ENDORSEMENT NO. 1 TO FINANCIAL GUARANTY TO INSURANCE POLICY
ENDORSEMENT
NO. 1 TO FINANCIAL GUARANTY TO INSURANCE POLICY
FINANCIAL
SECURITY ASSURANCE INC.
00
Xxxx
00xx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
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Obligor:
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ACE
Home Equity Loan Trust, Series 2006-GP1, established pursuant to
the Trust
Agreement, dated as of May 25, 2006, between ACE Securities Corp.,
as
Depositor and Wilmington Trust Company, as Owner Trustee, as amended
and
restated by the Amended and Restated Trust Agreement, dated as of
May 31,
2006, among the Depositor, the Owner Trustee and LaSalle Bank National
Association, in its capacity as Securities Administrator.
|
|
Obligations:
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$352,607,000
ACE Securities Corp. Home Equity Loan Trust, Series 2006-GP1 Asset
Backed
Notes, Class A
|
Policy
No.: 51736-N
Date
of
Issuance: May 31,
2006
1.
Definitions.
For all
purposes of this Policy, the terms specified below shall have the meanings
or
constructions provided below. Capitalized terms used herein and not otherwise
defined herein shall have the meanings provided in Appendix A to the Indenture
(as defined herein) unless the context shall otherwise require.
"Business
Day"
means
any day other than a Saturday, Sunday, legal holiday or other day on which
banking institutions in Xxx Xxxx, Xxx Xxxx, Xxxxxxx, Xxxxxxxx or any other
location of any successor Servicer, successor Securities Administrator or
successor Indenture Trustee are authorized or obligated by law, executive order
or governmental decree to be closed.
"Deficiency
Amount"
means,
with respect to any Payment Date, the excess, if any of Scheduled Payments
over
the amount available for distribution on such Payment Date to Noteholders
pursuant to Section 6.01 of the Sale and Servicing Agreement.
"Financial
Security"
means
Financial Security Assurance Inc., a New York stock insurance
company.
"Guaranteed
Principal Payment Amount"
means
an amount equal to (a) on the Payment Date in February 2031, the amount needed
to pay the outstanding Note Principal Balance of the Obligations following
the
distribution of the Available Payment Amount on that Payment Date, and (b)
for
any other Payment Date, the Trust Allocation Percentage of the aggregate amount,
if any, by which the sum of the aggregate Note Principal Balance of the
Obligations and the Certificate Principal Balance of the Class G Certificates,
in each case following the distribution of the Available Payment Amount and
the
Class G Principal Payment Amount on that Payment Date, exceeds the aggregate
Principal Balance of the HELOCs as of the close of business on the last day
of
the related Collection Period.
"Holder"
or
"Noteholder"
shall
have the meaning set forth in Appendix A to the Indenture; provided,
however,
that
"Holder" or "Noteholder" shall not include the Obligor or any affiliates or
successors thereof in the event that the Obligor or any such affiliate or
successor is a registered or beneficial owner of the Obligation.
"Indenture"
means
the indenture, dated as of May 31, 2006, pertaining to the Securities among
ACE
Home Equity Loan Trust, Series 2006-GP1, as issuer, Deutsche Bank National
Trust
Company, as Indenture Trustee, and the LaSalle Bank National Association, as
securities administrator and authenticating agent, as the same may be amended,
modified or supplemented from time to time with the consent of Financial
Security.
"Indenture
Trustee"
means
Deutsche Bank National Trust Company, a national banking association, in its
capacity as indenture trustee under the Indenture, and any successor thereto
as
indenture trustee under the Indenture.
"Policy"
means
this Financial Guaranty Insurance Policy and includes each endorsement
thereto.
"Receipt"
and
"Received"
mean
actual delivery to Financial Security and to the Fiscal Agent (as defined
below), if any, prior to 12:00 noon, New York City time, on a Business Day;
delivery either on a day that is not a Business Day, or after 12:00 noon, New
York City time, shall be deemed to be receipt on the next succeeding Business
Day. If any notice or certificate given hereunder by the Securities
Administrator is not in proper form or is not properly completed, executed
or
delivered, or contains any misstatement, it shall be deemed not to have been
Received, and Financial Security or its Fiscal Agent shall promptly so advise
the Securities Administrator and the Securities Administrator may submit an
amended notice.
"Scheduled
Payments"
means,
with respect to each Payment Date, the payment to be made to Holders in an
aggregate amount equal to (i) the Interest Payment Amount due on the Obligations
calculated in accordance with the original terms of the Obligations (without
regard to any increase in the Margin following the Optional Termination Date),
the Indenture and the Sale and Servicing Agreement, in each case, after giving
effect to amendments or modifications to which Financial Security has given
its
written consent and (ii) the Guaranteed Principal Payment Amount in accordance
with the original terms of the Indenture, the Sale and Servicing Agreement
and
the Obligations when issued and without regard to any amendment or modification
of the Indenture, the Sale and Servicing Agreement or the Obligations except
amendments or modifications to which Financial Security has given its prior
written consent. Scheduled Payments shall not include, nor shall coverage be
provided under this Policy in respect of any Relief Act Interest Shortfalls,
Prepayment Interest Shortfalls or any Net WAC Rate Carryover Amounts that may
be
incurred or that may be distributable to the Obligations. Scheduled Payments
shall not include payments that become due on an accelerated basis as a result
of a default by the Obligor, an election by the Obligor to pay principal on
an
accelerated basis, the occurrence of an Event of Default under the Indenture
or
any other cause, unless Financial Security elects, in its sole discretion,
to
pay in whole or in part such principal due upon acceleration, together with
any
accrued interest to the date of acceleration. In the event Financial Security
does not so elect, this Policy will continue to guarantee payment on the
Obligations in accordance with their original terms. Scheduled Payments shall
not include any amounts due in respect of the Obligations attributable to any
increase in interest rate, penalty or other sum payable by the Obligor by reason
of any Default or Event of Default in respect of the Obligations, or by reason
of any deterioration of the creditworthiness of the Obligor, nor shall Scheduled
Payments include, nor shall coverage be provided under this Policy in respect
of, any taxes, withholding or other charge imposed by any governmental authority
due in connection with the payment of any Scheduled Payment to a
Holder.
“Term
Of This Policy”
means
the period from and including the Date of Issuance to and including the latest
to occur of the date on which (i) the Note Principal Balance of the Obligations
has been reduced to zero after giving effect to all payments, (ii) any period
during which any Scheduled Payment could have been avoided in whole or in part
as a preference payment under applicable bankruptcy, insolvency, receivership
or
similar law has expired, and (iii) if any proceedings requisite to avoidance
as
a preference payment have been commenced prior to the occurrence of (i) and
(ii), a final and nonappealable order in resolution of each such proceeding
has
been entered.
2.
Notices
and Conditions to Payment in Respect of Deficiency Amounts.
Following Receipt by Financial Security of a notice and certificate from the
Securities Administrator in the form attached as Exhibit A to this Endorsement,
Financial Security will pay any amount payable hereunder in respect of any
Deficiency Amount on the Obligations out of the funds of Financial Security
on
the later to occur of (a) 12:00 noon, New York City time, on the second Business
Day following such Receipt; and (b) 12:00 noon, New York City time, on the
Payment Date to which such payment relates. Payments due hereunder in respect
of
any Deficiency Amount will be disbursed to the Securities Administrator by
wire
transfer of immediately available funds.
Financial
Security shall be entitled to pay any amount hereunder in respect of Scheduled
Payments on the Obligations, including any amount due on the Obligations on
an
accelerated basis, whether or not any notice and certificate shall have been
Received by Financial Security as provided above; provided,
however,
that by
acceptance of this Policy the Indenture Trustee agrees to provide, or to cause
the Securities Administrator to provide, to Financial Security upon Financial
Security's request to the Securities Administrator, a notice and certificate
in
respect of any such payments made by Financial Security. Financial Security
shall be entitled to pay hereunder any amount that becomes due on the
Obligations on an accelerated basis at any time or from time to time after
such
amount becomes due, in whole or in part, prior to the scheduled date of payment
thereof; Scheduled Payments insured hereunder shall not include interest, in
respect of principal paid hereunder on an accelerated basis, accruing from
and
after the date of such payment of principal. Financial Security's obligations
hereunder in respect of Scheduled Payments shall be discharged to the extent
such amounts are paid by the Obligor in accordance with the Indenture or the
Sale and Servicing Agreement or disbursed by Financial Security as provided
herein whether or not such funds are properly applied by the Securities
Administrator except as otherwise provided in paragraph 3 of this
Endorsement.
3.
Notices
and Conditions to Payment in Respect of Scheduled Payments Avoided as Preference
Payments.
If any
Scheduled Payment is avoided as a preference payment under applicable
bankruptcy, insolvency, receivership or similar law, Financial Security will
pay
such amount out of the funds of Financial Security on the later of (a) the
date
when due to be paid pursuant to the Order referred to below or (b) the first
to
occur of (i) the fourth Business Day following Receipt by Financial Security
from the Securities Administrator of (A) a certified copy of the order of the
court or other governmental body that exercised jurisdiction to the effect
that
the Noteholder is required to return principal of or interest paid on the
Obligations during the Term Of This Policy because such payments were avoidable
as preference payments under applicable bankruptcy law (the "Order"), (B) a
certificate of the Noteholder that the Order has been entered and is not subject
to any stay and (C) an assignment duly executed and delivered by the Noteholder,
in such form as is reasonably required by Financial Security and provided to
the
Noteholder by Financial Security, irrevocably assigning to Financial Security
all rights and claims of the Noteholder, as applicable, relating to or arising
under the Obligations against the estate of the Obligor or otherwise with
respect to such preference payment, and (ii) the date of Receipt by Financial
Security from the Securities Administrator of the items referred to in clauses
(A), (B) and (C) above if, at least four Business Days prior to such date of
Receipt, Financial Security shall have Received written notice from the
Securities Administrator that such items were to be delivered on such date
and
such date was specified in such notice. Such payment shall be disbursed to
the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named
in
the Order and not to the Securities Administrator or any Noteholder directly
(unless a Noteholder has previously paid such amount to the receiver,
conservator, debtor in-possession or trustee in bankruptcy named in the Order,
in which case such payment shall be disbursed to the Securities Administrator
for distribution to such Noteholder upon proof of such payment reasonably
satisfactory to Financial Security). In connection with the foregoing, Financial
Security shall have the rights provided pursuant to Sections 5.17 and 5.18
of
the Indenture, including, without limitation, the right to direct all matters
relating to any Preference Claim and subrogation to the rights of the Indenture
Trustee and each Holder of a Note in the conduct of any proceeding with respect
to a Preference Claim.
4.
Governing
Law.
This
Policy shall be governed by and construed in accordance with the laws of the
State of New York, without giving effect to the conflict of laws principles
thereof (other than Section 5-1401 of the New York General Obligations Law
which
shall govern).
5.
Fiscal
Agent.
At any
time during the Term Of This Policy, Financial Security may appoint a fiscal
agent (the "Fiscal Agent") for purposes of this Policy by written notice to
the
Securities Administrator at the notice address specified in the Indenture
specifying the name and notice address of the Fiscal Agent. From and after
the
date of receipt of such notice by the Securities Administrator, (i) copies
of
all notices and documents required to be delivered to Financial Security
pursuant to this Policy shall be simultaneously delivered to the Fiscal Agent
and to Financial Security and shall not be deemed Received until Received by
both and (ii) all payments required to be made by Financial Security under
this
Policy may be made directly by Financial Security or by the Fiscal Agent on
behalf of Financial Security. The Fiscal Agent is the agent of Financial
Security only and the Fiscal Agent shall in no event be liable to any Noteholder
for any acts of the Fiscal Agent or any failure of Financial Security to
deposit, or cause to be deposited, sufficient funds to make payments due under
this Policy.
6.
Waiver
of Defenses.
To the
fullest extent permitted by applicable law, Financial Security agrees not to
assert, and hereby waives, for the benefit of each Noteholder, all rights
(whether by counterclaim, setoff or otherwise) and defenses (including, without
limitation, the defense of fraud), whether acquired by subrogation, assignment
or otherwise, to the extent that such rights and defenses may be available
to
Financial Security to avoid payment of its obligations under this Policy in
accordance with the express provisions of this Policy. Nothing in this paragraph
shall be construed to limit or otherwise impair Financial Security's right
to
pursue recovery or claims (based on contractual rights, securities law
violations, fraud or other causes of action) against any person or entity,
or,
except as provided in paragraph 3 of this Endorsement, to require payment by
Financial Security of any amounts that have been previously paid or that are
not
otherwise due in accordance with the express provisions of this Policy or the
Obligations. Nothing in this Policy shall be construed to require payment to
the
extent any force majeure event or governmental act prevents Financial Security
from performing its obligations under this Policy, in which event Financial
Security agrees to (i) use commercially reasonable efforts to perform its
obligations under this Policy notwithstanding such force majeure event or
governmental act and (ii) perform its obligations under this Policy promptly
following cessation of such force majeure event or governmental
act.
7.
Notices.
All
notices to be given hereunder shall be in writing (except as otherwise
specifically provided herein) and shall be mailed by registered mail or
personally delivered or telecopied to Financial Security as
follows:
Financial
Security Assurance Inc.
00
Xxxx
00xx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Managing Director -- Transaction Oversight
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Re:
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$352,607,000
ACE Securities Corp. Home Equity Loan Trust, Series 2006-GP1 Asset
Backed
Notes, Class A
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Policy
No.: 51736-N
Telecopy
No.: (000) 000-0000
Confirmation:
(000) 000-0000
Financial
Security may specify a different address or addresses by writing mailed or
delivered to the Securities Administrator.
8.
Priorities.
In the
event that any term or provision of the face of this Policy is inconsistent
with
the provisions of this Endorsement, the provisions of this Endorsement shall
take precedence and shall be binding.
9.
Exclusions
From Insurance Guaranty Funds.
This
Policy is not covered by the Property/Casualty Insurance Security Fund specified
in Article 76 of the New York Insurance Law. This Policy is not covered by
the
Florida Insurance Guaranty Association created under Part II of Chapter 631
of
the Florida Insurance Code. In the event Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage
by
the California Insurance Guaranty Association, established pursuant to Article
14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance
Code.
10.
Surrender
of Policy.
The
Securities Administrator shall surrender this Policy to Financial Security
for
cancellation upon expiration of the Term Of This Policy.
IN
WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this Endorsement
No. 1 to be executed by its Authorized Officer.
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FINANCIAL
SECURITY ASSURANCE INC.
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By:
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/s/ M. Xxxxxxx Xxxxxx, Jr. |
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Authorized Officer
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Exhibit
A To Endorsement 1
NOTICE
OF CLAIM AND CERTIFICATE
(Letterhead
of Securities Administrator)
Financial
Security Assurance Inc.
00
Xxxx
00xx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Re: ACE
HOME EQUITY LOAN TRUST, SERIES 2006-GP1
The
undersigned, a duly authorized officer of LaSalle Bank National Association
(the
"Securities Administrator"), hereby certifies to Financial Security Assurance
Inc. ("Financial Security"), with reference to Financial Guaranty Insurance
Policy No. 51736-N issued on May 31, 2006 (the "Policy") issued by Financial
Security in respect of $352,607,000 ACE Securities Corp. Home Equity Loan Trust,
Series 2006-GP1 Asset Backed Notes, Class A (the "Obligations") of the above
referenced Trust, that:
(i) The
Securities Administrator is the securities administrator under the Indenture
for
the Noteholders.
(ii) The
sum
of all amounts on deposit (or scheduled to be on deposit) in the Payment Account
and available for distribution to the Noteholders pursuant to Section 6.01
of
the Sale and Servicing Agreement will be $
(the
"Deficiency Amount") less than the aggregate amount of Scheduled Payments due
on
__________ ___, 20__.
(iii) The
Securities Administrator is making a claim under the Policy for the Deficiency
Amount to be applied to the payment of Scheduled Payments.
(iv) The
Securities Administrator agrees that, following receipt of funds from Financial
Security, it shall (a) hold such amounts in trust and apply the same directly
to
the payment of Scheduled Payments on the Obligations when due; (b) not apply
such funds for any other purpose; (c) not commingle such funds with other funds
held by the Securities Administrator and (d) maintain an accurate record of
such
payments with respect to each Obligation and the corresponding claim on the
Policy and proceeds thereof and, if the Obligation is required to be surrendered
for such payment, shall stamp on each such Obligation the legend “$[INSERT
APPLICABLE AMOUNT] paid by Financial Security and the balance hereof has been
canceled and reissued” and then shall deliver such Obligation to Financial
Security.
(v) The
Securities Administrator, on its behalf and on behalf of the Indenture Trustee
and the Holders, hereby assigns to Financial Security the rights of the Holders
with respect to the Obligations to the extent of any payments under the Policy,
including, without limitation, any amounts due to the Holders in respect of
securities law violations arising from the offer and sale of the Obligations.
The foregoing assignment is in addition to, and not in limitation of, rights
of
subrogation otherwise available to Financial Security in respect of such
payments. The Securities Administrator shall, and by signature hereof shall
bind
the Indenture Trustee to, take such action and deliver such instruments as
may
be reasonably requested or required by Financial Security to effectuate the
purpose or provisions of this clause (v).
(vi) The
Securities Administrator, on its behalf and on behalf of the Indenture Trustee
and the Holders, hereby appoints Financial Security as agent and
attorney-in-fact for the Indenture Trustee, the Securities Administrator and
each such Holder in any legal proceeding with respect to the Obligations. The
Securities Administrator, on its behalf and on behalf of the Indenture Trustee,
hereby agrees that Financial Security may at any time during the continuation
of
any proceeding by or against the Obligor or the Depositor under the United
States Bankruptcy Code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an “Insolvency Proceeding”) direct
all matters relating to such Insolvency Proceeding including,
without limitation, (A) all matters relating to any claim in connection with
an
Insolvency Proceeding seeking the avoidance as a preferential transfer of any
payment made with respect to the Obligations (a "Preference Claim"), (B) the
direction of any appeal of any order relating to any Preference Claim, at the
expense of Financial Security but subject to reimbursement as provided in the
Insurance and Indemnity Agreement, and (C) the posting of any surety,
supersedeas, or performance bond pending any such appeal. In
addition, the Securities Administrator, on its behalf and on behalf of the
Indenture Trustee, hereby agrees that Financial Security shall be subrogated
to,
and the Securities Administrator, on its behalf and on behalf of the Indenture
Trustee and each Holder, hereby delegates and assigns, to the fullest extent
permitted by law, the rights of the Indenture Trustee and the Securities
Administrator and each Holder in the conduct of any Insolvency Proceeding,
including, without limitation, all rights of any party to an adversary
proceeding or action with respect to any court order issued in connection with
any such Insolvency Proceeding. Notwithstanding anything contained herein to
the
contrary, Financial Security shall not, without the Securities Administrator's
written consent (which consent shall not be unreasonably withheld or delayed):
(i) initiate, defend or settle any action, suit or proceeding relating to the
Obligations in the Securities Administrator's name without indicating Financial
Security's, representative capacity, (ii) engage counsel to represent the
Securities Administrator in any action, suit or relating to the Obligations,
(iii) initiate, defend or settle any action, suit or proceeding in the name
of
LaSalle Bank National Association in its individual capacity, or (iv) prepare,
execute or deliver any government filings, forms, permits, registrations or
other documents or take any action with the intent to cause, and that actually
causes, the Securities Administrator to be registered to do business in any
state.
(vii) Payment
should be made by wire transfer directed to the Policy Payments Account.
Unless
the context otherwise requires, capitalized terms used in this Notice of Claim
and Certificate and not defined herein shall have the meanings provided in
the
Policy.
IN
WITNESS WHEREOF, the Securities Administrator has executed and delivered this
Notice of Claim and Certificate as of the ______ day of ____________,
____.
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LASALLE
BANK NATIONAL ASSOCIATION,
not
in its individual capacity but solely as Securities
Administrator
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By:
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Title:
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For
[_________________] Use Only
Wire
transfer sent on ______________ by ________________
Confirmation
Number ___________________
