 6.01(c)(3)
(e).................................... 5.15
Section 316
(a).................................... 5.20
(b).................................... 5.09
(c).................................... 5.20
Section 317
(a)(1)................................. 5.03
(a)(2)................................. 5.05
(b).................................... 3.01
Section 318
(a).................................... 11.07
SCHEDULE I
MORTGAGE LOAN SCHEDULE
EXHIBIT A
FORM OF NOTE
ABFS MORTGAGE LOAN TRUST 1999-1
CLASS A-[1][2] NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE NOTE IS A NON-RECOURSE OBLIGATION OF THE TRUST, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AND THE NOTE INSURANCE POLICY
AS PROVIDED IN THE INDENTURE REFERRED TO BELOW. THE TRUST IS NOT OTHERWISE
PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
-------------------------------------------
Note No.: CUSIP No.:
A-[1][2]-
Class A-1 Original Note Principal Balance: Percentage Interest:
$__________ 100%
Date of Indenture: First Distribution Date:
As of March 1, 1999 April 26, 1999
------------------------------------------
A-1
ABFS MORTGAGE LOAN TRUST 1999-1
MORTGAGE BACKED NOTES, SERIES 1999-1, CLASS A-[1][2]
ABFS Mortgage Loan Trust 1999-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Trust"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of $__________ (_________________________
Thousand Dollars) payable on each Distribution Date in an amount equal to the
result obtained by multiplying (x) the Percentage Interest of this Note set
forth on the cover page hereof, by (y) the aggregate amount, if any, payable
from the related Distribution Account in respect of principal on the Class
A-[1][2] Notes, pursuant to the Indenture, dated as of March 1, 1999, between
the Trust and The Bank of New York, a New York banking corporation, as Indenture
Trustee (the "Indenture Trustee"); provided, however, that the entire unpaid
Note Principal Balance of this Note shall be due and payable on the earlier of
(i) the Distribution Date occurring in May 2030 (this Note's "Final Stated
Maturity Date"), (ii) the Redemption Date, if any, applicable to this Notes
pursuant to Article X of the Indenture or (iii) the date on which an Event of
Default shall have occurred and be continuing, if the Notes have been declared
to be immediately due and payable in the manner provided in Section 5.02 of the
Indenture. Capitalized terms used but not defined herein are defined in Appendix
I to the Indenture.
Pursuant to the terms of the Indenture, payments will be made on the
25th day of each month or, if such day is not a Business Day, on the Business
Day immediately following such 25th day (each a "Distribution Date"), commencing
on the first Distribution Date specified on the cover page hereof, to the Person
in whose name this Note is registered at the close of business on the applicable
Record Date, in an amount equal to the product of (a) the Percentage Interest
evidenced by this Note and (b) the sum of the amounts to be paid on the Class
A-[1][2] Notes with respect to such Distribution Date, all as more specifically
set forth in the Indenture.
Notwithstanding the foregoing, in the case of Definitive Notes, upon
written request at least five (5) days prior to the related Record Date with
appropriate instructions by the Holder of this Note (holding an aggregate
initial Note Principal Balance of at least $1,000,000), any payment of principal
or interest, other than the final installment of principal or interest, shall be
made by wire transfer to an account in the United States of America designated
by such Holder reasonably satisfactory to the Indenture Trustee.
On each Distribution Date, Noteholders will be entitled to receive
interest payments in an aggregate amount equal to the Current Interest for such
Class for such Distribution Date, together with principal payments in an
aggregate amount equal to the Principal Distribution Amount for such Class for
such Distribution Date, plus, until the Over-collateralization Amount for the
related Pool and such Distribution Date is equal to the Specified
Over-collateralization Amount for such Pool and such Distribution Date, the Net
Monthly Excess Cashflow, if any, for such Pool and such Distribution Date. The
"Note Principal Balance" of a Note as of any date of determination is equal to
the initial Note Principal Balance thereof as of the Closing Date, reduced by
the aggregate of all amounts previously paid with respect to such Note on
account of principal.
A-2
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Trust
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
This Note is one of a duly authorized issue of Notes of the Trust,
designated as the "ABFS Mortgage Loan Trust 1999-1, Mortgage Backed Notes,
Series 1999-1, Class A-[1][2]," issued under the Indenture, to which Indenture
and all indentures supplemental thereto reference is hereby made for a statement
of the respective rights and obligations thereunder of the Trust, the Indenture
Trustee and the Holders of the Notes. Also issued under the Indenture are the
"ABFS Mortgage Loan Trust 1999-1, Mortgage Backed Notes, Series 1999-1, Class
A[1][2]." To the extent that any provision of this Note contradicts or is
inconsistent with the provisions of the Indenture, the provisions of the
Indenture shall control and supersede such contradictory or inconsistent
provision herein. The Notes are subject to all terms of the Indenture.
The Class A-[1][2] Notes are and will be equally and ratably secured by
the Mortgage Loans in the Pool [I][II], the other collateral related thereto
pledged as security therefor as provided in the Indenture, and, to the extent
provided in the Indenture, by the Mortgage Loans in Pool [I][II].
As described above, the entire unpaid Note Principal Balance of this
Note shall be due and payable on the earlier of the Final Stated Maturity Date
and any Redemption Date applicable to such Class, pursuant to Article X of the
Indenture. Notwithstanding the foregoing, the entire unpaid Note Principal
Balance of the Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing if the Indenture Trustee, at the
direction or upon the prior written consent of Financial Security Assurance Inc.
(the "Note Insurer") in the absence of a Note Insurer Default, or the Holders of
the Notes representing not less than 50% of the Note Principal Balance of the
Outstanding Notes (with the prior written consent of the Note Insurer in the
absence of a Note Insurer Default) of both Classes, shall have declared the
Notes to be immediately due and payable in the manner provided in Section 5.02
of the Indenture. All principal payments on the Notes shall be made pro rata to
the Noteholders entitled thereto.
The Note Insurer, in consideration of the payment of the premium and
subject to the terms of the Note Guaranty Insurance Policy (the "Note Insurance
Policy") thereby has unconditionally and irrevocably guaranteed the payment of
the Insured Payments.
Pursuant to the Indenture, unless a Note Insurer Default exists (i) the
Note Insurer shall be deemed to be the holder of the Notes for certain purposes
specified in the Indenture and will be entitled to exercise all rights of the
Noteholders thereunder, including the rights of Noteholders relating to the
occurrence of, and the remedies with respect to, an Event of Default, without
the consent of such Noteholders, and (ii) the Indenture Trustee may take actions
which would otherwise be at its option or within its discretion, including
actions relating to the occurrence of, and the remedies with respect to, an
Event of Default, only at the direction of the Note Insurer. In addition, on
each Distribution Date, after the Noteholders have been paid all
A-3
amounts to which they are entitled, the Note Insurer will be entitled to be
reimbursed for any unreimbursed Insured Payments, unreimbursed Premium Amounts
(each with interest thereon at the "Late Payment Rate" specified in the
Insurance Agreement) and any other amounts owed under the Note Insurance Policy.
The Trust shall not be liable upon the indebtedness evidenced by the
Notes except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Notes. The assets included in the
Trust Estate and payments under the Note Insurance Policy will be sole source of
payments on the Notes, and each Holder hereof, by its acceptance of this Note,
agrees that (i) such Note will be limited in right of payment to amounts
available from the Trust Estate and the Note Insurance Policy as provided in the
Indenture and (ii) such Holder shall have no recourse to the Trust, the Owner
Trustee, the Indenture Trustee, the Depositor, the Seller, the Servicer or any
of their respective affiliates, or to the assets of any of the foregoing
entities, except the assets of the Trust pledged to secure the Notes pursuant to
the Indenture.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Note (or one or more Predecessor Notes) on
the Note Register as of the close of business on each Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Notwithstanding the foregoing, in the case of Definitive
Notes, upon written request at least five days prior to the related Record Date
with appropriate instructions by the Holder of this Note (holding an aggregate
initial Note Principal Balance of at least $1,000,000), any payment of principal
or interest, other than the final installment of principal or interest, shall be
made by wire transfer to an account in the United States of America designated
by such Holder reasonably satisfactory to the Indenture Trustee. Any reduction
in the principal amount of this Note (or any one or more Predecessor Notes)
effected by any payments made on any Distribution Date shall be binding upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Note on a
Distribution Date, then the Indenture Trustee, in the name of and on behalf of
the Trust, will notify the Person who was the Holder hereof as of the Record
Date preceding such Distribution Date by notice mailed or transmitted by
facsimile prior to such Distribution Date, and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes.
As provided in the Indenture, the Indenture may be terminated and the
Notes redeemed in whole, but not in part, at the option of the Servicer, on any
Distribution Date on and after the date on which the Aggregate Principal Balance
of all of the Mortgage Loans is less than 10% of the Maximum Collateral Amount
for Pool I and Pool II. As provided in the Indenture,
A-4
either Class of Notes may be redeemed in whole, but not in part, at the option
of the Servicer, on any Distribution Date on and after the date on which the
unpaid Note Principal Balance of such Class of Notes is less than or equal to
10% of the Original Note Principal Balance for such Class of Notes.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Trust pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
In the case of a transfer of a Class A-[1][2] Note, the Note Registrar
shall not register the transfer of this Note unless the Note Registrar has
received a representation letter from the transferee to the effect that either
(i) the transferee is not, and is not acquiring the Note on behalf of or with
the assets of, an employee benefit plan or other retirement plan or arrangement
that is subject to Title I of the Employee Retirement Income Security Act or
1974, as amended, or Section 4975 of the Code or (ii) the acquisition and
holding of this Note by the transferee qualifies for exemptive relief under a
Department of Labor Prohibited Transaction Class Exemption. Each Beneficial
Owner, by acceptance of a beneficial interest herein, shall be deemed to make
one of the foregoing representations.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Trust, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Trust or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Trust, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Indenture Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the
case of a Beneficial Owner, a beneficial interest in a Note, covenants and
agrees by accepting the benefits
A-5
of the Indenture that such Noteholder or Beneficial Owner will not at any time
institute against American Business Financial Services, Inc. or the Trust, or
join in any institution against American Business Financial Services, Inc. or
the Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture, the Trust Agreement, the Unaffiliated Seller's Agreement, the Sale
and Servicing Agreement, the Insurance Agreement and the Indemnification
Agreement (the "Basic Documents").
The Trust has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Trust
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Beneficial Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Trust.
Prior to the due presentment for registration of transfer of this Note,
the Trust, the Indenture Trustee and any agent of the Trust or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Trust, the Indenture Trustee or any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust and the rights of the Holders of the Notes under the Indenture at any time
by the Trust with the consent of the Note Insurer and the Holders of Notes
representing a majority of the Note Principal Balance of all Outstanding Notes.
The Indenture also contains provisions permitting the (i) Note Insurer or (ii)
if a Note Insurer Default exists, the Holders of Notes representing specified
percentages of the Note Principal Balance of Outstanding Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Trust with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Note Insurer or by the
Holder of this Note (or any one or more Predecessor Notes) shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the amendment thereof, in certain limited
circumstances, or the waiver of certain terms and conditions set forth in the
Indenture, without the consent of Holders of the Notes issued thereunder.
The term "Trust" as used in this Note includes any successor to the
Trust under the Indenture.
Initially, each Class of Notes will be represented by one Note
registered in the name of Cede & Co. as nominees of the Clearing Agency. The
Notes will be delivered in denominations as provided in the Indenture and
subject to certain limitations therein set forth. The Notes are exchangeable for
a like aggregate initial Note Principal Balance of Notes of different authorized
denominations, as requested by the Holder surrendering the same.
A-6
THIS NOTE AND THE INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Trust, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to herein, or
be valid or obligatory for any purpose.
A-7
IN WITNESS WHEREOF, the Trust has caused this Instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Dated:
ABFS MORTGAGE LOAN TRUST 1999-1
By: FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
under the Trust Agreement
By: __________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[1][2] Notes designated above and referred
to in the within-mentioned Indenture.
Dated:
THE BANK OF NEW YORK,
as Authenticating Agent
By: __________________________________
Authorized Signatory
A-8
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
--------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________________________________, attorney, to transfer said
Note on the books kept for registration thereof, with full power of substitution
in the premises.
Dated: _______________________________*/
Signature Guaranteed:
______________________________________*/
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-9
EXHIBIT B
FORM OF SUBSEQUENT PLEDGE AGREEMENT
This SUBSEQUENT PLEDGE AGREEMENT, dated as of __________, 1999 (the
"Subsequent Transfer Date"), is entered into by and between ABFS MORTGAGE LOAN
TRUST 1999-1, as issuer (the "Trust"), and THE BANK OF NEW YORK, as indenture
trustee (the "Indenture Trustee").
W I T N E S S E T H:
Reference is hereby made to that certain Indenture, dated as of March
1, 1999 (the "Indenture"), by and between the Trust and the Indenture Trustee.
Pursuant to the Indenture, the Trust agreed to pledge, and the Indenture Trustee
agreed to accept, from time to time, a security interest in Subsequent Mortgage
Loans (as defined below). The Indenture provides that each such pledge of
Subsequent Mortgage Loans be evidenced by the execution and delivery of a
Subsequent Pledge Agreement such as this Subsequent Pledge Agreement.
The assets pledged to the Indenture Trustee pursuant to this Subsequent
Pledge Agreement consist of (a) the Subsequent Mortgage Loans in Pool I and Pool
II listed in the Mortgage Loan Schedule attached hereto (including property that
secures a Subsequent Mortgage Loan that becomes an REO Property), including the
related Mortgage Files delivered or to be delivered to the Collateral Agent, on
behalf of the Indenture Trustee, including all payments of principal received,
collected or otherwise recovered after the Subsequent Cut-Off Date for each
Subsequent Mortgage Loan, all payments of interest accruing on each Subsequent
Mortgage Loan after the Subsequent Cut-Off Date therefor whenever received and
all other proceeds received in respect of such Subsequent Mortgage Loans, (b)
the Insurance Policies relating to the Subsequent Mortgage Loans, and (c) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid assets, including, without limitation, all insurance
proceeds and condemnation awards.
The "Subsequent Mortgage Loans" are those listed on the Schedule of
Mortgage Loans attached hereto. The Aggregate Principal Balance of such
subsequent Mortgage Loans as of the Subsequent Cut-Off Date is $__________ in
Pool I and $_________ in Pool II.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this Subsequent Pledge
Agreement, capitalized terms used herein but not otherwise defined shall have
the respective meanings assigned to such terms in Appendix I to the Indenture.
Section 2. Pledge. In consideration of $__________ (such amount being
approximately 100% of the Aggregate Principal Balance of the Subsequent Mortgage
Loans) from the Indenture Trustee, the Trust hereby pledges to the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer, without
recourse, all of the Trust's right, title and interest
B-1
in, to, and under the Subsequent Mortgage Loans and related assets described
above, whether now existing or hereafter arising.
In connection with such pledge, the Originators and the Unaffiliated
Seller shall satisfy the document delivery requirements set forth in Section
2.05 of the Sale and Servicing Agreement with respect to each Subsequent
Mortgage Loan.
In connection with such pledge, the Servicer shall make a Special
Advance of $________ as set forth in Section 5.18(b) of the Sale and Servicing
Agreement.
Section 3. Representations and Warranties Concerning the Subsequent
Mortgage Loans. With respect to each Subsequent Mortgage Loan, the Trust hereby
assigns each of the representations and warranties made by the Originators and
the Unaffiliated Seller in Section 3 of the Subsequent Transfer Agreement, for
the benefit of the Indenture Trustee, the Note Insurer and the Noteholders, on
which the Indenture Trustee relies in accepting the pledge of the Subsequent
Mortgage Loans and the Note Insurer relies in connection with the Note Insurance
Policy. Such representations and warranties speak as of the Subsequent Transfer
Date unless otherwise indicated, and shall survive each pledge, assignment,
transfer and conveyance of the respective Subsequent Mortgage Loans to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
Section 4. Repurchase of Subsequent Mortgage Loans. Upon discovery by
any of the Depositor, the Unaffiliated Seller, an Originator, the Indenture
Trustee, the Servicer (on behalf of the Trust), the Note Insurer or any
Noteholder of a breach of any of the representations and warranties made by the
Originators and the Unaffiliated Seller pursuant to Section 3.03 of the
Unaffiliated Seller's Agreement or Section 3 of any Subsequent Transfer
Agreement, the party discovering such breach shall give prompt written notice to
such other Person; provided, that the Indenture Trustee shall have no duty to
inquire or to investigate the breach of any such representations and warranties.
The Originators and the Unaffiliated Seller will be obligated to repurchase a
Subsequent Mortgage Loan which breaches a representation or warranty in
accordance with the provisions of Section 4.02 of the Sale and Servicing
Agreement or to indemnify as described in Section 3.05(g) of the Unaffiliated
Seller's Agreement. Such repurchase and indemnification obligation of the
Originators and the Unaffiliated Seller shall constitute the sole remedy against
the Originators and the Unaffiliated Seller, and the Trust for such breach
available to the Servicer, the Trust, the Indenture Trustee, the Note Insurer
and the Noteholders.
Section 5. Amendment. This Subsequent Pledge Agreement may be amended
from time to time by the Trust and the Indenture Trustee only with the prior
written consent of the Note Insurer (or, in the event of a Note Insurer Default,
the Majority Holders).
Section 6. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS SUBSEQUENT PLEDGE
AGREEMENT AND ANY AMENDMENT HEREOF PURSUANT TO SECTION 5 SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSEQUENT PLEDGE
B-2
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM
THEREIN.
Section 7. Counterparts. This Subsequent Pledge Agreement may be
executed in counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which shall constitute one and
the same instrument.
Section 8. Binding Effect; Third-Party Beneficiaries. This Subsequent
Pledge Agreement will inure to the benefit of and be binding upon the parties
hereto, the Note Insurer, the Noteholders, and their respective successors and
permitted assigns.
Section 9. Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
Section 10. Exhibits. The exhibits attached hereto and referred to
herein shall constitute a part of this Subsequent Pledge Agreement and are
incorporated into this Subsequent Pledge Agreement for all purposes.
[Remainder of Page Intentionally Left Blank]
B-3
IN WITNESS WHEREOF, the Trust and the Indenture Trustee have caused
this Subsequent Pledge Agreement to be duly executed by their respective
officers as of the day and year first above written.
ABFS MORTGAGE LOAN TRUST
1999-1, as Issuer
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity but solely
as Owner Trustee
By: ________________________________
Name:
Title:
THE BANK OF NEW YORK,
as Indenture Trustee
By: ________________________________
Name:
Title:
[Signature Page to Subsequent Pledge Agreement]
B-4
EXHIBIT C
FORM OF NOTE INSURER CONSENT TO
SUBSEQUENT MORTGAGE LOANS
__________, 1999
The Bank of New York,
as Indenture Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: ABFS Mortgage Loan Trust 1999-1;
Mortgage Backed Notes, Series 1999-1
------------------------------------
Ladies and Gentlemen:
Reference is made to the Indenture, dated as of March 1, 1999 (the
"Indenture"), by and between ABFS Mortgage Loan Trust 1999-1, as issuer (the
"Trust"), and you, as indenture trustee (the "Indenture Trustee"). Pursuant to
Section 2.14(b)(viii) of the Indenture, the undersigned hereby approves and
consents to the acquisition of the Subsequent Mortgage Loans listed on Schedule
I attached hereto aggregating $____________ in Aggregate Principal Balance by
the Trust and the subsequent pledge of such Subsequent Mortgage Loans by the
Trust to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer.
FINANCIAL SECURITY ASSURANCE INC.
By: ________________________________
Name:
Title:
C-1
Exhibit 4.1A
APPENDIX I
DEFINED TERMS
"Accepted Servicing Practices": The Servicer's normal servicing
practices, which in general will conform to the mortgage servicing practices of
prudent mortgage lending institutions which service, for their own account,
mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Mortgaged Properties are located.
"Account": Any of the Collection Account, the Distribution Accounts,
the Cross-collateralization Reserve Accounts, the Note Insurance Payment
Account, the Pre-Funding Accounts or the Capitalized Interest Accounts.
"Accountant": A Person engaged in the practice of accounting who
(except when the Indenture provides that an Accountant must be Independent) may
be employed by or affiliated with the Trust or an Affiliate of the Trust.
"Accrual Period": With respect to the Notes and any Distribution Date,
the prior calendar month.
"Act": With respect to any Noteholder, as defined in Section 11.03 of
the Indenture.
"Addition Notice": A written notice from the Unaffiliated Seller to the
Depositor, the Trust, the Indenture Trustee, the Collateral Agent, the Rating
Agencies and the Note Insurer that the Unaffiliated Seller desires to make a
Subsequent Transfer.
"Adjusted Note Rate": With respect to any Distribution Date for the
Class A-1 Notes, the percentage equal to (i) the Class A-1 Note Rate plus (ii)
the Premium Percentage for such Class; with respect to any Distribution Date for
the Class A-2 Notes, the percentage equal to (i) the Class A-2 Note Rate plus
(ii) the Premium Percentage for such Class.
"Administrative Costs": With respect to each Class of Notes and any
Distribution Date, the sum of the Indenture Trustee Fee, the Premium Amount and
the Servicing Fee for such Distribution Date and such Class of Notes.
"Affiliate": With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent": Any Note Registrar, Collateral Agent, or Authenticating Agent.
"Aggregate Principal Balance": With respect to any Mortgage Loans and
any date of determination, the aggregate of the Principal Balances of such
Mortgage Loans as of such date of determination.
"Appraised Value": As to any Mortgaged Property, the appraised value of
the Mortgaged Property based upon the appraisal made by or on behalf of the
related Originator at the time referred to in the related Basic Documents or, in
the case of a Mortgage Loan that is a purchase money mortgage loan, the sales
price of the Mortgaged Property, if such sales price is less than such appraised
value.
"Assignment of Mortgage": With respect to each Mortgage Loan, an
assignment of the 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 sale of the Mortgage to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
"Authenticating Agent": The Person, if any, appointed as Authenticating
Agent by the Owner Trustee, acting at the direction of the Majority
Certificateholders, pursuant to Section 6.14 of the Indenture, until any
successor Authenticating Agent for the Notes is named, and thereafter
"Authenticating Agent" shall mean such successor. The initial Authenticating
Agent shall be the Indenture Trustee. Any Authenticating Agent other than the
Indenture Trustee shall sign an instrument under which it agrees to be bound by
all of the terms of this Indenture applicable to the Authenticating Agent.
"Authorized Denominations": Each Class of Notes is issuable only in the
minimum Percentage Interest corresponding to a minimum denomination of $1,000 or
integral multiples of $1,000 in excess thereof; provided, however, that one Note
of each Class is issuable in a denomination equal to any such multiple plus an
additional amount such that the aggregate denomination of all Notes of such
Class shall be equal to the Original Note Principal Balance of such Class.
"Authorized Officer": With respect to (i) the Indenture Trustee, any
Responsible Officer, (ii) the Owner Trustee or the Collateral Agent, the
president, any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer,
any financial services officer or any other officer of the Owner Trustee or the
Collateral Agent customarily performing functions similar to those performed by
the above officers and (iii) any other Person, the chairman, chief operating
officer, president or any vice president of such Person.
"Available Funds": With respect to any Distribution Date and any
Distribution Account, the amount to be on deposit in such Distribution Account
on such Distribution Date (excluding the amount of any Insured Payment and prior
to the application of such amounts as described in Section 8.02 of the Indenture
for such Distribution Date) as a result of (a) the Servicer's remittance of the
Servicer Remittance Amount on the related Servicer Distribution Date, (b) any
transfers to such Distribution
2
Account made from the related Capitalized Interest Account and/or the related
Pre-Funding Account and relating to such Distribution Date pursuant to Section
8.01 of the Indenture, and (c) any transfers to such Distribution Account in
respect of the Shortfall Amount for such Class and such Distribution Date
pursuant to Section 8.01 of the Indenture, until such Shortfall Amount is paid
in full, made first, to the extent of the Net Monthly Excess Cashflow for the
other Pool of Mortgage Loans remaining after payment of any Net Mortgage Loan
Interest Shortfalls for such other Pool, from the Distribution Account relating
to such other Pool, second, from the Cross-collateralization Reserve Account
relating to this Pool, and third, from the Cross-collateralization Reserve
Account relating to the other Pool. For purposes of calculating the Available
Funds, any Loan Repurchase Price or Substitution Adjustment that is paid shall
be deemed deposited in the Distribution Account in the Due Period preceding such
Servicer Distribution Date.
"Available Funds Shortfall": With respect to any Distribution Date and
any Class, an amount equal to the excess of the Insured Distribution Amount for
such Distribution Date and for such Class over the Available Funds for such
Distribution Date and such Class available for distribution in respect of such
Insured Distribution Amount.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Basic Documents": The Indenture, the Trust Agreement, the Sale and
Servicing Agreement, the Unaffiliated Seller's Agreement, the Insurance
Agreement and the Indemnification Agreement.
"Beneficial Owner": With respect to a Book-Entry Note, the Person who
is the beneficial owner of such Note as reflected on the books of the Clearing
Agency for the Notes or on the books of a Person maintaining an account with
such Clearing Agency (as either a Direct Participant or an Indirect Participant,
in accordance with the rules of such Clearing Agency).
"Best Efforts": Efforts determined to be in good faith and reasonably
diligent by the Person performing such efforts, specifically the Trust or the
Servicer or any other agent of the Trust, as the case may be, in its reasonable
discretion. Such efforts do not require the Trust or the Servicer or any other
agent of the Trust, as the case may be, to enter into any litigation,
arbitration or other legal or quasi-legal proceeding, nor do they require the
Trust or the Servicer or any other agent of the Trust, as the case may be, to
advance or expend fees or sums of money in addition to those specifically set
forth in this Indenture and the Sale and Servicing Agreement.
"Book-Entry Notes": Any Notes registered in the name of the Clearing
Agency or its nominee, ownership of which is reflected on the books of the
Clearing Agency or on the books of a person maintaining an account with such
Clearing Agency (as either a Direct Participant or an Indirect Participant in
accordance with the rules of such Clearing Agency).
3
"Book-Entry Termination": The time at which the book-entry registration
of the Book-Entry Notes shall terminate, as specified in Section 2.13 of the
Indenture.
"Business Day": Any day other than (i) a Saturday or Sunday or (ii) a
day that is either a legal holiday or a day on which the Note Insurer or banking
institutions in the State of New York, the State of Delaware, the State of New
Jersey, the State of North Carolina, or the state in which the Indenture
Trustee's office from which payments will be made to Certificateholders, are
authorized or obligated by law, regulation or executive order to be closed.
"Business Purpose Property": Any mixed-use property, commercial
property, or four or more unit multifamily property.
"Capitalized Interest Account": Each of the Capitalized Interest
Accounts established in accordance with Section 8.01(c) of the Indenture and
maintained by the Indenture Trustee.
"Capitalized Interest Requirement": With respect to each Class of Notes
and the Distribution Date occurring in April 1999 and May 1999, (A) the product
of (i) one-twelfth of the related Adjusted Note Rate as calculated as of such
Distribution Date and (ii) the related Pre-Funded Amount as of the first day of
the related Due Period, minus (B) thirty (30) days' interest, at the related
Mortgage Interest Rate, on the Subsequent Mortgage Loans for the related Pool
transferred to the Trust during the related Due Period which had a Due Date
after the related Subsequent Cut-Off Date during the related Due Period, minus
(C) the amount of any Pre-Funding Earnings for the related Pool earned from the
last Distribution Date (or the Closing Date with respect to the April 1999
Distribution Date). In no event will the Capitalized Interest Requirement for
either Pool be less than zero.
"CERCLA": The Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Civil Relief Act Interest Shortfall": With respect to any Distribution
Date, for any Mortgage Loan as to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Due Period as a
result of the application of the Civil Relief Act, the amount, if any, by which
(a) interest collectible on such Mortgage Loan during the most recently ended
calendar month is less than (b) the sum of one month's interest on the Principal
Balance of such Mortgage Loan, calculated at a rate equal to the related
Mortgage Interest Rate.
"Class": Each class of Notes designated as the Class A-1 Notes and the
Class A-2 Notes.
"Class A-1 Current Interest": With respect to the Class A-1 Notes for
any Distribution Date, the interest accrued during the related Accrual Period at
the Class A-1
4
Note Rate applicable to such Distribution Date on the Class A-1 Note Principal
Balance as of such Distribution Date (and prior to making any distributions on
such Distribution Date).
"Class A-1 Distribution Amount": With respect to the Class A-1 Notes
for any Distribution Date, the amount to be distributed to the Holders of the
Class A-1 Notes on such Distribution Date, applied first to interest and then to
principal, which amount shall be the sum of (i) any moneys released from the
Pre-Funding Account as a prepayment of principal on the Class A-1 Notes pursuant
to Section 8.01(b) of the Indenture, and (ii) the lesser of (x) the Class A-1
Formula Distribution Amount for such Distribution Date and (y) the amount
(including any applicable portion of any Insured Payment) available for
distribution on account of the Class A-1 Notes for such Distribution Date.
"Class A-1 Formula Distribution Amount": With respect to the Class A-1
Notes for any Distribution Date, the sum of the Class A-1 Interest Distribution
Amount and the Class A-1 Principal Distribution Amount.
"Class A-1 Interest Distribution Amount": With respect to the Class A-1
Notes for any Distribution Date, an amount equal to the Class A-1 Current
Interest less the Class A-1 Mortgage Loan Interest Shortfall Amount.
"Class A-1 Mortgage Loan Interest Shortfall Amount": With respect to
the Mortgage Loans in Pool I and any Distribution Date, the sum of (x) the
excess, if any, of the aggregate Prepayment Interest Shortfalls for the related
Due Period over the aggregate amount of Compensating Interest paid by the
Servicer in respect thereto and (y) the aggregate amount of Civil Relief Act
Interest Shortfalls in respect of which the Servicer did not make a Servicer
Advance.
"Class A-1 Note": Any Note designated as a "Class A-1 Note" on the face
thereof, in the form of Exhibit A to the Indenture. The Class A-1 Notes shall be
issued with an initial aggregate Note Principal Balance equal to the Original
Note Principal Balance therefor.
"Class A-1 Note Principal Balance": As of any date of determination,
the Original Note Principal Balance of the Class A-1 Notes less any amounts
actually distributed with respect to principal thereon on all prior Distribution
Dates.
"Class A-1 Note Rate": With respect to any Distribution Date, the per
annum rate equal to 6.545%; provided, that, on any Distribution Date after the
Note Clean-Up Call Date for the Class A-1 Notes, the Class A-1 Note Rate will be
7.045%.
"Class A-1 Principal Distribution Amount": With respect to the Class
A-1 Notes for any Distribution Date, the lesser of (x) the Principal
Distribution Amount for Pool I for such Distribution Date, and (y) the Class A-1
Note Principal Balance as of such Distribution Date.
5
"Class A-2 Current Interest": With respect to the Class A-2 Notes for
any Distribution Date, the interest accrued during the related Accrual Period at
the Class A-2 Note Rate applicable to such Distribution Date on the Class A-2
Note Principal Balance as of such Distribution Date (and prior to making any
distributions on such Distribution Date).
"Class A-2 Distribution Amount": With respect to the Class A-2 Notes
for any Distribution Date, the amount to be distributed to the Holders of the
Class A-2 Notes on such Distribution Date, applied first to interest and then to
principal, which amount shall be the lesser of (x) the Class A-2 Formula
Distribution Amount for such Distribution Date and (y) the amount (including any
applicable portion of any Insured Payment) available for distribution on account
of the Class A-2 Notes for such Distribution Date.
"Class A-2 Formula Distribution Amount": With respect to the Class A-2
Notes for any Distribution Date, the sum of the Class A-2 Interest Distribution
Amount and the Class A-2 Principal Distribution Amount.
"Class A-2 Interest Distribution Amount": With respect to the Class A-2
Notes for any Distribution Date, an amount equal to (a) the related Class A-2
Current Interest, less the Class A-2 Mortgage Loan Interest Shortfall Amount.
"Class A-2 Mortgage Loan Interest Shortfall Amount": With respect to
the Mortgage Loans in Pool II and any Distribution Date, the sum of (x) the
excess, if any, of the aggregate Prepayment Interest Shortfalls for the related
Due Period over the aggregate amount of Compensating Interest paid by the
Servicer in respect thereto and (y) the aggregate amount of Civil Relief Act
Interest Shortfalls in respect of which the Servicer did not make a Servicer
Advance.
"Class A-2 Note": Any Note designated as a "Class A-2 Note" on the face
thereof, in the form of Exhibit A to the Indenture. The Class A-2 Notes shall be
issued with an initial aggregate Note Principal Balance equal to the Original
Note Principal Balance therefor.
"Class A-2 Note Principal Balance": As of any date of determination,
the Original Note Principal Balance of the Class A-2 Notes less any amounts
actually distributed with respect to principal thereon on all prior Distribution
Dates.
"Class A-2 Note Rate": With respect to any Distribution Date, the per
annum rate equal to 6.580%; provided that, on any Distribution Date after the
Note Clean-up Call Date for the Class A-2 Notes, the Class A-2 Note Rate will be
7.080%.
"Class A-2 Principal Distribution Amount": With respect to the Class
A-2 Notes for any Distribution Date, the lesser of (x) the Principal
Distribution Amount for Pool II for such Distribution Date and (y) the Class A-2
Note Principal Balance as of such Distribution Date.
6
"Clean-Up Call Date": The first Distribution Date after the sum of the
Aggregate Principal Balances of the Mortgage Loans in Pool I and Pool II is less
than 10% of the sum of the Maximum Collateral Amount for Pool I and Pool II.
"Clearing Agency": An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities and Exchange Act of 1934, as amended,
and the regulations of the Commission thereunder and shall initially be The
Depository Trust Company of New York, the nominee for which is Cede & Co.
"Clearing Agency Participants": The entities for whom the Clearing
Agency will maintain book-entry records of ownership and transfer of Book-Entry
Notes, which may include securities brokers and dealers, banks and trust
companies and clearing corporations and certain other organizations.
"Closing Date": March 30, 1999.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral Agent": Chase Bank of Texas, N.A., a national banking
association, or its successor-in-interest, or any successor Collateral Agent
appointed as provided in Section 9.08 of the Sale and Servicing Agreement.
"Collection Account": The Eligible Account established and maintained
by the Servicer pursuant to Section 5.02(b) of the Sale and Servicing Agreement.
"Combined Loan-to-Value Ratio" or "CLTV": As to any Mortgage Loan at
any time, the fraction, expressed as a percentage, the numerator of which is the
sum of (i) the Principal Balance thereof at such time and (ii) if such Mortgage
Loan is subject to a second mortgage, the unpaid principal balance of any
related first mortgage loan or loans, if any, as of such time, and the
denominator of which is the Appraised Value of any related Mortgaged Property or
Properties as of the date of the appraisal used by or on behalf of the
Unaffiliated Seller to underwrite such Mortgage Loan.
"Commission": The United States Securities and Exchange Commission.
"Compensating Interest": As defined in Section 6.05 of the Sale and
Servicing Agreement.
"Corporate Trust Office": With respect to (x) the Indenture Trustee,
the principal office of the Indenture Trustee at which at any particular time
its corporate trust business shall be principally administered, which office at
the date of the execution of the Basic Documents is located at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: ABFS Mortgage Loan Trust 1999-1;
(y) the Owner Trustee, the principal office of the Owner Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of the Basic Documents is located at
One Xxxxxx Square, 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: Corporate Trust Administration; and (z) the Collateral Agent, the
principal office of the Collateral Agent at which at any particular time its
7
corporate trust business shall be principally administered, which office at the
date of the execution of the Basic Documents is located at 000 Xxxx Xxxxxx Xxxx,
Xxxxxxx, Xxxxx 00000, Attention: Custody Manager.
"Cross-collateralization Reserve Accounts": With respect to each Class
of Notes, the segregated trust account, which shall be an Eligible Account,
established and maintained pursuant to Section 8.01(d) of the Indenture and
entitled "The Bank of New York, as Indenture Trustee for ABFS Mortgage Loan
Trust 1999-1 Mortgage Backed Notes, Series 1999-1, Class A-[1][2],
Cross-collateralization Reserve Account," as the case may be, on behalf of the
related Noteholders and the Note Insurer.
"Cumulative Loan Loss": With respect to any period, the sum of all
Liquidated Loan Losses which occurred during such period.
"Cumulative Loss Percentage": As of any date of determination thereof,
the aggregate of all Liquidated Loan Losses since the Closing Date as a
percentage of the sum of (i) the aggregate Principal Balance of the Initial
Mortgage Loans as of the Initial Cut-Off Date and (ii) the aggregate Principal
Balance of any Subsequent Mortgage Loans transferred to the Trust as of the
related Subsequent Cut-Off Date.
"Cumulative Loss Test": The Cumulative Loss Test for each period
indicated below is satisfied if the Cumulative Loss Percentage for such period
does not exceed the percentage set out for such period below:
Period Cumulative Loss Percentage
------ --------------------------
1st - 24th Distribution Date 1.00%
25th - 36th Distribution Date 1.50%
37th - 48th Distribution Date 1.75%
49th - 60th Distribution Date
and thereafter 2.00%
"Curtailment": With respect to a Mortgage Loan, any payment of
principal received during a Due Period as part of a payment that is in excess of
the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
Delinquency.
"Cut-Off Date": With respect to the Initial Mortgage Loans, the Initial
Cut-Off Date, and with respect to the Subsequent Mortgage Loans, the Subsequent
Cut-Off Date.
"Cut-Off Date Aggregate Principal Balance": Means the aggregate unpaid
principal balance of the Initial Mortgage Loans as of the Initial Cut-Off Date
(or, with respect to Initial Mortgage Loans which were originated after the
Initial Cut-Off Date, as of the date of origination). The Cut-Off Date Aggregate
Principal Balance for the Trust is $167,633,030.25. The Cut-Off Date Aggregate
Principal Balance for Pool I and Pool II is $89,436,393.09 and $78,196,637.16,
respectively.
8
"Cut-Off Date Principal Balance": Means as to each Initial Mortgage
Loan, its unpaid principal balance as of the Initial Cut-Off Date (or, with
respect to Initial Mortgage Loans which were originated after the Initial
Cut-Off Date, as of the date of origination).
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the Bankruptcy Code, except such a
reduction that constitutes a Deficient Valuation or a permanent forgiveness of
principal.
"Default": Any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding Principal Balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Notes": Notes other than Book-Entry Notes.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
a Qualified Substitute Mortgage Loan.
"Delinquency Ratio": With respect to any Distribution Date, the
percentage equivalent of a fraction (a) the numerator of which equals the
aggregate Principal Balances of all Mortgage Loans that are sixty (60) or more
days Delinquent, in foreclosure or converted to REO Property as of the last day
of such Due Period and (b) the denominator of which is the aggregate Principal
Balance of the Mortgage Loans as of the last day of such Due Period.
"Delinquent": A Mortgage Loan is "delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Depositor": Prudential Securities Secured Financing Corporation, a
Delaware corporation.
"Direct Participant": Any broker-dealer, bank or other financial
institution for which the Clearing Agency holds Notes from time to time as a
securities depositary.
"Distribution Account": With respect to each Class of Notes, the
segregated trust account, which shall be an Eligible Account, established and
maintained pursuant to Section 8.01(a) of the Indenture and entitled "The Bank
of New York, as
9
Indenture Trustee for ABFS Mortgage Loan Trust 1999-1 Mortgage Backed Notes,
Series 1999-1, Class A-[1][2], Distribution Account," as the case may be, on
behalf of the related Noteholders and the Note Insurer.
"Distribution Amount": The Class A-1 Distribution Amount or the Class
A-2 Distribution Amount, as applicable.
"Distribution Date": The 25th day of any month or if such 25th day is
not a Business Day, the first Business Day immediately following, commencing on
April 26, 1999.
"Due Date": With respect to each Mortgage Loan and any Distribution
Date, the day of the calendar month preceding the calendar month in which such
Distribution Date occurs on which the Monthly Payment for such Mortgage Loan was
due.
"Due Period": With respect to each Distribution Date, the calendar
month preceding the related Distribution Date.
"Eligible Account": Either (A) an account or accounts maintained with
an institution (which may include the Indenture Trustee; provided, that the
Indenture Trustee otherwise meets these requirements) whose deposits are insured
by the FDIC, the unsecured and uncollateralized debt obligations of which
institution shall be rated "AA" or better by S&P and "Aa2" or better by Moody's
and in the highest short term rating category by S&P and Moody's, and which is
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution (including
the Indenture Trustee) 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, (iv) a principal subsidiary of a bank holding company, or
(v) approved in writing by the Note Insurer and the Rating Agencies or (B) a
trust account or accounts maintained with the trust department of a federal or
state chartered depository institution or trust company (which may include the
Indenture Trustee; provided, that the Indenture Trustee otherwise meets these
requirements), having capital and surplus of not less than $50,000,000, acting
in its fiduciary capacity.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Excess Over-collateralized Amount": With respect to a Pool of Mortgage
Loans and any Distribution Date, the excess, if any, of (x) the
Over-collateralized Amount for such Pool that would apply on such Distribution
Date after taking into account the payment of the Class A-1 Distribution Amount
or the Class A-2 Distribution Amount, as applicable, on such Distribution Date
(except for any distributions of Over-collateralization Reduction Amounts for
such Pool on such Distribution Date) over (y) the related Specified
Over-collateralized Amount for such Pool for such Distribution Date; provided,
however, that the Excess Over-collateralized Amount for the period
10
beginning with the Distribution Date as to which clause (b)(i)(y)(A) of
"Specified Over-collateralized Amount" applies (the "Trigger Date") and ending
on the Distribution Date occurring in the month six months subsequent to the
Trigger Date (inclusive) shall be limited to the amount obtained using the
following formula.
n
--- x E.S.A.
6
Where "n" is equal to the number of Distribution Dates that have
occurred since the Trigger Date and "E.S.A." is equal to the amount of Excess
Over-collateralized Amount that would otherwise be obtained for such
Distribution Date without regard to the provisions of this proviso.
"Exchange Act": Means the Securities Exchange Act of 1934, as amended.
"Event of Default": As defined in Section 5.01 of the Indenture.
"Xxxxxx Xxx": The Federal National Mortgage Association, and any
successor thereto.
"FDIC": The Federal Deposit Insurance Corporation, and any successor
thereto.
"Final Certification": A certification as to the completeness of each
Indenture Trustee's Mortgage File prepared by the Collateral Agent, on behalf of
the Indenture Trustee, and provided by the Collateral Agent within ninety (90)
of the Closing Date pursuant to Section 2.06(a)(iii) of the Sale and Servicing
Agreement.
"Final Stated Maturity Date": With respect to both the Class A-1 Notes
and the Class A-2 Notes, the May 2030 Distribution Date.
"Foreclosure Profits": As to any Distribution Date, the excess, if any,
of (i) Net Liquidation Proceeds in respect of each Mortgage Loan that became a
Liquidated Mortgage Loan during the related Due Period over (ii) the sum of the
unpaid Principal Balance of each such Liquidated Mortgage Loan plus accrued and
unpaid interest at the applicable Mortgage Interest Rate on the unpaid Principal
Balance thereof from the Due Date on which interest was last paid by the
Mortgagor (or, in the case of a Liquidated Mortgage Loan that had been an REO
Mortgage Loan, from the Due Date on which interest was last deemed to have been
paid pursuant to Section 5.06 of the Sale and Servicing Agreement) to the Due
Date in the month succeeding the date the Loan became a Liquidated Mortgage
Loan.
"Xxxxxxx Mac": The Federal Home Loan Mortgage Corporation, and any
successor thereto.
"GAAP": Generally accepted accounting principles, consistently applied.
11
"Grant": To assign, transfer, mortgage, pledge, create and grant a
security interest in, deposit, set-over and confirm. A Grant of a Mortgage Loan
and the related Mortgage Files, a Permitted Investment, the Sale and Servicing
Agreement, the Unaffiliated Seller's Agreement, or any other instrument shall
include all rights, powers and options (but none of the obligations) of the
Granting party thereunder, including without limitation the immediate and
continuing right to claim for, collect, receive and give receipts for principal
and interest payments thereunder, Insurance Proceeds, Loan Purchase Prices and
all other moneys payable thereunder and all proceeds thereof, to give and
receive notices and other communications, to make waivers or other agreements,
to exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise, and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Highest Lawful Rate": As defined in Section 11.19 of the Indenture.
"I&I Payments": Payments due and owing under the Insurance Agreement
other than pursuant to Section 3.02(b) of such Insurance Agreement.
"Indemnification Agreement": As defined in the Insurance Agreement.
"Indenture": The Indenture, dated as of March 1, 1999, between the
Trust and the Indenture Trustee, relating to the issuance of the Notes.
"Indenture Trustee": The Bank of New York, a New York banking
corporation, or its successor-in-interest, or any successor Indenture Trustee
appointed as provided for in Section 6.09 of the Indenture.
"Indenture Trustee Fee": As to any Distribution Date, the fee payable
to the Indenture Trustee in respect of its services as Indenture Trustee
pursuant to Section 6.16 of the Indenture that accrues at a monthly rate equal
to one-twelfth of 0.025% on the Principal Balance of each Mortgage Loan, as of
the immediately preceding Due Date.
"Indenture Trustee's Mortgage File": The documents delivered to the
Collateral Agent, on behalf of the Indenture Trustee, pursuant to Section 2.05
of the Sale and Servicing Agreement.
"Indenture Trustee's Remittance Report": The statement prepared
pursuant to Section 2.08(d) of the Indenture, containing the following
information with respect to each Class:
(a) the amount of the distribution with respect to the each
Class of Notes and the Trust Certificates;
(b) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Prepayments or other
unscheduled recoveries of principal included therein and separately
identifying any Over-collateralization Increase Amounts for each Pool;
12
(c) the amount of such distributions allocable to interest and
the calculation thereof;
(d) the Note Principal Balance of each Class of Notes as of
such Distribution Date, together with the Note Principal Balance of
each Class of Notes (based on a Note in an original Note Principal
Balance of $1,000) then outstanding, in each case after giving effect
to any payment of principal on such Distribution Date;
(e) the amount of any Insured Payment included in the amounts
distributed to the Noteholders on such Distribution Date;
(f) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in such distribution;
(g) the amounts, if any, of any Liquidated Loan Losses for
consumer purpose loans and for business purpose loans for the related
Due Period and cumulative Liquidated Loan Losses since the Closing Date
for consumer purpose loans and for business purpose loans; and
(h) the Pre-Funding Amount for each Class on such Distribution
Date.
Items (a), (b) and (c) above shall, with respect to each Class of
Notes, be presented on the basis of a Note having a $1,000 denomination. In
addition, by January 31 of each calendar year following any year during which
the Notes are outstanding, the Indenture Trustee shall furnish a report to each
Holder of record if so requested in writing at any time during each calendar
year as to the aggregate of amounts reported pursuant to (a), (b) and (c) with
respect to the Notes for such calendar year.
"Independent": When used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Trust and any other obligor
upon the Notes, (ii) does not have any direct financial interest or any material
indirect financial interest in the Trust or in any such other obligor or in an
Affiliate of the Trust or such other obligor, and (iii) is not connected with
the Trust or any such other obligor as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Whenever it is herein provided that any Independent Person's opinion or
certificate shall be furnished to the Indenture Trustee, such Person shall be
appointed by a Trust Order and such opinion or certificate shall state that the
signer has read this definition and that the signer is Independent within the
meaning hereof.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Note.
"Individual Note": A Note of an Original Note Principal Balance of
$1,000; a Note of an Original Note Principal Balance in excess of $1,000 shall
be deemed to be a number of Individual Notes equal to the quotient obtained by
dividing such Original Note Principal Balance amount by $1,000.
13
"Initial Certification": A certification as to the completeness of each
Mortgage File prepared by the Collateral Agent, on behalf of the Indenture
Trustee, and provided by the Collateral Agent within thirty (30) of the Closing
Date pursuant to Section 2.06(a)(ii) of the Sale and Servicing Agreement.
"Initial Cut-Off Date": The close of business on February 28, 1999 (or
with respect to any Initial Mortgage Loan originated or otherwise acquired by an
Originator after February 28, 1999, the date of origination or acquisition of
such Initial Mortgage Loan).
"Initial Mortgage Loans": The Mortgage Loans delivered by the Trust on
the Closing Date.
"Initial Over-collateralized Amount": With respect to any Pool, an
amount equal to 0.50% of the Maximum Collateral Amount for such Pool.
"Insurance Agreement": The Insurance and Indemnity Agreement dated as
of March 1, 1999 among the Note Insurer, the Depositor, the Trust, the Servicer,
the Unaffiliated Seller, and the Originators as such agreement may be amended or
supplemented in accordance with the provisions thereof.
"Insurance Policies": All insurance policies insuring any Mortgage Loan
or Mortgaged Property, to the extent the Trust or the Indenture Trustee has any
interest therein.
"Insurance Proceeds": Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan to the extent such proceeds are not
applied to the restoration of the related Mortgaged Property or released to the
related Mortgagor in accordance with Accepted Servicing Practices. "Insurance
Proceeds" do not include "Insured Payments."
"Insured Distribution Amount": With respect to any Distribution Date
and for any Pool, is the sum of (i) the Interest Distribution Amount for such
Pool, (ii) the amount of the Over-collateralization Deficit applicable to such
Pool, if any, with respect to such Distribution Date, and (iii) with respect to
the Distribution Date which is a Final Stated Maturity Date, the outstanding
Note Principal Balance for the related Class of Notes.
"Insured Payment": With respect to any Distribution Date and any Class
of Notes, the Available Funds Shortfall for such Class.
"Interest Distribution Amount": The Class A-1 Interest Distribution
Amount or the Class A-2 Interest Distribution Amount, as applicable.
"Late Payment Rate": Has the meaning ascribed thereto in the Insurance
Agreement.
14
"Letter Agreement": The Letter of Representations to the Clearing
Agency from the Indenture Trustee and the Trust dated March 24, 1999.
"Liquidated Loan Loss": With respect to any Distribution Date, the
aggregate of the amount of losses with respect to each Mortgage Loan which
became a Liquidated Mortgage Loan prior to the Due Date preceding such
Distribution Date, equal to the excess of (i) the unpaid Principal Balance of
each such Liquidated Mortgage Loan, plus accrued interest thereon in accordance
with the amortization schedule at the time applicable thereto at the applicable
Mortgage Interest Rate from the Due Date as to which interest was last paid with
respect thereto through the Due Date in the month succeeding the date such Loan
became a Liquidated Mortgage Loan, over (ii) Net Liquidation Proceeds with
respect to such Liquidated Mortgage Loan.
"Liquidated Mortgage Loan": A Mortgage Loan with respect to which the
related Mortgaged Property has been acquired, liquidated or foreclosed and with
respect to which the Servicer determines that all Liquidation Proceeds which it
expects to recover have been recovered.
"Liquidation Expenses": Expenses incurred by the Servicer in connection
with the liquidation of any defaulted Mortgage Loan or property acquired in
respect thereof (including, without limitation, legal fees and expenses,
committee or referee fees, and, if applicable, brokerage commissions and
conveyance taxes), any unreimbursed amount expended by the Servicer pursuant to
Sections 5.04 and 5.06 of the Sale and Servicing Agreement respecting the
related Mortgage Loan and any unreimbursed expenditures for real property taxes
or for property restoration or preservation of the related Mortgaged Property.
Liquidation Expenses shall not include any previously incurred expenses in
respect of an REO Mortgage Loan which have been netted against related REO
Proceeds.
"Liquidation Proceeds": The amount (other than Insurance Proceeds)
received by the Servicer in connection with (i) the taking of all or a part of
Mortgaged Property by exercise of the power of eminent domain or condemnation,
(ii) the liquidation of a defaulted Mortgage Loan through a Indenture Trustee's
sale, foreclosure sale, REO Disposition or otherwise or (iii) the liquidation of
any other security for such Mortgage Loan, including, without limitation,
pledged equipment, inventory and working capital and assignments of rights and
interests made by the related Mortgagor.
"Loan Repurchase Price": With respect to any Mortgage Loan, the
Principal Balance of such Mortgage Loan as of the date of purchase, plus all
accrued and unpaid interest on such Principal Balance computed, as of the next
succeeding Due Date for such repurchased Mortgage Loan, at the Mortgage Interest
Rate, net of the Servicing Fee if the Unaffiliated Seller or any of its
Affiliates is the Servicer, plus the amount of any unreimbursed Servicing
Advances made by the Servicer with respect to such Mortgage Loan, which purchase
price shall be deposited in the Collection Account on the next succeeding
Servicer Distribution Date, after deducting therefrom any amounts received in
respect of such repurchased Mortgage Loan or Loans and being held in the
15
Collection Account for future distribution to the extent such amounts have not
yet been applied to principal or interest on such Mortgage Loan.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Loan as of
its date of origination, the ratio on such date borne by the outstanding
Principal Balance of the Mortgage Loan to the Appraised Value of the related
Mortgaged Property.
"Majority Certificateholders": The Holder or Holders of Trust
Certificates evidencing Percentage Interests in excess of 51% in the aggregate.
"Majority Noteholders": The Holder or Holders of Notes evidencing
Percentage Interests in excess of 51% in the aggregate.
"Maximum Collateral Amount": The sum of the Original Pool Principal
Balance and the Original Pre-Funded Amount for each Class of Notes.
"Monthly Payment": As to any Mortgage Loan (including any REO Mortgage
Loan) and any Due Date, the payment of principal and interest due thereon as
specified for such Due Date in the related amortization schedule at the time
applicable thereto (after adjustment for any Curtailments and Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than Deficient
Valuations, or similar proceeding or any moratorium or similar waiver or grace
period).
"Monthly Servicing Fee": As defined in Section 5.08 of the Sale and
Servicing Agreement.
"Moody's": Xxxxx'x Investors Service, Inc., a corporation organized and
existing under Delaware law, or any successor thereto and if such corporation no
longer for any reason performs the services of a securities rating agency,
"Moody's" shall be deemed to refer to any other nationally recognized rating
agency designated by the Note Insurer.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on the Mortgaged Property.
"Mortgage File": As described in Exhibit A to the Sale and Servicing
Agreement.
"Mortgage Interest Rate": As to any Mortgage Loan, the per annum fixed
rate at which interest accrues on the unpaid Principal Balance thereof.
"Mortgage Loan Interest Shortfall": With respect to any Distribution
Date, as to any Mortgage Loan, the sum of (a) the excess, if any, of the
Prepayment Interest Shortfall for such Mortgage Loan for the related Due Period
over the Compensating Interest for such Mortgage Loan paid by the Servicer in
respect thereto and (b) any Civil Relief Act Interest Shortfall in respect of
which the Servicer did not make a Servicer Advance.
16
"Mortgage Loan Schedule": The schedule of Initial Mortgage Loans as of
the Initial Cut-Off Date attached as Schedule I to the Indenture, which will be
deemed to be modified automatically to reflect any replacement, sale,
substitution, liquidation, transfer or addition of any Mortgage Loan, including
the addition of a Subsequent Mortgage Loan, pursuant to the terms hereof. The
initial Mortgage Loan Schedule sets forth as to each Initial Mortgage Loan, and
any subsequent Mortgage Loan Schedule provided in connection with the Subsequent
Mortgage Loans will set forth as to each Subsequent Mortgage Loan: (i) its
identifying number and the name of the related Mortgagor; (ii) the billing
address for the related Mortgaged Property including the state and zip code;
(iii) its date of origination; (iv) the original number of months to stated
maturity; (v) the original stated maturity; (vi) the original Principal Balance;
(vii) its Principal Balance as of the applicable Cut-Off Date; (viii) the
Mortgage Interest Rate; (ix) the scheduled monthly payment of principal and
interest and (x) a Pool designation.
"Mortgage Loans": The Initial Mortgage Loans and the Subsequent
Mortgage Loans, together with any Qualified Substitute Mortgage Loans
substituted therefor in accordance with the Basic Documents, as from time to
time are held as a part of the Trust, the Initial Mortgage Loans originally so
held being identified in the initial Mortgage Loan Schedule. When used in
respect of any Distribution Date, the term Mortgage Loans shall mean all
Mortgage Loans (including those in respect of which the Indenture Trustee has
acquired the related Mortgaged Property) which have not been repaid in full
prior to the related Due Period, did not become Liquidated Mortgage Loans prior
to such related Due Period or were not repurchased or replaced by the
Unaffiliated Seller prior to such related Due Period.
"Mortgage Note": The original, executed note or other evidence of any
indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Portfolio Performance Test": The Mortgage Portfolio
Performance Test is satisfied for any date of determination thereof if either
(a) (i) the Rolling Six Month Delinquency Rate is less than or equal to 11.00%,
(ii) the Over-collateralization Loss Test is satisfied and (iii) if the Twelve
Month Loss Amount is not greater than or equal to 1.25% of the Principal Balance
of the Mortgage Loans in each Pool as of the first day of the twelfth preceding
calendar month or (b) the Note Insurer, by notice to the Trust, the Servicer,
the Indenture Trustee and the Collateral Agent, expressly waives in writing
compliance with the foregoing tests for such Distribution Date.
"Mortgaged Property": The underlying property or properties securing a
Mortgage Loan, consisting of a fee simple interest in one or more parcels of
land.
"Mortgagor": The obligor on a Mortgage Note.
"Net Foreclosure Profits": As to any Distribution Date, the excess, if
any, of (i) the aggregate Foreclosure Profits with respect to such Distribution
Date over (ii) Liquidated Loan Losses with respect to such Distribution Date.
17
"Net Liquidation Proceeds": As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances and Servicing Advances made by the Servicer. For all purposes
of the Basic Documents, Net Liquidation Proceeds shall be allocated first to
accrued and unpaid interest on the related Mortgage Loan and then to the unpaid
Principal Balance thereof.
"Net Monthly Excess Cashflow": With respect to any Distribution Date
and any Pool, the excess of (x) the Available Funds for such Pool then on
deposit in the related Distribution Account over (y) the sum of (i) the Interest
Distribution Amount for such Pool and such Distribution Date, (ii) the Principal
Distribution Amount for such Pool and such Distribution Date, calculated for
this purpose without regard to any Over-collateralization Increase Amount (or
portion thereof included therein) for such Pool and such Distribution Date,
(iii) the amounts due to the Note Insurer for such Pool on such Distribution
Date pursuant to Section 8.02(ii) of the Indenture, and (iv) the Indenture
Trustee Fees allocable to such Pool for such Distribution Date.
"Net Mortgage Loan Interest Shortfall Amount": The Class A-1 Mortgage
Loan Interest Shortfall or the Class A-2 Mortgage Loan Interest Shortfall
Amount, as applicable.
"Net REO Proceeds": As to any REO Mortgage Loan, REO Proceeds net of
any related expenses of the Servicer.
"Net Weighted Average Mortgage Interest Rate": With respect to any Due
Period, the weighted average Mortgage Interest Rates (weighted by Principal
Balances) of the Mortgage Loans, calculated at the opening of business on the
first day of such Due Period, less the Servicing Fee Rate, and less the Premium
Percentage.
"Nonrecoverable Advances": With respect to any Mortgage Loan, (a) any
Periodic Advance previously made and not reimbursed from late collections
pursuant to Section 5.03 of the Sale and Servicing Agreement, or (b) a Periodic
Advance proposed to be made in respect of a Mortgage Loan or REO Property either
of which, in the good faith business judgment of the Servicer, as evidenced by
an Officer's Certificate delivered to the Note Insurer and the Indenture Trustee
no later than the Business Day following such determination, would not
ultimately be recoverable pursuant to Section 5.03 of the Sale and Servicing
Agreement.
"Note": Any Class A-1 Note or Class A-2 Note executed by the Owner
Trustee on behalf of the Trust and authenticated by the Indenture Trustee.
"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, any Note
registered in the name of the Servicer or any Subservicer or the Unaffiliated
Seller, 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.
18
For purposes of any consent, waiver, request or demand of Noteholders pursuant
to the Indenture, upon the Indenture Trustee's request, the Servicer and the
Unaffiliated Seller shall provide to the Indenture Trustee a notice identifying
any of their respective Affiliates or the Affiliates of any Subservicer that is
a Noteholder as of the date(s) specified by the Indenture Trustee in such
request. Any Notes on which payments are made under the Note Insurance Policy
shall be deemed to be Outstanding and held by the Note Insurer to the extent of
such payment.
"Note Clean-Up Call Date": With respect to the Class A-1 Notes, the
first Distribution Date after the Class A-1 Note Principal Balance is less than
or equal to 10% of the Original Note Principal Balance of the Class A-1 Notes;
with respect to the Class A-2 Notes, the first Distribution Date after the Class
A-2 Note Principal Balance is less than or equal to 10% of the Original Note
Principal Balance of the Class A-2 Notes.
"Note Insurance Payment Account": The Note Insurance Payment Account
established in accordance with Section 8.03(c) of the Indenture and maintained
by the Indenture Trustee.
"Note Insurance Policy": The Financial Guaranty Insurance Policy No.
50792-N, all endorsements thereto dated the Closing Date, issued by the Note
Insurer for the benefit of the Noteholders.
"Note Insurer": Financial Security Assurance Inc., a monoline stock
insurance company organized and created under the laws of the State of New York,
and any successors thereto.
"Note Insurer Default": The existence and continuance of any of the
following:
(a) the Note Insurer shall have failed to make a required
payment when due under the Note Insurance Policy;
(b) the Note Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the
Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization, (ii) made a general
assignment for the benefit of its creditors or (iii) had an order for
relief entered against it under the Bankruptcy Code, the New York State
Insurance Law or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation, or reorganization
that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department
of Insurance or any other competent regulatory authority shall have
entered a final and nonappealable order, judgment or decree (i)
appointing a custodian, indenture trustee, agent, or receiver for the
Note Insurer or for all or any material portion of its property or (ii)
authorizing the taking of possession by a custodian, indenture trustee,
agent, or receiver of the Note Insurer or of all or any material
portion of its property.
19
"Note Principal Balance": As to any particular Note and date of
determination, the product of the Percentage Interest evidenced thereby and the
aggregate principal balance of all Notes of the same Class as of such date of
determination. The Trust Certificates do not have a "Note Principal Balance".
"Note Rate": The Class A-1 Note Rate or the Class A-2 Note Rate, as
applicable.
"Note Register": As defined in Section 2.06 of the Indenture.
"Note Registrar": As defined in Section 2.06 of the Indenture.
"Note Termination Price": With respect to either Class, an amount equal
to the sum of (i) 100% of the aggregate Note Principal Balance of such Class,
plus accrued and unpaid interest thereon, and (ii) any unreimbursed amounts due
to the Note Insurer under the Basic Documents and any I&I Payments.
"Notes": The Class A-1 Notes and the Class A-2 Notes.
"Officer's Certificate": A certificate signed by the chairman of the
board, the president or a vice president and the treasurer, the secretary or one
of the assistant treasurers or assistant secretaries of the Unaffiliated Seller,
the Servicer, or the Depositor, or, with respect to the Trust, a certificate
signed by a Responsible Officer of the Owner Trustee, at the direction of the
related Majority Certificateholders as required by any Basic Document.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be counsel for the Unaffiliated Seller, the Servicer, the Depositor,
the Indenture Trustee, the Owner Trustee, a Noteholder or a Noteholder's
prospective transferee or the Note Insurer (including except as otherwise
provided herein, in-house counsel) reasonably acceptable to each addressee of
such opinion and experienced in matters relating to the subject of such opinion.
"Original Note Principal Balance": As of the Closing Date and as to the
Class A-1 Notes, $100,000,000.00 and as to the Class A-2 Notes, $84,075,000.00.
The Trust Certificates do not have an "Original Note Principal Balance."
"Original Pool Principal Balance": The aggregate Principal Balance of
the Mortgage Loans, as of the Initial Cut-Off Date, which amount for the Trust
is equal to $167,152,311.98. The Original Pool Principal Balance for Pool I and
Pool II is $89,127,717.90 and $78,024,594.08, respectively.
"Original Capitalized Interest Amount": With respect to the Class A-1
Notes, $80,287.09 and with respect to the Class A-2 Notes, $46,065.42
"Original Pre-Funded Amount": With respect to the Class A-1 Notes,
$11,374,794.66 and with respect to the Class A-2 Notes, $6,472,893.36.
20
"Originators": American Business Credit, Inc., HomeAmerican Credit,
Inc., d/b/a Upland Mortgage and New Jersey Mortgage and Investment Corp.
"Outstanding": As of the date of determination, all Notes theretofore
authenticated and delivered under the Indenture except:
(a) Definitive Notes theretofore canceled by the Note
Registrar or delivered to the Note Registrar for cancellation;
(b) Notes or portions thereof for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Indenture Trustee in trust for the Holders of such Notes; provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor, satisfactory to the Indenture Trustee, has been made;
(c) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser (as defined by the Uniform
Commercial Code of the applicable jurisdiction); and
(d) Notes alleged to have been destroyed, lost or stolen that
have been paid as provided for in Section 2.07 of the Indenture;
provided, however, that in determining whether the Holders of the requisite
percentage of the Note Principal Balance of the Outstanding Notes have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Notes owned by the Trust, any other obligor upon the Notes or any Affiliate of
the Trust, the Unaffiliated Seller, the Servicer or the Depositor or such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Notes that the Indenture Trustee knows to be so owned shall be so disregarded.
Notes so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Trust, any other obligor upon the Notes or any Affiliate of
the Trust, the Unaffiliated Seller, the Servicer or the Depositor or such other
obligor; provided, further, however, that Notes that have been paid with the
proceeds of the Note Insurance Policy shall be deemed to be Outstanding for the
purposes of this Indenture, such payment to be evidenced by written notice from
the Note Insurer to the Indenture Trustee, and the Note Insurer shall be deemed
to be the Holder thereof to the extent of any payments thereon made by the Note
Insurer which have not been reimbursed.
"Over-collateralization Deficit": As of any Distribution Date, the
amount, if any, by which (a) the aggregate Note Principal Balance of the Notes,
after taking into account the payment of the Principal Distribution Amount for
each Pool (except for any
21
amount in respect of the Over-collateralization Deficit) on such date exceeds
(b) the sum of (i) the Aggregate Principal Balances of the Mortgage Loans in
such Pool determined as of the end of the immediately preceding Due Period, (ii)
the amount, if any, on deposit in the Pre-Funding Accounts as of the close of
business on the last day of the immediately preceding Due Period, and (iii) the
amount on deposit in the Cross-collateralization Reserve Accounts on such
Distribution Date, after application of all amounts due on such Distribution
Date.
"Over-collateralization Deficiency Amount": With respect to any
Distribution Date and any Pool, the difference, if greater than zero, between
(a) the Specified Over-collateralized Amount for such Pool applicable to such
Distribution Date and (b) the Over-collateralized Amount for such Pool
applicable to such Distribution Date prior to taking into account the payment of
any related Over-collateralization Increase Amount for such Pool on such
Distribution Date.
"Over-collateralization Increase Amount": With respect to any
Distribution Date and any Pool, the lesser of:
(a) the Over-collateralization Deficiency Amount for such Pool
as of such Distribution Date (after taking into account the payment of
the Principal Distribution Amount for such Pool on such Distribution
Date (except for any Over-collateralization Increase Amount for such
Pool)); and
(b) (i) with respect to the first Distribution Date, zero, and
(ii) with respect to any other Distribution Date,
100% of the amount of Net Monthly Excess Cashflow on such
Distribution Date.
"Over-collateralization Loss Test": The Over-collateralization Loss
Test for any period set out below is satisfied if the Cumulative Loss Percentage
for such period does not exceed the percentage set out for such period below:
Period Cumulative Loss Percentage
---------------------------------- --------------------------
1st - 12th Distribution Date 0.75%
13th - 24th Distribution Date 1.25%
25th - 36th Distribution Date 1.75%
37th - 48th Distribution Date 2.00%
49th - 60th Distribution Date
and thereafter 2.50%
"Over-collateralization Reduction Amount": With respect to any Pool and
Distribution Date, is the positive difference, if any, between (a) the
Over-collateralized Amount for such pool that would apply on such Distribution
Date after taking into account all distributions to be made on such Distribution
Date (except for any distributions of related Over-collateralization Reduction
Amounts as described in this sentence) and (b) the Specified Over-collateralized
Amount for such Pool to the extent of principal available for distribution.
22
"Over-collateralized Amount": As of any Distribution Date and any Pool,
the difference, if any, between (a) the sum of (i) the aggregate Principal
Balances of the Mortgage Loans in such Pool as of the close of business on the
last day of the related Due Period and (ii) the amount on deposit in the related
Pre-Funding Account as of the close of business on the last day of the
immediately preceding Due Period and (b) the aggregate Note Principal Balance of
the related Class as of such Distribution Date (after taking into account the
payment of the Principal Distribution Amount for such Pool on such Distribution
Date, except for any portion thereof related to an Insured Payment); provided,
however, that such amount shall not be less than zero.
"Overfunded Interest Amount": With respect to each Pool and each
Subsequent Transfer Date occurring in March 1999, the excess of (i) the amount
on deposit in the related Capitalized Interest Account, over (ii) two-months'
interest calculated at the related Adjusted Note Rate on the amount on deposit
in the related Pre-Funding Account (net of any Pre-Funding Earnings for such
Pre-Funding Account) immediately following such Subsequent Transfer Date
(disregarding any amount applied from such Pre-Funding Account to a Subsequent
Mortgage Loan that does not have a Due Date in March 1999).
With respect to each Pool and each Subsequent Transfer Date occurring
in April 1999, the excess of (i) the amount on deposit in the related
Capitalized Interest Account, over (ii) one-month's interest calculated at the
related Adjusted Note Rate on the amount on deposit in the related Pre-Funding
Account (net of any Pre-Funding Earnings for such Pre-Funding Account)
immediately following such Subsequent Transfer Date (disregarding any amount
applied from the such Pre-Funding Account to a Subsequent Mortgage Loan that
does not have a Due Date in April 1999).
"Owner-Occupied Mortgaged Property": A Residential Dwelling as to which
(a) the related Mortgagor represented an intent to occupy as such Mortgagor's
primary residence at the origination of the Mortgage Loan, and (b) the
Unaffiliated Seller has no actual knowledge that such Residential Dwelling is
not so occupied.
"Ownership Interest": As to any Note, any ownership or security
interest in such Note, including any interest in such Note as the Holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial,
as owner or as pledgee.
"Owner Trustee": First Union Trust Company, National Association, a
national banking association, not in its individual capacity, but solely as
owner trustee under the Trust Agreement, and any successor owner trustee
thereunder.
"Owner Trustee Fee": As defined in Section 8.01 of the Trust Agreement.
"Paying Agent": The Indenture Trustee or any other depository
institution or trust company that is authorized by the Trust pursuant to Section
3.03 of the Indenture to pay the principal of, or interest on, any Notes on
behalf of the Trust, which agent, if not the Indenture Trustee, shall have
signed an instrument agreeing to be bound by the terms of the Indenture
applicable to such Paying Agent.
23
"Percentage Interest": With respect to a Note of any Class, the portion
evidenced by such Note, expressed as a percentage rounded to four decimal
places, equal to a fraction the numerator of which is the denomination
represented by original principal balance of such Note and the denominator of
which is the Original Note Principal Balance of such Class. With respect to a
Trust Certificate, the portion evidenced thereby as stated on the face of such
Trust Certificate.
"Periodic Advance": The aggregate of the advances required to be made
by the Servicer on any Servicer Distribution Date pursuant to Section 5.18 of
the Sale and Servicing Agreement, the amount of any such advances being equal to
the sum of:
(a) with respect to each Mortgage Loan that was Delinquent as
of the close of business on the last day of the Due Period preceding
the related Servicer Distribution Date, the product of (i) the
Principal Balance of such Mortgage Loan and (ii) one-twelfth of the
Mortgage Interest Rate for such Mortgage Loan net of the Servicing Fee,
and
(b) with respect to each REO Property which was acquired
during or prior to the related Due Period and as to which an REO
Disposition did not occur during the related Due Period, an amount
equal to the excess, if any, of (i) interest on the Principal Balance
of such REO Mortgage Loan at the Mortgage Interest Rate for such REO
Mortgage Loan net of the Servicing Fee, for the most recently ended Due
Period over (ii) the net proceeds from the REO Property transferred to
the Distribution Account for such Distribution Date;
provided, however, that in each such case such advance has not been determined
by the Servicer to be a Nonrecoverable Advance.
"Permitted Investments": As used herein, Permitted Investments shall
include the following:
(a) obligations of, or guaranteed as to principal and interest
by, the United States or any agency or instrumentality thereof when
such obligations are backed by the full faith and credit of the United
States;
(b) repurchase agreements on obligations specified in clause
(a) maturing not more than three months from the date of acquisition
thereof, provided that the unsecured obligations of the party agreeing
to repurchase such obligations are at the time rated in one of the two
highest rating categories by the Rating Agencies;
(c) certificates of deposit, time deposits and bankers'
acceptances (which, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days) of any U.S.
depository institution or trust company, incorporated under the laws of
the United States or any state; provided, that the debt obligations of
such depository institution or trust company at the date of acquisition
thereof have been rated in one of the two highest rating categories by
the Rating Agencies;
24
(d) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated in the highest short-term rating category by the Rating
Agencies;
(e) the VISTA U.S. Government Money Market Fund, the VISTA
Prime Money Market Fund and the VISTA Treasury Plus Fund, so long as
any such fund is rated in the highest rating category by Xxxxx'x or
S&P;
provided, that no instrument described hereunder shall evidence either the right
to receive (x) only interest with respect to the obligations underlying such
instrument or (y) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": A pension or benefit plan or individual retirement arrangement
that is subject to ERISA or Section 4975 of the Code.
"Pool": Pool I or Pool II, as the case may be.
"Pool I": The pool of Mortgage Loans held by the Trust, as a separate
sub-trust, which secure the obligations of the Trust with respect to the Class
A-1 Notes, as reflected on the Mortgage Loan Schedule.
"Pool I Trust Certificate": A certificate evidencing the beneficial
interest of a Trust Certificateholder in the sub-trust of the Trust consisting
of the Mortgage Loans in Pool I, substantially in the form of Exhibit A to the
Trust Agreement.
"Pool II": The pool of Mortgage Loans held by the Trust, as a separate
sub-trust, which secure the obligations of the Trust with respect to the Class
A-2 Notes, as reflected on the Mortgage Loan Schedule.
"Pool II Trust Certificate": A certificate evidencing the beneficial
interest of a Trust Certificateholder in the sub-trust of the Trust consisting
of the Mortgage Loans in Pool II, substantially in the form of Exhibit A to the
Trust Agreement.
"Predecessor Notes": With respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.07 of the Indenture in lieu of a
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note.
25
"Preference Amount": Any amounts distributed in respect of the Notes
which are recovered from any Holder of a Note as a voidable preference by a
trustee in bankruptcy pursuant to the Bankruptcy Code or other similar law in
accordance with a final, nonappealable order of a court having competent
jurisdiction and which have not theretofore been repaid to such Holder.
"Preference Claim": As defined in Section 8.03(f) of the Indenture.
"Pre-Funding Account": Each of the Pre-Funding Accounts established in
accordance with Section 8.01(b) of the Indenture and maintained by the Indenture
Trustee.
"Pre-Funding Amount": With respect to either Pool and any date of
determination, the amount on deposit in the related Pre-Funding Account.
"Pre-Funding Earnings": With respect to either Pool and any date of
determination, the actual investment earnings realized on amounts deposited in
the related Pre-Funding Account.
"Pre-Funding Period": With respect to either Pre-Funding Account, the
period commencing on the Closing Date and ending on the earliest to occur of (i)
the date on which the amount on deposit in such Pre-Funding Account (exclusive
of any investment earnings) is less than $100,000, (ii) the date on which any
Event of Default or Servicer Event Default occurs and (iii) the close of
business on April 30, 1999.
"Premium Amount": The product of the Premium Percentage and the
aggregate outstanding Note Principal Balance for the related Class on the
related Distribution Date, but prior to any distributions on such Distribution
Date.
"Premium Percentage": The rate at which the "Premium" is determined, as
described in the letter dated March 30, 1999 between the Servicer and the Note
Insurer.
"Premium Supplement Event": Means any Event of Default, Servicer Event
of Default or an "Event of Default" as defined in the Insurance Agreement.
"Prepayment Assumption": A constant prepayment rate of 25% HEP, used
solely for determining the accrual of original issue discount and market
discount on the Notes for federal income tax purposes.
"Prepayment Interest Shortfall": With respect to any Distribution Date,
for each Mortgage Loan that was the subject during the related Due Period of a
Principal Prepayment, an amount equal to the excess, if any, of (a) 30 days'
interest on the Principal Balance of such Mortgage Loan at a per annum rate
equal to (i) the Mortgage Interest Rate (or at such lower rate as may be in
effect for such Mortgage Loan pursuant to application of the Civil Relief Act,
any Deficient Valuation and/or any Debt Service Reduction) minus (ii) the
Servicing Fee Rate over (b) the amount of interest actually
26
remitted by the Mortgagor in connection with such Principal Prepayment less the
Servicing Fee for such Mortgage Loan in such month.
"Principal Balance": As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination after giving effect to prepayments received prior to
the end of the related Due Period and Deficient Valuations incurred prior to
such date of determination. The Principal Balance of a Mortgage Loan which
becomes a Liquidated Mortgage Loan on or prior to such date of determination
shall be zero.
"Principal Distribution Amount": For any Distribution Date and any Pool
of Mortgage Loans will be the lesser of:
(a) the excess of (i) the sum, as of such Distribution Date,
of (A) the Available Funds for such Pool and (B) any Insured Payment
with respect to the related Class of Notes plus, if the Note Insurer
shall so elect in its sole discretion, an amount of principal
(including Liquidated Loan Losses) that would have been payable
pursuant to clauses (b)(i) through (ix) below if sufficient funds were
made available to the Indenture Trustee, in accordance with the terms
of the Note Insurance Policy, over (ii) the sum of (w) the Interest
Distribution Amount for such Pool, (x) the Indenture Trustee Fee
allocable to such Pool and (y) the amount due the Note Insurer on such
Distribution Date pursuant to Section 8.02(ii) of the Indenture in
respect to the related Class of Notes; and
(b) the sum, without duplication, of:
(i) all principal in respect of the Mortgage Loans in
such Pool actually collected during the related Due Period;
(ii) the principal balance of each Mortgage Loan that
either was repurchased by the Unaffiliated Seller or purchased
by the Servicer on the related Servicer Distribution Date from
such Pool, to the extent such principal balance is actually
received by the Indenture Trustee;
(iii) any Substitution Adjustments delivered by the
Unaffiliated Seller on the related Servicer Distribution Date
in connection with a substitution of a Mortgage Loan in such
Pool, to the extent such Substitution Adjustments are actually
received by the Indenture Trustee;
(iv) the Net Liquidation Proceeds actually collected
by the Servicer with respect to Mortgage Loans in such Pool
during the related Due Period (to the extent such Net
Liquidation Proceeds relate to principal);
(v) with respect to the April 1999 or May 1999
Distribution Dates, moneys released from the related
Pre-Funding Account, if any;
27
(vi) the proceeds received by the Indenture Trustee
upon the exercise by the Servicer of the optional redemption
of the related Class of Notes pursuant to Section 10.01 of the
Indenture (to the extent such proceeds relate to principal);
(vii) the amount of any Over-collateralization
Deficit with respect to such Pool for such Distribution Date;
(viii) the proceeds received by the Indenture Trustee
on any termination of the Trust pursuant to Section 10.01 of
the Indenture (to the extent such proceeds relate to
principal) allocable to such Pool;
(ix) the amount of any Over-collateralization
Increase Amount with respect to such Pool for such
Distribution Date, to the extent of any Remaining Excess
Cashflow for such Pool available for such purpose;
(x) if the Note Insurer shall so elect in its sole
discretion, an amount of principal (including Liquidated Loan
Losses) that would have been payable pursuant to clauses (i)
through (ix) above if sufficient funds were made available to
the Indenture Trustee in accordance with the terms of the Note
Insurance Policy;
minus
(xi) the amount of any Over-collateralization
Reduction Amount for such Pool for such Distribution Date.
In no event will the Principal Distribution Amount for a Pool with
respect to any Distribution Date be (x) less than zero or (y) greater than the
then aggregate outstanding Note Principal Balance of the related Class of Notes.
"Principal Prepayment": Any payment of principal made by the Mortgagor
on a Mortgage Loan which is received in advance of its scheduled Due Date.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Prospectus Supplement": The Prospectus Supplement dated March 24, 1999
relating to the Notes filed with the Commission in connection with the
Registration Statement heretofore filed or to be filed with the Commission
pursuant to Rule 424(b)(2) or 424(b)(5).
"Qualified Appraiser": An appraiser, duly appointed by the Unaffiliated
Seller, who had no interest, direct or indirect, in the Mortgaged Property or in
any loan made on the security thereof, and whose compensation is not affected by
the approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfy the requirements of Title XI of
the Federal Institutions Reform,
28
Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder,
all as in effect on the date the Mortgage Loan was originated.
"Qualified Substitute Mortgage Loan": A mortgage loan or mortgage loans
substituted for a Deleted Mortgage Loan pursuant to Section 2.06(b) or 4.02(b)
of the Sale and Servicing Agreement, which (a) has or have an interest rate at
least equal to those applicable to the Deleted Mortgage Loan, (b) relates or
relate to a detached one-family residence or to the same type of Residential
Dwelling or Business Purpose Property, or any combination thereof, as the
Deleted Mortgage Loan and in each case has or have the same or a better lien
priority as the Deleted Mortgage Loan and has or have the same occupancy status
as the Deleted Mortgage Loan or is or are Owner-Occupied Mortgaged
Property(ies), (c) matures or mature no later than (and not more than one year
earlier than) the Deleted Mortgage Loan, (d) has or have a Loan-to-Value Ratio
or Loan-to-Value Ratios at the time of such substitution no higher than the
Loan-to-Value of the Deleted Mortgage Loan, (e) has or have a Combined
Loan-to-Value Ratio or Combined Loan-to-Value Ratios at the time of such
substitution no higher than the Combined Loan-to-Value Ratio of the Deleted
Mortgage Loan, (f) has or have a Principal Balance or Principal Balances (after
application of all payments received on or prior to the date of substitution)
not substantially less and not more than the Principal Balance of the Deleted
Mortgage Loan as of such date, and (g) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01
and 3.02 of the Unaffiliated Seller's Agreement.
"Rating Agency": S&P or Xxxxx'x.
"Rating Agency Condition": Means, with respect to any action to which a
Rating Agency Condition applies, that each Rating Agency shall have been given
ten (10) days (or such shorter period as is acceptable to each Rating Agency)
prior notice thereof and that each of the Rating Agencies shall have notified
the Indenture Trustee, the Servicer, the Depositor, the Note Insurer and the
Trust in writing that such action will not result in a reduction or withdrawal
of the then current "implied" rating of the Notes that it maintains without
taking into account the Note Insurance Policy.
"Record Date": With respect to the Notes, the last Business Day of the
month immediately preceding a month in which a Distribution Date occurs.
"Redemption Price": The Termination Price or the Note Termination
Price, as applicable.
"Redemption Date": The Distribution Date, if any, on which (i) the
Indenture is terminated and all of the Notes are redeemed pursuant to Article X
of the Indenture, which date may occur on or after the Clean-Up Call Date, or
(ii) a Class of Notes is redeemed pursuant to Article X of the Indenture, which
date may occur on or after the related Note Clean-Up Call Date.
"Reimbursement Amount": With respect to any Distribution Date and any
Pool of Mortgage Loans, equals the sum of (a)(i) all Insured Payments previously
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received by the Indenture Trustee and all Preference Amounts previously paid by
the Note Insurer and in each case not previously repaid to the Note Insurer
pursuant to Section 8.02(ii) of the Indenture, plus (ii) interest accrued on
each such Insured Payment and Preference Amounts not previously repaid
calculated at the Late Payment Rate from the date the Indenture Trustee received
the related Insured Payment or Preference Amounts paid by the Note Insurer, and
(b)(i) any amounts then due and owing to the Note Insurer under the Insurance
Agreement (excluding the Premium Amount due on such Distribution Date), as
certified to the Indenture Trustee by the Note Insurer plus (ii) interest on
such amounts at the rate specified in the Insurance Agreement. The Note Insurer
shall notify the Indenture Trustee and the Servicer of the amount of any
Reimbursement Amount.
"Remaining Excess Cashflow": For a Distribution Date and a Pool of
Mortgage Loans, the Net Monthly Excess Cashflow with respect to such Pool
remaining, if any, after payment of (i) any Net Mortgage Loan Interest Shortfall
Amounts for such Pool and such Distribution Date, and (ii) the Shortfall Amount
with respect to the other Pool of Mortgage Loans.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REO Disposition": The final sale by the Servicer of a Mortgaged
Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure.
"REO Mortgage Loan": Any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the related Mortgage
Note is discharged and the related Mortgaged Property is held as part of the
Trust.
"REO Proceeds": Proceeds received in respect of any REO Mortgage Loan
(including, without limitation, proceeds from the rental of the related
Mortgaged Property).
"REO Property": A Mortgaged Property acquired by the Servicer in the
name of the Indenture Trustee on behalf of the Noteholders through foreclosure
or deed-in-lieu of foreclosure.
"Request for Release": A request for release in substantially the form
attached as Exhibit F of the Sale and Servicing Agreement.
"Reserve Payment Amount": With respect to any Distribution Date and any
Class of Notes, the amount necessary for the funds on deposit in the related
Cross-collateralization Reserve Account to equal the Specified Reserve Amount.
"Residential Dwelling": A one- to four-family dwelling, a unit in a
planned unit development, a unit in a condominium development or a townhouse.
"Responsible Officer": When used with respect to the Indenture Trustee
or the Owner Trustee, any officer assigned to the Corporate Trust Division (or
any
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successor thereto), including any Vice President, Second Vice President, Senior
Trust Officer, Trust Officer, Assistant Trust Officer, any Assistant Secretary,
any trust officer or any other officer of the Indenture Trustee or the Owner
Trustee customarily performing functions similar to those performed by any of
the above designated officers and to whom, with respect to a particular matter,
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject. When used with respect to the Unaffiliated Seller
or the Servicer, the president or any vice president, assistant vice president,
or any secretary or assistant secretary.
"Rolling Six Month Delinquency Rate": For any Distribution Date, the
fraction, expressed as a percentage, equal to the average of the Delinquency
Ratio for each of the six (1, 2, 3, 4 or 5 in the case of the first six (6)
Distribution Dates, as the case may be) immediately preceding Due Periods.
"Sale": The meaning specified in Section 5.17 of the Indenture.
"Sale and Servicing Agreement": The Sale and Servicing Agreement, dated
as of March 1, 1999, among the Trust, the Servicer, the Depositor, the
Collateral Agent and the Indenture Trustee, providing for, among other things,
the sale of the Mortgage Loans from the Depositor to the Trust and the servicing
of the Mortgage Loans.
"Securities Act": Means the Securities Act of 1933, as amended.
"Servicer": American Business Credit, Inc., a Pennsylvania corporation,
or any successor appointed as herein provided.
"Servicer Distribution Date": With respect to any Distribution Date,
the 20th day of the month in which such Distribution Date occurs, or if such
20th day is not a Business Day, the Business Day preceding such 20th day.
"Servicer Event of Default": As defined in Section 7.01 of the Sale and
Servicing Agreement.
"Servicer Extension Notice": Has the meaning set forth in Section 8.04
of the Sale and Servicing Agreement.
"Servicer Remittance Amount": With respect to any Servicer Distribution
Date, an amount equal to the sum of (i) all collections of principal and
interest on the Mortgage Loans (including Principal Prepayments, Net REO
Proceeds and Net Liquidation Proceeds, if any) collected by the Servicer during
the related Due Period, (ii) all Periodic Advances made by the Servicer with
respect to interest payments due to be received on the Mortgage Loans on the
related Due Date and (iii) any other amounts required to be placed in the
Collection Account by the Servicer pursuant to the Sale and Servicing Agreement
but excluding the following:
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(a) amounts received on particular Mortgage Loans as late
payments of interest and respecting which the Servicer has previously
made an unreimbursed Periodic Advance;
(b) amounts received on a particular Mortgage Loan with
respect to which the Servicer has previously made an unreimbursed
Servicing Advance, to the extent of such unreimbursed Servicing
Advance;
(c) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(d) that portion of Liquidation Proceeds and REO Proceeds to
the extent of any unpaid Servicing Fee;
(e) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(f) all amounts in respect of late fees, assumption fees,
prepayment fees and similar fees;
(g) certain other amounts which are reimbursable to the
Servicer, as provided in this Sale and Servicing Agreement; and
(h) Net Foreclosure Profits.
"Servicer Remittance Report": The monthly report prepared by the
Servicer and delivered to the parties specified in Section 5.16(a) 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 (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures, (c) the management and liquidation
of the REO Property, including reasonable fees paid to any independent
contractor in connection therewith, (d) compliance with the obligations under
Section 5.06 of the Sale and Servicing Agreement, all of which reasonable and
customary out-of-pocket costs and expenses are reimbursable to the Servicer to
the extent provided in Sections 5.03 and 5.06 of the Sale and Servicing
Agreement.
"Servicing Compensation": The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Section 5.08 of the Sale and Servicing
Agreement.
"Servicing Fee": As to each Mortgage Loan, the annual fee payable to
the Servicer, which is calculated as an amount equal to the product of (a)
Servicing Fee Rate, and (b) the Principal Balance thereof. Such fee shall be
calculated and payable monthly only from the amounts received in respect of
interest on such Mortgage Loan and shall be
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computed on the basis of the same Principal Balance and for the period
respecting which any related interest payment on a Mortgage Loan is computed.
The Servicing Fee includes any servicing fees owed or payable to any
Subservicer.
"Servicing Fee Rate": 0.50% per annum
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee, the Collateral Agent and the Note Insurer by the
Servicer, as such list may from time to time be amended.
"Shortfall Amount": With respect to any Distribution Date and any Class
of Notes, an amount, not less than zero, equal to the excess, if any, of (A) the
sum of (x) the amounts specified in clause (a)(ii) of the definition of the
Principal Distribution Amount for such Class and (y) the amount specified in
clause (b)(vii) of the definition of the Principal Distribution Amount for such
Class and (z) any shortfall in the amount distributed to the Holders of such
Class in respect of the Net Mortgage Loan Interest Shortfall Amount for such
Class and such Distribution Date over (B) the Available Funds for such Class and
such Distribution Date, without taking into effect any Insured Payment or
Shortfall Amount and prior to the application of the amounts described in
Section 8.02 of the Indenture.
"Special Advance": As defined in Section 5.18(b) of the Sale and
Servicing Agreement.
"Specified Over-collateralized Amount": Means with respect to any
Distribution Date and any Pool:
(a) With respect to a Distribution Date occurring on or prior
to the Stepdown Date and after the Stepdown Date, if the Unaffiliated
Seller has given five days written notice of its election not to "step
down" as described in clause (b) below to the Indenture Trustee and the
Note Insurer, the amount which is equal to 5.00% of the Maximum
Collateral Amount for such Pool;
(b) With respect to a Distribution Date after the Stepdown
Date unless the Unaffiliated Seller has given five (5) days written
notice of its election not to "step down" as described in this clause
to the Indenture Trustee and the Note Insurer, (i) if the Stepdown
Requirement is satisfied, the lesser of (x) the amount equal to 5.00%
of the Maximum Collateral Amount for such Pool and (y) the greater of
(A) the amount equal to 10.00% of the then outstanding aggregate
Principal Balance of the Mortgage Loans in the related Pool of Mortgage
Loans or (B) 0.50% of the Maximum Collateral Amount for such Pool or
(ii) if the Stepdown Requirement is not satisfied, the amount which is
equal to 5.00% of the Maximum Collateral Amount for such Pool;
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provided, however, that if on any Distribution Date, the Mortgage Portfolio
Performance Test is not satisfied, then the Specified Over-collateralized Amount
will be unlimited during the period that such Mortgage Portfolio Performance
Test is not satisfied.
"Specified Reserve Amount": Means, with respect to any Pool and any
Distribution Date, the excess, if any, of (x) the Specified Over-collateralized
Amount for such Pool and such Distribution Date, over (y) the
Over-collateralized Amount for such Pool and such Distribution Date.
"Standard & Poor's" or "S&P": Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc. or any successor thereto and if such
corporation no longer for any reason performs the services of a securities
rating agency, "S&P" shall be deemed to refer to any other nationally recognized
statistical rating organization designated by the Note Insurer.
"Startup Day": The day designated as such pursuant to Section 2.07(a)
of the Trust Agreement.
"Step Down Date": The Distribution Date occurring in September 2001.
"Step Down Requirement": The Stepdown Requirement is satisfied for any
date of determination thereof if as of such date of determination either (i) (x)
the Rolling Six Month Delinquency Rate is less than 9.75%, (y) the Cumulative
Loss Test is satisfied and (z) the Twelve Month Loss Amount is not greater than
or equal to 0.75% of the Pool Principal Balance as of the first day of the
twelfth preceding calendar month or (ii) the Note Insurer, by notice to each of
the parties hereto in accordance with Section 10.06 of the Sale and Servicing
Agreement, expressly waives in writing compliance with the foregoing tests for
such Distribution Date.
"Subsequent Cut-Off Date": With respect to any Subsequent Mortgage
Loans, the close of business on the last day of the calendar month preceding the
month in which the Subsequent Transfer Date for such Subsequent Mortgage Loans
occurred.
"Subsequent Contribution Agreement": Any Subsequent Contribution
Agreement, between the Depositor and the Trust, in the form of Exhibit G to the
Sale and Servicing Agreement, relating to the contribution to the Trust of
Subsequent Mortgage Loans.
"Subsequent Mortgage Loans": The Mortgage Loans hereafter purchased by
the Trust and pledged to the Indenture Trustee with funds on deposit in either
Pre-Funding Account pursuant to Section 2.14 of the Indenture.
"Subsequent Pledge Agreement": Any Subsequent Pledge Agreement, between
the Trust and the Indenture Trustee, in the form of Exhibit B to the Indenture,
relating to the pledge to the Indenture Trustee, on behalf of the Noteholders
and the Note Insurer, of Subsequent Mortgage Loans.
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"Subsequent Transfer": The purchase by the Trust and pledge to the
Indenture Trustee of the Subsequent Mortgage Loans.
"Subsequent Transfer Agreement": Any Subsequent Transfer Agreement,
among the Originators, the Unaffiliated Seller and the Depositor, in the form of
the Exhibit A to the Unaffiliated Seller's Agreement, relating to the transfer
to the Depositor of any Subsequent Mortgage Loans.
"Subsequent Transfer Date": The date on which Subsequent Mortgage Loans
are purchased by the Trust with funds in either Pre-Funding Account, such date
occurring before the end of either Pre-Funding Period.
"Subservicers": HomeAmerican Credit, Inc., d/b/a Upland Mortgage, a
Pennsylvania corporation, or its successor in interest and New Jersey Mortgage
and Investment Corp., a New Jersey corporation, or its successor in interest.
"Subservicing Agreement": The agreement between the Servicer and the
Subservicers relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 5.13 of the Sale and Servicing Agreement, a copy of
which shall be delivered, along with any modifications thereto, to the Indenture
Trustee and the Note Insurer.
"Substitution Adjustment": As to any date on which a substitution
occurs pursuant to Sections 2.06(b) or 4.02(b) 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 Mortgage Loans as of the date of
substitution, are less than the aggregate of the Principal Balances of the
related Deleted Mortgage Loans together with 30-days' interest thereon at the
Mortgage Interest Rate.
"Termination Price": The sum of (i) 100% of the Aggregate Principal
Balance of each outstanding Mortgage Loan and (ii) the greater of (A) the
aggregate amount of accrued and unpaid interest on the Mortgage Loans through
the related Due Period and (B) thirty (30) days' interest thereon, computed at a
rate equal to the related Mortgage Interest Rate, in each case net of the
Servicing Fee, and (iii) any unpaid amount due the Note Insurer.
"Trust": ABFS Mortgage Loan Trust 1999-1, a Delaware statutory business
trust.
"Trust Agreement": The Trust Agreement, dated as of March 1, 1999,
among the Unaffiliated Seller, the Depositor and the Owner Trustee, relating to
the establishment of the Trust.
"Trust Certificate": Any one of the Pool I Trust Certificates or the
Pool II Trust Certificates.
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"Trust Certificateholder" or "Holder": A Person in whose name a Trust
Certificate is registered.
"Trust Estate": All money, instruments and other property subject or
intended to be subject to the lien of the Indenture, for the benefit of the
Noteholders and the Note Insurer, as of any particular time, including, without
limitation, all property and interests, including all proceeds thereof, Granted
to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, pursuant to the Granting Clauses of the Indenture. The Trust Estate
shall consist of two separate sub-trusts comprised of Pool I and Pool II.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939, as it
may be amended from time to time.
"Trust Order" and "Trust Request": A written order or request of the
Trust signed on behalf of the Trust by an Authorized Officer of the Owner
Trustee, at the direction of the related Majority Certificateholders and
delivered to the Indenture Trustee or the Authenticating Agent, as applicable.
"Twelve Month Loss Amount": With respect to any Distribution Date, an
amount equal to the aggregate of all Liquidated Loan Losses on the Mortgage
Loans which became Liquidated Mortgage Loans during the twelve (12) preceding
Due Periods.
"Unaffiliated Seller": ABFS 1999-1, Inc., a Delaware corporation.
"Unaffiliated Seller's Agreement": The Unaffiliated Seller's Agreement,
dated as of March 1, 1999, among the Unaffiliated Seller, the Originators and
the Depositor relating to the sale of the Mortgage Loans from the Originators to
the Unaffiliated Seller and from the Unaffiliated Seller to the Depositor.
"Underwriter": Prudential Securities Incorporated.
"Underwriting Guidelines": The underwriting guidelines of the
Originators as approved by the Note Insurer and the Depositor.
"United States Person": A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States or a
trust if a court within the United States can exercise primary jurisdiction over
its administration and at least one United States fiduciary has the authority to
control all substantial decisions of the trust.
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