Execution Copy
Exhibit 10.75
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 2001
by and among
Bear Xxxxxxx Asset Backed Securities, Inc.
(Depositor)
and
American Business Credit, Inc.
(Servicer)
and
The Chase Manhattan Bank
(Trustee and Collateral Agent)
ABFS Mortgage Loan Trust 2001-2
Mortgage Pass-Through Certificates,
Series 2001-2
Class A-1, Class X-0, Xxxxx X-0, Class A-4, Class A-IO,Class R and Class X
Table of Contents
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms....................................1
Section 1.02 Provisions of General Application.......................34
Section 1.03 Business Day Certificate................................35
ARTICLE II
ESTABLISHMENT OF THE TRUST
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 Establishment of the Trust..............................35
Section 2.02 Purchase and Sale of Mortgage Loans.....................35
Section 2.03 [Reserved]..............................................36
Section 2.04 Possession of Mortgage Files; Access to Mortgage Files..36
Section 2.05 Delivery of Mortgage Loan Documents.....................36
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee...............39
Section 2.07 Designations under REMIC Provisions; Designation of
Startup Day.............................................41
Section 2.08 Execution of Certificates...............................46
Section 2.09 Application of Principal and Interest...................46
Section 2.10 Grant of Security Interest..............................46
Section 2.11 Further Action Evidencing Assignments...................47
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Servicer and the
Unaffiliated Seller.....................................47
Section 3.02 Representations, Warranties and Covenants of
the Depositor...........................................49
Section 3.03 Purchase and Substitution...............................51
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates........................................53
Section 4.02 Registration of Transfer and Exchange of Certificates...53
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates.......59
Section 4.04 Persons Deemed Owners...................................59
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ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 REMIC Matters; The Servicer.............................60
Section 5.02 Collection of Certain Mortgage Loan Payments;
Collection Account......................................61
Section 5.03 Permitted Withdrawals from the Collection Account.......62
Section 5.04 Hazard Insurance Policies; Property Protection
Expenses................................................63
Section 5.05 Assumption and Modification Agreements..................64
Section 5.06 Realization Upon Defaulted Mortgage Loans...............65
Section 5.07 Trustee to Cooperate....................................66
Section 5.08 Servicing Compensation; Payment of Certain Expenses
by Servicer.............................................67
Section 5.09 Annual Statement as to Compliance.......................67
Section 5.10 Annual Independent Public Accountants' Servicing
Report..................................................67
Section 5.11 Access to Certain Documentation.........................67
Section 5.12 Maintenance of Fidelity Bond............................68
Section 5.13 The Subservicers........................................68
Section 5.14 Reports to the Trustee; Collection Account Statements...68
Section 5.15 Optional Purchase of Defaulted Mortgage Loans...........69
Section 5.16 Reports to be Provided by the Servicer..................69
Section 5.17 Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans..................................70
Section 5.18 Periodic Advances; Special Advance......................70
Section 5.19 Indemnification; Third Party Claims.....................71
Section 5.20 Maintenance of Corporate Existence and Licenses;
Merger or Consolidation of the Servicer.................71
Section 5.21 Assignment of Agreement by Servicer; Servicer Not to
Resign..................................................72
Section 5.22 Periodic Filings with the Securities and Exchange
Commission; Additional Information......................72
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01 Establishment of Accounts; Withdrawals from Accounts;
Deposits to the Distribution Account....................73
Section 6.02 Permitted Withdrawals From the Distribution Account.....74
Section 6.03 Collection of Money.....................................74
Section 6.04 The Certificate Insurance Policy........................75
Section 6.05 Distributions...........................................76
Section 6.06 Investment of Accounts..................................78
Section 6.07 Reports by the Trustee..................................79
Section 6.08 Additional Reports by Trustee...........................82
Section 6.09 Compensating Interest...................................82
Section 6.10 Effect of Payments by the Certificate Insurer;
Subrogation.............................................82
Section 6.11 Additional Rights of Certificate Insurer................83
Section 6.12 Supplemental Interest Payment Account...................85
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ARTICLE VII
DEFAULT
Section 7.01 Events of Default.......................................85
Section 7.02 Trustee to Act; Appointment of Successor................88
Section 7.03 Waiver of Defaults......................................90
Section 7.04 Rights of the Certificate Insurer to Exercise Rights of
Class A Certificateholders..............................90
Section 7.05 Trustee To Act Solely with Consent of the Certificate
Insurer.................................................91
Section 7.06 Mortgage Loans, Trust Fund and Accounts Held for Benefit
of the Certificate Insurer..............................91
Section 7.07 Certificate Insurer Default.............................91
ARTICLE VIII
TERMINATION
Section 8.01 Termination.............................................92
Section 8.02 Additional Termination Requirements.....................93
Section 8.03 Accounting Upon Termination of Servicer.................94
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of Trustee.......................................95
Section 9.02 Certain Matters Affecting the Trustee..................100
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans..101
Section 9.04 Trustee May Own Certificates...........................101
Section 9.05 Trustee's Fees and Expenses; Indemnity.................102
Section 9.06 Eligibility Requirements for Trustee...................102
Section 9.07 Resignation and Removal of the Trustee.................103
Section 9.08 Successor Trustee......................................104
Section 9.09 Merger or Consolidation of Trustee.....................104
Section 9.10 Appointment of Co-Trustee or Separate Trustee..........104
Section 9.11 Tax Returns............................................105
Section 9.12 Retirement of Certificates.............................106
Section 9.13 Trustee May Enforce Claims Without Possession of
Certificates...........................................106
Section 9.14 Suits for Enforcement..................................106
ARTICLE X
THE COLLATERAL AGENT
Section 10.01 Duties of the Collateral Agent.........................106
Section 10.02 Certain Matters Affecting the Collateral Agent.........108
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Section 10.03 Collateral Agent Not Liable for Certificates or
Mortgage Loans.........................................109
Section 10.04 Collateral Agent May Own Certificates..................109
Section 10.05 Collateral Agent's Fees and Expenses; Indemnity........109
Section 10.06 Eligibility Requirements for Collateral Agent..........110
Section 10.07 Resignation and Removal of the Collateral Agent........110
Section 10.08 Successor Collateral Agent.............................111
Section 10.09 Merger or Consolidation of Collateral Agent............111
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Limitation on Liability of the Depositor and
the Servicer...........................................112
Section 11.02 Acts of Certificateholders.............................112
Section 11.03 Amendment..............................................113
Section 11.04 Recordation of Agreement...............................113
Section 11.05 Duration of Agreement..................................114
Section 11.06 Notices................................................114
Section 11.07 Severability of Provisions.............................114
Section 11.08 No Partnership.........................................114
Section 11.09 Counterparts...........................................114
Section 11.10 Successors and Assigns.................................115
Section 11.11 Headings...............................................115
Section 11.12 The Certificate Insurer Default........................115
Section 11.13 Third Party Beneficiary................................115
Section 11.14 [RESERVED].............................................115
Section 11.15 Appointment of Tax Matters Person......................115
Section 11.16 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL.............................................115
EXHIBITS
EXHIBIT A Class A-1, Class A-2, Class A-3 and Class A-4 Certificates
EXHIBIT B Class A-IO Certificate
EXHIBIT C Class R Certificate
EXHIBIT D Class X Certificate
EXHIBIT E Contents of the Mortgage File
EXHIBIT F Certificate Re: Prepaid Loans
EXHIBIT G Trustee's Acknowledgement of Receipt
EXHIBIT H Initial Certification of Collateral Agent
EXHIBIT I Final Certification of Collateral Agent
EXHIBIT J Request for Release of Documents
EXHIBIT K Transfer Affidavit and Agreement
EXHIBIT L Transferor's Certificate
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EXHIBIT M ERISA Investment Representation Letter
EXHIBIT N Resale Certification
EXHIBIT O Assignment
EXHIBIT P Wiring Instruction Form
EXHIBIT Q Collateral Agent's Acknowledgment of Receipt
SCHEDULES
SCHEDULE I Mortgage Loan Schedule
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POOLING AND SERVICING AGREEMENT, relating to ABFS MORTGAGE
LOAN TRUST 2001-2, dated as of June 1, 2001 (this "Agreement"), by and among
BEAR XXXXXXX ASSET BACKED SECURITIES, INC., a Delaware corporation, in its
capacity as depositor (the "Depositor"), AMERICAN BUSINESS CREDIT, INC., a
Pennsylvania corporation, in its capacity as servicer (the "Servicer"), and THE
CHASE MANHATTAN BANK, a New York banking corporation, in its capacity as trustee
(the "Trustee").
WHEREAS, the Depositor wishes to establish a trust which
provides for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the trust estate;
WHEREAS, The Chase Manhattan Bank is willing to serve in the
capacity of Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Certificate
Insurer") is intended to be a third party beneficiary of this Agreement and is
hereby recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Depositor, the Servicer and the Trustee
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms. Whenever used herein, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings.
ABFS: American Business Financial Services, Inc.
ACCEPTED SERVICING PRACTICES: The Servicer's normal servicing
practices including practices regarding reconciliation of bank accounts,
processing of mortgage payments, processing of disbursements for tax and
insurance payments, maintenance of mortgage loan records, performance of
collection efforts including disposition of delinquent loans, foreclosure
activities and disposition of real estate owned and performance of investor
accounting and reporting processes. Such practices 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
jurisdiction in which the related Mortgaged Properties are located, which may
change from time to time; provided that such practices shall at all times
conform to the Credit Policy and Servicing Manuals.
ACCOUNT: Any of the Collection Account, the Distribution
Accounts, the Interest Reserve Account, the Cross-collateralization Reserve
Account, the Supplemental Interest Payment Account or the Certificate Insurance
Payment Account.
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ACCRUAL PERIOD: With respect to the Class A-1, Class A-3,
Class A-4 and Class A-IO Certificates and any Distribution Date, the prior
calendar month; with respect to the Class A-2 Certificates and any Distribution
Date, the period from and including the prior Distribution Date (or, in the case
of the July 2001 Distribution Date, from and including the Closing Date) to and
including the day immediately preceding such Distribution Date.
ADMINISTRATIVE COSTS: With respect to any Distribution Date,
the sum of the Trustee Fee, the Premium Amount and the Servicing Fee for such
Distribution Date.
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.
AGGREGATE PRINCIPAL BALANCE: With respect to the Mortgage
Loans and any date of determination, the aggregate Principal Balance of the
Mortgage Loans as of such date of determination.
AGREEMENT: This Pooling and Servicing Agreement, including the
Exhibits hereto, and all amendments hereof and supplements hereto.
APPRAISED VALUE: As to any Mortgaged Property and time
referred to herein, 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
herein 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 Trustee
for the benefit of the Certificateholders.
AUTHORIZED DENOMINATIONS: Each of the Class A-1 Certificates,
the Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates and
Class A-IO Certificates 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 Certificate of each Class
is issuable in a denomination equal to any such multiple plus an additional
amount such that the aggregate denomination of all Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates and Class A-IO
Certificates shall be equal to the applicable Original Certificate Principal
Balance or the Class A-IO Notional Amount, as applicable.
AVAILABLE FUNDS: As defined in Section 6.04(a).
BASE SPECIFIED OVER-COLLATERALIZATION AMOUNT: means 4.40% of
the Original Aggregate Principal Balance.
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BASIC DOCUMENTS: The Pooling and Servicing Agreement, the
Unaffiliated Seller's Agreement, the Insurance Agreement, the Indemnification
Agreement and the Underwriting Agreement.
BUSINESS DAY: Any day other than (a) a Saturday or Sunday, or
(b) a day on which banking institutions in the States of Pennsylvania, New York
or New Jersey are authorized or obligated by law or executive order to be
closed.
BUSINESS PURPOSE PROPERTY: Any mixed-use property, commercial
property, or four or more unit multifamily property.
CERCLA: The Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
CERTIFICATE: Any Class A-1 Certificate, Class A-2 Certificate,
Class A-3 Certificate, Class A-4 Certificate, Class A-IO Certificate, Class X
Certificate or Class R Certificate executed by the Trustee on behalf of the
Trust Fund and authenticated by the Trustee.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Certificate 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 Certificates necessary to effect any such consent, waiver, request
or demand has been obtained. For purposes of any consent, waiver, request or
demand of Certificateholders pursuant to this Agreement, upon the Trustee's
request, the Servicer and the Unaffiliated Seller shall provide to the Trustee a
notice identifying any of their respective Affiliates or the Affiliates of any
Subservicer that is a Certificateholder as of the date(s) specified by the
Trustee in such request. Any Certificates on which payments are made under the
Certificate Insurance Policy shall be deemed to be outstanding and held by the
Certificate Insurer to the extent of such payment.
CERTIFICATE INSURANCE PAYMENT ACCOUNT: The Certificate
Insurance Payment Account established in accordance with Section 6.04(c) hereof
and maintained by the Trustee.
CERTIFICATE INSURANCE POLICY: The Insurance Policy No. 35634
issued by the Certificate Insurer and all endorsements thereto dated the Closing
Date, issued by the Certificate Insurer for the benefit of the Class A
Certificateholders.
CERTIFICATE INSURER: MBIA Insurance Corporation.
CERTIFICATE INSURER DEFAULT: The existence and continuance of
any of the following:
(a) the Certificate Insurer shall have failed to make a
required payment when due under the Certificate Insurance Policy;
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(b) the Certificate Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States 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
United States 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,
trustee, agent, or receiver for the Certificate Insurer or for all or any
material portion of its property or (ii) authorizing the taking of possession by
a custodian, trustee, agent, or receiver of the Certificate Insurer or of all or
any material portion of its property.
CERTIFICATE PRINCIPAL BALANCE: As to any particular Class A-1
Certificate, Class A-2 Certificate, Class A-3 Certificate, Class A-4 Certificate
and date of determination, the product of the Percentage Interest evidenced
thereby and the Class A-1 Certificate, Class A-2 Certificate, Class A-3
Certificate or Class A-4 Certificate Principal Balance, respectively, as of such
date. The Class A-IO, Class X and Class R Certificates do not have a
"Certificate Principal Balance".
CERTIFICATE REGISTER: As described in Section 4.02.
CHANGE OF CONTROL: Any of the following: ABFS shall cease to
own, beneficially and of record, 100% of the issued and outstanding Stock of the
Servicer; the consummation of a merger or consolidation of ABFS with or into
another entity or any other corporate reorganization, if more that 50% of the
combined voting power of the continuing or surviving entity's Stock outstanding
immediately after such merger, consolidation or such other reorganization is
owned by persons who were not stockholders of ABFS immediately prior to such
merger, consolidation or other reorganization; or the sale, transfer, or other
disposition of all or substantially all of ABFS's assets. For purposes of the
foregoing, "Stock" means all shares, options, warrants, interests, participation
or other equivalents (regardless of how designated) of or in a corporation or
equivalent entity, whether voting or nonvoting, including common stock,
preferred stock, convertible debentures and all agreements, instruments and
documents convertible, in whole or in part, into any one or more or all of the
foregoing.
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 Mortgage Interest Rate.
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CLASS: Each class of Certificates designated as the Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-IO Certificates, Class X Certificates or the Class
R Certificates.
CLASS A CERTIFICATES: The Class A-1 Certificates, the Class
A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates, and
the Class A-IO Certificates.
CLASS A-1 CARRY FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-1 Interest
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the amount actually distributed on the Class A-1 Certificates in respect of
interest on such immediately preceding Distribution Date and (b) 30 days'
interest on the amount described in clause (a) calculated at an interest rate
equal to the Class A-1 Pass-Through Rate applicable to such Distribution Date.
CLASS A-1 CERTIFICATE: Any Certificate designated as a "Class
A-1 Certificate" on the face thereof, in the form of Exhibit A hereto. The Class
A-1 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-1 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-1
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates.
CLASS A-1 CURRENT INTEREST: With respect to the Class A-1
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-1 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-1 Certificate 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
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-1 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be the lesser of (x) the
Class A-1 Formula Distribution Amount for such Distribution Date or (y) the
amount (including any applicable portion of any Insured Payment) available for
distribution on account of the Class A-1 Certificates for such Distribution
Date.
CLASS A-1 FINAL SCHEDULED MATURITY DATE: The December 2031
Distribution Date.
CLASS A-1 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-1 Certificates for any Distribution Date, the sum of the Class A-1
Interest Distribution Amount and the Class A-1 Principal Distribution Amount.
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CLASS A-1 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-1 Certificates for any Distribution Date an amount equal to (a) the
related Class A-1 Current Interest, minus (b) the amount of any Class A-1
Mortgage Loan Interest Shortfalls, if any, plus (c) any Class A-1 Carry-Forward
Amount, less (d) any amounts paid by the Certificate Insurer in respect of such
Class A-1 Carry-Forward Amount.
CLASS A-1 MORTGAGE LOAN INTEREST SHORTFALLS: With respect to
the Class A-1 Certificates for any Distribution Date will be the aggregate of
the Mortgage Loan Interest Shortfalls in Mortgage Loan Group I, if any, for such
Distribution Date, to the extent such Mortgage Loan Interest Shortfalls are not
paid by the Servicer as Compensating Interest.
CLASS A-1 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to 6.34% (or, for each Distribution Date, if any,
occurring after the Clean-up Call Date, 6.84%).
CLASS A-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-1 Certificates for any Distribution Date, the lesser of (x) the
Principal Distribution Amount for Mortgage Loan Group I for such Distribution
Date, or (y) the Class A-1 Certificate Principal Balance as of such Distribution
Date.
CLASS A-2 AVAILABLE FUNDS CAP CARRY-FORWARD AMOUNT: With
respect to the Class A-2 Certificates and any Distribution Date, the sum of:
(a) the excess of (x) the Class A-2 Current Interest
calculated at the Class A-2 Formula Pass-through Rate over
(y) the Class A-2 Current Interest calculated at the Class
A-2 Available Funds Cap Rate, in each case as of such
Distribution Date,
(b) the amount of any Class A-2 Available Funds Cap
Carry-Forward Amount remaining unpaid from any previous
Distribution Date, with interest thereon at the Class A-2
Formula Pass-through Rate.
CLASS A-2 AVAILABLE FUNDS CAP RATE: Is a per annum rate equal
to, with respect to any Due Period, the Net Weighted Average Mortgage Interest
Rate for the Mortgage Loans in Mortgage Loan Group II for such Due Period, minus
the product of (x) the Class A-IO Pass-through Rate and (y) a fraction, the
numerator of which is the Class A-IO Notional Amount on such Distribution Date
and the denominator of which is the outstanding Aggregate Principal Balance of
the Mortgage Loans in Mortgage Loan Group I and Mortgage Loan Group II as of
such date.
CLASS A-2 CARRY-FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-2 Interest
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the amount actually distributed on the Class A-2 Certificates in respect of
interest on such immediately preceding Distribution Date and (b) 30 days'
interest on the amount described in clause (a) calculated at an interest rate
equal to the Class A-2 Formula Pass-Through Rate applicable to such Distribution
Date.
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CLASS A-2 CERTIFICATE: Any Certificate designated as a "Class
A-2 Certificate" on the face thereof, in the form of Exhibit A hereto. The Class
A-2 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-2 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-2
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates.
CLASS A-2 CURRENT INTEREST: With respect to the Class A-2
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-2 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-2 Certificate 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
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-2 Certificates 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 or (y) the
amount (including any applicable portion of any Insured Payment) available for
distribution on account of the Class A-2 Certificates for such Distribution
Date.
CLASS A-2 FINAL SCHEDULED MATURITY DATE: The October 2014
Distribution Date.
CLASS A-2 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-2 Certificates 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 FORMULA PASS-THROUGH RATE: With respect to any
Distribution Date, the per annum rate equal to LIBOR plus 0.14%.
CLASS A-2 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-2 Certificates for any Distribution Date an amount equal to (a) the
related Class A-2 Current Interest, minus (b) the amount of any Class A-2
Mortgage Loan Interest Shortfalls, if any, plus (c) any Class A-2 Carry-Forward
Amount, less (d) any amounts paid by the Certificate Insurer in respect of such
Class A-2 Carry-Forward Amount.
CLASS A-2 MORTGAGE LOAN INTEREST SHORTFALLS: With respect to
the Class A-2 Certificates for any Distribution Date will be the Class A-2
Certificates' pro rata portion of any Mortgage Loan Interest Shortfalls in
Mortgage Loan Group II, if any, for such Distribution Date, to the extent such
Mortgage Loan Interest Shortfalls are not paid by the Servicer as Compensating
Interest.
CLASS A-2 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to the lesser of (x) the Class A-2 Formula
Pass-Through Rate and (y) the Class A-2 Available Funds Cap Rate for such
Distribution Date.
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CLASS A-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-2 Certificates for any Distribution Date, the lesser of (x) the
Principal Distribution Amount for Mortgage Loan Group II for such Distribution
Date, and (y) the Class A-2 Certificate Principal Balance as of such
Distribution Date.
CLASS A-3 CARRY FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-3 Interest
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the amount actually distributed on the Class A-3 Certificates in respect of
interest on such immediately preceding Distribution Date and (b) 30 days
interest on the amount described in clause (a) calculated at an interest rate
equal to the Class A-3 Pass-Through Rate applicable to such Distribution Date.
CLASS A-3 CERTIFICATE: Any Certificate designated as a "Class
A-3 Certificate" on the face thereof, in the form of Exhibit A hereto. The Class
A-3 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-3 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-3
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates.
CLASS A-3 CURRENT INTEREST: With respect to the Class A-3
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-3 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-3 Certificate Principal
Balance as of such Distribution Date (and prior to making any distributions on
such Distribution Date).
CLASS A-3 DISTRIBUTION AMOUNT: With respect to the Class A-3
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-3 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be the lesser of (x) the
Class A-3 Formula Distribution Amount for such Distribution Date or (y) the
amount (including any applicable portion of any Insured Payment) available for
distribution on account of the Class A-3 Certificates for such Distribution
Date.
CLASS A-3 FINAL SCHEDULED MATURITY DATE: The July 2016
Distribution Date.
CLASS A-3 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-3 Certificates for any Distribution Date, the sum of the Class A-3
Interest Distribution Amount and the Class A-3 Principal Distribution Amount.
CLASS A-3 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-3 Certificates for any Distribution Date an amount equal to (a) the
related Class A-3 Current Interest, minus (b) the amount of any Class A-3
Mortgage Loan Interest Shortfalls, if any, plus (c) any Class A-3 Carry-Forward
Amount, less (d) any amounts paid by the Certificate Insurer in respect of such
Class A-3 Carry-Forward Amount.
8
CLASS A-3 MORTGAGE LOAN INTEREST SHORTFALLS: With respect to
the Class A-3 Certificates for any Distribution Date will be the Class A-3
Certificates' pro rata portion of the Mortgage Loan Interest Shortfalls in
Mortgage Loan Group II, if any, for such Distribution Date, to the extent such
Mortgage Loan Interest Shortfalls are not paid by the Servicer as Compensating
Interest.
CLASS A-3 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to 5.82%.
CLASS A-3 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-3 Certificates for any Distribution Date, the lesser of (x) the
Principal Distribution Amount for Mortgage Loan Group II for such Distribution
Date (net of the Class A-2 Principal Distribution Amount) or (y) the Class A-3
Certificate Principal Balance as of such Distribution Date.
CLASS A-4 CARRY FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-4 Interest
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the amount actually distributed on the Class A-4 Certificates in respect of
interest on such immediately preceding Distribution Date and (b) 30 days
interest on the amount described in clause (a) calculated at an interest rate
equal to the Class A-4 Pass-Through Rate applicable to such Distribution Date.
CLASS A-4 CERTIFICATE: Any Certificate designated as a "Class
A-4 Certificate" on the face thereof, in the form of Exhibit A hereto. The Class
A-4 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-4 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-4
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates.
CLASS A-4 CURRENT INTEREST: With respect to the Class A-4
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-4 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-4 Certificate Principal
Balance as of such Distribution Date (and prior to making any distributions on
such Distribution Date).
CLASS A-4 DISTRIBUTION AMOUNT: With respect to the Class A-4
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-4 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be the lesser of (x) the
Class A-4 Formula Distribution Amount for such Distribution Date or (y) the
amount (including any applicable portion of any Insured Payment) available for
distribution on account of the Class A-4 Certificates for such Distribution
Date.
CLASS A-4 FINAL SCHEDULED MATURITY DATE: The December 2031
Distribution Date.
9
CLASS A-4 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-4 Certificates for any Distribution Date, the sum of the Class A-4
Interest Distribution Amount and the Class A-4 Principal Distribution Amount.
CLASS A-4 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-4 Certificates for any Distribution Date an amount equal to (a) the
related Class A-4 Current Interest, minus (b) the amount of any Class A-4
Mortgage Loan Interest Shortfalls, if any, plus (c) any Class A-4 Carry-Forward
Amount, less (d) any amounts paid by the Certificate Insurer in respect of such
Class A-4 Carry-Forward Amount.
CLASS A-4 MORTGAGE LOAN INTEREST SHORTFALLS: For any
Distribution Date will be the Class A-4 Certificates' pro rata portion of the
Mortgage Loan Interest Shortfalls in Mortgage Loan Group II, if any, for such
Distribution Date, to the extent such Mortgage Loan Interest Shortfalls are not
paid by the Servicer as Compensating Interest.
CLASS A-4 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to the lesser of (x) 6.99% (or, for each
Distribution Date, if any, occurring after the Clean-up Call Date, 7.49%).
CLASS A-4 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-4 Certificates for any Distribution Date, the lesser of (x) the
Principal Distribution Amount for Mortgage Loan Group II for such Distribution
Date (net of the Class A-2 Principal Distribution Amount and the Class A-3
Principal Distribution Amount), or (y) the Class A-4 Certificate Principal
Balance as of such Distribution Date.
CLASS A-IO CARRY-FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-IO Interest
Distribution Amount as of the immediately preceding Distribution Date exceeds
(ii) the amount actually paid to the holders of the Class A-IO Certificates on
such immediately preceding Distribution Date and (b) thirty (30) days' interest
on the amount described in clause (a) calculated at an interest rate equal to
the Class A-IO Pass-through Rate.
CLASS A-IO CERTIFICATE: Any Certificate designated as a "Class
A-IO Certificate" on the face thereof, in the form of Exhibit B hereto.
CLASS A-IO CURRENT INTEREST: With respect to the Class A-IO
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-IO Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-IO Notional Amount as
of such Distribution Date.
CLASS A-IO INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-IO Certificates for any Distribution Date an amount equal to (a) the
related Class A-IO Current Interest, minus (b) the amount of any Class A-IO
Mortgage Loan Interest Shortfalls, if any, plus (c) any Class A-IO Carry-Forward
Amount, less (d) any amounts paid by the Certificate Insurer in respect of such
Class A-IO Carry-Forward Amount.
CLASS A-IO MORTGAGE LOAN INTEREST SHORTFALLS: With respect to
the Class A-IO Certificates for any Distribution Date will be the Class A-IO
Certificates' pro rata portion of the Mortgage Loan Interest Shortfalls in
Mortgage Loan Group I and Mortgage Loan Group II, if any, for such Distribution
Date, to the extent such Mortgage Loan Interest Shortfalls are not paid by the
Servicer as Compensating Interest.
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CLASS A-IO NOTIONAL AMOUNT: With respect to each Distribution
Date occurring (i) prior to the January 2004 Distribution Date, an amount equal
to the lesser of (x) $35,500,000 or (y) the Aggregate Principal Balance as of
the first day of the related Due Period; and (ii) on and after the Distribution
Date occurring in January 2004, $0.
CLASS A-IO PASS-THROUGH RATE: A fixed rate equal to 8.00% per
annum.
CLASS R CERTIFICATE: Any Certificate denominated as a Class R
Certificate and subordinate to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-IO and Class X Certificates in right of payment to the extent set forth
herein, which Certificate shall be in the form of Exhibit C hereto.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLASS X CERTIFICATE: Any Certificate denominated as a Class X
Certificate and subordinate to the Class X-0, Xxxxx X-0, Class A-3, Class A-4
and Class A-IO Certificates in right of payment to the extent set forth herein,
which Certificate shall be in the form of Exhibit D hereto.
CLASS X CERTIFICATEHOLDER: A Holder of a Class X Certificate.
CLEAN-UP CALL DATE: As defined in Section 8.01(b).
CLOSING DATE: June 28, 2001.
CODE: The Internal Revenue Code of 1986, as amended.
COLLATERAL AGENT: The Chase Manhattan Bank, its successors and
assigns.
COLLECTION ACCOUNT: The Eligible Account established and
maintained by the Servicer pursuant to Section 5.02(b).
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 Securities and Exchange Commission.
COMPENSATING INTEREST: As defined in Section 6.09 hereof.
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CORRESPONDING CLASS: Means the Class of Master REMIC Interest
as used in the Table in Section 2.07.
CREDIT AND SERVICING POLICY MANUALS: With respect to an
Originator, its written policies and procedures regarding underwriting,
origination and servicing of mortgage loans, as delivered to the Certificate
Insurer on or prior to the Closing Date, with such changes notified to the
Certificate Insurer (a) that do not have a material adverse effect on such
policies and procedures, or (b) that are approved by the Certificate Insurer,
such approval not to be unreasonably withheld, conditional or delayed or (c)
that the Servicer does not apply to the Mortgage Loans.
CROSS-COLLATERALIZATION RESERVE ACCOUNT: With respect to the
Class A Certificates, the segregated trust account, which shall be an Eligible
Account, established and maintained pursuant to Section 6.01(a) and entitled
"The Chase Manhattan Bank, as Trustee for ABFS Mortgage Loan Trust 2001-2
Mortgage Pass-Through Certificates, Series 2001-2, Class A,
Cross-collateralization Reserve Account," on behalf of the Class A
Certificateholders and the Certificate Insurer.
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 Aggregate Principal Balance of the Mortgage Loans in both
Mortgage Loan Groups as of the Cut-Off Date.
CUT-OFF DATE: The close of business on June 1, 2001 (or with
respect to any Mortgage Loan originated or otherwise acquired by an Originator
after June 1, 2001, the date of origination or acquisition of such Mortgage
Loan).
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 United States Bankruptcy Code,
except such a reduction that constitutes a Deficient Valuation or a permanent
forgiveness of principal.
DEFICIENCY AMOUNT: With respect to either Mortgage Loan Group
and any Distribution Date, an amount equal to the excess, if any, of (i) the
Required Distribution relating to that Mortgage Loan Group for such Distribution
Date over (ii) the Available Funds for that Mortgage Loan Group for such
Distribution Date; such amount shall never be less than zero.
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 United
States Bankruptcy Code.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced by or to be
replaced by a Qualified Substitute Mortgage Loan.
DELINQUENCY AMOUNT: means, as of the end of a Due Period, the
product of (i) the Rolling Three Month Delinquency Rate and (ii) the Aggregate
Principal Balance as of the first day of the applicable three month period.
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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 90 or more days
Delinquent, in foreclosure or converted to REO Property as of the last day of
the related Due Period and (b) the denominator of which is the aggregate
Principal Balance of the Mortgage Loans as of the last day of the related 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: Bear Xxxxxxx Asset Backed Securities, Inc., a
Delaware corporation, and any successor thereto.
DEPOSITORY: The Depository Trust Company, 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 and any successor Depository hereafter named.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial
institution for which the Depository holds Class X-0, Xxxxx X-0, Class A-3,
Class A-4 or Class A-IO Certificates from time to time as a securities
depository.
DISTRIBUTION ACCOUNT: One of the Distribution Accounts
established in accordance with Section 6.01(a) hereof and maintained by the
Trustee.
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 July 25, 2001.
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 Trustee, provided such institution
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
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 Certificate 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
Trustee, provided that the Trustee otherwise meets these requirements), having
capital and surplus of not less than $50,000,000, acting in its fiduciary
capacity.
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ERISA: As defined in Section 4.02(n) hereof.
EVENT OF DEFAULT: As described in Section 7.01.
EXCESS OVER-COLLATERALIZED AMOUNT: With respect to a Mortgage
Loan Group and any Distribution Date, the excess, if any, of (a) the
Over-collateralized Amount for such Mortgage Loan Group that would apply on such
Distribution Date after taking into account all distributions that would be made
on such Distribution Date if the related Over-collateralization Reduction
Amounts for such Mortgage Loan Group were not deducted from the Principal
Distribution Amount for such Mortgage Loan Group over (b) the Specified
Over-collateralized Amount for such Mortgage Loan Group.
FDIC: The Federal Deposit Insurance Corporation, and any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, and any
successor thereto.
FNMA: The Federal National Mortgage Association, and any
successor thereto.
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 to 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 to which interest was last deemed
to have been paid pursuant to Section 5.06 to the first day of the month
following the month in which such Mortgage Loan became a Liquidated Mortgage
Loan).
GAAP: Generally accepted accounting principles, consistently
applied, as of the date of such application.
I & I PAYMENTS: Payments due and owing under the Insurance and
Reimbursement Agreement other than pursuant to Section 2.4(a) of such Agreement.
INDIRECT PARTICIPANT: Any financial institution for whom any
Direct Participant holds an interest in a Class A-1, Class A-2, Class A-3, Class
A-4 or Class A-IO Certificate.
INSURANCE AND REIMBURSEMENT AGREEMENT: The Insurance and
Reimbursement Agreement dated as of June 28, 2001 among the Certificate Insurer,
the Depositor, the Trustee, the Servicer, the Unaffiliated Seller, HomeAmerican
Credit, Inc., d/b/a Upland Mortgage and American Business Mortgage Services,
Inc. as such agreement may be amended or supplemented in accordance with the
provisions thereof.
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INSURANCE POLICIES: All insurance policies insuring any
Mortgage Loan or Mortgaged Property to the extent the Trust or the 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 PAYMENT: With respect to any Distribution Date, the
Deficiency Amount.
INSURER DEFENSE COSTS: All costs and expenses of the
Certificate Insurer (including out of pocket costs and expenses of the Trustee
or the Depositor that the Certificate Insurer may have paid) in connection with
any action, proceeding or investigation that could adversely affect the Trust or
the rights or obligations of the Certificate Insurer under any of the Insurance
and Reimbursement Agreement, this Agreement, the Unaffiliated Seller Agreement
or any other document delivered with respect thereto, including (without
limitation) any judgment or settlement entered into affecting the Certificate
Insurer or the Certificate Insurer's interests, together with interest thereon
at a rate equal to the Late Payment Rate from the date such expenses are
incurred up to but not including the date the Certificate Insurer is reimbursed
for such expenses in full.
INTEREST DETERMINATION DATE: With respect to any Accrual
Period for the Class A-2 Certificates, the second London Business Day preceding
the first day of such Accrual Period; provided, however, that with respect to
the July 2001 Distribution Date, the Interest Determination Date shall be the
second London Business Day preceding the Closing Date.
INTEREST DISTRIBUTION AMOUNT: Means (i) with respect to
Mortgage Loan Group I, the Class A-1 Interest Distribution Amount and Mortgage
Loan Group I's pro rata portion of the Class A-IO Interest Distribution Amount
and (ii) with respect to Mortgage Loan Group II, the sum of the Class A-2
Interest Distribution Amount, Class A-3 Interest Distribution Amount, Class A-4
Interest Distribution Amount and Mortgage Loan Group II's pro rata portion of
the Class A-IO Interest Distribution Amount.
INTEREST RESERVE ACCOUNT: The Interest Reserve Account
established in accordance with Section 6.01(a) hereof and maintained by the
Trustee.
LATE PAYMENT RATE: Has the meaning ascribed thereto in the
Insurance and Reimbursement Agreement.
LIBOR: With respect to any Accrual Period for the Class A-2
Certificates, the rate determined by the Trustee on the related Interest
Determination Date on the basis of the offered rates of the Reference Banks for
one-month U.S. dollar deposits, as such rates appear on Telerate Page 3750, as
of 11:00 a.m. (London time) on such Interest Determination Date. On each
Interest Determination Date, LIBOR for the related Accrual Period will be
established by the Trustee as follows:
15
(a) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period for the Class A-2 Certificates shall be the arithmetic
mean of such offered quotations (rounded upwards if necessary to the
nearest whole multiple of 1/16%).
(b) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period for the Class A-2 Certificates shall be the higher of
(i) LIBOR as determined on the previous Interest Determination Date and
(ii) the Reserve Interest Rate.
LIQUIDATED LOAN LOSS: With respect to any Distribution Date as
of the related Due Date, an amount equal to the excess of (i) the unpaid
principal balance of a 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 last day of the month in which such
Mortgage 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 hereof 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
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: As defined in Section 2.06(c).
LONDON BUSINESS DAY: A day on which banks are open for dealing
in foreign currency and exchange in London and New York City.
16
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class
X-0, Xxxxx X-0, Class A-3, Class A-4 and Class A-IO Certificates evidencing
Percentage Interests in excess of 51% in the aggregate.
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 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 hereof.
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 Certificate Insurer.
MORTGAGE: The mortgage, deed of trust or other instrument
creating a first or second lien on the Mortgaged Property.
MORTGAGED PROPERTY: The underlying property or properties
securing a Mortgage Loan, consisting of a fee simple estate in such real
property.
MORTGAGE FILE: As described in Exhibit E.
MORTGAGE INTEREST RATE: As to any Mortgage Loan, the per annum
fixed rate at which interest accrues on the unpaid principal balance thereof as
set forth on the related Mortgage Note.
MORTGAGE LOAN INTEREST SHORTFALL: With respect to any
Distribution Date, as to any Mortgage Loan, the sum of (a) any Prepayment
Interest Shortfall for which no payment of Compensating Interest is paid and (b)
any Civil Relief Act Interest Shortfall in respect of such Mortgage Loan for
such Distribution Date.
MORTGAGE LOAN GROUP: Mortgage Loan Group I and Mortgage Loan
Group II.
MORTGAGE LOAN GROUP I: Those Mortgage Loans listed on the
Mortgage Loan Schedule as being designated to Mortgage Loan Group I.
MORTGAGE LOAN GROUP II: Those Mortgage Loans listed on the
Mortgage Loan Schedule as being designated to Mortgage Loan Group II.
MORTGAGE LOANS: The mortgage loans set forth on the Mortgage
Loan Schedule, together with any Qualified Substitute Mortgage Loans substituted
therefor in accordance with this Agreement, as from time to time are held as a
part of the Trust Fund, the Mortgage Loans originally so held being identified
in the 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 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.
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MORTGAGE LOAN SCHEDULE: The schedule of Mortgage Loans as of
the Cut-Off Date as attached hereto as Schedule I, which will be deemed to be
modified automatically upon any replacement, sale, substitution, liquidation,
transfer or addition of any Mortgage Loan pursuant to the terms hereof. The
Mortgage Loan Schedule sets forth as to each 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) the
Principal Balance as of the Cut-Off Date; (viii) the Mortgage Interest Rate and
(ix) the scheduled monthly payment of principal and interest.
MORTGAGE NOTE: The original, executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
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.
NET INCOME: For any fiscal quarter of ABFS, the net income (or
loss) of ABFS and its consolidated subsidiaries for such quarter, determined in
accordance with GAAP.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances made by the Servicer out of its own funds. For all purposes of
this Agreement, 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 MORTGAGE LOAN INTEREST SHORTFALLS: As of any Distribution
Date, the aggregate of the Class A-1 Mortgage Loan Interest Shortfalls, Class
A-2 Mortgage Loan Interest Shortfalls, Class A-3 Mortgage Loan Interest
Shortfalls, Class A-4 Mortgage Loan Interest Shortfalls, and Class A-IO Mortgage
Loan Interest Shortfalls, if any, for such Distribution Date.
NET MONTHLY EXCESS CASHFLOW: With respect to any Distribution
Date and any Mortgage Loan Group, the excess of (x) the Available Funds for such
Mortgage Loan Group then on deposit in the related Distribution Account over (y)
the sum of (i) the Interest Distribution Amount for such Mortgage Loan Group and
such Distribution Date, (ii) the Principal Distribution Amount for such Mortgage
Loan Group or such Distribution Date, calculated for this purpose without regard
to any Over-collateralization Increase Amount (or portion thereof included
therein) for such Mortgage Loan Group and such Distribution Date, (iii) the
amounts due to the Certificate Insurer, if any, for such Mortgage Loan Group on
such Distribution Date pursuant to Section 6.05 of this Agreement, and (iv) the
Trustee Fees allocable to such Mortgage Loan Group for such Distribution Date.
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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 OR NET WAC: With
respect to any Due Period and any Mortgage Loan Group, the weighted average
Mortgage Interest Rates (weighted by Principal Balances) of the Mortgage Loans
in such Mortgage Loan Group, calculated at the opening of business on the first
day of such Due Period, less the rate at which the Servicing Fee is then
calculated, less the rate at which the Trustee Fee is then calculated, less the
Premium Percentage and any taxes imposed on any REMIC created hereunder pursuant
to Section 9.01(d) herein.
NET WORTH: As of any date, the consolidated total
stockholder's equity of ABFS and its consolidated subsidiaries, determined in
accordance with GAAP.
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, 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 Certificate Insurer and the Trustee no later than
the Business Day following such determination, would not ultimately be
recoverable pursuant to Sections 5.03.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of
the Board, the President or a Vice President, the Treasurer, the Secretary or
one of the Assistant Treasurers or Assistant Secretaries of the Unaffiliated
Seller and/or the Servicer, or the Depositor, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may,
without limitation, be counsel for the Unaffiliated Seller, the Servicer, the
Trustee, a Certificateholder or a Certificateholder's prospective transferee or
the Certificate 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; except that any opinion of
counsel relating to (a) the qualification of the REMIC Trust as a REMIC or (b)
compliance with the REMIC Provisions must be an opinion of counsel who (i) is in
fact independent of the Unaffiliated Seller, the Servicer and the Trustee, (ii)
does not have any direct financial interest or any material indirect financial
interest in the Unaffiliated Seller or the Servicer or the Trustee or in an
Affiliate thereof, (iii) is not connected with the Unaffiliated Seller or the
Servicer or the Trustee as an officer, employee, director or person performing
similar functions and (iv) is reasonably acceptable to the Certificate Insurer.
ORIGINAL CERTIFICATE PRINCIPAL BALANCE: As of the Startup Day
and as to the Class A-1 Certificates, $275,000,000, as to the Class A-2
Certificates, $32,798,000, as to the Class A-3 Certificates, $23,278,000 and as
to the Class A-4 Certificates, $23,924,000. The Class A-IO, Class X and Class R
Certificates do not have an Original Certificate Principal Balance.
19
ORIGINAL AGGREGATE PRINCIPAL BALANCE: The Aggregate Principal
Balance of both Mortgage Loan Groups as of the Cut-Off Date, which amount is
equal to $355,000,000.00.
ORIGINATORS: American Business Credit, Inc., HomeAmerican
Credit, Inc., d/b/a Upland Mortgage and American Business Mortgage Services,
Inc.
OVER-COLLATERALIZATION DEFICIENCY AMOUNT: With respect to a
Mortgage Loan Group and any Distribution Date, the difference, if greater than
zero, between (a) the Specified Over-collateralized Amount for such Mortgage
Loan Group applicable to such Distribution Date and (b) the Over-collateralized
Amount for such Mortgage Loan Group applicable to such Distribution Date.
OVER-COLLATERALIZATION DEFICIT: As of any Distribution Date,
the amount, if any, by which (a) the sum of (i) the Class A-1 Certificate
Principal Balance, (ii) the Class A-2 Certificate Principal Balance, (iii) the
Class A-3 Certificate Principal Balance and (iv) the Class A-4 Certificate
Principal Balance, as applicable, with respect to the related Mortgage Loan
Group, after taking into account the payment of the Principal Distribution
Amount for the related Mortgage Loan Group (except for any amount in respect of
the Over-collateralization Deficit) on such date exceeds (b) the sum of (i) the
Aggregate Principal Balance of the related Mortgage Loan Group determined as of
the end of the immediately preceding Due Period and (ii) the amount on deposit
in the Cross-collateralization Reserve Account on such Distribution Date
allocated to such Mortgage Loan Group (it being understood that any such amount
allocated to one Mortgage Loan Group will be excluded for purposes of
calculating the Over-collateralization Deficit for the other Mortgage Loan
Group), after application of all amounts due on such Distribution Date (other
than amounts in respect of Over-collateralization Deficit).
OVER-COLLATERALIZATION INCREASE AMOUNT: With respect to any
Mortgage Loan Group and to any Distribution Date, the Over-collateralization
Deficiency Amount for such Mortgage Loan Group and as of such Distribution Date
(after taking into account the payment of the Principal Distribution Amount
(except for clause (b)(viii) thereof) for such Mortgage Loan Group on such
Distribution Date). Such distribution is limited to the extent of the Available
Funds for that Mortgage Loan Group.
OVER-COLLATERALIZATION REDUCTION AMOUNT: With respect to any
Mortgage Loan Group and any Distribution Date, an amount equal to the lesser of
(a) the Excess Over-collateralized Amount for such Distribution Date or (b) the
Principal Distribution Amount for such Mortgage Loan Group for such Distribution
Date (without regard to any Over-collateralization Reduction Amounts for such
Mortgage Loan Group included in the definition thereof).
OVER-COLLATERALIZED AMOUNT: With respect to any Mortgage Loan
Group and any Distribution Date, the difference, if any, between (a) the
Aggregate Principal Balance of the Mortgage Loans in such Mortgage Loan Group as
of the close of business on the last day of the related Due Period and (b) the
Principal Balance of the related Classes of Certificates as of such Distribution
Date (after taking into account the payment of the Principal Distribution Amount
for such Mortgage Loan Group on such Distribution Date except for any portion
thereof related to an Insured Payment and any Over-collateralization Increase
Amount); provided, however, that such amount shall not be less than zero.
20
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as
to which (a) the related Mortgagor represented an intent to occupy as such
Mortgagor's primary, secondary or vacation 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 Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
PERCENTAGE INTEREST: With respect to a Class A-1 Certificate,
Class A-2 Certificate, Class A-3 Certificate or Class A-4 Certificate, the
portion evidenced by such Certificate, expressed as a percentage rounded to four
decimal places, equal to a fraction the numerator of which is the denomination
represented by such Certificate and the denominator of which is the Original
Certificate Principal Balance of such Class. With respect to a Class A-IO, Class
X or Class R Certificate, the portion evidenced thereby as stated on the face of
such Certificate.
PERIODIC ADVANCE: The aggregate of the advances required to be
made by the Servicer on any Servicer Remittance Date pursuant to Section 5.18
hereof, 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 Remittance 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 income from the REO
Property transferred to either 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:
(i) 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;
21
(ii) repurchase agreements on obligations specified in clause
(i) 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;
(iii) 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;
(iv) 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;
(v) 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 Moody's or S&P;
provided, that, each such Permitted Investment shall be a "permitted investment"
within the meaning of Section 860G(a)(5) of the Code and 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: (yy) 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; or (zz) provide any voting right or substantially equivalent interest
in the producer of such investment, whether directly or indirectly, through
conversion or any other manner or method. or be disposed of prior to its
maturity.
PERMITTED TRANSFEREE: Any Person other than (a) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (b) a foreign government, International
Organization or any agency or instrumentality of either of the foregoing, (c) an
organization (except certain farmers' cooperatives described in Section 521 of
the Code) which is exempt from tax imposed by Chapter 1 of the Code (including
the tax imposed by Section 511 of the Code on unrelated business taxable income)
on any excess inclusions (as defined in Section 860E(c)(1) of the Code) with
respect to any Class R Certificate, (d) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (e) an "electing
large partnership" within the meaning Section 775 of the Code' and (f) any other
Person so designated by the Trustee based upon an Opinion of Counsel to the
Trustee and the Certificate Insurer that the transfer of an Ownership Interest
in a Class R Certificate to such Person may cause either (i) the REMIC Trust to
fail to qualify as a REMIC at any time that the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-IO or Class X Certificates are outstanding or (ii) the Trust
Fund or any Person having an Ownership Interest in any Class of Certificates,
other than such Person, to incur a liability for any federal tax imposed under
the Code that would not otherwise be imposed but for the Transfer of an
Ownership Interest in a Class R Certificate to such Person. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in Section 7701 of the Code or successor provisions. A corporation will
not be treated as an instrumentality of the United States or of any State or
political subdivision thereof for these purposes if all of its activities are
subject to tax and, with the exception of FHLMC, a majority of its board of
directors is not selected by such governmental unit.
22
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: As defined in Section 4.02(n).
PREFERENCE AMOUNT: Any amounts distributed in respect of the
Class X-0, Xxxxx X-0, Class A-3, Class A-4 and Class A-IO Certificates which are
recovered from any Holder of a Class A-1, Class A-2, Class A-3, Class A-4 or
Class A-IO Certificate as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code (11 U.S.C.), as amended from time
to time in accordance with a final, nonappealable order of a court having
competent jurisdiction.
PREFERENCE CLAIM: As defined in Section 6.04(f).
PREMIUM AMOUNT: The sum of (a) the product of the Premium
Percentage and the Class A-1 Certificate Principal Balance for the related
Distribution Date, (b) the product of the Premium Percentage and the Class A-2
Certificate Principal Balance for the related Distribution Date, (c) the product
of the Premium Percentage and the Class A-3 Certificate Principal Balance for
the related Distribution Date, and (d) the product of the Premium Percentage and
the Class A-4 Certificate Principal Balance for the related Distribution Date
(before giving effect to any distributions on that date); provided, however, the
Premium Amount for the Distribution Date in July 2001 will be equal to zero.
PREMIUM PERCENTAGE: The rate at which the "Premium" is
determined as described in the letter dated June 28, 2001 between ABFS and the
Certificate Insurer.
PREPAYMENT ASSUMPTION: A constant prepayment rate of 23% HEP
for the Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-IO Certificates and Class X used solely for
determining the accrual of original issue discount and market discount on the
Certificates 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 rate at which the Servicing Fee is calculated over (b) the amount of
interest actually remitted by the Mortgagor in connection with such Principal
Prepayment less the Servicing Fee for such Mortgage Loan in such month.
23
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 Principal Prepayments received
prior to the end of the related Due Period and Deficient Valuations incurred
prior to the related Due Date. The Principal Balance of a Mortgage Loan which
becomes a Liquidated Mortgage Loan on or prior to the related Due Date shall be
zero (except for purposes of calculating the Loan Repurchase Price of such
Mortgage Loan).
PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date with
respect to any Mortgage Loan Group, will be the lesser of:
(a) the excess of (i) the sum, as of such Distribution Date,
of (A) the Available Funds for such Mortgage Loan Group and (B) any Insured
Payment for such Mortgage Loan Group plus if the Certificate Insurer, to the
extent not obligated hereunder or under the Insurance and Reimbursement
Agreement, 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)-(ix) below if sufficient funds were made available to the Trustee
in accordance with the terms of the Certificate Insurance Policy over (ii) sum
of (w) the Interest Distribution Amount, (x) the Trustee Fees and (y) the amount
due to the Certificate Insurer on such Distribution Date pursuant to Section
6.05, in each case with respect to such Mortgage Loan Group; and
(b) the sum, without duplication, of:
(i) all principal in respect of the Mortgage Loans in
such Mortgage Loan Group actually collected during the related
Due Period plus, if the outstanding Certificate Principal
Balance relating to the other Mortgage Loan Group has been
reduced to zero, all principal in respect of the Mortgage
Loans in the other Mortgage Loan Group actually collected
during the related Due Period,
(ii) the Principal Balance of each Mortgage Loan that
either was repurchased by the Unaffiliated Seller or by an
Originator or purchased by the Servicer on the related
Servicer Remittance Date from such Mortgage Loan Group, to the
extent such Principal Balance is actually received by the
Trustee,
(iii) any Substitution Adjustments delivered on the
related Servicer Remittance Date in connection with a
substitution of a Mortgage Loan in such Mortgage Loan Group,
to the extent such Substitution Adjustments are actually
received by the Trustee,
(iv) the Net Liquidation Proceeds actually collected by
the Servicer on all Mortgage Loans in such Mortgage Loan Group
during the related Due Period (to the extent such Net
Liquidation Proceeds relate to principal),
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(v) the proceeds received by the Trustee upon the
exercise by the Servicer of the option to repurchase the
Mortgage Loans in such Mortgage Loan Group on or after the
Clean-up Call Date, (to the extent that such proceeds relate
to principal)
(vi) the amount of any Over-collateralization Deficit
with respect to such Mortgage Loan Group for such Distribution
Date,
(vii) the proceeds received by the Trustee on any
termination of the Trust to the extent such proceeds relate to
principal allocable to such Mortgage Loan Group,
(viii) the amount of any Over-collateralization Increase
Amount with respect to such Mortgage Loan Group for such
Distribution Date, and
(ix) if the Certificate 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)-(viii) above if sufficient funds were made available to
the Trustee in accordance with the terms of the Certificate
Insurance Policy,
minus
(x) the amount of any Over-collateralization Reduction
Amount with respect to such Mortgage Loan Group for such
Distribution Date.
PRINCIPAL PREPAYMENT: Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated June 8,
2001 relating to the Class X-0, Xxxxx X-0, Class A-3, Class A-4 and Class A-IO
Certificates 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, Recovery and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
QUALIFIED MORTGAGE: "Qualified Mortgage" shall have the
meaning set forth from time to time in the definition thereof at Section
860G(a)(3) of the Code (or any successor statute thereto).
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or
mortgage loans substituted for a Deleted Mortgage Loan pursuant to Section
2.06(c) or 3.03 hereof, which (a) has or have an interest rate at least equal to
that 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 the same occupancy status or is an Owner Occupied
Mortgaged Property, (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 at the time of such substitution no higher than the Loan-to-Value Ratio 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,
(g) satisfies or satisfy the criteria set forth from time to time in the
definition of "qualified replacement mortgage" at Section 860G(a)(4) of the Code
(or any successor statute thereto), and (h) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01,
3.02 and 3.03 of the Unaffiliated Seller's Agreement.
25
RATING AGENCY: S&P or Moody's.
RECORD DATE: With respect to the Certificates, the last
Business Day of the month immediately preceding the month in which a
Distribution Date occurs.
REFERENCE BANKS: Citibank, Xxxxxxx'x Bank PLC, The Bank of
Tokyo-Mitsubishi and National Westminster Bank PLC; provided, that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Unaffiliated Seller which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the control
of or under common control with the Unaffiliated Seller or any affiliate
thereof, (iii) whose quotations appear on the Telerate Page 3750 on the relevant
Interest Determination Date and (iv) which have been designated as such by the
Trustee.
REIMBURSEMENT AMOUNT: As of any Distribution Date, the sum of
(a)(i) all payments under the Certificate Insurance Policy previously received
by the Trustee and all Preference Amounts previously paid by the Certificate
Insurer and in each case not previously repaid to the Certificate Insurer
pursuant to Sections 6.05(a) hereof plus (ii) interest accrued on each such
payment and Preference Amounts not previously repaid calculated at the Late
Payment Rate from the date the Trustee received the related payment or
Preference Amount paid by the Certificate Insurer and (b)(i) any amounts then
due and owing to the Certificate Insurer under the Insurance and Reimbursement
Agreement (excluding the Premium Amount due on such Distribution Date), as
certified to the Trustee by the Certificate Insurer plus (ii) interest on such
amounts at the Late Payment Rate and (c) to the extent not otherwise included,
all Insurer Defense Costs. Any Reimbursement Amounts described in clause (a)
shall be allocated to the Mortgage Loan Group in respect of which the relevant
payment under the Certificate Insurance Policy was made. Any other Reimbursement
Amounts shall be allocated between the Mortgage Loan Groups in such manner as
the Certificate Insurer shall still direct in its sole discretion. The
Certificate Insurer shall notify the Trustee and the Depositor of the amount of
any Reimbursement Amount.
26
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC I: As described in Section 2.07 herein.
REMIC I REGULAR INTERESTS: As described in Section 2.07
herein.
REMIC II: As described in Section 2.07 herein.
REMIC II REGULAR INTERESTS: As described in Section 2.07
herein.
REMIC III: As described in Section 2.07 herein.
REMIC III REGULAR INTERESTS: As described in Section 2.07
herein.
REMIC PROVISIONS: Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and temporary and final regulations promulgated thereunder and
published rulings, notices and announcements, as the foregoing may be in effect
from time to time.
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 Fund.
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 Trustee on behalf of the Certificateholders through foreclosure
or deed-in-lieu of foreclosure.
REPRESENTATION LETTER: Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates and Class A-IO Certificates registered in the Certificate Register
under the nominee name of the Depository.
REPRESENTATIVE: Bear, Xxxxxxx & Co. Inc. as the representative
underwriter for the Underwriters listed on Schedule A to the Underwriting
Agreement.
REQUEST FOR RELEASE: A request for release in substantially
the form attached as Exhibit H hereto.
REQUIRED DISTRIBUTIONS: means, with respect to (1) any
Distribution Date occurring prior to the Distribution Date on December 25, 2031,
the sum of (x) the Interest Distribution Amount for all Class A Certificates net
of any Net Mortgage Loan Interest Shortfalls and Class A-2 Available Funds Cap
Carry-Forward Amounts and (y) the sum of the Over-collateralization Deficit(s)
with respect to both Mortgage Loan Groups, and (2) the final scheduled
Distribution Date on December 25, 2031, the sum of (x) the amount set forth in
clause (1)(x) above and (y) the outstanding aggregate Certificate Principal
Balance, if any, of the Class A-1, Class A-2, Class A-3 and Class A-4
Certificates, after giving effect to all other distributions of principal on the
Class A-1, Class A-2, Class A-3 and Class A-4 Certificates on that Distribution
Date.
27
RESERVE INTEREST RATE: With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which three New
York City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which three
New York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
RESIDENTIAL DWELLING: A one- to four-family dwelling, a unit
in a planned unit development, a unit in a condominium development, a townhouse
or a manufactured housing unit which is non-mobile.
RESPONSIBLE OFFICER: When used with respect to the Trustee,
any officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Assistant Vice President, Trust Officer, any
Assistant Secretary, any trust officer or any other officer of the 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 in each case having direct responsibility for the
administration of this Agreement. 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.
RETAINED INTEREST: An interest in a pool of promissory notes,
mortgage loans, or other financial assets which entitles the holder to receive
excess cash flows derived from such assets after payments to senior holders of
direct or indirect beneficial or other interests in such assets as well as
expenses and other payments accorded priority in right or payment to such
residual interest.
ROLLING THREE MONTH DELINQUENCY RATE: For any Distribution
Date, a percentage, equal to the average of the Delinquency Ratio for each of
the three (1 or 2 in the case of the first three Distribution Dates, as the case
may be) immediately preceding Due Periods.
S&P: Standard & Poor's, 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 Certificate Insurer.
28
SERVICER: American Business Credit, Inc., a Pennsylvania
corporation, or any successor appointed as herein provided.
SERVICER REMITTANCE 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 REMITTANCE AMOUNT: With respect to any Servicer
Remittance 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 this Agreement but excluding the
following:
(a) amounts received on particular Mortgage Loans as late
payments of interest and respecting which the Servicer has previously made an
unreimbursed Periodic Advance out of its own funds;
(b) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(c) that portion of Liquidation Proceeds and REO Proceeds to
the extent of any unpaid Servicing Fee;
(d) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(e) all amounts in respect of late fees, assumption fees,
prepayment fees and similar fees;
(f) certain other amounts which are reimbursable to the
Servicer, as provided in this Pooling and Servicing Agreement; and
(g) Net Foreclosure Profits.
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 and
expenses relating to (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 5.22, 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 5.22.
SERVICING COMPENSATION: The Servicing Fee and other amounts to
which the Servicer is entitled pursuant to Section 5.08.
29
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) 0.50% per annum, and (b) the Principal Balance thereof (or, in the case
of any successor Servicer, such other amount as the Certificate Insurer and such
successor may agree upon in writing; provided however that if the Trustee is
acting as successor Servicer in no event shall the Servicing Fee be less than
the amount paid to the initial Servicer hereunder). Such fee shall be calculated
and payable monthly only from the amounts received in respect of interest on
such Mortgage Loan and shall be computed on the basis of the same principal
amount 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 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 Trustee and the Certificateholders by the Servicer, as such list may from
time to time be amended.
SHORTFALL AMOUNT: With respect to any Mortgage Loan Group and
Distribution Date, an amount, not less than zero, equal to the sum, without
duplication, of:
(a) the excess, if any, of the sum of the amounts
described in Section 6.05(a)(i)-(iv) over the
Available Funds (excluding any funds which are to be
transferred from the Cross-collateralization Reserve
Account on that date) for such Mortgage Loan Group
and Distribution Date;
(b) with respect to any Distribution Date prior to the
final scheduled maturity date on December 25, 2031,
the aggregate amount of Liquidated Loan Losses
incurred during the prior Due Period for such
Mortgage Loan Group, to the extent not paid as part
of the related Principal Distribution Amount for such
Distribution Date;
(c) with respect to any Distribution Date prior to the
final scheduled maturity date on December 25, 2031,
any Over-collateralization Deficit for such Mortgage
Loan Group and Distribution Date, to the extent not
paid as part of the related Principal Distribution
Amount for such Distribution Date; and
(d) with respect to the final scheduled maturity date on
December 25, 2031, the outstanding principal balance,
if any, of the Class A-1 Certificates and the
outstanding Aggregate Principal Balance, if any, of
the Class A-2, Class A-3 and Class A-4 Certificates,
as applicable, to the extent not otherwise paid on
that Distribution Date.
SPECIAL ADVANCE: As defined in Section 5.18(b) hereof.
SPECIFIED OVER-COLLATERALIZED AMOUNT: With respect to either
Mortgage Loan Group, an amount equal to the product of (x) a fraction, the
numerator of which is the Aggregate Principal Balance of the Mortgage Loans in
such Mortgage Loan Group as of the Closing Date, and the denominator of which is
equal to the Aggregate Principal Balance for both Mortgage Loan Groups as of the
Closing Date; provided, that if on any Distribution Date, after giving effect to
all distributions on that Distribution Date, the Certificate Principal Balance
of the Certificates relating to any Mortgage Loan Group will be reduced to zero,
then the fraction described in this clause (x) for the other Mortgage Loan Group
for such Distribution Date and all subsequent Distribution Dates shall be equal
to 100% and (y) an amount computed as follows:
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(a) during the period commencing on the Closing Date and ending on
the later of (x) the thirtieth Distribution Date following the Closing Date and
(y) the date upon which the Aggregate Principal Balance for both Mortgage Loan
Groups is less than or equal to 50% of the Original Aggregate Principal Balance,
the greater of (i) the Base Specified Over-collateralization Amount, and (ii)
88.00% of the Delinquency Amount;
(b) thereafter, the greatest of:
(i) the product of 8.8% times the Aggregate Principal
Balance as of such determination date,
(ii) 88.00% of the Delinquency Amount,
(iii) 0.75% of the Original Aggregate Principal Balance,
or
(iv) the aggregate Principal Balance of the three
largest Mortgage Loans;
provided, however, that for any date occurring after the end
of the period in clause (a) above, if the average Delinquency
Ratio for the three calendar month period then most recently
ended exceeds 9.75%, the Specified Over-collateralization
Amount shall be no less than the Specified
Over-collateralization Amount as of the previous Distribution
Date; and provided, further that the Certificate Insurer may,
in its sole discretion, at the request of the Servicer, reduce
the Specified Over-collateralization Amount for the purpose of
reducing or eliminating, in whole or in part, its application
hereunder. The Trustee and the Rating Agencies shall be
notified in writing of any such modification prior to the
Distribution Date with respect to which such reduction is to
take effect, and such modification shall not take effect
unless each Rating Agency shall have confirmed that such
modification would not result in a reduction or withdrawal of
the then current ratings of the Certificates.
SPECIFIED RESERVE AMOUNT: Means, with respect to any
Distribution Date, the sum of (a) the Shortfall Amount with respect to both
Mortgage Loan Groups on that Distribution Date and (b) the excess, if any, of
(x) the Specified Over-collateralized Amount for both Mortgage Loan Groups and
such Distribution Date, over (y) the Over-collateralized Amount for both
Mortgage Loan Groups and for such Distribution Date.
STARTUP DAY: The day designated as such pursuant to Section
2.07(b) hereof.
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SUBSERVICERS: HomeAmerican Credit, Inc., d/b/a Upland
Mortgage, a Pennsylvania corporation, or its successor in interest and American
Business Mortgage Services, Inc., 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, a copy of which shall be delivered,
along with any modifications thereto, to the Trustee and the Certificate
Insurer.
SUBSTITUTION ADJUSTMENT: As to any date on which a
substitution occurs pursuant to Sections 2.06 or 3.03, 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.
SUPPLEMENTAL INTEREST PAYMENT ACCOUNT: The Eligible Account
established and maintained in accordance to Section 6.12.
SUPPLEMENTAL INTEREST PAYMENT AMOUNT AVAILABLE: The amount, if
any, on deposit in the Supplemental Interest Payment Account on any Distribution
Date.
SUPPLEMENTAL INTEREST RIGHT: The right of the Class A-2
Certificateholders to receive Class A-2 Available Funds Cap Carry-Forward
Amounts in accordance with Section 6.12.
SUPPLEMENTAL INTEREST TRUST: The trust established in
accordance with Section 6.12 to hold the Supplemental Interest Payment Account.
The Supplemental Interest Trust will not be an asset of any REMIC.
TAX MATTERS PERSON: The Person or Persons appointed pursuant
to Section 11.15 from time to time to act as the "tax matters person" (within
the meaning of the REMIC Provisions) for each of the REMICs created hereunder.
TAX RETURN: The federal income tax return on Internal Revenue
Service Form 1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax
Return," including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of each REMIC created hereunder due to its classification
as a REMIC under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provision of federal, state
or local tax laws.
TELERATE PAGE 3750: The display designated as Telerate Page
3750 on the Telerate Service (or such other page as may replace the Telerate
page on that service for the purpose of displaying London interbank offered
rates of major banks).
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TRANSFER: Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
TRANSFER AFFIDAVIT AND AGREEMENT: As defined in Section 4.02
(l)(ii).
TRANSFEREE: Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
TRANSFEROR: Any Person who is disposing by Transfer any
Ownership Interest in a Certificate.
TRUST: ABFS Mortgage Loan Trust 2001-2, the trust created
hereunder.
TRUSTEE: The Chase Manhattan Bank, a New York banking
corporation, or its successor-in-interest, or any successor trustee appointed as
herein provided.
TRUSTEE FEE: As to any Distribution Date, the fee payable to
the Trustee in respect of its services as Trustee that accrues at a monthly rate
equal to one-twelfth of 0.00625% on the Principal Balance of each Mortgage Loan
as of the immediately preceding Due Date.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the
Trustee or its designated agent pursuant to Section 2.05.
TRUSTEE'S REMITTANCE REPORT: As defined in Section 6.07.
TRUST FUND: The segregated pool of assets subject hereto,
constituting the trust created hereby and to be administered hereunder,
consisting of: (i) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all principal collected and interest due and accruing thereon after the related
Cut-Off Date, and any proceeds thereof; (ii) any REO Property, together with all
collections thereon and proceeds thereof; (iii) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof; 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; (v) the rights and remedies of the Trustee
against any Person making any representation or warranty to the Trustee
hereunder, to the extent provided herein; (vi) all rights of the Depositor under
the Unaffiliated Seller's Agreement; (vii) each Account and such assets that are
deposited therein from time to time and any investments thereof, together with
any and all income, proceeds and payments with respect thereto and (viii) all
proceeds of the foregoing.
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 12 preceding
Due Periods.
UNAFFILIATED SELLER: ABFS 2001-2, Inc.
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UNAFFILIATED SELLER'S AGREEMENT: The Unaffiliated Seller's
Agreement, dated as of the date hereof, 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.
UNDERWRITERS: The Representative and Xxxxxx Xxxxxxx & Co.
Incorporated.
UNDERWRITING AGREEMENT: The Underwriting Agreement, dated as
of June 8, 2001 between the Depositor and the Representative.
UNDERWRITING GUIDELINES: The underwriting guidelines of the
Originators, a copy of which is attached as an exhibit to the Unaffiliated
Seller's Agreement.
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, any state thereof or the District of
Columbia, an estate 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.
Section 1.02 Provisions of General Application. (a) All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
(b) The terms defined in this Article include the plural as well as the
singular.
(c) The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole. All references to Articles and
Sections shall be deemed to refer to Articles and Sections of this Agreement.
(d) Any reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
(e) All calculations of interest (other than with respect to the Mortgage
Loans) provided for herein shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All calculations of interest with respect to
any Mortgage Loan provided for herein shall be made in accordance with the terms
of the related Mortgage Note and Mortgage or, if such documents do not specify
the basis upon which interest accrues thereon, on the basis of a 360-day year
consisting of twelve 30-day months, to the extent permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the date such
payment is actually received by the Servicer, provided, however, that for
purposes of calculating distributions on the Certificates prepayments with
respect to any Mortgage Loan are deemed to be received on the date they are
applied in accordance with Accepted Servicing Practices consistent with the
terms of the related Mortgage Note and Mortgage to reduce the outstanding
principal balance of such Mortgage Loan on which interest accrues.
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Section 1.03 Business Day Certificate. On the Closing Date (with respect to
the calendar year 2001) and thereafter, within 15 days prior to the end of each
calendar year while this Agreement remains in effect (with respect to the
succeeding calendar years), the Servicer shall provide to the Trustee and the
Depositor a certificate of a Servicing Officer specifying the days on which
banking institutions in the State of Pennsylvania are authorized or obligated by
law, executive order or governmental decree to be closed.
ARTICLE II
ESTABLISHMENT OF THE TRUST
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 Establishment of the Trust. (a) The Depositor does hereby
establish, pursuant to the further provisions of this Agreement and the laws of
the State of New York, an express trust to be known, for convenience, as "ABFS
Mortgage Loan Trust 2001-2" and does hereby appoint The Chase Manhattan Bank as
Trustee in accordance with the provisions of this Agreement. Each Mortgage Loan
Group shall constitute a separate sub-trust of Trust.
(b) The Trust may perform the following permitted
activities:
(i) hold receivables transferred from the
Unaffiliated Seller and other passive assets
of the Trust, which assets can not be
contrary to the status of the Trust as a
qualified special purpose entity under
existing accounting literature, including
passive derivative financial instruments
that pertain to beneficial interests issued
or sold to parties other than the
Unaffiliated Seller, its affiliates or
agents;
(ii) issue Certificates and other interests in
the Trust;
(iii) receive collections and make payments on
such Certificates and interests in
accordance with the terms of this Agreement;
and
(iv) engage in other activities that are
necessary or incidental to accomplish these
limited purposes, which activities can not
be contrary to the status of the Trust as a
qualified special purpose entity under
existing accounting literature.
Section 2.02 Purchase and Sale of Mortgage Loans. The Depositor does hereby
sell, transfer, assign, set over and convey to the Trustee, on behalf of the
Trust, without recourse but subject to the terms and provisions of this
Agreement, all of the right, title and interest of the Depositor in and to the
Mortgage Loans, including the outstanding principal as of and interest due and
accruing after the Cut-off Date on such Mortgage Loans, and all other assets
included or to be included in the Trust Fund for the benefit of the
Certificateholders and the Certificate Insurer. In connection with such transfer
and assignment, and pursuant to Section 2.07 of the Unaffiliated Seller's
Agreement, the Depositor does hereby also irrevocably transfer, assign, set over
and otherwise convey to the Trustee, on behalf of the Trust, all of its rights
under the Unaffiliated Seller's 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, agreements and covenants of the Unaffiliated
Seller and the Originators contained in Sections 3.01, 3.02 and 3.03 of the
Unaffiliated Seller's Agreement.
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Section 2.03 [Reserved].
Section 2.04 Possession of Mortgage Files; Access to Mortgage Files. (a)
Upon the issuance of the Certificates, the ownership of each Mortgage Note, the
Mortgage and the contents of the related Mortgage File related to each Mortgage
Loan is vested in the Trustee for the benefit of the Certificateholders and the
Certificate Insurer.
(b) Pursuant to Section 2.05 of the Unaffiliated Seller's Agreement, the
Depositor has delivered or caused to be delivered to the Trustee's Mortgage File
related to each Mortgage Loan to the Trustee.
The Collateral Agent, on behalf of the Trustee, will be the custodian or
may, with the consent of the Certificate Insurer, enter into a custodial
agreement pursuant to which the Trustee will appoint a custodian (the
"Collateral Agent") to hold the Mortgage Files in trust for the benefit of all
present and future Certificateholders and the Certificate Insurer; provided,
however, that the custodian so appointed shall in no event be the Depositor or
the Servicer or any Person known to a Responsible Officer of the Trustee to be
an Affiliate of the Depositor or the Servicer and shall be approved by the
Certificate Insurer.
The Custodian shall afford the Depositor, the Certificate Insurer and the
Servicer reasonable access to all records and documentation regarding the
Mortgage Loans relating to this Agreement, such access being afforded upon
reasonable request and during normal business hours at the offices of the
Custodian at customary charges.
Section 2.05 Delivery of Mortgage Loan Documents. (a) In connection with
the transfer and assignment of the Mortgage Loans, the Depositor does hereby
with respect to the Mortgage Loans, deliver or cause to be delivered to the
Collateral Agent, on behalf of the Trustee the following documents or
instruments with respect to each Mortgage Loan so transferred or assigned:
(i) the original Mortgage Note, endorsed without recourse in blank by the
related Originator, including all intervening endorsements showing a complete
chain of endorsement;
(ii) the related Mortgage with evidence of recording indicated thereon or a
copy thereof certified by the applicable recording office;
36
(iii) the recorded Assignment of Mortgage, or copy thereof certified by the
applicable recording office, if any, showing a complete chain of assignment from
the originator of the related Mortgage Loan to the related Originator (which
assignment may, at such Originator's option, be combined with the assignment
referred to in subpart (iv) hereof);
(iv) an Assignment of Mortgage in recordable form (which, if acceptable for
recording in the relevant jurisdiction, may be included in a blanket assignment
or assignments) of each Mortgage from the related Originator to the Trustee;
(v) originals of all assumption, modification and substitution agreements
in those instances where the terms or provisions of a Mortgage or Mortgage Note
have been modified or such Mortgage or Mortgage Note has been assumed; and
(vi) an original title insurance policy (or (A) a copy of the title
insurance policy, or (B) a binder thereof or copy of such binder together with a
certificate from the related Originator that the original Mortgage has been
delivered to the title insurance company that issued such binder for
recordation).
In instances where the original recorded Mortgage and any original recorded
Assignment of Mortgage thereof pursuant to clause (iii) above cannot be
delivered by the Depositor to the Collateral Agent on behalf of the Trustee
prior to or concurrently with the execution and delivery of this Agreement, due
to a delay in connection with recording, the Depositor may:
(x) In lieu of delivering such original recorded Mortgage, deliver to the
Collateral Agent on behalf of the Trustee a copy thereof provided that the
related Originator certifies that the original Mortgage has been delivered to a
title insurance company for recordation after receipt of its policy of title
insurance or binder therefor; and
(y) In lieu of delivering the original recorded Assignment of Mortgage,
deliver to the Collateral Agent on behalf of the Trustee a copy of the
Assignment of Mortgage certified by the related Originator.
The Trustee shall promptly upon receipt thereof, with respect to each
Mortgage Note described in (i) above and each Assignment of Mortgage described
in (iv) above, endorse such Mortgage Note and Assignment of Mortgage as follows:
"The Chase Manhattan Bank, as Trustee under the Pooling and Servicing Agreement
dated as of June 1, 2001, ABFS Mortgage Loan Trust 2001-2."
As promptly as practicable, but in any event within thirty (30) days from
the Closing Date, the related Originator shall cause to be recorded, at the
related Originator's expense, in the appropriate public office for real property
records, the Assignments of Mortgages to the Trustee.
All original documents relating to the Mortgage Loans which are not
delivered to the Trustee, as permitted by Section 2.05(a) of the Unaffiliated
Seller's Agreement and this Section 2.05(a), are and shall be held by the
related Originator, the Unaffiliated Seller or the Servicer in trust for the
benefit of the Trustee on behalf of the Certificateholders.
37
(b) Within thirty (30) days following delivery of the Mortgage Files to the
Collateral Agent on behalf of the Trustee, the Collateral Agent will review each
Mortgage File to ascertain that all required documents set forth in Section
2.05(a) (other than clause (v) thereof) have been executed and received, and
that such documents relate to the Mortgage Loans identified on the Mortgage Loan
Schedule, and in so doing the Trustee may rely on the purported due execution
and genuineness of any signature thereon. If within such 30-day period (or, with
respect to any Qualified Substitute Mortgage Loan, within thirty (30) days after
the assignment thereof) the Collateral Agent on behalf of the Trustee finds any
document constituting a part of a Mortgage File not to have been executed or
received or to be unrelated to the Mortgage Loans identified in the Mortgage
Loan Schedule, the Collateral Agent shall promptly notify the Servicer, the
Trustee and the Certificate Insurer, and the Servicer shall have a period of
sixty (60) days after such notice within which to correct or cure any such
defect. Each original recorded Assignment of Mortgage shall be delivered to the
Trustee within ten (10) days following the date on which it is returned to the
Servicer by the office with which such Assignment of Mortgage was filed for
recording and within ten (10) days following receipt by the Trustee or the
Trustee shall review such Assignment of Mortgage to confirm the information
specified above with respect to the documents constituting the Mortgage File.
Upon receipt by the Trustee of the recorded assignment such recorded assignment
shall become part of the Mortgage File. The Trustee shall notify the Servicer of
any defect in such assignment based on such review. The Servicer shall have a
period of 60 days following such notice to correct or cure such defect. In the
event that the Servicer fails to record an Assignment of Mortgage as herein
provided the Trustee shall, at the Servicer's expense, use reasonable efforts to
prepare and, if required hereunder, file such assignments for recordation in the
appropriate real property or other records and the Servicer hereby appoints the
Trustee as its attorney-in-fact with full power and authority acting in its
stead for the purpose of such preparation, execution and filing.
(c) It is intended that the conveyance of the Mortgage Loans and other
property by the Depositor to the Trustee as provided in this Section 2.05 and
Section 2.02 be, and be construed as, a sale of the Mortgage Loans and such
other property by the Depositor to the Trustee for the benefit of the
Certificateholders. It is, further, not intended that such conveyance be deemed
a pledge of the Mortgage Loans or such other property by the Depositor to the
Trustee to secure a debt or other obligation of the Depositor. However, in the
event that the Mortgage Loans or any of such other property are held to be
property of the Depositor, or if for any reason this Agreement is held or deemed
to create a security interest in the Mortgage Loans or any of such other
property, then it is intended that: (i) this Agreement shall also be deemed to
be a security agreement within the meaning of the Uniform Commercial Code; (ii)
the conveyance provided for in this Section shall be deemed to be a grant by the
Depositor to the Trustee of a security interest in all of the Depositor's right,
title and interest in and to the Mortgage Loans, the Trust Fund and such other
property and all amounts payable to the holders of the Mortgage Loans in
accordance with the terms thereof and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities or other
property, including, without limitation, all amounts from time to time held or
invested in the Distribution Accounts, whether in the form of cash, instruments,
securities or other property; (iii) the possession by the Trustee or its agent
of the Mortgage Notes and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to the Uniform Commercial Code; and (iv) notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from financial intermediaries,
bailees or agents (as applicable) of the Trustee for the purpose of perfecting
such security interest under applicable law. The Depositor and the Trustee
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, the Trust Fund or any of such other property,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of this Agreement.
38
(d) Without diminution of the requirements of Sections 2.04(c) and this
Section 2.05, all original documents relating to the Mortgage Loans that are not
delivered to the Trustee, are and shall be held by the Servicer in trust for the
benefit of the Trustee on behalf of the Certificateholders and the Certificate
Insurer. In the event that any such original document is required pursuant to
the terms of this Section 2.05 to be a part of a Mortgage File, such document
shall be delivered promptly to the Trustee pursuant to the Unaffiliated Seller's
Agreement. In acting as custodian of any such original document, the Servicer
agrees further that it does not and will not have or assert any beneficial
ownership interest in the Mortgage Loans or the Mortgage Files. Promptly upon
the Depositor's and the Trust's acquisition thereof and the Servicer's receipt
thereof, the Servicer on behalf of the Trust shall xxxx conspicuously each
original document not delivered to the Trustee, and the Unaffiliated Seller's
master data processing records evidencing each Mortgage Loan with a legend,
acceptable to the Trustee, evidencing that the Trust has purchased the Mortgage
Loans and all right and title thereto and interest therein pursuant to the
Unaffiliated Seller's Agreement and this Agreement.
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee. (a) The Trustee, agrees to execute and
deliver to the Depositor, the Certificate Insurer, the Servicer and the
Unaffiliated Seller on or prior to the Closing Date an acknowledgment of receipt
of the Certificate Insurance Policy, in a form attached as Exhibit G hereto,
and, on or prior to the Closing Date, with respect to each Mortgage Loan
transferred on such date, the original Mortgage Note (with any exceptions
noted), in the form attached as Exhibit Q hereto and declares that it will hold
such documents and any amendments, replacements or supplements thereto, as well
as any other assets included in the definition of Trust Fund and delivered to
the Trustee, as Trustee in trust upon and subject to the conditions set forth
herein for the benefit of the Certificateholders and the Certificate Insurer.
The Collateral Agent agrees, for the benefit of the Certificateholders and the
Certificate Insurer, to review (or cause to be reviewed) each Trustee's Mortgage
File within thirty (30) days after the Closing Date, and to deliver to the
Unaffiliated Seller, the Servicer, the Depositor and the Certificate Insurer a
certification in the form attached hereto as Exhibit I to the effect that, as to
each Mortgage Loan listed in the related Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), (i) all documents required
to be delivered to it pursuant to Section 2.05 (other than the items listed in
clause (a)(v) thereof) are in its possession, (ii) each such document has been
reviewed by it and has not been mutilated, damaged, torn or otherwise physically
altered (handwritten additions, changes or corrections shall not constitute
physical alteration if initialed by the Mortgagor), appears regular on its face
and relates to such Mortgage Loan, and (iii) based on its examination and only
as to the foregoing documents, the information set forth on the Mortgage Loan
Schedule as to the information set forth in (i), (ii), (v) and (vi) of the
definition of "Mortgage Loan Schedule" set forth herein accurately reflects the
information set forth in the Trustee's Mortgage File delivered on such date. The
Trustee shall be under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, or appropriate for the represented purpose or that
they are other than what they purport to be on their face.
39
(b) Within ninety (90) days of the Closing Date, with respect to the
Mortgage Loans transferred on such date; the Trustee shall deliver (or cause to
be delivered) to the Servicer, the Unaffiliated Seller, the Depositor, the
Rating Agencies and the Certificate Insurer a final certification in the form
attached hereto as Exhibit G to the effect that, as to each Mortgage Loan listed
in the related Mortgage Loan Schedule (other than any Mortgage Loan paid in full
or any Mortgage Loan specifically identified in such certification as not
covered by such certification), (i) all documents required to be delivered to it
pursuant to Section 2.05 (other than the items listed in clause (a)(v) thereof)
are in its possession, (ii) each such document has been reviewed by it and has
not been mutilated, damaged, torn or otherwise physically altered (handwritten
additions, changes or corrections shall not constitute physical alteration if
initialed by the Mortgagor), appears regular on its face and relates to such
Mortgage Loan, and (iii) based on its examination and only as to the foregoing
documents, the information set forth in (i), (ii), (v) and (vi) of the
definition of "Mortgage Loan Schedule" set forth herein accurately reflects the
information set forth in the Trustee's Mortgage File delivered on such date.
(c) If the Trustee during the process of reviewing the Trustee's Mortgage
Files finds any document constituting a part of a Trustee's Mortgage File which
is not executed, has not been received, is unrelated to the Mortgage Loan
identified in the related Mortgage Loan Schedule, or does not conform to the
requirements of Section 2.05 or the description thereof as set forth in the
related Mortgage Loan Schedule, the Trustee or the Certificate Insurer, as
applicable, shall promptly so notify the Servicer, the Unaffiliated Seller and
the Certificate Insurer. In performing any such review, the Trustee may
conclusively rely on the Unaffiliated Seller as to the purported genuineness of
any such document and any signature thereon. It is understood that the scope of
the Trustee's review of the Mortgage Files is limited solely to confirming that
the documents listed in Section 2.05 (other than those listed in clause (v)
thereof) have been executed and received and relate to the Mortgage Files
identified in the related Mortgage Loan Schedule. The Trustee shall have no
responsibility for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form, whether any document has been recorded in accordance with the requirements
of any applicable jurisdiction, or whether a blanket assignment is permitted in
any applicable jurisdiction. Pursuant to the Unaffiliated Seller's Agreement,
the Unaffiliated Seller and the Originators have agreed to use reasonable
efforts to cause to be remedied a material defect in a document constituting
part of a Mortgage File of which it is so notified by the Trustee. If, however,
within sixty (60) days after the Trustee's notice to it respecting such defect
the Unaffiliated Seller has not caused to be remedied the defect and the defect
materially and adversely affects the value of, or the interest of the
Certificateholders in the related Mortgage Loan or the interests of the
Certificate Insurer, the Unaffiliated Seller and the Originators will be
obligated, pursuant to the Unaffiliated Seller's Agreement, to either (i)
substitute in lieu of such Mortgage Loan a Qualified Substitute Mortgage Loan in
the manner and subject to the conditions set forth in Section 3.03 or (ii)
purchase such Mortgage Loan at a purchase price equal to the Principal Balance
of such Mortgage Loan as of the date of purchase, plus all accrued and unpaid
interest on such Principal Balance computed at the Mortgage Interest Rate, net
of the Servicing Fee if the Unaffiliated Seller or an Originator, as applicable,
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 Remittance
Date, after deducting therefrom any amounts received in respect of such
repurchased Mortgage Loan or Loans and being held in the Collection Account for
future distribution to the extent such amounts have not yet been applied to
principal or interest on such Mortgage Loan (the "Loan Repurchase Price"). 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 Remittance Date.
40
(d) Upon receipt by the Trustee of a certification of a Servicing Officer
of such substitution or purchase and, in the case of a substitution, upon
receipt of the related Trustee's Mortgage File, and the deposit of the amounts
described above in the Collection Account (which certification shall be in the
form of Exhibit J hereto), the Trustee shall release to the Servicer for release
to the Unaffiliated Seller the related Trustee's Mortgage File and shall
execute, without recourse, and deliver such instruments of transfer furnished by
the Unaffiliated Seller as may be necessary to transfer such Mortgage Loan to
the Unaffiliated Seller. The Trustee shall notify the Certificate Insurer if the
Unaffiliated Seller fails to repurchase or substitute for a Mortgage Loan in
accordance with the foregoing.
Section 2.07 Designations under REMIC Provisions; Designation of Startup
Day. (a) REMIC I will consist of all of the assets of the Trust Fund and will be
evidenced by the Class I-1 Interest, Class I-2 Interest, Class I-3 Interest and
Class I-4 Interest (the "REMIC I Regular Interests") which will be
uncertificated and will represent the "regular interests" in REMIC I. REMIC II
will consist of the REMIC I Regular Interests and will be evidenced by the Class
II-1 Interest, Class II-2 Interest and Class II-3 Interest (the "REMIC II
Regular Interests") which will be uncertificated and will represent the "regular
interests" in REMIC II. REMIC III will consist of the REMIC II Regular Interests
and will be evidenced by the Class III-A-1 Interest, Class III-Accrual I
Interest, Class III-A-2 Interest, Class III-A-3 Interest, Class III-A-4
Interest, Class III-Accrual II and III-A-IO Interest (the "REMIC III Regular
Interests") which will be uncertificated and will represent "regular interests"
in REMIC III. The Class R-I Interest, Class R-II Interest and Class R-III
Interest will represent the sole class of residual interest in each of REMIC I,
REMIC II and REMIC III, respectively. The Trustee will hold the REMIC I Regular
Interests, REMIC II Regular Interests and REMIC III Regular Interests. The
Master REMIC will consist of the REMIC III Regular Interests and will be
evidenced by the Class A-1, Class A-2 (other than the Class A-2 Supplemental
Interest Right), Class A-3, Class A-4, Class A-IO and Class X Certificates
(which will represent the "regular interests" in the Master REMIC) and the Class
R-IV Interest as the single "residual interest" in the Master REMIC. The Class R
Certificates will represent the beneficial ownership of the Class R-I, R-II,
R-III and R-IV Interests.
41
(i) The following table sets forth characteristics of the Certificates,
each of which, except for the Class R Certificates, is hereby designated as a
"regular interest" in the Master REMIC:
---------------------------------------------------------------------------------------------------------------
Original Certificate
Principal Pass-Through
Balance Rate
------------------------------ ------------------------------------ -------------------------------------------
Class A-1 $275,000,000 6.34%(1)
------------------------------ ------------------------------------ -------------------------------------------
Class A-2(2) $32,798,000 (3)
------------------------------ ------------------------------------ -------------------------------------------
Class A-3 $23,278,000 5.82%
------------------------------ ------------------------------------ -------------------------------------------
Class A-4 $23,924,000 6.99%(4)
------------------------------ ------------------------------------ -------------------------------------------
Class A-IO (5) 8.00%
------------------------------ ------------------------------------ -------------------------------------------
Class X (6) (7)
------------------------------ ------------------------------------ -------------------------------------------
Class R (8) (8)
---------------------------------------------------------------------------------------------------------------
(1) 6.84% for each Distribution Date after the Clean Up Call Date.
(2) The Class A-2 Certificate represents two separate investments: (i) the
Class A-2 Certificates without the Class A-2 Supplemental Interest Right (the
"Class A-2 Regular Interest") and (ii) the Class A-2 Supplemental Interest
Right. Only the first investment, the Class A-2 Regular Interest, will be
treated as a regular interest in the Master REMIC.
(3) Class A-2 Pass-Through Rate.
(4) 7.49% for each Distribution Date after the Clean Up Call Date.
(5) On each Distribution Date up to and including the Distribution Date in
December, 2003, the Class A-IO Certificates will have a notional balance equal
to the notional balance of the Class III A-IO Interest, and for each
Distribution Date thereafter, $0.
(6) The Class X Certificates will be comprised of two components, the Class
PO Component and Class IO Component, each of which is hereby designated a REMIC
regular interest for federal income tax purposes. The Class PO Component will
have a principal balance equal to the excess of the principal balance of the
Mortgage Loans over the sum of the principal balances of the Master REMIC
Regular Interests. The Class IO Component will have a notional principal balance
equal to the aggregate principal balance of the Mortgage Loans.
(7) The pass-through rate in respect of the Class IO Component will be the
excess of: (i) the weighted average of Class II-1 and Class II-2 over (ii) the
product of: (A) two and (B) the weighted average pass-through rate of the REMIC
III Regular Interests (other than the Class III-AIO Interest), where Class
III-Accrual I and Class III-Accrual II are each subject to a cap equal to zero
and the Class III-A-1, Class III-A-2, Class III-A-3 and III-A-4 are each subject
to a cap equal to the pass-through rate on its Corresponding Class.
42
(8) The Class R Certificates will represent the beneficial ownership of the
R-I, R-II, R-III and R-IV Interests.
(ii) The REMIC III Regular Interests shall have the following principal
balances, pass-through rates and Corresponding Classes of Certificates in the
manner set forth in the following table:
-----------------------------------------------------------------------------------------------------------------
Corresponding
REMIC Initial Interest Class of Master
Interests Balance Rate REMIC Interest
------------------------ --------------------------------- ------------------------- ----------------------------
III-A-1 50% of the Corresponding Class 100% of the A-1
balance Class II-1 rate
------------------------ --------------------------------- ------------------------- ----------------------------
III-Accrual I 50% of the Aggregate Principal 100% of the N/A
Balance for Mortgage Loan Group Class II-1 rate
I plus 50% of the
Over-collateralization Amount
for Mortgage Loan Group I
------------------------ --------------------------------- ------------------------- ----------------------------
III-A-2 50% of the Corresponding Class 100% of the A-2
balance Class II-2 rate
------------------------ --------------------------------- ------------------------- ----------------------------
III-A-3 50% of the Corresponding Class 100% of the A-3
balance Class II-2 rate
------------------------ --------------------------------- ------------------------- ----------------------------
III-A-4 50% of the Corresponding Class 100% of the A-4
balance Class II-2 rate
------------------------ --------------------------------- ------------------------- ----------------------------
III-Accrual II 50% of the Aggregate Principal 100% of the N/A
Balance for Mortgage Loan Group Class II-2 rate
II plus 50% of the Over-
collateralization Amount
for Mortgage Loan Group II
------------------------ --------------------------------- ------------------------- ----------------------------
III-A-IO a notional balance equal to the 8.00% A-IO
Class II-3 notional balance
-----------------------------------------------------------------------------------------------------------------
On each Distribution Date, 50% of the increase in the Over-collateralized
Amount for Mortgage Loan Group I will be payable as a reduction of the principal
balance of Class III-A-I and will be accrued and added to the principal balance
of Class III-Accrual I. On each Distribution Date, the increase in the principal
balance of Class III-Accrual I may not exceed interest accruals for such
Distribution Date for Class III-Accrual I. In the event that (i) 50% of the
increase in the Over-collateralized Amount for Mortgage Loan Group I exceeds
(ii) interest accruals on Class III-Accrual I for such Distribution Date, the
excess for such Distribution Date (accumulated with all such excesses for all
prior Distribution Dates) will be added to any increase in the
Over-collateralized Amount for Mortgage Loan Group I for purposes of determining
the amount of interest accrual on Class III-Accrual I payable as principal on
Class III-Accrual I on the next Distribution Date pursuant to the first sentence
of this paragraph.
43
All payments of scheduled principal and prepayments of principal generated
by the Mortgage Loans in Mortgage Loan Group I shall be allocated 50% to Class
III-Accrual I, and 50% to Class III-A-1, until paid in full. Notwithstanding the
above, principal payments allocated to the Class X Certificates that result in
the reduction in the Over-collateralized Amount for Mortgage Loan Group I shall
be allocated to Class III-Accrual I (until paid in full). Liquidated Loan Losses
for Mortgage Loan Group I shall be applied so that after all distributions have
been made on each Distribution Date the principal balance of Class III-A-I is
equal to 50% of the principal balance of its Corresponding Class and Class
III-Accrual I is equal to 50% of the Aggregate Principal Balance of Mortgage
Loan Group I plus 50% of the Over-collateralized Amount for Mortgage Loan Group
I.
On each Distribution Date, 50% of the increase in the Group 2
Over-collateralization Amount for Mortgage Loan Group II will be payable as a
reduction of the principal balances of Class III-A-2, Class III-A-3 and Class
III-A-4 (in the order and amount of such reduction to the principal balance of
each classes' Corresponding Class) and will be accrued and added to the
principal balance of Class III-Accrual II. On each Distribution Date, the
increase in principal balance of Class III-Accrual II may not exceed interest
accruals for such Distribution Date for Class III-Accrual II. In the event that
(i) 50% of the increase in the Over-collateralization Amount for Mortgage Loan
Group II exceeds (ii) interest accruals on Class III-Accrual II for such
Distribution Date, the excess for such Distribution Date (accumulated with all
such excesses for all prior Distribution Dates) will be added to any increase in
the Over-collateralization Amount for Mortgage Loan Group II for purposes of
determining the amount of interest accrual on Class III-Accrual II payable as
principal on Class III-Accrual II on the next Distribution Date pursuant to the
first sentence of this paragraph.
All payments of scheduled principal and prepayments of principal generated
by the Mortgage Loans in Mortgage Loan Group II shall be allocated 50% to Class
III-Accrual II and 50% to Class III-A-2, Class III-A-3 and Class III-A-4 (in the
order and amount of reductions to the principal balances of each classes'
Corresponding Class) until paid in full. Notwithstanding the above, principal
payments allocated to the Class X Certificates that result in the reduction of
the Over-collateralization Amount for Mortgage Loan Group II shall be allocated
to Class III-Accrual II (until paid in full). Liquidated Loan Losses for
Mortgage Loan Group II shall be applied so that after all distributions have
been made on each Distribution Date the principal balances of Class III-A-2,
Class III-A-3 and Class III-A-4 are each equal to 50% of the principal balance
of its Corresponding Class and Class III-Accrual II is equal to 50% or the
Aggregate Principal Balance for Mortgage Loan Group II plus 50% of the
Over-collateralization Amount for Mortgage Loan Group II.
(iii) The REMIC II Regular Interests shall have the following principal
balances, pass-though rates and Corresponding Classes of Certificates in the
manner set forth in the following table:
44
----------------------------------------------------------------------------------------------------------------------
REMIC Interests Initial Balance Interest Rate Corresponding Class
------------------------------- ---------------------------- ---------------------------- ----------------------------
II-1 $275,000,000 (1) N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
II-2 $80,000,000 (2) N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
II-3 (3) 8.00% A-IO
----------------------------------------------------------------------------------------------------------------------
(1) On each Distribution Date up to and including the Distribution Date in
December 2003, a rate equal to the weighted average of the interest rates on
Class I-1 and Class I-2, where the rate on Class I-2 is first reduced by 8.00%.
On each Distribution Date thereafter, a rate equal to the weighted average of
the interest rates on Class I-1 and Class I-2.
(2) On each Distribution Date up to and including the Distribution Date in
December 2003, a rate equal to the weighted average of the interest rates on
Class I-3 and Class I-4, where the rate on Class I-3 is first reduced by 8.00%.
On each Distribution Date thereafter, a rate equal to the weighted average of
the interest rates on Class I-3 and Class I-4.
(3) On each Distribution Date up to and including the Distribution Date in
December 2003, a notional balance equal to the lesser of $35,500,000 and the
outstanding Aggregate Principal Balance of the Mortgage Loan Groups as of the
first day of the previous calendar month. On each Distribution Date thereafter,
zero.
(iv) The REMIC I Regular Interests shall have the following principal
balances, pass-through rates and Corresponding Classes of Certificates in the
manner set forth in the following table:
----------------------------------------------------------------------------------------------------------------
Corresponding
REMIC Initial Interest Class of Master
Interests Balance Rate REMIC Interest
------------------------ ----------------------------- ---------------------------- ----------------------------
I-1 $247,500,000 Net WAC of Mortgage Loan N/A
Group I
------------------------ ----------------------------- ---------------------------- ----------------------------
I-2 $27,500,000 (1) N/A
------------------------ ----------------------------- ---------------------------- ----------------------------
I-3 $8,000,000 (1) N/A
------------------------ ----------------------------- ---------------------------- ----------------------------
I-4 $72,000,000 Net WAC of Mortgage Loan N/A
Group II
----------------------------------------------------------------------------------------------------------------
---------------
(1) aggregate Net WAC for both Mortgage Loan Groups.
On each Distribution Date, all Liquidated Loan Losses for Mortgage Loan
Group I, prepayments and payments of scheduled principal will be allocated to
Class I-1 until such class is paid in full or eliminated by such losses,
thereafter all additional Liquidated Loan Losses for Mortgage Loan Group I,
prepayments and payments of scheduled principal will be allocated to Class I-2.
On each Distribution Date all Liquidated Loan Losses for Mortgage Loan Group II,
prepayments, and payments of scheduled principal will be allocated to Class I-4
until such class is paid in full or eliminated by such losses, thereafter all
additional Liquidated Loan Losses for Mortgage Loan Group II, prepayments, and
payments of scheduled principal will be allocated to Class I-3.
45
(b) The Closing Date will be the "startup day" of each REMIC created
hereunder within the meaning of Section 860G(a)(9) of the Code.
Section 2.08 Execution of Certificates. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the delivery of the Trustee's
Mortgage Files relating thereto to it and, concurrently with such delivery, has
executed, authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, the Trustee's Mortgage Files and the other
assets included in the definition of Trust Fund, Certificates duly authenticated
by the Trustee in Authorized Denominations evidencing the entire ownership of
the Trust Fund.
Section 2.09 Application of Principal and Interest. In the event that Net
Liquidation Proceeds on a Liquidated Mortgage Loan are less than the Principal
Balance of the related Mortgage Loan plus accrued interest thereon, or any
Mortgagor makes a partial payment of any Monthly Payment due on a Mortgage Loan,
such Net Liquidation Proceeds or partial payment shall be applied as provided in
the related Mortgage Note, and if not so provided, first to interest accrued at
the Mortgage Interest Rate and then to principal.
Section 2.10 Grant of Security Interest. (a) Except with respect to the
REMIC Provisions, it is the intention of the parties hereto that the conveyance
by the Depositor of the Trust Fund to the Trustee on behalf of the Trust shall
constitute a purchase and sale of such Trust Fund and not a loan. In the event,
however, that a court of competent jurisdiction were to hold that the
transaction evidenced hereby constitutes a loan and not a purchase and sale, it
is the intention of the parties hereto that this Agreement shall constitute a
security agreement under applicable law, and that the Depositor shall be deemed
to have granted to the Trustee, on behalf of the Trust, a first priority
perfected security interest in all of the Depositor's right, title and interest
in, to and under the Trust Fund. The conveyance by the Depositor of the Trust
Fund to the Trustee on behalf of the Trust shall not constitute and is not
intended to result in an assumption by the Trustee or any Certificateholder of
any obligation of the Unaffiliated Seller or any other Person in connection with
the Trust Fund.
(b) The Depositor and the Servicer shall take no action inconsistent with
the Trust's ownership of the Trust Fund and each shall indicate or shall cause
to be indicated in its records and records held on its behalf that ownership of
each Mortgage Loan and the assets in the Trust Fund are held by the Trustee on
behalf of the Trust. In addition, the Depositor and the Servicer shall respond
to any inquiries from third parties with respect to ownership of a Mortgage Loan
or any other asset in the Trust Fund by stating that it is not the owner of such
asset and that ownership of such Mortgage Loan or other Trust Fund asset is held
by the Trustee on behalf of the Trust.
Section 2.11 Further Action Evidencing Assignments. (a) The Servicer agrees
that, from time to time, at its expense, it shall cause the Unaffiliated Seller
(and the Depositor on behalf of itself also agrees that it shall), promptly to
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or appropriate, or that the Servicer, the
Certificate Insurer or the Trustee may reasonably request, in order to perfect,
protect or more fully evidence the transfer of ownership of the Trust Fund or to
enable the Trustee to exercise or enforce any of its rights hereunder. Without
limiting the generality of the foregoing, the Servicer and the Depositor will,
upon the request of the Servicer, the Certificate Insurer or the Trustee,
execute and file (or cause to be executed and filed) such real estate filings,
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate.
46
(b) The Depositor hereby grants to the Servicer and the Trustee powers of
attorney to execute all documents on its behalf under this Agreement and the
Unaffiliated Seller's Agreement as may be necessary or desirable to effectuate
the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Servicer and the Unaffiliated Seller.
The Servicer and the Unaffiliated Seller hereby represent and warrant to the
Trustee, the Depositor, the Certificate Insurer and the Certificateholders as of
the Closing Date and during the term of this Agreement that:
(a) Each of the Unaffiliated Seller, the Servicer and the Subservicers is a
corporation duly organized, validly existing and in good standing under the laws
of their respective states of incorporation and has the corporate power to own
its assets and to transact the business in which it is currently engaged. Each
of the Unaffiliated Seller, the Servicer and the Subservicers is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it or the performance of its obligations hereunder
requires such qualification and in which the failure so to qualify could
reasonably be expected to have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Unaffiliated
Seller, the Servicer or the Subservicers or the performance of their respective
obligations hereunder;
(b) The Unaffiliated Seller and the Servicer each has the power and
authority to make, execute, deliver and perform this Agreement and all of the
transactions contemplated under this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Unaffiliated Seller and the Servicer,
enforceable in accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting the rights of creditors generally and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(c) Neither the Unaffiliated Seller nor the Servicer is required to obtain
the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency which consent already has not been obtained in
connection with the execution, delivery, performance, validity or enforceability
of this Agreement, except such as have been obtained prior to the Closing Date;
(d) The execution, delivery and performance of this Agreement by the
Unaffiliated Seller and the Servicer will not violate any provision of any
existing law or regulation or any order or decree of any court or the Articles
of Incorporation or Bylaws of the Unaffiliated Seller or the Servicer,
respectively, or constitute a breach of any mortgage, indenture, contract or
other agreement to which the Unaffiliated Seller or the Servicer, respectively,
is a party or by which it may be bound;
47
(e) There is no action, suit, proceeding or investigation pending or
threatened against the Servicer, the Unaffiliated Seller or the Subservicers
which, either in any one instance or in the aggregate, is, likely to result in
any material adverse change in the business, operations, financial condition,
properties, or assets of the Servicer, the Unaffiliated Seller or the
Subservicers, or in any material impairment of the right or ability of any of
them to carry on its business substantially as now conducted, or in any material
liability on the part of any of them, or which would draw into question the
validity of this Agreement, the Certificates, or the Mortgage Loans or of any
action taken or to be taken in connection with the obligations of the
Unaffiliated Seller or the Servicer contemplated herein or therein, or which
would be likely to impair materially the ability of the Unaffiliated Seller or
the Servicer to perform its obligations hereunder;
(f) Neither this Agreement nor any statement, report, or other document
furnished or to be furnished by the Servicer, the Unaffiliated Seller or the
Subservicer pursuant to this Agreement, or the Insurance and Reimbursement
Agreement or in connection with the transactions contemplated hereby, including,
without limitation, the sale or placement of the Certificates, contains any
untrue statement of fact provided by or on behalf of the Unaffiliated Seller or
the Servicer or omits to state a fact necessary to make the statements provided
by or on behalf of the Unaffiliated Seller or the Servicer contained herein or
therein not misleading:
(g) Neither the Unaffiliated Seller nor the Servicer believes, nor does
either have any reason or cause to believe, that it cannot perform each and
every covenant contained in this Agreement;
(h) The transfer, assignment, and conveyance of the Mortgage Loans by the
Unaffiliated Seller pursuant to this Agreement is not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(i) The Unaffiliated Seller is solvent and will not as a result of this
Agreement and the undertakings of the Unaffiliated Seller hereunder be rendered
insolvent; and
(j) None of the Unaffiliated Seller, the Servicer or the Subservicers is an
"investment company" or a company "controlled by an investment company," within
the meaning of the Investment Company Act of 1940, as amended.
(k) Immediately prior to the transfer and assignment by the Depositor to
the Trustee, the Depositor had good title to, and was the sole owner of each
Mortgage Loan, free of any interest of any other Person, and the Depositor has
transferred all right, title and interest in each Mortgage Loan to the Trustee.
The transfer of the Mortgage Note and the Mortgage as and in the manner
contemplated by this Agreement is sufficient either (i) fully to transfer to the
Trustee, for the benefit of the Certificateholders and the Certificate Insurer,
all right, title, and interest of the Depositor thereto as note holder and
mortgagee or (ii) to grant to the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, the security interest referred
to in Section 2.10 hereof. The Mortgage has been duly assigned and the Mortgage
Note has been duly endorsed. The Assignment of Mortgage delivered to the Trustee
pursuant to Section 2.05(a)(iv) is in recordable form and is acceptable for
recording under the laws of the applicable jurisdiction. The endorsement of the
Mortgage Note, the delivery to the Trustee of the endorsed Mortgage Note, and
such Assignment of Mortgage, and the delivery of such Assignment of Mortgage for
recording to, and the due recording of such Assignment of Mortgage in, the
appropriate public recording office in the jurisdiction in which the Mortgaged
Property is located are sufficient to permit the Trustee to avail itself of all
protection available under applicable law against the claims of any present or
future creditors of the Depositor, and are sufficient to prevent any other sale,
transfer, assignment, pledge, or hypothecation of the Mortgage Note and Mortgage
by the Depositor from being enforceable.
48
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.01 shall survive the delivery of the
respective Mortgage Files to the Trustee or to a custodian, as the case may be,
and inure to the benefit of the Trustee and the Certificate Insurer.
Section 3.02 Representations, Warranties and Covenants of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee and the
Certificate Insurer that as of the date of this Agreement or as of such date
specifically provided herein:
(a) The Depositor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(b) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the
Servicer and the Trustee, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except as have been made on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby or thereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement, (i) conflicts or
will conflict with or results or will result in a breach of, or constitutes or
will constitute a default or results or will result in an acceleration under (A)
the charter or bylaws of the Depositor, or (B) of any term, condition or
provision of any material indenture, deed of trust, contract or other agreement
or instrument to which the Depositor or any of its subsidiaries is a party or by
which it or any of its subsidiaries is bound; (ii) results or will result in a
violation of any law, rule, regulation, order, judgment or decree applicable to
the Depositor of any court or governmental authority having jurisdiction over
the Depositor or its subsidiaries; or (iii) results in the creation or
imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans;
49
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement; and
(g) The Depositor is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency that may materially and adversely affect its performance
hereunder.
(h) Immediately prior to the transfer and assignment by the Depositor to
the Trustee, the Depositor had good title to, and was the sole owner of each
Mortgage Loan, free of any interest of any other Person, and the Depositor has
transferred all right, title and interest in each Mortgage Loan to the Trustee.
The transfer of the Mortgage Note and the Mortgage as and in the manner
contemplated by this Agreement is sufficient either (i) fully to transfer to the
Trustee, for the benefit of the Certificateholders and the Certificate Insurer,
all right, title, and interest of the Depositor thereto as note holder and
mortgagee or (ii) to grant to the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, the security interest referred
to in Section 2.10 hereof. The Mortgage has been duly assigned and the Mortgage
Note has been duly endorsed. The Assignment of Mortgage delivered to the Trustee
pursuant to Section 2.05(a)(iv) is in recordable form and is acceptable for
recording under the laws of the applicable jurisdiction. The endorsement of the
Mortgage Note, the delivery to the Trustee of the endorsed Mortgage Note, and
such Assignment of Mortgage, and the delivery of such Assignment of Mortgage for
recording to, and the due recording of such Assignment of Mortgage in, the
appropriate public recording office in the jurisdiction in which the Mortgaged
Property is located are sufficient to permit the Trustee to avail itself of all
protection available under applicable law against the claims of any present or
future creditors of the Depositor, and are sufficient to prevent any other sale,
transfer, assignment, pledge, or hypothecation of the Mortgage Note and Mortgage
by the Depositor from being enforceable.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02 shall survive delivery of the
respective Mortgage Files to the Trustee or to a custodian, as the case may be,
and shall inure to the benefit of the Trustee and the Certificate Insurer.
Section 3.03 Purchase and Substitution. (a) It is understood and agreed
that the representations and warranties set forth in Sections 3.01, 3.02 and
3.03 of the Unaffiliated Seller's Agreement shall survive delivery of the
Certificates to the Certificateholders. Pursuant to the Unaffiliated Seller's
Agreement, with respect to any representation or warranty contained in Sections
3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement that is made to the
best of the Unaffiliated Seller's knowledge, the Unaffiliated Seller shall be
deemed to have knowledge of all facts and circumstances in existence as of such
date and, if it is discovered by the Servicer, any Subservicer, the Trustee, the
Certificate Insurer or any Certificateholder that the substance of such
representation and warranty was inaccurate as of the Closing Date and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan or the interests of the Trustee or the Certificate Insurer with respect
thereto, then notwithstanding the Unaffiliated Seller's lack of knowledge with
respect to the inaccuracy at the time the representation or warranty was made,
such inaccuracy shall be deemed a breach of the applicable representation or
warranty. Upon discovery by the Unaffiliated Seller, the Servicer, any
Subservicer, the Trustee or the Certificate Insurer of a breach of any of such
representations and warranties which materially and adversely affects the value
of the Mortgage Loans or the interest of the Trustee, the Certificateholders or
the Certificate Insurer, or which materially and adversely affects the interests
of the Trustee, the Certificate Insurer or the Certificateholders in the related
Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan (notwithstanding that such representation and warranty
was made to the Unaffiliated Seller's best knowledge), the party discovering
such breach shall promptly (and in any event within five (5) Business Days of
the discovery) give written notice to the others. Subject to the last paragraph
of this Section 3.03, within sixty (60) days of the earlier of its discovery or
its receipt of notice of any breach of a representation or warranty, pursuant to
the Unaffiliated Seller's Agreement, the Servicer shall, or shall cause the
Unaffiliated Seller or an Originator to (a) promptly cure such breach in all
material respects, or (b) purchase such Mortgage Loan on the next succeeding
Servicer Remittance Date, by depositing an amount equal to the Loan Repurchase
Price into the Collection Account, or (c) remove such Mortgage Loan from the
Trust Fund (in which case it shall become a Deleted Mortgage Loan) and
substitute one or more Qualified Substitute Mortgage Loans; provided, that, such
substitution is effected not later than the date which is two years after the
Startup Day or at such later date, if the Trustee and the Certificate Insurer
receive an Opinion of Counsel to the effect set forth below in this Section. In
addition, pursuant to the Unaffiliated Seller's Agreement, the Unaffiliated
Seller and the related Originator shall be obligated to indemnify the Trustee,
the Certificateholders and the Certificate Insurer for any third party claims
arising out of a breach by the Unaffiliated Seller of representations or
warranties regarding the Mortgage Loans. Pursuant to the Unaffiliated Seller's
Agreement any such substitution shall be accompanied by payment by the
Unaffiliated Seller of the Substitution Adjustment, if any, to be deposited in
the Collection Account.
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(b) As to any Deleted Mortgage Loan for which the Unaffiliated Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the Servicer shall
cause the Unaffiliated Seller or an Originator, as applicable, to effect such
substitution by delivering to the Trustee a certification in the form attached
hereto as Exhibit H, executed by a Servicing Officer and the documents described
in Sections 2.05(a)(i)-(vi) for such Qualified Substitute Mortgage Loan or
Loans.
(c) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Loans
after the date of such substitution. Monthly Payments received with respect to a
Qualified Substitute Mortgage Loan or Loans on or before the date of
substitution will be retained by the Unaffiliated Seller. The Trust Fund will
own all payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Unaffiliated Seller shall thereafter be entitled to retain
all amounts subsequently received in respect of such Deleted Mortgage Loan. The
Servicer shall give written notice to the Trustee and the Certificate Insurer
that such substitution has taken place and shall amend the Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of
this Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans. Upon such substitution, such Qualified Substitute Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects.
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(d) It is understood and agreed that the obligations of the Unaffiliated
Seller and the related Originator set forth in Sections 2.06 and 3.05 of the
Unaffiliated Seller's Agreement to and the Servicer's obligation to cause the
Unaffiliated Seller and the Originator to cure, purchase or substitute for a
defective Mortgage Loan, or to indemnify as described in clause (a) above,
constitute the sole remedies of the Trustee, the Certificate Insurer and the
Certificateholders respecting a breach of the representations and warranties of
the Unaffiliated Seller and the Originators set forth in Sections 3.01, 3.02 and
3.03 of the Unaffiliated Seller's Agreement. The Trustee shall give prompt
written notice to the Certificate Insurer and the Rating Agencies of any
repurchase or substitution made pursuant to this Section 3.03 or Section
2.06(b).
(e) Upon discovery by the Servicer, the Trustee, the Certificate Insurer or
any Certificateholder that any Mortgage Loan does not constitute a Qualified
Mortgage, the party discovering such fact shall promptly (and in any event
within five (5) Business Days of the discovery) give written notice thereof to
the other parties. In connection therewith, pursuant to the Unaffiliated
Seller's Agreement, the Unaffiliated Seller shall be required to repurchase or
substitute a Qualified Substitute Mortgage Loan for the affected Mortgage Loan
within sixty (60) days of the earlier of such discovery by any of the foregoing
parties, or the Trustee's or the Unaffiliated Seller's receipt of notice, in the
same manner as it would a Mortgage Loan for a breach of representation or
warranty contained in Sections 3.01, 3.02 or 3.03 of the Unaffiliated Seller's
Agreement. The Trustee shall reconvey to the Unaffiliated Seller the Mortgage
Loan to be released pursuant hereto in the same manner, and on the same terms
and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Sections 3.01, 3.02 or 3.03 of the
Unaffiliated Seller's Agreement.
(f) Pursuant to Section 3.05(j) of the Unaffiliated Seller's Agreement the
Unaffiliated Seller and each of the Originators shall be jointly and severally
responsible for any repurchase, cure or substitution obligation of the
Unaffiliated Seller or any of the Originators under this Agreement or the
Unaffiliated Seller's Agreement.
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates. The Class A-1, Class A-2, Class A-3 and
Class A-4 Certificates shall be substantially in the form annexed hereto of
Exhibit A and the Class A-IO, Class X and Class R Certificates shall be
substantially in the forms annexed hereto as Exhibits B, C and D, respectively.
All Certificates shall be executed by manual or facsimile signature on behalf of
the Trustee by an authorized officer and authenticated by the manual or
facsimile signature of an authorized officer. Certificates bearing the
signatures of individuals who were at the time of the execution of the
Certificates the authorized officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Certificates or did not hold such offices
at the date of such Certificates. All Certificates issued hereunder shall be
dated the date of their authentication.
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Section 4.02 Registration of Transfer and Exchange of Certificates. (a) The
Trustee, as registrar, shall cause to be kept a register (the "Certificate
Register") in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and the
registration of transfer of Certificates. The Trustee is hereby appointed
registrar for the purpose of registering Certificates and transfers of
Certificates as herein provided. The Certificate Insurer shall be entitled to
inspect and copy the Certificate Register and the records of the Trustee
relating to the Certificates during normal business hours upon reasonable
notice.
(b) All Certificates issued upon any registration of transfer or exchange
of Certificates shall be valid evidence of the same ownership interests in the
Trust and entitled to the same benefits under this Agreement as the Certificates
surrendered upon such registration of transfer or exchange.
(c) Every Certificate presented or surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the Holder thereof
or his attorney duly authorized in writing.
(d) No service charge shall be made to a Holder for any registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Certificates; any
other expenses in connection with such transfer or exchange shall be an expense
of the Trust.
(e) It is intended that the Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates, Class A-4 Certificates and the Class A-IO Certificates
be registered so as to participate in a global book-entry system with the
Depository, as set forth herein. The Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates and the Class A-IO
Certificates shall, except as otherwise provided in the next paragraph, be
initially issued in the form of a single fully registered Certificate with a
denomination equal to the Original Certificate Principal Balance or Class A-IO
Notional Amount, respectively. Upon initial issuance, the ownership of each such
Class A-1 Certificate, Class A-2 Certificate, Class A-3 Certificate, Class A-4
Certificate and Class A-IO Certificate shall be registered in the Certificate
Register in the name of Cede & Co., or any successor thereto, as nominee for the
Depository. The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository. With respect to the Class
A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates and Class A-IO Certificates registered in the Certificate Register
in the name of Cede & Co., as nominee of the Depository, the Depositor, the
Unaffiliated Seller, the Servicer, the Trustee and the Certificate Insurer shall
have no responsibility or obligation to Direct or Indirect Participants or
beneficial owners for which the Depository holds Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates and Class A-IO
Certificates from time to time as a Depository. Without limiting the immediately
preceding sentence, the Depositor, the Unaffiliated Seller, the Servicer, the
Trustee and the Certificate Insurer shall have no responsibility or obligation
with respect to (i) the accuracy of the records of the Depository, Cede & Co.,
or any Direct or Indirect Participant with respect to any Ownership Interest,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a Certificateholder, of any notice with respect to the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates and Class A-IO Certificates or (iii) the payment to any Direct or
Indirect Participant or any other Person, other than a Certificateholder, of any
amount with respect to any distribution of principal or interest on the Class
A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates or Class A-IO Certificates. No Person other than a
Certificateholder shall receive a certificate evidencing such Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates or Class A-IO Certificate. Upon delivery by the Depository to the
Trustee of written notice to the effect that the Depository has determined to
substitute a new nominee in place of Cede & Co., and subject to the provisions
hereof with respect to the payment of interest by the mailing of checks or
drafts to the Certificateholders appearing as Certificateholders at the close of
business on a Record Date, the name "Cede & Co." in this Agreement shall refer
to such new nominee of the Depository.
53
(f) In the event that (i) the Depository or the Servicer advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class
A-4 Certificates or Class A-IO Certificates and the Servicer or the Depository
is unable to locate a qualified successor or (ii) the Trustee at its sole option
elects to terminate the book-entry system through the Depository, the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates and Class A-IO Certificates shall no longer be restricted to being
registered in the Certificate Register in the name of Cede & Co. (or a successor
nominee) as nominee of the Depository. At that time, the Servicer may determine
that the Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates and Class A-IO Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Servicer, or such depository's agent or
designee but, if the Servicer does not select such alternative global book-entry
system, then the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates and Class A-IO Certificates may be
registered in whatever name or names Certificateholders transferring Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates and Class A-IO Certificates shall designate, in accordance with the
provisions hereof; provided, however, that any such reregistration shall be at
the expense of the Servicer.
(g) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Class A-1 Certificate, Class A-2 Certificate, Class A-3
Certificate, Class A-4 Certificate or Class A-IO Certificate is registered in
the name of Cede & Co., as nominee of the Depository, all distributions of
principal or interest on such Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates, Class A-4 Certificates or Class A-IO Certificates, as
the case may be, and all notices with respect to such Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates or Class
A-IO Certificates, as the case may be, shall be made and given, respectively, in
the manner provided in the Representation Letter.
54
(h) No transfer, sale, pledge or other disposition of any Class R or Class
X Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "1933 Act") and effective registration or qualification under applicable
state securities laws or "Blue Sky" laws, or is made in a transaction that does
not require such registration or qualification. In the event that a transfer of
a Certificate is to be made in reliance upon an exemption from the 1933 Act, the
Trustee or the Certificate Registrar shall require, in order to assure
compliance with the 1933 Act, that the Certificateholder desiring to effect such
disposition and such Certificateholder's prospective transferee each certify to
the Trustee or the Certificate Registrar in writing the facts surrounding such
disposition substantially in the form of Exhibit K hereto (with respect to a
transfer made pursuant to Rule 144A promulgated under the 0000 Xxx) and may,
unless such transfer occurs more than three years after the Closing Date or is
made pursuant to Rule 144A promulgated under the 1933 Act, require an Opinion of
Counsel satisfactory to the Trustee or Certificate Registrar as the case may be,
that such transfer may be made pursuant to an exemption from the 1933 Act, which
Opinion of Counsel shall be at the expense of the Certificateholder. None of the
Servicer, the Depositor, the Unaffiliated Seller or the Trustee is obligated
under this Agreement to register Certificates under the 1933 Act, as amended or
any other securities law or to take any action not otherwise required under this
Agreement to permit the transfer of the Class R or Class X Certificates without
such registration or qualification. Every Certificate presented or surrendered
for registration of transfer or exchange shall be accompanied by a written
instrument of transfer substantially in the form of Exhibit L hereto, or such
other endorsement or written instrument of transfer as is satisfactory to the
Trustee, duly executed by the Holder thereof or his attorney duly authorized in
writing, together with wiring instructions, if applicable, in the form of
Exhibit P.
(i) Any such Certificateholder desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Depositor, the Unaffiliated
Seller, the Servicer and the Certificate Insurer against any liability that may
result if the transfer is not exempt or is not made in accordance with such
applicable federal and state laws. Promptly after receipt by an indemnified
party under this paragraph of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this paragraph. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to appoint counsel reasonably satisfactory to such indemnified party to
represent the indemnified party in such action; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such action
and approval by the indemnified party of such counsel, the indemnifying party
will not be liable to such indemnified party under this paragraph for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso of the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel for any indemnified party),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. Under no circumstances shall the indemnified party enter
into a settlement agreement with respect to any lawsuit, claim or other
proceeding without the prior written consent of the indemnifying party.
55
(j) Subject to the restrictions set forth in this Agreement, upon surrender
for registration of transfer of any Certificate at the office or agency of the
Trustee located in New York, New York, the Trustee shall execute, authenticate
and deliver in the name of the designated transferee or transferees, a new
Certificate of the same Class and Percentage Interest and dated the date of
authentication by the Trustee. At the option of the Certificateholders,
Certificates may be exchanged for other Certificates of Authorized Denominations
of a like aggregate Percentage Interest, upon surrender of the Certificates to
be exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute, authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. No
service charge shall be made for any transfer or exchange of Certificates, but
the Trustee may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates. All Certificates surrendered for transfer and exchange
shall be cancelled and destroyed by the Trustee in accordance with the Trustee's
standard procedures.
(k) No transfer of a Class A-1 Certificate, Class A-2 Certificate, Class
A-3 Certificate, Class A-4 Certificate or Class A-IO Certificate shall be made
to the Unaffiliated Seller or, to the actual knowledge of a Responsible Officer
of the Trustee, to any of the Unaffiliated Seller's Affiliates, successors or
assigns.
(l) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Servicer or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (viii) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class R
Certificate shall be a Permitted Transferee and a United States Person and shall
promptly notify the Trustee of any change or impending change in its status as
either a United States Person or a Permitted Transferee.
56
(ii) In connection with any proposed Transfer of any Ownership Interest in
a Class R Certificate, the Trustee shall require delivery to it of, and shall
not register the Transfer of any Class R Certificate until its receipt of, an
affidavit and agreement (a "Transfer Affidavit and Agreement") attached hereto
as Exhibit I from the proposed Transferee, in form and substance satisfactory to
the Trustee, representing and warranting, among other things, that such
Transferee is a Permitted Transferee, that it is not acquiring its Ownership
Interest in the Class R Certificate that is the subject of the proposed Transfer
as a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that as long as it retains its Ownership Interest in a Class R
Certificate, it will endeavor to remain a Permitted Transferee, and that it has
reviewed the provisions of this Section 4.02(l) and agrees to be bound by them.
(iii) Notwithstanding the delivery of a Transfer Affidavit and Agreement by
a proposed Transferee under clause (ii) above, if a Responsible Officer of the
Trustee has actual knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Class R Certificate to
such proposed Transferee shall be effected.
(iv) Each Person holding or acquiring any Ownership Interest in a Class R
Certificate shall agree (x) to require a Transfer Affidavit and Agreement from
any other Person to whom such Person attempts to transfer its Ownership Interest
in a Class R Certificate and (y) not to transfer its Ownership Interest unless
it provides a certificate (attached hereto as Exhibit J) to the Trustee stating
that, among other things, it has no actual knowledge that such other Person is
not a Permitted Transferee.
(v) Each Person holding or acquiring an Ownership Interest in a Class R
Certificate, by purchasing an Ownership Interest in such Certificate, agrees to
give the Trustee written notice that it is a "pass-through interest holder"
within the meaning of temporary Treasury regulation Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring an Ownership Interest in a Class R Certificate, if it
is, or is holding an Ownership Interest in a Class R Certificate on behalf of, a
"pass-through interest holder".
(vi) The Trustee will register the Transfer of any Class R Certificate only
if it shall have received the Transfer Affidavit and Agreement and all of such
other documents as shall have been reasonably required by the Trustee as a
condition to such registration. In addition, no Transfer of a Class R
Certificate shall be made unless the Trustee shall have received a
representation letter from the Transferee of such Certificate to the effect that
such Transferee is a United States Person and is not a "disqualified
organization" (as defined in Section 860E(e)(5) of the Code).
(vii) Any attempted or purported transfer of any Ownership Interest in a
Class R Certificate in violation of the provisions of this Section 4.02 shall be
absolutely null and void and shall vest no rights in the purported transferee.
If any purported transferee shall become a Holder of a Class R Certificate in
violation of the provisions of this Section 4.02, then the last preceding
Permitted Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Class R Certificate.
The Trustee shall notify the Servicer upon receipt of written notice or
discovery by a Responsible Officer that the registration of transfer of a Class
R Certificate was not in fact permitted by this Section 4.02. Knowledge shall
not be imputed to the Trustee with respect to an impermissible transfer in the
absence of such a written notice or discovery by a Responsible Officer. The
Trustee shall be under no liability to any Person for any registration of
transfer of a Class R Certificate that is in fact not permitted by this Section
4.02 or for making any payments due on such Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions of this
Agreement so long as the transfer was registered after receipt of the related
Transfer Affidavit and Agreement. The Trustee shall be entitled, but not
obligated to, recover from any Holder of a Class R Certificate that was in fact
not a Permitted Transferee at the time it became a Holder or, at such subsequent
time as it became other than a Permitted Transferee, all payments made on such
Class R Certificate at and after either such time. Any such payments so
recovered by the Trustee shall be paid and delivered by the Trustee to the last
preceding Holder of such Certificate.
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(viii) If any purported transferee shall become a Holder of a Class R
Certificate in violation of the restrictions in this Section 4.02, then the
Servicer or its designee shall have the right, without notice to the Holder or
any prior Holder of such Class R Certificate, to sell such Class R Certificate
to a purchaser selected by the Servicer or its designee on such reasonable terms
as the Servicer or its designee may choose. Such purchaser may be the Servicer
itself or any Affiliate of the Servicer. The proceeds of such sale, net of
commissions, expenses and taxes due, if any, will be remitted by the Servicer to
the last preceding purported transferee of such Class R Certificate, except that
in the event that the Servicer determines that the Holder or any prior Holder of
such Class R Certificate may be liable for any amount due under this Section
4.02 or any other provision of this Agreement, the Servicer may withhold a
corresponding amount from such remittance as security for such claim. The terms
and conditions of any sale under this clause (viii) shall be determined in the
sole discretion of the Servicer or its designee, and it shall not be liable to
any Person having an Ownership Interest in a Class R Certificate as a result of
its exercise of such discretion.
(m) The provisions of Section 4.02(l) may be modified, added to or
eliminated, provided that there shall have been delivered to the Trustee and the
Certificate Insurer an Opinion of Counsel to the effect that such modification
of, addition to or elimination of such provisions will not cause the REMIC Trust
to cease to qualify as a REMIC and will not cause (x) the REMIC Trust to be
subject to an entity-level tax caused by the Transfer of any Ownership Interest
in a Class R Certificate to a Person that is not a Permitted Transferee or (y) a
Person other than the prospective transferee to be subject to a REMIC-related
tax caused by the Transfer of an Ownership Interest in a Class R Certificate to
a Person that is not a Permitted Transferee.
(n) The Trustee and the Servicer shall require the prospective transferee
of any Class R or Class X Certificate to certify (in the form of Exhibit K
hereto) that it is not a pension or benefit plan or individual retirement
arrangement that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or to Section 4975 of the Code (a "Plan") or an
entity whose underlying assets are deemed to be assets of a Plan by reason of
such plan's or arrangement's investment in the entity, as determined under U.S.
Department of Labor Regulations 29 C.F.R. ss. 2510.3-101 or otherwise.
58
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Certificate is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Servicer, the Certificate Insurer
and the Trustee such security or indemnity as may reasonably be required by each
of them to save each of them harmless, then, in the absence of notice to the
Servicer and the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and Percentage Interest, but bearing a number not
contemporaneously outstanding. Upon the issuance of any new Certificate under
this Section 4.03, the Servicer and the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and their fees and expenses connected therewith. Any duplicate
Certificate issued pursuant to this Section 4.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Certificate shall be
found at any time.
Section 4.04 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer and subject to the provisions of
Section 4.02 and Article X, the Servicer, the Depositor, the Unaffiliated
Seller, the Certificate Insurer and the Trustee may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving remittances pursuant to Section 6.05 and for all other
purposes whatsoever, and the Servicer, the Depositor, the Unaffiliated Seller,
the Certificate Insurer and the Trustee shall not be affected by notice to the
contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 REMIC Matters; The Servicer. (a) The parties intend that the
Trust Fund formed hereunder shall, constitute, and that the affairs of the Trust
Fund shall be conducted and this Agreement shall be construed so as to qualify
the Trust Fund as, four separate "real estate mortgage investment conduits" as
defined in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Servicer covenants and agrees that it shall, to the extent
permitted by applicable law, act as agent (and the Servicer is hereby appointed
to act as agent) on behalf of the Trust Fund and that in such capacity it shall:
(a) prepare and file, or cause to be prepared and filed, all required federal,
state and local tax returns for each REMIC using a calendar year as the taxable
year for the Trust Fund when and as required by the REMIC Provisions and other
applicable federal, state and local income tax laws; (b) maintain or cause the
maintenance of the books of each REMIC on the accrual method of accounting; (c)
make elections, on behalf of each REMIC, to be treated as a REMIC on the federal
tax return of the Trust Fund for its first taxable year, in accordance with the
REMIC Provisions; (d) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders all information reports as and when
required to be provided to them in accordance with the REMIC Provisions; (e)
conduct the affairs of each REMIC at all times that any Certificates are
outstanding so as to maintain the status thereof as a REMIC under the REMIC
Provisions; and (f) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the REMIC status of any
REMIC created hereunder.
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(b) In the event that any income tax (including any tax with regard to
"prohibited transactions" of any REMIC created hereunder as defined in Section
860F of the Code) is imposed on the Trust Fund, such tax shall be charged
against amounts otherwise distributable to the Holders of the Class R or Class X
Certificates on a pro rata basis to the extent hereinafter provided. In the
event that any such tax shall be due and owing at a time when amounts otherwise
distributable to the Holders of the Class R or Class X Certificates are not
available, the Servicer shall pay such tax from its own funds. In such event,
the Trustee is hereby authorized to retain from amounts otherwise distributable
to the Holders of the Class R and Class X Certificates on any Distribution Date
sufficient funds to reimburse the Servicer for the payment of such tax (but such
obligation shall not prevent the Trustee or any other appropriate Person from
contesting any such tax in appropriate proceedings and shall prevent the Trustee
from withholding payment of such tax, if permitted by law, pending the outcome
of such proceedings).
(c) The Servicer shall service and administer the Mortgage Loans in
accordance with the Accepted Servicing Practices and shall have full power and
authority to do any and all things not inconsistent therewith in connection with
such servicing and administration which it may deem necessary or desirable in
order to maximize collections on the Mortgage Loans, subject to the limitations
set forth in this Agreement. The Trustee shall furnish the Servicer with any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder. Without
limiting the generality of the foregoing, the Servicer shall continue, and is
hereby authorized and empowered by the Trustee, to execute and deliver, on
behalf of itself, the Certificateholders and the Trustee or any of them, any and
all instruments of satisfaction or cancellation, or of partial or full release
or discharge and all other comparable instruments, and to effect such
modifications, waivers, indulgences and other like matters as are in its
judgment necessary or desirable, with respect to the Mortgage Loans and the
Mortgaged Properties and the servicing and administration thereof in order to
maximize collections on the Mortgage Loans. The Servicer shall notify the
Trustee of any such waiver, release, discharge, modification, indulgence or
other such matter by delivering to the Trustee an Officer's Certificate
certifying that such agreement is in compliance with this Section 5.01(b)
together with the original copy of any written agreement or other document
executed in connection therewith, all of which written agreements or documents
shall, for all purposes, be considered a part of the related Mortgage File to
the same extent as all other documents and instruments constituting a part
thereof. Notwithstanding anything in this Agreement to the contrary, the
Servicer shall not permit any modification with respect to any Mortgage Loan
that would change the Mortgage Interest Rate, reduce or increase the principal
balance, change the lien priority, the original LTV or change the final maturity
date on or of such Mortgage Loan unless (i) the Mortgagor is in default with
respect to the Mortgage Loan or such default is, in the judgment of the
Servicer, imminent and (ii) the Certificate Insurer consents to such
modifications in writing; provided, however, that the Servicer shall be
permitted to extend the final maturity date on a Mortgage Loan by 180 days or
less without the consent of the Certificate Insurer, so long as such final
maturity date (as so extended) is not later than the latest of (i) the Class A-1
Final Scheduled Maturity Date, (ii) the Class A-2 Final Scheduled Maturity Date,
(iii) the Class A-3 Final Scheduled Maturity Date, and (iv) the Class A-4 Final
Scheduled Maturity Date.
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(d) The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Trustee under this Agreement is
intended by the parties to be that of an independent contractor and not that of
a joint venturer, partner or agent.
Section 5.02 Collection of Certain Mortgage Loan Payments; Collection
Account. (a) The Servicer shall make its reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow the Accepted Servicing Practices. Consistent with the foregoing, the
Servicer may in its discretion waive any assumption fees or other fees which may
be collected in the ordinary course of servicing such Mortgage Loans.
(b) The Servicer shall establish and maintain in the name of the Trustee
the Collection Account, in trust for the benefit of the Certificateholders and
the Certificate Insurer. The Collection Account shall be established and
maintained as an Eligible Account.
(c) The Servicer shall deposit in the Collection Account any amounts
representing Monthly Payments on the Mortgage Loans due and accrued or to be
applied as of a date after the Cut-Off Date, and thereafter, on each Business
Day (except as otherwise permitted herein), the following payments and
collections received or made by it (other than in respect of principal collected
and interest due and accrued on the Mortgage Loans on or before the Cut-Off
Date):
(i) Payments of interest on the Mortgage Loans;
(ii) Payments of principal of the Mortgage Loans;
(iii) The Loan Repurchase Price of Mortgage Loans repurchased pursuant to
Sections 2.06, 3.03, 5.05, 5.15 or otherwise hereunder;
(iv) The Substitution Adjustment received in connection with Mortgage Loans
for which Qualified Substitute Mortgage Loans are received pursuant to Sections
2.06 and 3.03;
(v) All Liquidation Proceeds; and
(vi) All Insurance Proceeds (including, for this purpose, any amounts
required to be deposited by the Servicer pursuant to the last sentence of
Section 5.04).
It is understood that the Servicer need not deposit amounts representing
fees, prepayment premiums, late payment charges or extension or other
administrative charges payable by Mortgagors, or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items.
(d) The Trustee shall invest any funds in the Collection Account in
Permitted Investments as directed by the Servicer, which shall mature not later
than the Business Day next preceding the Servicer Remittance Date next following
the date of such investment (except that any investment held by the Trustee may
mature on such Servicer Remittance Date) and shall not be sold or disposed of
prior to its maturity. All net income and gain realized from any such investment
shall be for the benefit of the Servicer and shall be subject to its withdrawal
or order on a Distribution Date. The Servicer shall deposit from its own funds
the amount of any loss, to the extent not offset by investment income or
earnings, in the Collection Account upon the realization of such loss.
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Section 5.03 Permitted Withdrawals from the Collection Account. The Trustee
shall make withdrawals from the Collection Account, on any Distribution Date,
for the following purposes:
(a) to reimburse the Servicer for Liquidation Expenses theretofore incurred
in respect of any Mortgage Loan in an amount not to exceed the amount of the sum
of the related Insurance Proceeds and Liquidation Proceeds deposited in the
Collection Account pursuant to Section 5.02(c)(v)-(vi);
(b) to reimburse the Servicer for amounts expended by it pursuant to
Section 5.04 in good faith in connection with the restoration of damaged
property, in an amount not to exceed the amount of the related Insurance
Proceeds and Liquidation Proceeds (net of withdrawals pursuant to clause (a)
above) and amounts representing proceeds of other insurance policies covering
the property subject to the related Mortgage deposited in the Collection Account
pursuant to Section 5.02(c)(v)-(vi);
(c) to pay to the Unaffiliated Seller amounts received in respect of any
Deleted Mortgage Loan purchased or substituted for by the Unaffiliated Seller to
the extent that the distribution to the Certificateholders of any such amounts
on the Distribution Date upon which the proceeds of such purchase are
distributed to the Certificateholders would make the total amount distributed in
respect of any such Mortgage Loan on such Distribution Date greater than the
Loan Repurchase Price or the Substitution Adjustment therefor;
(d) to reimburse the Servicer for unreimbursed Servicing Advances, without
interest, with respect to the Mortgage Loans for which it has made a Servicing
Advance, from subsequent collections with respect to interest on such Mortgage
Loans and from Liquidation Proceeds, Insurance Proceeds and/or the Loan
Repurchase Price or Substitution Adjustment of or relating to such Mortgage
Loans;
(e) to reimburse the Servicer for any Periodic Advances, such reimbursement
to be made from any collections in respect of the related Mortgage Loan with
respect to which such Periodic Advance was made;
(f) to withdraw any amount received from a Mortgagor that is recoverable
and sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction;
(g) to withdraw any funds deposited in the Collection Account that were not
required to be deposited therein; and
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(h) to pay the Servicer Servicing Compensation pursuant to Section 5.08
hereof to the extent not retained or paid.
The Servicer shall keep and maintain a separate accounting for each
Mortgage Loan for the purpose of accounting for withdrawals from the Collection
Account pursuant to subclause (a).
Section 5.04 Hazard Insurance Policies; Property Protection Expenses. (a)
The Servicer shall cause to be maintained for each Mortgage Loan a hazard
insurance policy with extended coverage which contains a standard mortgagee's
clause with an appropriate endorsement in an amount equal to the lesser of (a)
the maximum insurable value of the related Mortgaged Property or (b) the sum of
the Principal Balance of such Mortgage Loan plus the outstanding balance of any
mortgage loan senior to such Mortgage Loan, but in no event shall such amount be
less than is necessary to prevent the Mortgagor from becoming a coinsurer
thereunder. The Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements which are a part of such
property or (ii) the combined Principal Balance of such Mortgage Loan and the
principal balance of any mortgage loan senior to such Mortgage Loan at the time
of such foreclosure plus accrued interest and the good-faith estimate of the
Servicer of related Liquidation Expenses to be incurred in connection therewith.
Amounts collected by the Servicer under any such policies shall be deposited in
the Collection Account to the extent that they constitute Liquidation Proceeds
or Insurance Proceeds. Each hazard insurance policy shall contain a standard
mortgage clause naming the Originator, its successors and assigns, as mortgagee.
The Servicer shall be under no obligation to require that any Mortgagor maintain
earthquake or flood or other additional insurance and shall be under no
obligation itself to maintain any such additional insurance on property acquired
in respect of a Mortgage Loan, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance.
(b) If the Servicer shall obtain and maintain a blanket policy issued by an
insurer acceptable to the Rating Agencies and the Certificate Insurer insuring
against hazard losses on all of the Mortgage Loans, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 5.04(a), it
being understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property a policy complying with Section
5.04(a), and there shall have been a loss which would have been covered by such
policy, deposit in the Collection Account the amount not otherwise payable under
the blanket policy because of such deductible clause.
(c) If the Mortgaged Property or REO Property is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area (and if the flood insurance policy referenced herein has been made
available), the Servicer will cause to be maintained flood insurance in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the Principal Balance of the related Mortgage Loan and the balance of the
related first lien, if any, (ii) the maximum insurable value of the related
Mortgaged Property, and (iii) the maximum amount of such insurance available for
the related Mortgaged Property under the national flood insurance program
(assuming that the area in which such Mortgaged Property is located is
participating in such program).
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Section 5.05 Assumption and Modification Agreements. In any case in which a
Mortgaged Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall exercise its right to accelerate the maturity of the related
Mortgage Loan and require that the Principal Balance thereof be paid in full on
or prior to such conveyance by the Mortgagor under any "due-on-sale" clause
applicable thereto. If such "due-on-sale" clause, by its terms, is not operable
or the Servicer is prevented, as provided in the last paragraph of this Section
5.05, from enforcing any such clause, the Servicer is authorized, subject to the
consent of the Certificate Insurer, to take or enter into an assumption and
modification agreement from or with the Person to whom such property has been or
is about to be conveyed, pursuant to which such Person becomes liable under the
Mortgage Note and the Mortgagor remains liable thereon or, if the Servicer in
its reasonable judgment finds it appropriate, is released from liability
thereon. The Servicer shall notify the Trustee that any assumption and
modification agreement has been completed by delivering to the Trustee and the
Certificate Insurer an Officer's Certificate certifying that such agreement is
in compliance with this Section 5.05 together with the original copy of such
assumption and modification agreement. Any such assumption and modification
agreement shall, for all purposes, be considered a part of the related Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. In connection with any such agreement, the then current Mortgage
Interest Rate thereon shall not be increased or decreased. Any fee collected by
the Servicer for entering into any such agreement will be retained by the
Servicer as additional servicing compensation. At its sole election, the
Servicer may purchase from the Trust Fund any Mortgage Loan that has been
assumed in accordance with this Section 5.05 within one month after the date of
such assumption at a price equal to the greater of (i) the fair market value of
such Mortgage Loan (as determined by the Servicer in its good faith judgment)
and (ii) the Loan Repurchase Price. Such amount, if any, shall be deposited into
the Collection Account in the Due Period in which such repurchase is made.
Notwithstanding the foregoing paragraph of this Section 5.05 or any other
provision of this Agreement, the Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan, or transfer of any Mortgaged Property without the
assumption thereof, by operation of law or any assumption or transfer which the
Servicer reasonably believes it may be restricted by law from preventing for any
reason whatsoever.
Section 5.06 Realization Upon Defaulted Mortgage Loans. (a) The Servicer
shall foreclose upon or otherwise comparably convert to ownership Mortgaged
Properties securing such of the Mortgage Loans as come into and continue in
default and as to which no satisfactory arrangements can be made for collection
of delinquent payments pursuant to Section 5.02(a). Prior to conducting any sale
in a foreclosure proceeding or accepting a deed-in-lieu of foreclosure with
respect to any Mortgaged Property, the Servicer shall cause an environmental
review to be performed, in accordance with Accepted Servicing Practices on the
Mortgaged Property by a company such as Equifax, Inc. or Toxicheck. If such
review reveals that the Mortgaged Property has on it, under it or is near
hazardous or toxic material or waste or reveals any other environmental problem,
the Servicer shall not foreclose or accept a deed-in-lieu of foreclosure without
the prior written consent of the Certificate Insurer, such consent not to be
unreasonably withheld, conditioned or delayed. In connection with such
foreclosure or other conversion, the Servicer shall follow such practices
(including, in the case of any default on a related senior mortgage loan, the
advancing of funds to correct such default) and procedures which are consistent
with Accepted Servicing Practices as it shall deem necessary or advisable and as
shall be normal and usual in its general first and second mortgage loan
servicing activities. The foregoing is subject to the proviso that the Servicer
shall not be required to expend its own funds in connection with any foreclosure
or towards the correction of any default on a related senior mortgage loan or
restoration of any property unless, in the reasonable judgment of the Servicer,
such expenses will be recoverable from Liquidation Proceeds.
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(b) In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee on behalf of
Certificateholders. In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Trust Fund shall: (i) dispose of such Mortgaged
Property prior to the end of the third taxable year after its acquisition by the
Trust Fund or (ii) request more than 60 days prior to the date on which such 3
year period would otherwise expire, an extension of the 3 year period, or (iii)
unless the Servicer shall have furnished the Trustee with an Opinion of Counsel
to the effect that the holding by the Trust Fund of such Mortgaged Property
subsequent to the third taxable year after its acquisition will not result in
the imposition of taxes on "prohibited transactions" of the Trust Fund as
defined in Section 860F of the Code or cause the Trust Fund to fail to qualify
as a REMIC at any time that any Certificates are outstanding.
(c) Any Insurance Proceeds or Liquidation Proceeds received with respect to
a Mortgage Loan or REO Property (other than received in connection with a
purchase by the Class R Certificateholders of all the Mortgage Loans and REO
Properties in the Trust Estate pursuant to Section 8.01(b)) will be applied in
the following order of priority, in each case to the extent of available funds:
first, to pay the Servicer any accrued and unpaid Servicing Fees relating to
such Mortgage Loan; second, to reimburse the Servicer or any Subservicer for any
related unreimbursed Servicing Advances, and any related unreimbursed Periodic
Advances theretofore funded by the Servicer or any Subservicer from its own
funds, in each case, with respect to the related Mortgage Loan; third, to
accrued and unpaid interest on the Mortgage Loan, at the Mortgage Loan Rate (or
at such lesser rate as may be in effect for such Mortgage Loan pursuant to
application of the Civil Relief Act) on the Principal Balance of such Mortgage
Loan, to the date such Mortgage Loan is determined to be a Liquidated Mortgage
Loan if it is a Liquidated Mortgage Loan, or to the Due Date in the Due Period
prior to the Distribution Date on which such amounts are to be distributed if
such determination has not yet been made, minus any unpaid Servicing Fees with
respect to such Mortgage Loan; fourth, to the extent of the Principal Balance of
the Mortgage Loan outstanding immediately prior to the receipt of such proceeds,
as a recovery of principal of the related Mortgage Loan; and fifth, to any
prepayment or late payment charges or penalty interest payable in connection
with the receipt of such proceeds and to all other fees and charges due and
payable with respect to such Mortgage Loan. The amount of any gross Insurance
Proceeds and Liquidation Proceeds received with respect to any Mortgage Loan or
REO Property minus the amount of any unreimbursed Servicing Advances,
unreimbursed Periodic Advances or unpaid Servicing Fees, in each case, with
respect to the related Mortgage Loan, are the "Net Recovery Proceeds" with
respect to such Mortgage Loan or REO Property.
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Section 5.07 Trustee to Cooperate. Upon the payment in full of the
Principal Balance of any Mortgage Loan, the Servicer will notify the Trustee by
a certification (which certification shall include a statement to the effect
that all amounts received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 5.02 have been so
deposited) of a Servicing Officer. Upon any such payment in full, the Servicer
is authorized to execute, pursuant to the authorization contained in Section
5.01, an instrument of satisfaction regarding the related Mortgage, which
instrument of satisfaction shall be recorded by the Servicer if required by
applicable law and be delivered to the Person entitled thereto, it being
understood and agreed that no expenses incurred in connection with such
instrument of satisfaction shall be reimbursed from the Collection Account. From
time to time and as appropriate for the servicing or foreclosure of any Mortgage
Loan, the Trustee shall, upon request of the Servicer and delivery to the
Trustee of a trust receipt signed by a Servicing Officer, release the related
Mortgage File to the Servicer and shall execute such documents as shall be
necessary for the prosecution of any such proceedings. Such trust receipt shall
obligate the Servicer to return the Mortgage File to the Trustee when the need
therefor by the Servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
similar to that hereinabove specified, the trust receipt shall be released by
the Trustee to the Servicer.
Section 5.08 Servicing Compensation; Payment of Certain Expenses by
Servicer. On each Distribution Date, the Servicer shall be entitled to receive
and the Trustee shall pay, out of collections on the Mortgage Loans for the Due
Period, as servicing compensation for such Due Period, an amount (the "Monthly
Servicing Fee") equal to the product of one-twelfth of the servicing fee rate
and the Aggregate Principal Balance as of the beginning of such Due Period.
Additional servicing compensation in the form of assumption fees, late payment
charges or extension and other administrative charges shall be retained by the
Servicer. The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of all fees and
expenses of the Subservicer and payment of the Trustee Fee to the extent that
monies in the Collection Account are insufficient therefor, as provided in
Section 9.05 hereof, and all other fees and expenses not expressly stated
hereunder to be payable by or from another source) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 5.09 Annual Statement as to Compliance. (a) The Servicer will
deliver to the Trustee, the Rating Agencies, the Certificate Insurer and each
Certificateholder, on or before April 30 of each year, beginning April 30, 2002,
an Officer's Certificate of the Servicer stating that (a) a review of the
activities of the Servicer during the preceding calendar year and of its
performance under this Agreement has been made under such Officer's supervision
and (b) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its material obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
Section 5.10 Annual Independent Public Accountants' Servicing Report. On or
before April 30 of each year, beginning April 30, 2002, the Servicer at its
expense shall cause a firm of independent public accountants that is a member of
the American Institute of Certified Public Accountants (who may also render
other services to the Servicer) to furnish a report to the Trustee, the Rating
Agencies, the Certificate Insurer and each Certificateholder to the effect that
such firm has examined certain documents and records relating to the servicing
of mortgage loans under pooling and servicing agreements (including this
Agreement) substantially similar to this Agreement, and that such examination,
which has been conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers (to the extent that the procedures in
such audit guide are applicable to the servicing obligations set forth in such
agreements), has disclosed no items of noncompliance with the provisions of this
Agreement which, in the opinion of such firm, are material, except for such
items of noncompliance as shall be set forth in such report.
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Section 5.11 Access to Certain Documentation. Each of the Servicer, the
Depositor and the Unaffiliated Seller shall permit the designated agents or
representatives of each Certificateholder, the Certificate Insurer and the
Trustee (i) to examine and make copies of and abstracts from all books, records
and documents (including computer tapes and disks) in the possession or under
the control of the Servicer, the Depositor or the Unaffiliated Seller relating
to the Mortgage Loans and (ii) to visit the offices and properties of the
Servicer and of the Unaffiliated Seller for the purpose of examining such
materials and to discuss matters relating to the Mortgage Loans and the
Servicer's, the Depositor's and the Unaffiliated Seller's performance under this
Agreement with any of the officers or employees of the Servicer, the Depositor
and the Unaffiliated Seller having knowledge thereof and with the independent
public accountants of the Servicer (and by this provision the Servicer and the
Unaffiliated Seller each authorize their respective accountants to discuss their
respective finances and affairs), all at such reasonable times, as often as may
be reasonably requested and without charge to such Certificateholder, the
Certificate Insurer or the Trustee.
Section 5.12 Maintenance of Fidelity Bond. The Servicer shall during the
term of its service as servicer maintain in force a fidelity bond and errors and
omissions insurance in respect of its officers, employees or agents. Such bond
and insurance shall comply with the requirements from time to time of the FNMA
for Persons performing servicing for mortgage loans purchased by such
association.
Section 5.13 The Subservicers. The parties acknowledge that the Servicer
intends to appoint the Subservicers as the Servicer's agents for the purpose of
servicing on the Servicer's behalf such of the Mortgage Loans as were originated
by such subservicer. The Servicer agrees to cause the Subservicers to service
such Mortgage Loans in a manner consistent with the Accepted Servicing Practices
set forth in this Agreement, and agrees that receipt by the Subservicers of any
and all amounts which by the terms hereof are required to be deposited in the
Collection Account shall constitute receipt thereof by the Servicer for all
purposes hereof as of the date so received by the Subservicers. Notwithstanding
such designation of the Subservicers, the Servicer agrees that it is, and it
shall remain, fully obligated under the terms hereof as Servicer with respect to
all such Mortgage Loans, and nothing herein shall relieve or release the
Servicer from its obligations to the other parties hereto to service such
Mortgage Loans in the manner provided in this Agreement.
Section 5.14 Reports to the Trustee; Collection Account Statements. Not
later than fifteen (15) days after each Distribution Date, the Servicer shall
provide to the Trustee and the Certificate Insurer a statement, certified by a
Servicing Officer, setting forth the status of the Collection Account as of the
close of business on the related Distribution Date, stating that all
distributions required by this Agreement to be made by the Servicer on behalf of
the Trustee have been made (or if any required distribution has not been made by
the Servicer, specifying the nature and status thereof) and showing, for the
period covered by such statement, the aggregate of deposits into and withdrawals
from the Collection Account for each category of deposit specified in Section
5.02 and each category of withdrawal specified in Section 5.03 and the aggregate
of deposits into the Collection Account as specified in Section 6.01(c). Such
statement shall also state the aggregate unpaid principal balance of all the
Mortgage Loans as of the close of business on the last day of the month
preceding the month in which such Distribution Date occurs. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon
request.
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Section 5.15 Optional Purchase of Defaulted Mortgage Loans. (a) The
Unaffiliated Seller, in its sole discretion, shall have the right to elect (by
written notice sent to the Trustee and the Certificate Insurer), but shall not
be obligated, to purchase for its own account from the Trust Fund any Mortgage
Loan which is 180 days or more Delinquent in the manner and at the price
specified in Section 2.06(b). The purchase price for any Mortgage Loan purchased
hereunder shall be deposited in the Collection Account and the Trustee, upon
receipt of such deposit, shall release or cause to be released to the
Unaffiliated Seller the related Trustee's Mortgage File and shall execute and
deliver such instruments of transfer or assignment prepared by the Unaffiliated
Seller, in each case without recourse, as shall be necessary to vest in the
Unaffiliated Seller any Mortgage Loan released pursuant hereto and the
Unaffiliated Seller shall succeed to all the Trustee's right, title and interest
in and to such Mortgage Loan and all security and documents related thereto.
Such assignment shall be an assignment outright and not for security. The
Unaffiliated Seller shall thereupon own such Mortgage Loan, and all security and
documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
(b) If the Unaffiliated Seller shall have repurchased Mortgage Loans under
this Section 5.15 in an aggregate principal amount equal to 2.00% of the
Original Aggregate Principal Balance, the Unaffiliated Seller may not thereafter
exercise its right under this Section 5.15 to purchase any Mortgage Loan without
the prior written consent of the Certificate Insurer. Any request by the
Unaffiliated Seller to the Certificate Insurer for consent to repurchase
Mortgage Loans that are not the most Delinquent shall be accompanied by a
description of the Mortgage Loans that have been Delinquent longer than the
Mortgage Loan or Mortgage Loans the Unaffiliated Seller proposes to repurchase.
If the Certificate Insurer fails to respond to such request within ten (10)
Business Days after receipt thereof, the Unaffiliated Seller shall be deemed to
have been granted consent to repurchase the Mortgage Loan or Mortgage Loans
proposed to be repurchased. Notice to the Certificate Insurer shall be delivered
in accordance with the terms of the Insurance and Reimbursement Agreement.
Section 5.16 Reports to be Provided by the Servicer. (a) In connection with
the transfer of the Certificates, the Trustee on behalf of any Certificateholder
may request that the Servicer make available to any prospective
Certificateholder annual audited financial statements of the Servicer for one or
more of the most recently completed five fiscal years for which such statements
are available, which request shall not be unreasonably denied or unreasonably
delayed. Such annual audited financial statements also shall be made available
to the Certificate Insurer upon request.
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(b) The Servicer also agrees to make available on a reasonable basis to the
Certificate Insurer or any prospective Certificateholder a knowledgeable
financial or accounting officer for the purpose of answering reasonable
questions respecting recent developments affecting the Servicer or the financial
statements of the Servicer and to permit the Certificate Insurer or any
prospective Certificateholder to inspect the Servicer's servicing facilities
during normal business hours for the purpose of satisfying the Certificate
Insurer or such prospective Certificateholder that the Servicer has the ability
to service the Mortgage Loans in accordance with this Agreement.
Section 5.17 Adjustment of Servicing Compensation in Respect of Prepaid
Mortgage Loans. The Monthly Servicing Fee that the Servicer shall be entitled to
receive with respect to all of the Mortgage Loans and each Distribution Date
shall be offset on such Distribution Date by an amount equal to the aggregate
Prepayment Interest Shortfall with respect to all Mortgage Loans which were
subjects of Principal Prepayments during the month preceding the month of such
Distribution Date. The amount of any offset against the Monthly Servicing Fee
with respect to any Distribution Date under this Section 5.17 shall be limited
to the Monthly Servicing Fee otherwise payable to the Servicer (without
adjustment on account of Prepayment Interest Shortfalls) with respect to such
Distribution Date, and the rights of the Certificateholders to the offset of the
aggregate Prepayment Interest Shortfalls shall not be cumulative.
Section 5.18 Periodic Advances; Special Advance. (a) If, on any Servicer
Remittance Date, the Servicer determines that any Monthly Payments due on the
Due Date immediately preceding such Servicer Remittance Date have not been
received as of the close of business on the Business Day preceding such Servicer
Remittance Date, the Servicer shall determine the amount of any Periodic Advance
required to be made with respect to the related Distribution Date. The Servicer
shall include in the amount to be deposited in the Collection Account on such
Servicer Remittance Date an amount equal to the Periodic Advance, if any, which
deposit may be made in whole or in part from funds in the Collection Account
being held for future distribution or withdrawal on or in connection with
Distribution Dates in subsequent months. Any funds being held for future
distribution to Certificateholders and so used shall be replaced by the Servicer
from its own funds by deposit in the Collection Account on or before the
Business Day preceding the next Servicer Remittance Date on which the funds in
the Collection Account shall be less than the amount necessary to pay in full
the Required Distribution with respect to such date be made on such date;
provided, that if such funds are not sufficient the Servicer will use its own
funds to the extent necessary to fulfill its replacement or advance obligation.
The Servicer shall designate on its records the specific Mortgage Loans and
related installments (or portions thereof) as to which such Periodic Advance
shall be deemed to have been made, such determination being conclusive for
purposes of withdrawals from the Collection Account pursuant to Section 5.03.
(b) In addition to the Periodic Advances the Servicer shall make a special
advance (the "Special Advance") on the Servicer Remittance Date occurring in
July 2001, with respect to interest on Mortgage Loans not having their first
payment due until after June 2001. The Special Advance will be deposited into
the Interest Reserve Account and will be paid out of the Interest Reserve
Account, and will be equal to the lesser of (1) the difference of (i) the sum of
(a) the Class A-1 Interest Distribution Amount, (b) the Class A-2 Interest
Distribution Amount (c) the Class A-3 Interest Distribution Amount, (d) the
Class A-4 Interest Distribution Amount and (e) the Class A-IO Interest
Distribution Amount over (ii) the sum of (x) the amount of interest collected
for the first Due Period and (y) the amount on deposit in the Interest Reserve
Account immediately prior to such Special Advance and (2) an amount equal to the
amount of interest that would have accrued on all such Mortgage Loans from the
Cut-Off Date to its corresponding scheduled payment date, assuming it had a
payment date in June. Any funds remaining in the Interest Reserve Account after
the immediately succeeding Distribution Date shall be remitted to the Servicer
on such Distribution Date. The Special Advance shall be made without regard to
recoverability, and shall not be reimbursable, except as set forth in the
preceding sentences. In no event shall the Trustee, as successor Servicer, be
liable for the payment of the Special Advance except to the extent of the amount
on deposit in the Interest Reserve Account.
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Section 5.19 Indemnification; Third Party Claims. (a) The Servicer agrees
to indemnify and to hold each of the Depositor, the Trustee, the Collateral
Agent, the Unaffiliated Seller, the Certificate Insurer and each
Certificateholder harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Depositor, the Trustee, the Collateral Agent, the
Unaffiliated Seller, the Certificate Insurer and any Certificateholder may
sustain in any way related to the failure of the Servicer to perform its duties
and service the Mortgage Loans in compliance with the terms of this Agreement.
Each indemnified party and the Servicer shall immediately notify the other
indemnified parties if a claim is made by a third party with respect to this
Agreement, and the Servicer shall assume the defense of any such claim and pay
all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Depositor, the Servicer, the Trustee, the Unaffiliated Seller, the
Certificate Insurer and/or a Certificateholder in respect of such claim. The
obligations of the Servicer under this Section 5.19 arising prior to any
resignation or termination of the Servicer hereunder shall survive the
resignation or termination of the Servicer.
(b) The Trustee may, if necessary, reimburse the Servicer from amounts
otherwise distributable on the Class X and R Certificates for all amounts
advanced by it pursuant to Section 4.04 of the Unaffiliated Seller's Agreement,
except when the claim relates directly to the failure of the Servicer, if it is,
or is an Affiliate of, the Unaffiliated Seller, to perform its obligations to
service and administer the Mortgages in compliance with the terms of the
Unaffiliated Seller's Agreement, or the failure of the Unaffiliated Seller to
perform its duties in compliance with the terms of this Agreement.
(c) The Trustee shall reimburse the Unaffiliated Seller from amounts
otherwise distributable on the Class X and R Certificates for all amounts
advanced by the Unaffiliated Seller pursuant to the second sentence of Section
4.04(a)(ii) of the Unaffiliated Seller's Agreement except when the relevant
claim relates directly to the failure of the Unaffiliated Seller to perform its
duties in compliance with the terms of the Unaffiliated Seller's Agreement.
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Section 5.20 Maintenance of Corporate Existence and Licenses; Merger or
Consolidation of the Servicer. (a) The Servicer will keep in full effect its
existence, rights and franchises as a corporation, will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction
necessary to protect the validity and enforceability of this Agreement or any of
the Mortgage Loans and to perform its duties under this Agreement and will
otherwise operate its business so as to cause the representations and warranties
under Section 3.01 to be true and correct at all times under this Agreement.
(b) Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be an established mortgage loan servicing institution that has a
net worth of at least $15,000,000 and is a Permitted Transferee, and in all
events shall be the successor of the Servicer without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. The Servicer shall send notice of any
such merger or consolidation to the Trustee and the Certificate Insurer.
Section 5.21 Assignment of Agreement by Servicer; Servicer Not to Resign.
The Servicer shall not assign this Agreement nor resign from the obligations and
duties hereby imposed on it except by mutual consent of the Servicer, the
Unaffiliated Seller, the Certificate Insurer and the Trustee or upon the
determination that the Servicer's duties hereunder are no longer permissible
under applicable law and that such incapacity cannot be cured by the Servicer
without incurring, in the reasonable judgment of the Certificate Insurer,
unreasonable expense. Any such determination that the Servicer's duties
hereunder are no longer permissible under applicable law permitting the
resignation of the Servicer shall be evidenced by a written Opinion of Counsel
(who may be outside counsel for the Servicer) to such effect delivered to the
Trustee, the Unaffiliated Seller, the Depositor and the Certificate Insurer. No
such resignation shall become effective until the Trustee or a successor
appointed in accordance with the terms of this Agreement has assumed the
Servicer's responsibilities and obligations hereunder in accordance with Section
7.02. The Servicer shall provide the Trustee, the Rating Agencies and the
Certificate Insurer with 30 days prior written notice of its intention to resign
pursuant to this Section 5.21.
Section 5.22 Periodic Filings with the Securities and Exchange Commission;
Additional Information. The Trustee shall prepare or cause to be prepared for
filing with the Commission (other than the initial Current Report on Form 8-K to
be filed by the Depositor in connection with the issuance of the Certificates)
any and all reports, statements and information respecting the Trust and/or the
Certificates required to be filed, and shall solicit any and all proxies of the
Certificateholders whenever such proxies are required to be solicited, pursuant
to the Securities Exchange Act of 1934, as amended. The Depositor shall promptly
file, and exercise its reasonable best efforts to obtain a favorable response
to, no-action requests with, or other appropriate exemptive relief from, the
Commission seeking the usual and customary exemption from such reporting
requirements granted to issuers of securities similar to the Certificates if and
to the extent the Depositor shall deem any such relief to be necessary or
appropriate. Fees and expenses incurred by the Trustee in connection with the
foregoing shall be reimbursed pursuant to Section 9.05 and shall not be paid by
the Trust.
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The Servicer and the Depositor each agree to promptly furnish to the
Trustee, from time to time upon request, such further information, reports and
financial statements as the Trustee deems appropriate to prepare and file all
necessary reports with the Securities and Exchange Commission.
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01 Establishment of Accounts; Withdrawals from Accounts; Deposits
to the Distribution Account. (a) With respect to each Mortgage Loan Group, the
Trustee shall establish and maintain a Distribution Account which shall be
titled "Distribution Account, The Chase Manhattan Bank, as trustee for the
registered holders of ABFS Mortgage Loan Trust 2001-2, Mortgage Pass-Through
Certificates, Series 2001-2", Mortgage Loan Group [I] [II], as the case may be,
which account shall be an Eligible Account held by the Trustee on behalf of the
related Certificateholders and the Certificate Insurer. The Trustee shall
establish and maintain the Interest Reserve Account which shall be titled
"Interest Reserve Account, The Chase Manhattan Bank, as trustee for the
registered holders of ABFS Mortgage Loan Trust 2001-2, Mortgage Pass-Through
Certificates, Series 2001-2" which account shall be an Eligible Account. The
Trustee shall establish and maintain the Cross-collateralization Reserve Account
which shall be titled "Cross-collateralization Reserve Account, The Chase
Manhattan Bank, as trustee for the registered holders of ABFS Mortgage Loan
Trust 2001-2, Mortgage Pass-Through Certificates, Series 2001-2" which account
shall be an Eligible Account. Upon receipt of the proceeds of the sale of the
Certificates, on the Closing Date, the Trustee shall, upon the Unaffiliated
Seller's direction, from the proceeds of the sale of the Certificates, deposit,
on behalf of the Certificateholders in the Interest Reserve Account, an amount
equal to $1,400,000. Amounts on deposit in the Interest Reserve Account shall be
invested by the Trustee, at the direction of the Servicer in Permitted
Investments. Any such Permitted Investment shall mature no later than the
Servicer Remittance Date. All income realized from any such Permitted Investment
shall be for the benefit of the Servicer as additional servicing compensation.
The amount of any losses incurred in respect of any such Permitted Investment
shall be deposited in the Interest Reserve Account by the Servicer out if its
own funds immediately as realized.
(b) The Servicer shall direct the Trustee in writing to invest the funds in
the Distribution Accounts only in Permitted Investments. Any such Permitted
Investment shall mature no later than one Business Day prior to the Distribution
Date. No Permitted Investment shall be sold or disposed of prior to maturity.
All income realized from any such Permitted Investment shall be for the benefit
of the Servicer as additional servicing compensation. The amount of any losses
incurred in respect of any such investments shall be deposited in the
Distribution Accounts by the Servicer out of its own funds immediately as
realized.
(c) On each Servicer Remittance Date, the Servicer shall cause to be
deposited in each Distribution Account, from funds on deposit in the Collection
Account, (a) an amount equal to the Servicer Remittance Amount allocable for the
related Mortgage Loan Group and (b) Net Foreclosure Profits for the related
Mortgage Loan Group, if any with respect to the related Distribution Date, minus
any portion thereof payable to the Servicer pursuant to Section 5.03. On each
Servicer Remittance Date, the Servicer shall also deposit into the Distribution
Account any Periodic Advances for the related Mortgage Loan Group with respect
to the related Distribution Date calculated in accordance with Section 5.18. If
on any Servicer Remittance Date the amount that would otherwise be deposited by
the Servicer in a Distribution Account for either Mortgage Loan Group exceeds
the amount required to reduce the Certificate Principal Balance of the related
Certificates to zero (such Mortgage Loan Group being the "Amortized Group"),
then the Servicer shall on such date and on each Servicer Remittance Date
thereafter, deposit into the Distribution Account for the other Mortgage Loan
Group all principal in respect of the Mortgage Loans for the Amortized Group
actually collected during the related Due Period (to the extent of such excess).
The amount so deposited by the Servicer will be included in the Available Funds
for such other Mortgage Loan Group and will be applied in accordance with
Section 6.05 on the related Distribution Date.
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Section 6.02 Permitted Withdrawals From the Distribution Account. The
Trustee shall withdraw or cause to be withdrawn funds from the related
Distribution Account for the following purposes:
(a) to effect the distributions described in Section 6.05;
(b) to pay to the Unaffiliated Seller with respect to each Mortgage Loan or
property acquired in respect thereof that has been repurchased or replaced
pursuant to Section 2.05 or 3.03 or to pay to the Servicer with respect to each
Mortgage Loan or property acquired in respect thereof that has been purchased,
all amounts received thereon and not required to be distributed as of the date
on which the related repurchase or purchase price or Principal Balance was
determined;
(c) to pay the Servicer any interest earned on or investment income earned
with respect to funds in the Distribution Account;
(d) to return to the Collection Account any amount deposited in the
Distribution Account that was not required to be deposited therein; and
(e) to clear and terminate the Distribution Account upon termination of the
Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for withdrawals
from the Distribution Accounts pursuant to each of subclauses (a) through (e)
listed above.
Section 6.03 Collection of Money. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of all money and other
property payable to or receivable by the Trustee pursuant to this Agreement,
including (a) all payments due on the Mortgage Loans in accordance with the
respective terms and conditions of such Mortgage Loans and required to be paid
over to the Trustee by the Servicer or by any Sub-Servicer and (b) Insured
Payments. The Trustee shall hold all such money and property received by it, as
part of the Trust Fund and shall apply it as provided in this Agreement.
Section 6.04 The Certificate Insurance Policy. (a) Within two (2) days of
each Servicer Remittance Date and based solely on the Servicer's Remittance
Report delivered to the Trustee, the 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 (i) the Servicer's
remittance of the Servicer Remittance Amount on the related Servicer Remittance
Date and (ii) any transfers made from the Cross-collateralization Reserve
Account in respect of the Shortfall Amount for the related Mortgage Loan Group
and such Distribution Date pursuant to Section 6.05 of this Agreement, excluding
the amount of any Insured Payment and after giving effect to the application of
the amounts described in clauses (a)(i) and (a)(ii) of Section 6.05 for the
related Distribution Date. The amounts described above in the preceding sentence
with respect to the Distribution Date are the "Available Funds" with respect to
such Mortgage Loan Group.
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(b) If on any Distribution Date there is a Deficiency Amount, the Trustee
shall complete a Notice in the form of Exhibit A to the Certificate Insurance
Policy and submit such notice to the Certificate Insurer no later than 12:00
noon New York, New York City time on the third Business Day preceding such
Distribution Date as a claim for an Insured Payment in an amount equal to such
Deficiency Amount.
(c) The Trustee shall establish a separate Eligible Account for the benefit
of Holders of the Certificates and the Certificate Insurer referred to herein as
the "Certificate Insurance Payment Account" over which the Trustee shall have
exclusive control and sole right of withdrawal. The Trustee shall deposit upon
receipt any amount paid under the Certificate Insurance Policy in the
Certificate Insurance Payment Account and distribute such amount only for
purposes of payment to the Class A Certificateholders of the Required
Distribution for which a claim was made and such amount may not be applied to
satisfy any costs, expenses or liabilities of the Servicer, the Trustee or the
Trust Fund. Amounts paid under the Certificate Insurance Policy, to the extent
needed to pay the Required Distribution shall be transferred to the related
Distribution Account on the related Distribution Date and disbursed by the
Trustee to the Class A Certificateholders in accordance with Section 6.05. 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 Required Distribution
with other funds available to make such payment. However, the amount of any
payment of principal or of interest on the Certificates to be paid from funds
transferred from the Certificate Insurance Payment Account shall be noted as
provided in paragraph (d) below in the Certificate Register and in the statement
to be furnished to Holders of the Class A Certificates pursuant to Section 6.07.
Funds held in the Certificate Insurance Payment Account shall not be invested.
Any funds remaining in the Certificate Insurance Payment Account on the first
Business Day following a Distribution Date shall be returned to the Certificate
Insurer pursuant to the written instructions of the Certificate Insurer by the
end of such Business Day.
(d) The Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Certificate from moneys received
under the Certificate Insurance Policy. The Certificate Insurer shall have the
right to inspect such records at reasonable times during normal business hours
upon one Business Day's prior notice to the Trustee.
(e) In the event that the Trustee has received a certified copy of an order
of the appropriate court that any Required Distribution has been voided in whole
or in part as a preference payment under applicable bankruptcy law, the Trustee
shall so notify the Certificate Insurer, shall comply with the provisions of the
Certificate Insurance Policy to obtain payment by the Certificate Insurer of
such voided Required Distribution, and shall, at the time it provides notice to
the Certificate Insurer, notify, by mail to the Certificateholders of the
affected Certificates that, in the event any Certificateholder's Required
Distribution is so recovered, such Certificateholder will be entitled to payment
pursuant to the Certificate Insurance Policy, a copy of which shall be made
available through the Trustee, the Certificate Insurer or the Certificate
Insurer's fiscal agent, if any, and the Trustee shall furnish to the Certificate
Insurer or its fiscal agent, if any, its records evidencing the payments which
have been made by the Trustee and subsequently recovered from the
Certificateholders, and dates on which such payments were made.
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(f) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the 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 Certificates.
Each Certificateholder, by its purchase of Certificates, the Servicer and the
Trustee agree that, the Certificate Insurer (so long as no Certificate 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 Certificate Insurer shall be subrogated to, and
each Certificateholder, the Servicer and the Trustee hereby delegate and assign
to the Certificate Insurer, to the fullest extent permitted by law, the rights
of the Servicer, the Trustee and each Certificateholder 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 Trustee shall, upon retirement of the Certificates, furnish to the
Certificate Insurer a notice of such retirement, and, upon retirement of the
Certificates and the expiration of the term of the Certificate Insurance Policy,
surrender the Certificate Insurance Policy to the Certificate Insurer for
cancellation.
Section 6.05 Distributions. (a) No later than 12:00 noon, New York, New
York time on the Servicer Remittance Date, the Servicer shall deliver to the
Trustee a report in computer-readable form containing such information as to
enable the Trustee to make the distribution pursuant to clause (i) through (xi)
below, and such other information as the Trustee shall reasonably require. With
respect to amounts held in the Distribution Account for the related Mortgage
Loan Group, on each Distribution Date, the Trustee shall make the following
allocations, disbursements and transfers in the following order of priority, and
each such allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations, transfers and disbursements have
occurred:
(i) to the Trustee, an amount equal to the Trustee's Fees then due to it
with respect to such Mortgage Loan Group;
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(ii) to the Certificate Insurer the Premium Amount for such Distribution
Date then due to it with respect to such Mortgage Loan Group;
(iii) the Interest Distribution Amount for the related Class A Certificates
with respect to such Mortgage Loan Group, including the pro rata portion of the
Class A-IO Interest Distribution Amount, apportioned to that Mortgage Loan
Group;
(iv) the Reimbursement Amount owing to the Certificate Insurer with respect
to such Mortgage Loan Group;
(v) the Principal Distribution Amount for that Mortgage Loan Group, which
will be distributed (x) with respect to Mortgage Loan Group I, to the holders of
the Class A-1 Certificates, until the aggregate Certificate Principal Balance of
the Class A-1 Certificates is reduced to zero; and (y) with respect to Mortgage
Loan Group II, (i) to the holders of the Class A-2 Certificates, until the
aggregate Certificate Principal Balance of the Class A-2 Certificates is reduced
to zero, then (ii) to the holders of the Class A-3 Certificates, until the
aggregate Certificate Principal Balance of the Class A-3 Certificates is reduced
to zero, and then (iii) to the holders of the Class A-4 Certificates, until the
aggregate Certificate Principal Balance of the Class A-4 Certificates is reduced
to zero;
(vi) to the Cross-collateralization Reserve Account, the amount necessary
for the balance of such account to equal the Specified Reserve Amount; provided,
that if the outstanding aggregate Certificate Principal Balance of the
Certificates related to such Mortgage Loan Group shall have been reduced to
zero, then all Net Monthly Excess Cashflow in respect of such Mortgage Loan
Group will be transferred to the Cross-collateralization Reserve Account;
(vii) the amount of any Net Mortgage Loan Interest Shortfalls for the Class
A Certificates;
(viii) to the Trustee, an amount equal to the outstanding expenses due the
Trustee pursuant to this Agreement and not otherwise paid or reimbursed by the
Servicer with respect to such Mortgage Loan Group;
(ix) to the Servicer for reimbursement of any Nonrecoverable Advances and
nonrecoverable Servicing Advances with respect to such Mortgage Loan Group;
(x) to the Supplemental Interest Account, as a distribution to the holders
of the Class X Certificates the sum of all amounts to which such Certificates
are entitled pursuant to Section 2.07(a)(i), notes (6) and (7) thereunder and,
to the extent not duplicative, any Over-collateralization Reduction Amounts; and
(xi) to the holders of the Class R Certificates, any further remaining
cashflow.
On each Distribution Date, to the extent there would be any outstanding
Shortfall Amount for either Mortgage Loan Group after the application of the
Available Funds for such Mortgage Loan Group pursuant to clauses (i) through (v)
above (without taking into account any transfers from the
Cross-collateralization Reserve Account or Insured Payments included in such
Available Funds on that date), amounts on deposit in the Cross-collateralization
Reserve Account, including any amounts to be deposited from the other Mortgage
Loan Group pursuant to clause (vi) above on that Distribution Date, shall be
withdrawn from the Cross-collateralization Reserve Account and applied on that
Distribution Date towards the payment of any outstanding Shortfall Amount with
respect to such Mortgage Loan Group on that Distribution Date.
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If on any Distribution Date a Shortfall Amount exists with respect to only
one Mortgage Loan Group (the "Shortfall Group"), then distributions from the
Distribution Account with respect to such Shortfall Group shall not be made
until after the distributions with respect to the other Mortgage Loan Group have
been completed, and the Available Funds for the Shortfall Group shall include
(to the extent of such Shortfall Amount for the Shortfall Group) all amounts on
deposit in the Cross-collateralization Reserve Account after giving effect to
the distributions from the other Mortgage Loan Group. If on any Distribution
Date a Shortfall Amount exists with respect to both Mortgage Loan Groups and the
funds in the Cross-collateralization Reserve Account are not sufficient to pay
such Shortfall Amounts in full, then the funds in the Cross-collateralization
Reserve Account shall be applied to the payment of such Shortfall Amounts in
such order of priority as the Certificate Insurer shall direct or, in the
absence of such direction, pro rata in proportion to the respective Shortfall
Amounts for each Mortgage Loan Group.
If the amount on deposit in the Cross-collateralization Reserve Account on
any Distribution Date, after the deposit in such account on such date of any
amounts pursuant to clause (vi) above and the use of such amounts pursuant to
the preceding paragraph, exceeds or would exceed the Specified Reserve Amount
for such date, the amount of such excess shall be withdrawn from the
Cross-collateralization Reserve Account and deposited into the Distribution
Account to be applied pursuant to clauses (vii) through (xi) above.
Notwithstanding the foregoing, the aggregate amounts distributed on all
Distribution Dates to the Holders of the Class A-1, Class A-2, Class A-3, and
Class A-4 Certificates on account of principal shall not exceed the Original
Certificate Principal Balance for the Class A-1, Class A-2, Class A-3 and Class
A-4 Certificates, respectively.
Section 6.06 Investment of Accounts. (a) So long as no Event of Default
shall have occurred and be continuing, and consistent with any requirements of
the Code, all or a portion of any Account other than the Certificate Insurance
Payment Account held by the Trustee shall be invested and reinvested by the
Trustee, as directed in writing by the Servicer, in one or more Permitted
Investments bearing interest or sold at a discount. If an Event of Default shall
have occurred and be continuing or if the Servicer does not provide investment
directions, the Trustee shall invest all Accounts in Permitted Investments
described in paragraph (iv) of the definition of Permitted Investments. No such
investment in any Account shall mature later than the Business Day immediately
preceding the next Distribution Date (except that if such Permitted Investment
is an obligation of the Trustee, then such Permitted Investment shall mature not
later than such Distribution Date).
(b) Subject to Section 6.01(b), if any amounts are needed for disbursement
from any Account held by the Trustee and sufficient uninvested funds are not
available to make such disbursement, the Trustee shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in such
Account. The Trustee shall not be, and the Servicer shall be, liable for any
investment loss or other charge resulting therefrom unless the Trustee's failure
to perform in accordance with this Section 6.06 is the cause of such loss or
charge.
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(c) Subject to Section 9.01 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Permitted Investment included therein
(except to the extent that the Trustee is the obligor and has defaulted thereon
or as provided in subsection (b) of this Section 6.06).
(d) So long as no Event of Default shall have occurred and be continuing,
all net income and gain realized from investment of, and all earnings on, funds
deposited in any Account (excluding the Certificate Insurance Payment Account)
shall be for the benefit of the Servicer as servicing compensation (in addition
to the Servicing Fee). The Servicer shall deposit in the related Account the
amount of any loss incurred in respect of any Permitted Investment held therein
which is in excess of the income and gain thereon immediately upon realization
of such loss, without any right to reimbursement therefor from its own funds.
Section 6.07 Reports by the Trustee. (a) On each Distribution Date the
Trustee shall forward to each Holder, to the Certificate Insurer, to the
Underwriter, to the Depositor and to the Rating Agencies the report provided by
the Servicer pursuant to Section 6.05 (the "Servicer Remittance Report"),
setting forth information including, without limitation, the following
information:
(i) the amount of the distribution with respect to the Class X-0, Xxxxx
X-0, Class A-3, Class A-4, Class A-IO, Class R and Class X Certificates;
(ii) 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;
(iii) the amount of such distributions allocable to interest and the
calculation thereof;
(iv) the Class A-1 Certificate Principal Balance as of such Distribution
Date, together with the principal amount of the Class A-1 Certificates (based on
a Certificate in an original principal amount of $1,000) then outstanding, in
each case after giving effect to any payment of principal on such Distribution
Date;
(v) the Class A-2 Certificate Principal Balance as of such Distribution
Date, together with the principal amount of the Class A-2 Certificates (based on
a Certificate in an original principal amount of $1,000) then outstanding, in
each case after giving effect to any payment of principal on such Distribution
Date;
(vi) the Class A-3 Certificate Principal Balance as of such Distribution
Date, together with the principal amount of the Class A-3 Certificates (based on
a Certificate in an original principal amount of $1,000) then outstanding, in
each case after giving effect to any payment of principal on such Distribution
Date;
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(vii) the Class A-4 Certificate Principal Balance as of such Distribution
Date, together with the principal amount of the Class A-4 Certificates (based on
a Certificate in an original principal amount of $1,000) then outstanding, in
each case after giving effect to any payment of principal on such Distribution
Date;
(viii) the Class A-IO Notional Amount then outstanding as of such
Distribution Date, after giving effect to any payment of interest on such
Distribution Date.
(ix) the amount of any Insured Payment included in the amounts distributed
to the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-IO
Certificateholders on such Distribution Date;
(x) the total of any Substitution Adjustments and any Loan Repurchase Price
amounts included in such distribution; and
(xi) 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 Startup Date for consumer purpose
loans and for business purpose loans.
Items (i), (ii) and (iii) above shall, with respect to the Class A-1, Class
A-2, Class A-3, and Class A-4 Certificates, be presented on the basis of a
Certificate having a $1,000 denomination. In addition, by January 31 of each
calendar year following any year during which the Certificates are outstanding,
the 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 (i), (ii) and (iii) with respect to the Certificates for
such calendar year.
(b) All distributions made to the Class A-1, the Class A-2, Class A-3,
Class A-4, Class A-IO, Class X and Class R Certificateholders as a Class on each
Distribution Date will be made on a pro rata basis among the Certificateholders
of each Class on the next preceding Record Date based on the Percentage Interest
represented by their respective Certificates, and shall be made by wire transfer
of immediately available funds to the account of such Certificateholder at a
bank or other entity having appropriate facilities therefor, if, in the case of
a Class A-1, Class A-2, Class A-3 or Class A-4 Certificateholder, such
Certificateholder shall own of record Certificates of the same Class which have
denominations aggregating at least $5,000,000 appearing in the Certificate
Register and shall have provided complete wiring instructions at least five
Business Days prior to the Record Date, and otherwise by check mailed to the
address of such Certificateholder appearing in the Certificate Register.
(c) In addition, the Servicer Remittance Report described in subsection (a)
above forwarded by the Trustee to each Holder, to the Certificate Insurer, to
the Underwriter, to the Servicer, to the Depositor and to the Rating Agencies on
each Distribution Date, shall include the following information with respect to
all Mortgage Loans in both Mortgage Loan Groups on a group-by-group basis as
well as a break out as to (x) consumer purpose and business purpose Mortgage
Loans as of the close of business on the last Business Day of the prior calendar
month (except as otherwise provided in clause (v) below), which is hereby
required to be prepared by the Servicer and furnished to the Trustee for such
purpose and to the Certificate Insurer on or prior to the related Servicer
Remittance Date:
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(i) for the related Due Period, the total number of Mortgage Loans and the
aggregate Principal Balances thereof, together with the number, aggregate
principal balances of such Mortgage Loans and the percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of the aggregate Principal
Balances of such Mortgage Loans to the aggregate Principal Balance of all
Mortgage Loans (A) 31-60 days Delinquent, (B) 61-90 days Delinquent and (C) 91
or more days Delinquent;
(ii) for the related Due Period, the number, aggregate Principal Balances
of all Mortgage Loans and percentage (based on the aggregate Principal Balances
of the Mortgage Loans) of the aggregate Principal Balances of such Mortgage
Loans to the aggregate Principal Balance of all Mortgage Loans in foreclosure
proceedings and the number, aggregate Principal Balances of all Mortgage Loans
and percentage (based on the aggregate Principal Balances of the Mortgage Loans)
of any such Mortgage Loans also included in any of the statistics described in
the foregoing clause (i);
(iii) for the related Due Period, the number, aggregate Principal Balances
of all Mortgage Loans and percentage (based on the aggregate Principal Balances
of the Mortgage Loans) of the aggregate Principal Balances of such Mortgage
Loans to the aggregate Principal Balance of all Mortgage Loans relating to
Mortgagors in bankruptcy proceedings and the number, aggregate Principal
Balances of all Mortgage Loans and percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of any such Mortgage Loans also included in any
of the statistics described in the foregoing clause (i);
(iv) for the related Due Period, the number, aggregate Principal Balances
of all Mortgage Loans and percentage (based on the aggregate Principal Balances
of the Mortgage Loans) of the aggregate Principal Balances of such Mortgage
Loans to the aggregate Principal Balance of all Mortgage Loans relating to REO
Properties and the number, aggregate Principal Balances of all Mortgage Loans
and percentage (based on the aggregate Principal Balances of the Mortgage Loans)
of any such Mortgage Loans also included in any of the statistics described in
the foregoing clause (i);
(v) the weighted average Mortgage Interest Rate as of the Due Date
occurring in the Due Period related to such Distribution Date;
(vi) the weighted average remaining term to stated maturity of all Mortgage
Loans;
(vii) the book value of any REO Property;
(viii) the Cumulative Loss Percentage for the related Due Period and the
aggregate Cumulative Loss Percentage since the Closing Date;
(ix) the Delinquency Ratio, the Rolling Three Month Delinquency Rate and
the Twelve Month Loss Amount;
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(x) the aggregate Principal Balance of the three largest Mortgage Loans;
and
(xi) the total number of Mortgage Loans and the Aggregate Principal
Balance.
Section 6.08 Additional Reports by Trustee. (a) The Trustee shall report to
the Depositor, the Servicer and the Certificate Insurer with respect to the
amount then held in each Account (including investment earnings accrued or
scheduled to accrue) held by the Trustee and the identity of the investments
included therein, as the Depositor, the Servicer or the Certificate Insurer may
from time to time request in writing.
(b) From time to time, at the request of the Certificate Insurer, the
Trustee shall report to the Certificate Insurer with respect to its actual
knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth in
any Unaffiliated Seller's Agreement or in Section 3.01 or 3.02 hereof. The
Trustee shall also provide the Certificate Insurer such other information as may
be reasonably requested by it.
Section 6.09 Compensating Interest. Not later than the Servicer Remittance
Date, the Servicer shall remit to the Trustee (without right or reimbursement
therefor) for deposit into the Distribution Account for a Mortgage Loan Group an
amount equal to the lesser of (a) the aggregate of the Prepayment Interest
Shortfalls for the related Distribution Date resulting from Principal
Prepayments in respect of such Mortgage Loan Group during the related Due Period
in respect of such Mortgage Loan Group and (b) its aggregate Monthly Servicing
Fees received in the related Due Period and shall not have the right to
reimbursement therefor (the "Compensating Interest"); provided, however, that
Compensating Interest with respect to any Mortgage Loan and any Distribution
Date shall not exceed the Servicing Fees due in respect of such Mortgage Loan on
such Distribution Date.
Section 6.10 Effect of Payments by the Certificate Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on the Certificates which is made with moneys received
pursuant to the terms of the Certificate Insurance Policy shall not be
considered payment of the Certificates from the Trust Fund. The Depositor, the
Servicer and the Trustee acknowledge, and each Holder by its acceptance of a
Certificate agrees, that without the need for any further action on the part of
the Certificate Insurer, the Depositor, the Servicer, the Trustee or the
Certificate Registrar (a) to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on the
Certificates to the Holders of such Certificates, the Certificate Insurer will
be fully subrogated to, and each Certificateholder, the Servicer and the Trustee
hereby delegate and assign to the Certificate Insurer, to the fullest extent
permitted by law, the rights of such Holders to receive such principal and
interest from the Trust Fund, including, without limitation, any amounts due to
the Certificateholders in respect of securities law violations arising from the
offer and sale of the Certificates, and (b) the Certificate Insurer shall be
paid such amounts from the sources and in the manner provided herein for the
payment of such amounts and as provided in the Insurance and Reimbursement
Agreement. The Trustee and the Servicer shall cooperate in all respects with any
reasonable request by the Certificate Insurer for action to preserve or enforce
the Certificate Insurer's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Holders as otherwise set
forth herein.
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Section 6.11 Additional Rights of Certificate Insurer. (a) Unless a
Certificate Insurer Default exists and is continuing, the Trustee, the Depositor
and the Servicer shall cooperate in all respects with any reasonable request by
the Certificate Insurer for action to preserve or enforce the Certificate
Insurer's rights or interests hereunder without limiting the rights or affecting
the interests of the Certificateholders as otherwise set forth herein.
(b) Unless a Certificate Insurer Default exists and is continuing, the
Certificate Insurer shall have the right to participate in, to direct the
enforcement or defense of, and, at the Certificate Insurer's sole option, to
institute or assume the defense of, any action, proceeding or investigation for
any remedy available to the Trustee with respect to any matter that could
adversely affect the Trust, the Trust Fund or the rights or obligations of the
Certificate Insurer hereunder, under the Unaffiliated Seller Agreement, under
the Insurance and Reimbursement Agreement or under the Certificate Insurance
Policy or any other instrument, document or agreement relating to the foregoing
(collectively, the "Transaction Documents"), including (without limitation) any
insolvency or bankruptcy proceeding in respect of any Originator, the
Unaffiliated Seller, the Servicer, the Depositor or any Affiliate thereof
provided, that such participation or direction shall not be in conflict with any
rule of law or with the terms of this Agreement. Following written notice to the
Trustee, the Certificate Insurer shall have exclusive right to determine, in its
sole discretion, the actions necessary to preserve and protect the Trust and the
Trust Fund. The Certificate Insurer shall be entitled to reimbursement for all
out-of-pocket costs and expenses of the Certificate Insurer in connection with
such action, proceeding or investigation, including (without limitation)
reasonable attorneys' fees and any judgment or settlement entered into affecting
the Certificate Insurer or the Certificate Insurer's interests, all of which
shall be included in the Reimbursement Amount.
(c) In connection with any such action, proceeding or investigation for any
remedy available to the Trustee with respect to any matter that could adversely
affect the Trust, the Trust Fund or the rights or obligations of the Certificate
Insurer hereunder or under the Certificate Insurance Policy or the Transaction
Documents, including (without limitation) any insolvency or bankruptcy
proceeding in respect of any Originator, the Unaffiliated Seller, the Servicer,
the Depositor, the Trust or any Affiliate thereof, the Trustee hereby agrees to
cooperate with, and (unless a Certificate Insurer Default exists and is
continuing) to take such action as reasonably directed by, the Certificate
Insurer, including (without limitation) entering into such agreements and
settlements as the Certificate Insurer shall direct, in its sole discretion,
without the consent of any Certificateholder. Notwithstanding any other
provision herein or in any of the other Transaction Documents, the Trustee shall
not be liable to the Certificate Insurer or any Certificateholder for any such
action that conforms to the direction of the Certificate Insurer.
(d) Any judgment or settlement entered against or affecting the Trust or
the Trust Fund in connection with any action, proceeding or investigation shall
be paid by the Trustee from the Trust Fund out of funds that would otherwise be
distributed to the Holders of the Class X or R Certificates.
(e) The Trustee hereby agrees to provide to the Certificate Insurer prompt
written notice of any action, proceeding or investigation that names the Trust
or the Trustee as a party or that could adversely affect the Trust, the Trust
Fund or the rights or obligations of the Certificate Insurer hereunder or under
the Certificate Insurance Policy or the Transaction Documents, including
(without limitation) any insolvency or bankruptcy proceeding in respect of any
Originator, the Unaffiliated Seller, the Servicer, the Depositor, the Trust or
any Affiliate thereof.
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(f) Notwithstanding anything contained herein or in any of the other
Transaction Documents to the contrary (other than at any time during which a
Certificate Insurer Default exists or is continuing), the Trustee shall not,
without the Certificate Insurer's prior written consent or unless directed by
the Certificate Insurer, undertake or join any litigation or agree to any
settlement of any action, proceeding or investigation affecting the Trust, the
Trust Fund or the rights or obligations of the Certificate Insurer hereunder or
under the Certificate Insurance Policy or the Transaction Documents.
(g) Each Holder of a Certificate, by acceptance of its Certificate, and the
Trustee agree that Certificate Insurer shall have such rights as set forth in
this Section, which are in addition to any rights of the Certificate Insurer
pursuant to the other provisions of the Transaction Documents, that the rights
set forth in this Section may be exercised by the Certificate Insurer, in its
sole discretion, without the need for the consent or approval of any
Certificateholder or the Trustee, notwithstanding any other provision contained
herein or in any of the other Transaction Documents, and that nothing contained
in this Section shall be deemed to be an obligation of the Certificate Insurer
to exercise any of the rights provided for herein.
(h) The Trustee shall, upon reasonable prior written request, permit any
representative of the Certificate Insurer, during the Trustee's normal business
hours, to examine all books of accounts, records, reports and other information
of the Trustee relating to the Certificates and the Trust Fund (including,
without limitation, the Mortgage Files), to make copies and extracts therefrom
and to discuss the Trustee's performance of its duties with respect to the
Transaction Documents with the Responsible Officers of the Trustee.
Section 6.12 Supplemental Interest Payment Account.
(a) The parties hereto do hereby create and establish a trust, the "ABFS
Mortgage Loan Supplemental Interest Trust 2001-2" (the "Supplemental Interest
Trust"). The Supplemental Interest Trust shall hold a trust account at the
corporate trust office of the Trustee; the "Supplemental Interest Payment
Account" to be held by the Trustee in its name on behalf of the Supplemental
Interest Trust. None of the assets of the Supplemental Interest Trust shall be
considered assets of the REMIC Trust, and any amounts transferred from the REMIC
Trust to the Supplemental Interest Trust shall be treated as distributions with
respect to the Class X Certificates.
(b) On each Distribution Date, the Trustee shall withdraw from the
Supplemental Interest Payment Account and pay to the owners of each Supplemental
Interest Right (which owners shall, in the absence of contrary instructions
received by the Trustee from the Holders of the Class A-2 Certificates, be the
Holders of the Class A-2 Certificates), pro rata based on the Class A-2
Available Funds Cap Carry-Forward Amount due to the Class A-2 Certificateholders
for such Distribution Date.
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(c) Any portion of the Supplemental Interest Payment Amount Available
remaining after application of clause (b) above shall be distributed to the
owners of the Class X Certificates pro rata in accordance with their Percentage
Interests.
(d) The Trustee, on behalf of the Supplemental Interest Trust, shall comply
with all requirements of the Code and applicable state and local law with
respect to the withholding from any distributions made by it to any Person
entitled thereto of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
(e) Notwithstanding any other provision of this Section 6.12, the right to
receive the Class A-2 Available Funds Cap Carry-Forward Amount (such right, the
"Supplemental Interest Right") shall be separately transferable from the Class
A-2 Certificates, subject to the restrictions on transfer set forth in Article
IV hereof.
ARTICLE VII
DEFAULT
Section 7.01 Events of Default(a) . (a) In case one or more of the
following events (each an "Event of Default") shall occur and be continuing:
(i) any failure by the Servicer to remit to the Trustee any payment
required to be made by the Servicer under the terms of this Agreement which
continues unremedied for one (1) Business Day after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer and the Certificate Insurer by the Trustee or to
the Servicer and the Trustee by the Certificate Insurer or Certificateholders
of Class A Certificates evidencing Percentage Interests of at least 25%;
(ii) the failure by the Servicer to make any required Servicing Advance
which failure continues unremedied for a period of thirty (30) days after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee or to the
Servicer and the Trustee by any Certificateholder or the Certificate Insurer;
(iii) any failure on the part of the Servicer duly to observe or perform in
any material respect any other of the covenants or agreements on the part of
the Servicer contained in this Agreement, or the failure of any representation
and warranty made pursuant to Section 3.01 to be true and correct which
continues unremedied for a period of thirty (30) days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer, as the case may be, by the Depositor or the
Trustee or to the Servicer and the Trustee by any Certificateholder or the
Certificate Insurer;
(iv) a decree or order of a court or agency or supervisory authority having
jurisdiction in an involuntary case under any present or future federal or
state bankruptcy, insolvency or similar law or for the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force, undischarged
or unstayed for a period of forty-five (45) days;
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(v) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Servicer
or of or relating to all or substantially all of the Servicer's property;
(vi) the Servicer shall admit in writing its inability to pay its debts as
they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its creditors, or voluntarily suspend payment of its obligations;
(vii) the Certificate Insurer shall notify the Trustee of any event of
default under the Insurance and Reimbursement Agreement;
(viii) if on any Distribution Date the Rolling Three Month Delinquency Rate
exceeds 12.50% of the aggregate outstanding Principal Balance of the Mortgage
Loans;
(ix) if on any Distribution Date, the Twelve Month Loss Amount exceeds
2.50% of the sum of the aggregate outstanding Principal Balance of the
Mortgage Loans as of the close of business on the first day of the twelfth
preceding calendar month (or, if later, the Cut-Off Date);
(x) ABFS or the Servicer shall fail to pay any principal or interest when
due on any outstanding indebtedness having an aggregate principal amount in
excess of $1,000,000 and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to
such outstanding indebtedness, or any such outstanding indebtedness of ABFS or
the Servicer having an aggregate principal amount in excess of $1,000,000
shall be declared to be due and payable or required to be prepaid (other than
a regular scheduled payment) prior to the date of maturity thereof;
(xi) Net Worth to be less than the sum of (i) $30,000,000 plus (ii) 50% of
the cumulative Net Income for each fiscal quarter ending after the Closing
Date; (excluding any fiscal quarter for which Net Income was less than zero);
or
(xii) any Change of Control shall occur.
Then, and in each and every such case, so long as such Event of Default
shall not have been remedied: (x) with respect solely to clause (i) above, if
such payment is in respect of Periodic Advances or Compensating Interest owing
by the Servicer and such payment is not made by 12:00 Noon, New York time on the
fourth Business Day prior to the applicable Distribution Date, the Trustee, upon
receipt of written notice or discovery by a Responsible Officer of such failure,
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer and to the Certificate Insurer and the Trustee may, and shall, at
the direction of the Certificate Insurer, terminate all of the rights and
obligations of the Servicer under this Agreement and the Trustee, or a successor
servicer appointed in accordance with Section 7.02, shall immediately make such
Periodic Advance or payment of Compensating Interest and assume, pursuant to
Section 7.02 hereof, the duties of a successor Servicer; (y) with respect to any
other Event of Default, the Trustee shall, at the direction of the Certificate
Insurer, by notice in writing to the Servicer and a Responsible Officer of the
Trustee, terminate all the rights and obligations of the Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof, as
servicer. Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall, subject to Section 7.02, pass to and be vested in the
Trustee or such other Person as may be specified by the Certificate Insurer and
the Trustee is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, at the expense of the
Servicer, any and all documents and other instruments and do or cause to be done
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, including, but not limited to, the transfer and
endorsement or assignment of the Mortgage Loans and related documents. The
Servicer agrees to cooperate (and pay any related costs and expenses) with the
Trustee in effecting the termination of the Servicer's responsibilities and
rights hereunder and the transfer of such responsibilities and rights to a
successor Servicer, including, without limitation, the transfer to the Trustee
or its designee for administration by it of all amounts which shall at the time
be credited by the Servicer to the Collection Account or thereafter received
with respect to the Mortgage Loans. The Trustee shall promptly notify the
Certificate Insurer and the Rating Agencies of the occurrence of an Event of
Default.
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Section 7.02 Trustee to Act; Appointment of Successor. (a) On and after the
time the Servicer receives a notice of termination pursuant to Section 7.01, or
the Trustee receives the resignation of the Servicer evidenced by an Opinion of
Counsel pursuant to Section 5.21, the Trustee shall promptly notify the Rating
Agencies, except as otherwise provided in Section 7.01, the Trustee or such
other Person as may be specified by the Certificate Insurer shall be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof arising on or after
the date of succession; provided, however, that the Trustee shall not be liable
for any actions or the representations and warranties of any servicer prior to
it and including, without limitation, the obligations of the Servicer set forth
in Sections 2.06 and 3.03. The Trustee, as successor servicer, shall be
obligated to pay Compensating Interest pursuant to Section 6.09 in any event and
to make advances pursuant to Section 5.18 unless, and only to the extent the
Trustee determines reasonably and in good faith that such advances would not be
recoverable pursuant to Section 5.04, such determination to be evidenced by a
certification of a Responsible Officer of the Trustee delivered to the
Certificate Insurer.
(b) Notwithstanding the above, the Trustee may, if it shall be unwilling to
so act, or shall, if it is unable to so act or if the Certificate Insurer so
requests in writing to the Trustee, appoint, pursuant to such direction of the
Certificate Insurer, or if no such direction is provided to the Trustee,
pursuant to the provisions set forth in paragraph (c) below, or petition a court
of competent jurisdiction to appoint, any established mortgage loan servicing
institution acceptable to the Certificate Insurer that has a net worth of not
less than $15,000,000 as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer hereunder.
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(c) In the event the Trustee is the successor servicer, it shall be
entitled to the same Servicing Compensation (including the Servicing Fee as
adjusted pursuant to the definition thereof) and other funds pursuant to Section
5.08 hereof as the Servicer if the Servicer had continued to act as servicer
hereunder. In the event the Trustee is unable or unwilling to act as successor
servicer, the Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth above. Such public announcement shall specify that
the successor servicer shall be entitled to the full amount of the aggregate
Servicing Fees hereunder as servicing compensation, together with the other
Servicing Compensation. Within thirty days after any such public announcement,
the Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest qualifying bid. The Trustee shall deduct from any sum
received by the Trustee from the successor to the Servicer in respect of such
sale, transfer and assignment all costs and expenses of any public announcement
and of any sale, transfer and assignment of the servicing rights and
responsibilities hereunder and the amount of any unreimbursed Servicing Advances
and Periodic Advances owed to the Trustee. After such deductions, the remainder
of such sum shall be paid by the Trustee to the Servicer at the time of such
sale, transfer and assignment to the Servicer's successor.
(d) The Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession. The
Servicer agrees to cooperate with the Trustee and any successor servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
servicer, as applicable, at the Servicer's cost and expense, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor servicer, as applicable, all amounts that then have been or should
have been deposited in the Collection Account by the Servicer or that are
thereafter received with respect to the Mortgage Loans. Any collections received
by the Servicer after such removal or resignation shall be endorsed by it to the
Trustee and remitted directly to the Trustee or, at the direction of the
Trustee, to the successor servicer. Neither the Trustee nor any other successor
servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer hereunder. Notwithstanding anything to the
contrary herein, no appointment of a successor to the Servicer under this
Agreement shall be effective until the Certificate Insurer shall have consented
thereto, and written notice of such proposed appointment shall have been
provided by the Trustee to the Certificate Insurer and to each
Certificateholder. The Trustee shall not resign as servicer until a successor
servicer reasonably acceptable to the Certificate Insurer has been appointed or
until a successor servicer has been appointed in accordance with paragraph (c)
above. The Certificate Insurer shall have the right to remove the Trustee (or
any Successor Servicer) as successor Servicer under this Section 7.02 without
cause, and the Trustee shall appoint such other successor Servicer as directed
by the Certificate Insurer.
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(e) Pending appointment of a successor to the Servicer hereunder, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as the
Certificate Insurer and such successor shall agree; provided, however, that
unless otherwise agreed by the Certificate Insurer, no such compensation shall
be in excess of that permitted the Servicer pursuant to Section 5.08, together
with other Servicing Compensation. The Servicer, the Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
Section 7.03 Waiver of Defaults. The Majority Certificateholders may, on
behalf of all Certificateholders, and subject to the consent of the Certificate
Insurer, waive any events permitting removal of the Servicer as servicer
pursuant to this Article VII; provided, however, that the Majority
Certificateholders may not waive a default in making a required distribution on
a Certificate without the consent of the holder of such Certificate. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived. Notice of any such waiver shall be given by the Trustee to
the Rating Agencies and the Certificate Insurer.
Section 7.04 Rights of the Certificate Insurer to Exercise Rights of Class
A Certificateholders. By accepting its Certificate, each Class A
Certificateholder agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall be deemed to be the Certificateholders for all
purposes (other than with respect to the receipt of payment on the Certificates)
and shall have the right to exercise all rights of the Class A
Certificateholders under this Agreement and under the Class A Certificates
without any further consent of the Class A Certificateholders, including,
without limitation:
(a) the right to require the Unaffiliated Seller to repurchase Mortgage
Loans pursuant to Section 2.06 or 3.03 hereof to the extent set forth in such
Sections;
(b) the right to give notices of breach or to terminate the rights and
obligations of the Servicer as servicer pursuant to Section 7.01 hereof and to
consent to or direct waivers of Servicer defaults pursuant to Section 7.03
hereof;
(c) the right to direct the actions of the Trustee during the continuance
of an Event of Default pursuant to Sections 7.01 and 7.02 hereof;
(d) the right to institute proceedings against the Servicer pursuant to
Section 7.01 hereof;
(e) the right to direct the Trustee to investigate certain matters pursuant
to Section 9.02(a)(v) hereof;
(f) the right to remove the Trustee pursuant to Section 9.07 hereof;
(g) the right to direct foreclosures upon the failure of the Servicer to do
so in accordance with the provisions of Section 5.06 of this Agreement; and
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(h) any rights or remedies expressly given the Majority Certificateholders.
In addition, each Certificateholder agrees that, subject to Section 10.02,
unless a Certificate Insurer Default exists, the rights specifically enumerated
above may only be exercised by the Certificateholders with the prior written
consent of the Certificate Insurer.
Section 7.05 Trustee To Act Solely with Consent of the Certificate Insurer.
Unless a Certificate Insurer Default exists, the Trustee shall not, without the
Certificate Insurer's consent or unless directed by the Certificate Insurer:
(a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 7.01 hereof;
(b) agree to any amendment pursuant to Section 10.03 hereof; or
(c) undertake any litigation.
The Certificate Insurer may, in writing and in its sole discretion renounce
all or any of its rights under Sections 7.04, 7.05 or 7.06 or any requirement
for the Certificate Insurer's consent for any period of time.
Section 7.06 Mortgage Loans, Trust Fund and Accounts Held for Benefit of
the Certificate Insurer. (a) The Trustee shall hold the Trust Fund and the
Mortgage Files for the benefit of the Certificateholders and the Certificate
Insurer and all references in this Agreement and in the Certificates to the
benefit of Holders of the Certificates shall be deemed to include the
Certificate Insurer. The Trustee shall cooperate in all reasonable respects with
any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement and
the Certificates unless, as stated in an Opinion of Counsel addressed to the
Trustee and the Certificate Insurer, such action is adverse to the interests of
the Certificateholders or diminishes the rights of the Certificateholders or
imposes additional burdens or restrictions on the Certificateholders.
(b) The Servicer hereby acknowledges and agrees that it shall service the
Mortgage Loans for the benefit of the Certificateholders and for the benefit of
the Certificate Insurer, and all references in this Agreement to the benefit of
or actions on behalf of the Certificateholders shall be deemed to include the
Certificate Insurer.
Section 7.07 Certificate Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Certificates to the contrary, if a
Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of all of its rights under this
Agreement, the provisions of this Article VII and all other provisions of this
Agreement which (a) permit the Certificate Insurer to exercise rights of the
Certificateholders, (b) restrict the ability of the Certificateholders, the
Servicer or the Trustee to act without the consent or approval of the
Certificate Insurer, (c) provide that a particular act or thing must be
acceptable to the Certificate Insurer, (d) permit the Certificate Insurer to
direct (or otherwise to require) the actions of the Trustee, the Servicer or the
Certificateholders, (e) provide that any action or omission taken with the
consent, approval or authorization of the Certificate 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 Trustee shall administer the Trust
Fund and perform its obligations hereunder solely for the benefit of the Holders
of the Certificates. Nothing in the foregoing sentence, nor any action taken
pursuant thereto or in compliance therewith, shall be deemed to have released
the Certificate Insurer from any obligation or liability it may have to any
party or to the Certificateholders hereunder, under any other agreement,
instrument or document (including, without limitation, the Certificate Insurance
Policy) or under applicable law.
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ARTICLE VIII
TERMINATION
Section 8.01 Termination. (a) Subject to Section 8.02, this Agreement shall
terminate upon notice to the Trustee of the later of the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or Periodic Advances of same by the Servicer), or the disposition
of all funds with respect to the last Mortgage Loan and the remittance of all
funds due hereunder and the payment of all Reimbursement Amounts, Premium
Amounts, Trustee Fees and other amounts due and payable to the Certificate
Insurer and the Trustee; provided, however, that in no event shall the Trust
established by this Agreement terminate later than: (i) twenty-one years after
the death of the last surviving lineal descendant of Xxxxxx X. Xxxxxxx, late
Ambassador of the United States to the Court of St. Xxxxx, alive as of the date
hereof or (ii) the Distribution Date in December 2031.
(b) In addition, subject to Section 8.02, Servicer may, at its option and
at its sole cost and expense, terminate this Agreement on the first Distribution
Date after any Distribution Date on which the Aggregate Principal Balance is
less than 10% of the Original Aggregate Principal Balance (the "Clean-Up Call
Date") by purchasing, on such succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the sum of (i)
100% of the aggregate Principal Balance of each outstanding Mortgage Loan and
each REO Property and (ii) the greater of (1) the Aggregate amount of accrued
and unpaid interest on the Mortgage Loans through the related Due Period and (2)
30 days' accrued interest thereon computed at a rate equal to the related
Mortgage Interest Rate, in each case net of the Servicing Fee, (iii) any
Reimbursements, Amounts or Premium Amounts due to the Certificate Insurer under
this Agreement and any I&I Payments and (iv) any Trustee Fees or other amounts
due to the Trustee hereunder (the "Termination Price"); provided that in no
event will the Termination Price be less than the sum of the Class A-1
Certificate Principal Balance, the Class A-2 Certificate Principal Balance,
Class A-3 Certificate Principal Balance and Class A-4 Certificate Principal
Balance plus all accrued and unpaid interest on the Class X-0, Xxxxx X-0, Class
A-3, Class A-4 and Class A-IO Certificates plus all accrued and unpaid Premium
Amounts, Reimbursement Amounts and all amounts due the Trustee hereunder plus
all unreimbursed Periodic Advances and Servicing Advances. Any such purchase
shall be accomplished by deposit of the Termination Price into the Distribution
Account (such deposit to be made ratably between the Distribution Accounts in
proportion to the amounts described in the proviso to the preceding sentence for
each Mortgage Loan Group). No such termination is permitted without the prior
written consent of the Certificate Insurer if it would result in a draw on the
Certificate Insurance Policy.
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(c) If on any Distribution Date, the Servicer determines that there are no
outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than funds in the Distribution Account, the Servicer shall send a final
distribution notice promptly to each such Certificateholder and any Certificate
Insurer in accordance with paragraph (d) below.
(d) Notice of any termination, specifying the Distribution Date upon which
the Trust Fund will terminate and the Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation, shall be given promptly by the Servicer by letter to
Certificateholders and the Certificate Insurer mailed during the month of such
final distribution before the Servicer Remittance Date in such month, specifying
(i) the Distribution Date upon which final payment of the Certificates will be
made upon presentation and surrender of Certificates at the office of the
Trustee therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified. The Servicer shall
give such notice to the Trustee therein specified. The Servicer shall give such
notice to the Trustee at the time such notice is given to Certificateholders.
The obligations of the Certificate Insurer hereunder shall terminate upon the
deposit by the Servicer with the Trustee of a sum sufficient to purchase all of
the Mortgage Loans and REO Properties as set forth above or when the Class A-1
Certificate Principal Balance, Class A-2 Certificate Principal Balance, Class
A-3 Certificate Principal Balance and Class A-4 Certificate Principal Balance
have been reduced to zero.
(e) In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned written notice, the Servicer shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, all of the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within nine months after the second notice all the Certificates shall
not have been surrendered for cancellation, the Class R Certificateholders shall
be entitled to all unclaimed funds and other assets which remain subject hereto
and the Trustee upon transfer of such funds shall be discharged of any
responsibility for such funds and the Certificateholders shall look only to the
Class R Certificateholders for payment and not to the Certificate Insurer or the
Trustee. Such funds shall remain uninvested.
Section 8.02 Additional Termination Requirements. (a) In the event that the
Servicer exercises its purchase option as provided in Section 8.01, the Trust
Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee and the Certificate Insurer have been furnished
with an Opinion of Counsel to the effect that the failure of the Trust Fund to
comply with the requirements of this Section 8.02 will not (i) result in the
imposition of taxes on "prohibited transactions" of any REMIC created hereunder
as defined in Section 860F of the Code or (ii) cause any REMIC created hereunder
to fail to qualify as a REMIC at any time that any Class A-1, Class A-2, Class
A-3, Class A-4 or Class A-IO Certificates are outstanding:
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(i) Within 90 days prior to the final Distribution Date the Servicer shall
adopt and the Trustee shall sign, a plan of complete liquidation of each REMIC
created hereunder meeting the requirements of a "Qualified Liquidation" under
Section 860F of the Code and any regulations thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee shall
sell all of the assets of the REMIC I to the Servicer for cash; and
(iii) At the time of the making of the final payment on the Certificates,
the Trustee shall distribute or credit, or cause to be distributed or credited
(A) to the Class A-1 Certificateholders, the Class A-1 Certificate Principal
Balance, plus one month's interest thereon at the Class A-1 Pass-Through Rate,
(B) to the Class A-2 Certificateholders, the Class A-2 Certificate Principal
Balance, plus one month's interest thereon at the Class A-2 Pass-Through Rate,
(C) to the Class A-3 Certificateholders, the Class A-3 Certificate Principal
Balance, plus one month's interest thereon at the Class A-3 Pass-Through Rate,
(D) to the Class A-4 Certificateholders, the Class A-4 Certificate Principal
Balance, plus one month's interest thereon at the Class A-4 Pass-Through Rate,
(E) to the Certificate Insurer any amounts due the Certificate Insurer under
this Agreement or the Insurance and Reimbursement Agreement and unpaid,
including all Reimbursement Amounts, and (F) to the Class X
Certificateholders, all cash on hand after such payment to the Class A-1,
Class A-2, Class A-3 and Class A-4 Certificateholders (other than cash
retained to meet claims) and the Trust Fund shall terminate at such time;
provided, however that any such payment will be made after all outstanding
fees, costs and expenses of the Trustee have been paid in full.
(b) By their acceptance of the Certificates, the Holders thereof hereby
agree to appoint the Servicer as their attorney in fact to: (i) adopt such a
plan of complete liquidation (and the Certificateholders hereby appoint the
Trustee as their attorney in fact to sign such plan) as appropriate or upon the
written request of the Certificate Insurer and (ii) to take such other action in
connection therewith as may be reasonably required to carry out such plan of
complete liquidation all in accordance with the terms hereof.
Section 8.03 Accounting Upon Termination of Servicer. Upon termination of
the Servicer, the Servicer shall, at its expense:
(a) deliver to its successor or, if none shall yet have been appointed, to
the Trustee, the funds in any Account;
(b) deliver to its successor or, if none shall yet have been appointed, to
the Trustee all Mortgage Files and related documents and statements held by it
hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been appointed, to
the Trustee and, upon request, to the Certificateholders a full accounting of
all funds, including a statement showing the Monthly Payments collected by it
and a statement of monies held in trust by it for the payments or charges with
respect to the Mortgage Loans; and
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(d) execute and deliver such instruments and perform all acts reasonably
requested in order to effect the orderly and efficient transfer of servicing of
the Mortgage Loans to its successor and to more fully and definitively vest in
such successor all rights, powers, duties, responsibilities, obligations and
liabilities of the "Servicer" under this Agreement.
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of Trustee. (a) The Trustee, prior to the occurrence of
an Event of Default of which a Responsible Officer of the Trustee shall have
actual knowledge and after the curing of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge has occurred and
has not been cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement; provided, however,
that the Trustee shall not be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Servicer or the Unaffiliated Seller hereunder. If
any such instrument is found not to conform on its face to the requirements of
this Agreement, the Trustee will, at the expense of the Servicer notify the
Certificate Insurer of such instrument in the event the Trustee, after so
requesting, does not receive a satisfactorily corrected instrument.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default of which a Responsible
Officer of the Trustee shall have actual knowledge, and after the curing of
all such Events of Default which may have occurred, the duties and obligations
of the Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Agreement;
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(ii) the Trustee shall not be personally liable for an error of judgment
made in good faith by a Responsible Officer or other officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
this Agreement or at the direction of the Certificate Insurer, unless a
Certificate Insurer Default shall have occurred and be continuing, or with the
consent of the Certificate Insurer, unless a Certificate Insurer Default shall
have occurred and be continuing, the Majority Certificateholders, relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement;
(iv) the Trustee shall not be required to take notice or be deemed to have
notice or knowledge of any default or Event of Default (except an Event of
Default with respect to the nonpayment of any amount described in Section
7.01(a)), unless a Responsible Officer of the Trustee shall have received
written notice thereof. In the absence of receipt of such notice, the Trustee
may conclusively assume that there is no default or Event of Default;
(v) the Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability for the performance of any of its duties
hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer under this Agreement except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement; and
(vi) subject to the other provisions of this Agreement (and except in its
capacity as successor Servicer) and without limiting the generality of this
Section, the Trustee shall have no duty (A) to see to any recording, filing,
or depositing of this Agreement 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 or 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, the Trust Fund,
the Certificateholders or the Mortgage Loans, (D) to confirm or verify the
contents of any reports or certificates of the Servicer delivered to the
Trustee pursuant to this Agreement believed by the Trustee to be genuine and
to have been signed or presented by the proper party or parties.
(d) It is intended that the Trust Fund formed hereunder shall constitute,
and that the affairs of the REMIC Trust shall be conducted so as to qualify it
as four separate REMICs as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Unaffiliated Seller, as Class
R Certificateholder, covenants and agrees that it shall appoint the Servicer to
act as agent (and the Servicer is hereby appointed to act as agent) and as Tax
Matters Person on behalf of each REMIC created hereunder, and that in such
capacities it shall:
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(i) prepare, sign and file, or cause to be prepared and filed, in a timely
manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax Return (Form
1066) and any other Tax Return required to be filed by each REMIC created
hereunder, using a calendar year as the taxable year for each REMIC created
hereunder;
(ii) make, or cause to be made, an election, on behalf of each REMIC
created hereunder, to be treated as a REMIC on the federal tax return of each
REMIC created hereunder for its first taxable year;
(iii) prepare and forward, or cause to be prepared and forwarded, to the
Trustee, the Certificateholders and to the Internal Revenue Service and any
other relevant governmental taxing authority all information returns or
reports as and when required to be provided to them in accordance with the
REMIC Provisions;
(iv) to the extent that the affairs of the Trust Fund are within its
control, conduct such affairs of the Trust Fund at all times that any
Certificates are outstanding so as to maintain the status of each REMIC
created hereunder as a REMIC under the REMIC Provisions and any other
applicable federal, state and local laws, including, without limitation,
information reports relating to "original issue discount," as defined in the
Code, based upon the Prepayment Assumption and calculated by using the issue
price of the Certificates;
(v) not knowingly or intentionally take any action or omit to take any
action that would cause the termination of the REMIC status of any REMIC
created hereunder;
(vi) pay the amount of any and all federal, state, and local taxes,
including, without limitation, upon the Trustee or the Certificateholders in
connection with the Trust, the Trust Fund or the Mortgage Loans, prohibited
transaction taxes as defined in Section 860F of the Code, other than any
amount due as a result of a transfer or attempted or purported transfer in
violation of Section 4.02, imposed on any REMIC created hereunder when and as
the same shall be due and payable (but such obligation shall not prevent the
Unaffiliated Seller or any other appropriate Person from contesting any such
tax in appropriate proceedings and shall not prevent the Unaffiliated Seller
from withholding payment of such tax, if permitted by law, pending the outcome
of such proceedings).
(vii) ensure that any such returns or reports filed on behalf of any REMIC
created hereunder by the Trustee are properly executed by the appropriate
person and submitted in a timely manner;
(viii) represent any REMIC created hereunder in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year
of any REMIC created hereunder, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
item of any REMIC created hereunder and otherwise act on behalf of each REMIC
created hereunder in relation to any tax matter involving any REMIC created
hereunder;
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(ix) as provided in Section 5.11 hereof, make available information
necessary for the computation of any tax imposed (1) on transferors of
residual interests to transferees that are not Permitted Transferees or (2) on
pass-through entities, any interest in which is held by an entity which is not
a Permitted Transferee. The Trustee covenants and agrees that it will
cooperate with the Servicer in the foregoing matters and that it will sign, as
Trustee, any and all Tax Returns required to be filed by each REMIC created
hereunder. Notwithstanding the foregoing, at such time as the Trustee becomes
the successor Servicer, the holder of the largest percentage of the Class R
Certificates shall serve as Tax Matters Person until such time as an entity is
appointed to succeed the Trustee as Servicer;
(x) make available to the Internal Revenue Service and those Persons
specified by the REMIC Provisions all information necessary to compute any tax
imposed (A) as a result of the Transfer of an Ownership Interest in a Class R
Certificate to any Person who is not a Permitted Transferee, including the
information described in Treasury regulations sections 1.860D-1(b)(5) and
1.860E-2(a)(5)with respect to the "excess inclusions" of such Class R
Certificate and (B) as a result of any regulated investment company, real
estate investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an Ownership
Interest in a Class R Certificate having as among its record holders at any
time any Person that is not a Permitted Transferee. Reasonable compensation
for providing such information may be accepted by the Trustee;
(xi) pay out of its own funds, without any right of reimbursement, any and
all tax related expenses of each REMIC created hereunder (including, but not
limited to, tax return preparation and filing expenses and any professional
fees or expenses related to audits or any administrative or judicial
proceedings with respect to each REMIC created hereunder that involve the
Internal Revenue Service or state tax authorities), other than the expense of
obtaining any Opinion of Counsel required pursuant to Sections 3.03, 5.10 and
8.02 and other than taxes except as specified herein;
(xii) upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificates the Form 1066 and each Form
1066Q and the Unaffiliated Seller shall respond promptly to written requests
made not more frequently than quarterly by any Holder of Class R Certificates
with respect to the following matters:
(A) the original projected principal and interest cash flows on the
Closing Date on the regular and residual interests created hereunder and on
the Mortgage Loans, based on the Prepayment Assumption;
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(B) the projected remaining principal and interest cash flows as of the
end of any calendar quarter with respect to the regular and residual
interests created hereunder and the Mortgage Loans, based on the Prepayment
Assumption;
(C) the Prepayment Assumption and any interest rate assumptions used in
determining the projected principal and interest cash flows described
above;
(D) the original issue discount (or, in the case of the Mortgage Loans,
market discount) or premium accrued or amortized through the end of such
calendar quarter with respect to the regular or residual interests created
hereunder and with respect to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(E) the treatment of losses realized with respect to the Mortgage Loans
or the regular interests created hereunder, including the timing and amount
of any cancellation of indebtedness income of any REMIC created hereunder
with respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(F) the amount and timing of any non-interest expenses of any REMIC
created hereunder; and
(G) any taxes (including penalties and interest) imposed on any REMIC
created hereunder, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure property" or
state or local income or franchise taxes; and
(xiii) make any other required reports in respect of interest payments in
respect of the Mortgage Loans and acquisitions and abandonments of Mortgaged
Property to the Internal Revenue Service and/or the borrowers, as applicable.
(e) In the event that any tax is imposed on "prohibited transactions" of
any REMIC created hereunder as defined in Section 860F(a)(2) of the Code, on the
"net income from foreclosure property" of any REMIC created hereunder as defined
in Section 860G(c) of the Code, on any contribution to any REMIC created
hereunder after the Startup Day pursuant to Section 860G(d) of the Code, or any
other tax is imposed, such tax shall be paid by (i) the Trustee, if such tax
arises out of or results from a breach by the Trustee of any of its obligations
under this Agreement, (ii) the Servicer, if such tax arises out of or results
from a breach by the Servicer of any of its obligations under this Agreement, or
otherwise (iii) the holders of the Class R Certificates in proportion to their
Percentage Interests. To the extent such tax is chargeable against the holders
of the Class R Certificates, notwithstanding anything to the contrary contained
herein, the Trustee is hereby authorized to retain from amounts otherwise
distributable to the Holders of the Class R Certificates on any Distribution
Date sufficient funds to for the payment of such tax.
Section 9.02 Certain Matters Affecting the Trustee(a) . (a) Except as
otherwise provided in Section 9.01:
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(i) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, Opinion of Counsel,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any Opinion of Counsel shall
be full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such opinion of counsel;
(iii) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to institute, conduct or
defend by litigation hereunder or in relation hereto at the request, order or
direction of the Certificate Insurer or any of the Certificateholders,
pursuant to the provisions of this Agreement, unless such Certificateholders
or the Certificate Insurer, as applicable, shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein by the Trustee or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default of which a Responsible Officer of the
Trustee shall have actual knowledge (which has not been cured), to exercise
such of the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs;
(iv) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(v) the 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 Certificate
Insurer or the Majority Certificateholders; provided, however, that if the
payment within a reasonable time to the 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 Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the Trustee may
require reasonable indemnity satisfactory to the Trustee against such cost,
expense or liability as a condition to taking any such action. The reasonable
expense of every such examination shall be paid by the Servicer or, if paid by
the Trustee, shall be repaid by the Servicer upon demand from the Servicer's
own funds;
(vi) the right of the Trustee to perform any discretionary act enumerated
in this Agreement shall not be construed as a duty, and the Trustee shall not
be answerable for other than its negligence or willful misconduct in the
performance of such act;
(vii) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust created hereby or the powers granted
hereunder; and
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(viii) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
attorneys or custodians and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed by the Trustee with due care.
(b) Following the Startup Day, the Trustee shall not knowingly accept any
contribution of assets to the Trust Fund, unless the Trustee and the Certificate
Insurer shall have received an Opinion of Counsel (at the expense of the
Servicer) to the effect that the inclusion of such assets in the Trust Fund will
not cause any REMIC created hereunder to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject any REMIC created hereunder to
any tax under the REMIC Provisions or other applicable provisions of federal,
state and local law or ordinances. The Trustee agrees to indemnify the Trust
Fund and the Servicer for any taxes and costs, including any attorney's fees,
imposed or incurred by the Trust Fund or the Servicer as a result of the breach
of the Trustee's covenants set forth within this subsection (b).
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein or in the Certificates (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Unaffiliated Seller or the Servicer as the case may be, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Agreement or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or the proceeds of the
Certificates, or for the use or application of any funds paid to the Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the Collection
Account by the Servicer. The Trustee shall not be responsible for the legality
or validity of the Agreement or the validity, priority, perfection or
sufficiency of the security for the Certificates issued or intended to be issued
hereunder. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04 Trustee May Own Certificates. The Trustee in its individual or
any other capacity may become the owner or pledgor of Certificates with the same
rights it would have if it were not Trustee, and may otherwise deal with the
parties hereto.
Section 9.05 Trustee's Fees and Expenses; Indemnity. (a) The Trustee
acknowledges that in consideration of the services rendered by the Trustee in
the execution of the trust hereby created and in the exercise and performance of
any of the powers and duties hereunder it is entitled to receive the Trustee's
Fee in accordance with the provision of Section 6.05(a) (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
any express trust). Additionally, the Trustee hereby covenants, for the benefit
of the Depositor and the Certificate Insurer, that the Trustee has arranged
separately with the Servicer for the payment or reimbursement to the Trustee of
all of the Trustee's expenses in connection with this Agreement, including,
without limitation, all reasonable out of pocket expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ). Notwithstanding any other provision of this Agreement to the
contrary, the Servicer covenants and agrees to indemnify the Trustee and its
officers, directors, employees and agents from, and hold it harmless against,
any and all losses, liabilities, damages, claims or expenses incurred in
connection with any legal action relating to this Agreement, the Certificates or
incurred in connection with the administration of the Trust, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence of the Trustee in the performance of its duties hereunder or by
reason of the Trustee's reckless disregard of obligations and duties hereunder.
For the avoidance of doubt, the parties hereto acknowledge that it is the intent
of the parties that the Depositor and the Certificate Insurer shall not pay any
of the Trustee's fees and expenses in connection with this transaction.
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(b) The Trust Fund, the Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Servicer and held harmless
against any loss, liability, claim, damage or expense arising out of, or imposed
upon the Trust or the Trustee through the Servicer's acts or omissions in
violation of this Agreement, other than any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence of the Trustee in the
performance of its duties hereunder or by reason of the Trustee's reckless
disregard of obligations and duties hereunder. The Servicer shall immediately
notify the Trustee, the Servicer, the Depositor, the Certificate Insurer and all
Certificateholders if a claim is made by a third party with respect to this
Agreement, and the Servicer shall assume (with the consent of the Certificate
Insurer) the defense of any such claim and advance all expenses in connection
therewith, including reasonable counsel fees, and promptly advance funds to pay,
discharge and satisfy any judgment or decree which may be entered against the
Servicer, the Depositor, the Trustee, the Certificate Insurer and/or any
Certificateholder in respect of such claim. The obligations of the Servicer
under this Section 9.05 arising prior to any resignation or termination of the
Servicer hereunder shall survive the resignation or removal of the Trustee,
termination of the Servicer and payment of the Certificates, and shall extend to
any co-trustee or separate trustee appointed pursuant to this Article IX.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Trustee be liable for special, indirect or consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action.
Section 9.06 Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be a banking entity (a) organized and doing business under
the laws of any state or the United States of America subject to supervision or
examination by federal or state authority, (b) authorized under such laws to
exercise corporate trust powers, including taking title to the Trust Fund assets
on behalf of the Certificateholders, (c) be a wholly owned subsidiary of a bank
holding company having a combined capital and surplus of at least $50,000,000,
(d) whose long-term deposits, if any, shall be rated at least BBB- by S&P and
Baa3 by Xxxxx'x (except as provided herein) or such lower long-term deposit
rating as may be approved in writing by the Certificate Insurer, and (e)
reasonably acceptable to the Certificate Insurer as evidenced in writing. If
such banking entity publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of determining an entity's combined capital and
surplus for clause (c) of this Section, the amount set forth in its most recent
report of condition so published shall be deemed to be its combined capital and
surplus. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.07.
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Section 9.07 Resignation and Removal of the Trustee. (a) The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer, the Certificate Insurer and the
Depositor. Upon receiving such notice of resignation, the Certificate Insurer
may promptly appoint a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the resigning Trustee and to the
successor trustee. A copy of such instrument shall be delivered to the
Depositor, the Certificateholders, the Certificate Insurer and the Unaffiliated
Seller by the Servicer. Unless a successor trustee shall have been so appointed
and shall have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Servicer or the Certificate Insurer, or if at any time
the Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or the Trustee shall breach any of its obligations hereunder in any
material respect then the Servicer (with the consent of the Certificate Insurer)
or the Certificate Insurer may remove the Trustee and the Servicer shall, at the
direction of the Certificate Insurer, and the Certificate Insurer may, within
thirty (30) days after such removal, appoint, a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor trustee. A copy of such instrument shall be
delivered to the Depositor, the Certificateholders, the Certificate Insurer and
the Unaffiliated Seller by the Servicer.
(c) If the Trustee fails to perform in accordance with the terms of this
Agreement, the Majority Certificateholders (with the consent of the Certificate
Insurer) or the Certificate Insurer may remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed by
such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be delivered to the Servicer, one complete set to the
Trustee and the Certificate Insurer so removed and one complete set to the
successor Trustee so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 9.08.
Section 9.08 Successor Trustee. Any successor trustee appointed as provided
in Section 9.07 shall execute, acknowledge and deliver to the Depositor, the
Certificate Insurer, the Unaffiliated Seller, the Servicer and to its
predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and related documents and statements held by it
hereunder, and the Servicer and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations. No successor trustee shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee shall be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register and to the Rating Agencies. If the Servicer fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Servicer.
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Section 9.09 Merger or Consolidation of Trustee. Any Person into which the
Trustee may be merged or converted or with which it may be consolidated or any
corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or national banking association succeeding to the business of the
trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 9.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.10 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
9.10 and the consent of the Certificate Insurer, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 9.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 9.08 hereof.
(b) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
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(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co-trustee, provided
that the Trustee appointed such separate trustee or co-trustee with due care. If
any separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 9.11 Tax Returns. The Servicer, upon request, will promptly furnish
the Trustee with all such information as may be reasonably required in
connection with the Trustee's preparation of all Tax Returns of the Trust Fund
or for the purpose of the Trustee responding to reasonable requests for
information made by Certificateholders in connection with tax matters and, upon
request within five (5) Business Days after its receipt thereof, the Servicer
shall (a) sign on behalf of the Trust Fund any Tax Return that the Servicer is
required to sign pursuant to applicable federal, state or local tax laws, and
(b) cause such Tax Return to be returned to the Trustee for filing and for
distribution to Certificateholders if required.
Section 9.12 Retirement of Certificates. The Trustee shall, upon the
retirement of the Certificates pursuant hereto or otherwise, furnish to the
Certificate Insurer a notice of such retirement, and, upon retirement of the
Certificates and the expiration of the term of the Certificate Insurance Policy,
shall surrender the Certificate Insurance Policy to the Certificate Insurer for
cancellation.
Section 9.13 Trustee May Enforce Claims Without Possession of Certificates.
All rights of action and claims under this Agreement or the Certificates may be
prosecuted and enforced by the Trustee without the possession of any of the
Certificates or the production thereof in any proceeding relating thereto, any
such proceeding instituted by the Trustee shall be brought in its own name or in
its capacity as Trustee. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been recovered.
Section 9.14 Suits for Enforcement. In case an Event of Default or other
default by the Servicer hereunder shall occur and be continuing, the Trustee, in
its discretion, but subject to Section 9.01 and Section 7.01, as applicable, may
proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee or the
Certificateholders.
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ARTICLE X
THE COLLATERAL AGENT
Section 10.01 Duties of the Collateral Agent. (a) The Collateral Agent,
prior to the occurrence of an Event of Default of which a Responsible Officer
shall have actual knowledge and after the curing of all Events of Default which
may have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default of which a
Responsible Officer shall have actual knowledge has occurred and has not been
cured or waived, the Collateral Agent shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) The Collateral Agent, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Collateral Agent which are specifically required to be furnished pursuant
to any provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement; provided, however,
that the Collateral Agent shall not be responsible for the accuracy or content
of any resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by any Person hereunder. If any such instrument is
found not to conform on its face to the requirements of this Agreement, the
Collateral Agent shall note it as such on the Initial Certification or Final
Certification delivered pursuant to Section 2.06(b).
(c) No provision of this Agreement shall be construed to relieve the
Collateral Agent from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default of which a Responsible
Officer shall have actual knowledge , and after the curing of all such Events
of Default which may have occurred, the duties and obligations of the
Collateral Agent shall be determined solely by the express provisions of this
Agreement, the Collateral Agent shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Collateral Agent and, in the absence of bad faith on the
part of the Collateral Agent, the Collateral Agent may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Collateral Agent
and conforming to the requirements of this Agreement;
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(ii) the Collateral Agent shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or other officers of the
Collateral Agent, unless it shall be proved that the Collateral Agent was
negligent in ascertaining the pertinent facts;
(iii) the Collateral Agent shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with this Agreement or at the direction of the Certificate Insurer
or the Trustee or with the consent of the Certificate Insurer or the Trustee;
(iv) the Collateral Agent shall not be required to expend or risk its own
funds or otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it and
none of the provisions contained in this Agreement shall in any event require
the Collateral Agent to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer or the Trustee under
this Agreement; and
(v) subject to the other provisions of this Agreement and without limiting
the generality of this Section 10.01, the Collateral Agent shall have no duty
(A) to see to any recording, filing, or depositing of this Agreement 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 or 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, the Trust Fund, the Certificateholders or the
Mortgage Loans, (D) to confirm or verify the contents of any reports or
certificates of any Person delivered to the Collateral Agent pursuant to this
Agreement believed by the Collateral Agent to be genuine and to have been
signed or presented by the proper party or parties.
Section 10.02 Certain Matters Affecting the Collateral Agent. Except as
otherwise provided in Section 10.01 hereof:
(a) the Collateral Agent may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate, Opinion of
Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) the Collateral Agent may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(c) the Collateral Agent shall be under no obligation to exercise any of
the powers vested in it by this Agreement or to institute, conduct or defend by
litigation hereunder or in relation hereto at the request, order or direction of
the Certificate Insurer or any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders or the Certificate
Insurer, as applicable, shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein by the Collateral Agent or thereby; nothing contained herein shall,
however, relieve the Collateral Agent of the obligation, upon the occurrence of
an Event of Default of which a Responsible Officer shall have actual Knowledge
(which has not been cured), to exercise such of the rights and powers vested in
it by this Agreement, and to use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs;
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(d) the Collateral Agent shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(e) the Collateral Agent 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 Certificate
Insurer or the majority of Certificate Holders; provided, however, that if the
payment within a reasonable time to the Collateral Agent of the costs, expenses
or liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Collateral Agent, not reasonably assured to the
Collateral Agent by the security afforded to it by the terms of this Agreement,
the Collateral Agent may require reasonable indemnity satisfactory to the
Collateral Agent against such cost, expense or liability as a condition to
taking any such action. The reasonable expense of every such examination shall
be paid by the Servicer or, if paid by the Collateral Agent, shall be repaid by
the Servicer upon demand from the Servicer's own funds;
(f) the right of the Collateral Agent to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Collateral Agent shall not be answerable for anything other than its negligence
or willful misconduct in the performance of such act;
(g) the Collateral Agent may execute any of the powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys.
Section 10.03 Collateral Agent Not Liable for Certificates or Mortgage
Loans. The recitals contained herein shall be taken as the statements of the
Trust and the Servicer, as the case may be, and the Collateral Agent assumes no
responsibility for their correctness. The Collateral Agent makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document. The Collateral Agent shall not be accountable
for the use or application of any funds paid to the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account by the
Servicer. The Collateral Agent shall not be responsible for the legality or
validity of the Agreement or the validity, priority, perfection or sufficiency
of the security for the Certificates issued or intended to be issued under this
Agreement.
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Section 10.04 Collateral Agent May Own Certificates. The Collateral Agent
in its individual or any other capacity may become the owner or pledgor of
Certificates with the same rights it would have if it were not Collateral Agent,
and may otherwise deal with the parties hereto.
Section 10.05 Collateral Agent's Fees and Expenses; Indemnity. (a) The
Collateral Agent acknowledges that in consideration of the performance of its
duties hereunder it is entitled to receive its fees and expenses from the
Servicer, as separately agreed between the Servicer and the Collateral Agent.
The Depositor, the Trustee and the Certificate Insurer shall not pay any of the
Collateral Agent fees and expenses in connection with this transaction. The
Collateral Agent shall not be entitled to compensation for any expense,
disbursement or advance as may arise from its negligence or bad faith.
(b) The Collateral Agent and any director, officer, employee or agent of
the Collateral Agent shall be indemnified by first, the Trust and, second, the
Servicer and held harmless against any loss, liability, claim, damage or
reasonable expense incurred in connection with this Agreement other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence of the Collateral Agent in the performance of its duties hereunder
or by reason of the Collateral Agent's reckless disregard of obligations and
duties hereunder. The obligations of the Servicer under this Section 10.05
arising prior to any resignation or termination of the Servicer hereunder shall
survive termination of the Servicer and payment of the Certificates.
Section 10.06 Eligibility Requirements for Collateral Agent. The Collateral
Agent hereunder shall at all times be a banking entity (a) organized and doing
business under the laws of any state or the United States of America subject to
supervision or examination by federal or state authority, (b) authorized under
such laws to exercise corporate trust powers, including taking title to the
Trust Fund on behalf of the Trustee, for the benefit of the Certificateholders
and the Certificate Insurer, (c) be a wholly owned subsidiary of a bank holding
company having a combined capital and surplus of at least $50,000,000, (d) whose
long-term deposits, if any, shall be rated at least BBB- by S&P and Baa3 by
Moody's (except as provided herein) or such lower long-term deposit rating as
may be approved in writing by the Certificate Insurer, and (e) reasonably
acceptable to the Certificate Insurer as evidenced in writing. If such banking
entity publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of determining an entity's combined capital and surplus for clause
(c) of this Section 10.06, the amount set forth in its most recent report of
condition so published shall be deemed to be its combined capital and surplus.
In case at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of this Section 10.06, the Collateral Agent shall
resign immediately in the manner and with the effect specified in Section 10.07.
Section 10.07 Resignation and Removal of the Collateral Agent. (a) The
Collateral Agent may at any time resign and be discharged from the trusts hereby
created by giving thirty (30) days' written notice thereof to the Trustee, the
Servicer, and the Certificate Insurer.
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(b) If at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of Section 10.06 and shall fail to resign after
written request therefor by the Trustee, the Servicer or the Certificate
Insurer, or if at any time the Collateral Agent shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Collateral Agent or of its property shall be appointed, or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Trustee or the Servicer, with the consent of the Certificate Insurer, or the
Certificate Insurer may remove the Collateral Agent.
(c) If the Collateral Agent fails to perform in accordance with the terms
of this Agreement, the Trustee, the Servicer or the Majority Certificateholders,
with the consent of the Certificate Insurer, or the Certificate Insurer may
remove the Collateral Agent.
(d) Upon removal or receipt of notice of resignation of the Collateral
Agent, the Trustee shall either (i) take possession of the Trustee's Mortgage
Files and assume the duties of the Collateral Agent hereunder or (ii) appoint a
successor Collateral Agent pursuant to Section 9.08. If the Trustee shall assume
the duties of the Collateral Agent hereunder, it shall notify the Trust, the
Depositor, the Servicer and Certificate Insurer in writing.
Section 10.08 Successor Collateral Agent. Upon the resignation or removal
of the Collateral Agent, the Trustee may appoint a successor Collateral Agent,
with the written approval of the Certificate Insurer; provided, however, that
the successor Collateral Agent so appointed shall in no event be the
Unaffiliated Seller, the Depositor or the Servicer or any Person known to a
Responsible Officer of the Trustee to be an Affiliate of the Unaffiliated
Seller, the Depositor or the Servicer and shall be approved by the Certificate
Insurer. The Trustee or such custodian, as the case may be, shall assume the
duties of the Collateral Agent hereunder. Any successor Collateral Agent
appointed as provided in this Section 10.08 shall execute, acknowledge and
deliver to the Trust, the Depositor, the Certificate Insurer, the Servicer, the
Trustee and to its predecessor Collateral Agent an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Collateral Agent shall become effective and such successor
Collateral Agent, without any further act, deed or conveyance, shall become
fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as Collateral
Agent herein. The predecessor Collateral Agent shall deliver to the successor
Collateral Agent all Trustee's Mortgage Files and related documents and
statements held by it hereunder, and the Servicer and the predecessor Collateral
Agent shall execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor Collateral Agent all such rights, powers, duties and obligations.
The cost of any such transfer to the successor Collateral Agent shall be for the
account of the Collateral Agent in the event of the resignation of the
Collateral Agent, and shall be for the account of the Servicer in the event of
the removal of the Collateral Agent. No successor Collateral Agent shall accept
appointment as provided in this Section 10.08 unless at the time of such
acceptance such successor Collateral Agent shall be eligible under the
provisions of Section 10.06. Upon acceptance of appointment by a successor
Collateral Agent as provided in this Section 10.08, the Servicer shall mail
notice of the succession of such Collateral Agent hereunder to all
Certificateholders at their addresses as shown in the Certificate Register and
to the Rating Agencies. If the Servicer fails to mail such notice within ten
(10) days after acceptance of appointment by the successor Collateral Agent, the
successor Collateral Agent shall cause such notice to be mailed at the expense
of the Servicer.
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Section 10.09 Merger or Consolidation of Collateral Agent. Any Person into
which the Collateral Agent may be merged or converted or with which it may be
consolidated or any corporation or national banking association resulting from
any merger, conversion or consolidation to which the Collateral Agent shall be a
party, or any corporation or national banking association succeeding to the
business of the Collateral Agent, shall be the successor of the Collateral Agent
hereunder; provided, that such corporation or national banking association shall
be eligible under the provisions of Section 10.06, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Limitation on Liability of the Depositor and the Servicer.
None of the Depositor, the Servicer or any of the directors, officers, employees
or agents of the Depositor the Servicer shall be under any liability to the
Trust, the Certificateholders or the Certificate Insurer for any action taken,
or for refraining from the taking of any action, in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor or the Servicer or any such Person against any
breach of warranties, representations, covenants or agreements made herein, or
against any specific liability imposed on each such party pursuant to this
Agreement or against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations or duties hereunder. The
Depositor or the Servicer and any director, officer, employee or agent of the
Depositor or the Servicer may rely in good faith on any document of any kind
which, prima facie, is properly executed and submitted by any appropriate Person
respecting any matters arising hereunder.
Section 11.02 Acts of Certificateholders. (a) Except as otherwise
specifically provided herein, whenever Certificateholder action, consent or
approval is required under this Agreement, such action, consent or approval
shall be deemed to have been taken or given on behalf of, and shall be binding
upon, all Certificateholders if the Majority Certificateholders or the
Certificate Insurer agrees to take such action or give such consent or approval.
(b) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(c) No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
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(d) Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel (which shall be
an expense of the Trust) stating that the execution of such amendment is
authorized and permitted by this Agreement. The Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's own
rights, duties or immunities under this Agreement.
Section 11.03 Amendment. (a) This Agreement may be amended from time to
time by the Servicer, the Depositor and the Trustee by written agreement, upon
the prior written consent of the Certificate Insurer, without notice to or
consent of the Certificateholders to cure any ambiguity, to correct or
supplement any provisions herein, to comply with any changes in the Code, or to
make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement or effect a significant change in the permitted activities of the
Trust; provided, however, that such action shall not, as evidenced by an Opinion
of Counsel, at the expense of the party requesting the change, delivered to the
Trustee, adversely affect in any material respect the interests of any
Certificateholder; and provided further, that no such amendment shall (x) reduce
in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, or change the rights or
obligations of any other party hereto without the consent of such party, or (y)
amend or alter Section 2.01(b) hereof. The Trustee shall give prompt written
notice to the Rating Agencies of any amendment made pursuant to this Section
11.03 or pursuant to Section 6.09 of the Unaffiliated Seller's Agreement.
(b) This Agreement may be amended from time to time by the Servicer, the
Depositor and the Trustee with the consent of the Certificate Insurer, the
Majority Certificateholders and the Holders of the majority of the Percentage
Interest in the Class R Certificates for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Holders; provided, however, that
no such amendment shall be made unless the Trustee receives an Opinion of
Counsel, at the expense of the party requesting the change, that such change (i)
will not adversely affect the status of any REMIC created hereunder as a REMIC,
(ii) will not cause a tax to be imposed on any REMIC created hereunder and (iii)
such change will not effect a significant change in the permitted activities of
the Trust; and provided, further, that no such amendment shall reduce in any
manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Class of Certificates without
the consent of the Holders of such Class of Certificates or reduce the
percentage for the Holders of which are required to consent to any such
amendment without the consent of the Holders of 100% of such Class of
Certificates affected thereby.
(c) It shall not be necessary for the consent of Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
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Section 11.04 Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer at the direction of the Majority
Certificateholders or the Certificate Insurer.
Section 11.05 Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 11.06 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
to (i) in the case of the Servicer, American Business Credit, Inc., Xxxxxxxxxx
Xxxxxx Xxxxxx, 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxx Xxxxxx, XX 00000,
Attention: Xx. Xxxxxxx X. Xxxxx, (ii) in the case of the Unaffiliated Seller,
ABFS 2001-2, Inc., Balapointe Office Centre, 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx
000, Xxxx Xxxxxx, XX 00000, Attention: Xx. Xxxxxxx X. Xxxxx, (iii) in the case
of the Trustee, The Chase Manhattan Bank, Institutional Trust Services, 000 Xxxx
00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 Attention: Structured Finance
Services, ABFS 2001-2, (iv) in the case of the Certificateholders, as set forth
in the Certificate Register, (v) in the case of Xxxxx'x Investors Service, Inc.,
00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Home Equity Monitoring
Group, (vi) in the case of Standard & Poor's, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000 Attention: Residential Mortgage Surveillance Group, (vii) in the
case of the Certificate Insurer, MBIA Insurance Corporation, 000 Xxxx Xxxxxx,
Xxxxxx, Xxx Xxxx 00000, Attention: Insured Portfolio Management - Mortgage
Backed Securities, Telecopy: (000) 000-0000 (in each case in which notice or
other communication to the Certificate Insurer refers to an Event of Default, a
claim on the Certificate Insurance Policy or with respect to which failure on
the part of the Certificate 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 the General Counsel and shall be marked to
indicate "URGENT MATERIAL ENCLOSED") and (viii) in the case of the Depositor or
the Underwriter, Bear Xxxxxxx Asset Backed Securities, Inc. or Bear Xxxxxxx &
Co. Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Chief Counsel.
Any such notices shall be deemed to be effective with respect to any party
hereto upon the receipt of such notice by such party, except that notices to the
Certificateholders shall be effective upon mailing or personal delivery.
Section 11.07 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 11.08 No Partnership. Nothing herein contained shall be deemed or
construed to create a co-partnership or joint venture between the parties hereto
and the services of the Servicer shall be rendered as an independent contractor
and not as agent for the Certificateholders.
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Section 11.09 Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
Section 11.10 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Servicer, the Depositor, the Trustee and the
Certificateholders and their respective successors and permitted assigns.
Section 11.11 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
Section 11.12 The Certificate Insurer Default. Any right conferred to the
Certificate Insurer shall be suspended during any period in which a Certificate
Insurer Default exists. At such time as the Certificates are no longer
outstanding hereunder, the Certificate Insurance Policy has terminated in
accordance with its terms and no amounts owed to the Certificate Insurer
hereunder and no Reimbursement Amounts remain unpaid, the Certificate Insurer's
rights hereunder shall terminate.
Section 11.13 Third Party Beneficiary. The parties agree that each of the
Unaffiliated Seller and the Certificate Insurer is intended and shall have all
rights of a third-party beneficiary of this Agreement.
Section 11.14 [RESERVED].
Section 11.15 Appointment of Tax Matters Person. The Holders of the Class R
Certificates hereby appoint the Servicer to act, as their agent, as the Tax
Matters Person for each REMIC created hereunder for all purposes of the Code.
The Tax Matters Person will perform, or cause to be performed, such duties and
take, or cause to be taken, such actions as are required to be performed or
taken by the Tax Matters Person under the code. The Holders of the Class R
Certificates may hereafter appoint a different entity as their agent, or may
appoint one of the Class R Certificateholders to be the Tax Matters Person.
Section 11.16 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW
YORK.
(b) THE SERVICER AND THE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH IN SECTION 10.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS,
POSTAGE PREPAID. THE DEPOSITOR, THE SERVICER AND THE TRUSTEE EACH HEREBY WAIVE
ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE DEPOSITOR, THE SERVICER OR THE TRUSTEE TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS
TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
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(c) THE DEPOSITOR, THE SERVICER AND THE TRUSTEE EACH HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Servicer, the Trustee, Collateral Agent and the
Depositor have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
BEAR XXXXXXX ASSET BACKED SECURITIES, INC., as Depositor
By:_____________________________
Name:
Title:
AMERICAN BUSINESS CREDIT, INC., as Servicer
By:_____________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee and Collateral Agent
By:_____________________________
Name:
Title:
