EXECUTION VERSION
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TRUST AGREEMENT
dated as of September 22, 2003
by and between
ABFS BALAPOINTE, INC.,
as Depositor
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Capitalized Terms.............................................................................1
Section 1.02 Other Definitional Provisions.................................................................5
ARTICLE II
ORGANIZATION
Section 2.01 Name..........................................................................................5
Section 2.02 Office........................................................................................5
Section 2.03 Purposes and Powers...........................................................................6
Section 2.04 Appointment of Owner Trustee..................................................................8
Section 2.05 Capital Contribution of Depositor.............................................................8
Section 2.06 Declaration of Trust..........................................................................8
Section 2.07 Liability of the Holders......................................................................9
Section 2.08 Title to Trust Property.......................................................................9
Section 2.09 Situs of Trust................................................................................9
Section 2.10 Representations and Warranties of the Depositor; Covenant of the Certificateholders...........9
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01 Initial Ownership............................................................................11
Section 3.02 The Certificates.............................................................................11
Section 3.03 Execution, Authentication and Delivery of Trust Certificates.................................11
Section 3.04 Registration of Transfer and Exchange of Trust Certificates..................................11
Section 3.05 Mutilated, Destroyed, Lost or Stolen Certificates............................................12
Section 3.06 Persons Deemed Owners........................................................................13
Section 3.07 Access to List of Holders' Names and Addresses...............................................13
Section 3.08 Maintenance of Office or Agency..............................................................13
Section 3.09 Restrictions on Transfer of Certificates.....................................................13
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.01 Prior Notice to Holders with Respect to Certain Matters......................................16
Section 4.02 Action by Holders with Respect to Bankruptcy.................................................17
Section 4.03 Restrictions on Holders' Power...............................................................17
Section 4.04 Majority Control.............................................................................17
ARTICLE V
TAX PROVISIONS; CERTAIN DUTIES
Section 5.01 Federal Income Tax Provisions................................................................18
Section 5.02 Withholding Taxes............................................................................20
Section 5.03 Accounting and Records to the Noteholders, Owners, the Internal Revenue Service and
Others.....................................................................................21
Section 5.04 Signature on Returns.........................................................................22
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01 General Authority............................................................................22
Section 6.02 General Duties...............................................................................22
Section 6.03 Action upon Instruction......................................................................23
Section 6.04 No Duties Except as Specified in this Agreement, the Basic Documents or any
Instructions...............................................................................24
Section 6.05 No Action Except Under Specified Documents or Instructions...................................24
Section 6.06 Restrictions.................................................................................24
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.01 Acceptance of Trusts and Duties..............................................................24
Section 7.02 Furnishing of Documents......................................................................26
Section 7.03 Representations and Warranties...............................................................26
Section 7.04 Reliance; Advice of Counsel..................................................................27
Section 7.05 Not Acting in Individual Capacity............................................................27
Section 7.06 Owner Trustee Not Liable for Certificates or Mortgage Loans..................................27
Section 7.07 Owner Trustee May Own Certificates and Notes.................................................28
Section 7.08 Licenses.....................................................................................28
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.01 Owner Trustee's Fees and Expenses............................................................28
Section 8.02 Indemnification..............................................................................28
Section 8.03 Payments to the Owner Trustee................................................................29
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.01 Termination of Trust Agreement...............................................................29
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01 Eligibility Requirements for Owner Trustee...................................................30
Section 10.02 Resignation or Removal of Owner Trustee......................................................31
Section 10.03 Successor Owner Trustee......................................................................31
Section 10.04 Merger or Consolidation of Owner Trustee.....................................................32
Section 10.05 Appointment of Co-Trustee or Separate Trustee................................................32
ARTICLE XI
MISCELLANEOUS
Section 11.01 Supplements and Amendments...................................................................33
Section 11.02 No Legal Title to Owner Trust Estate in Holders..............................................34
Section 11.03 Limitations on Rights of Others..............................................................34
Section 11.04 Notices......................................................................................35
Section 11.05 Severability.................................................................................35
Section 11.06 Separate Counterparts........................................................................35
Section 11.07 Successors and Assigns.......................................................................35
Section 11.08 No Petition..................................................................................35
Section 11.09 Recourse.....................................................................................36
Section 11.10 Headings.....................................................................................36
Section 11.11 GOVERNING LAW................................................................................36
Section 11.12 [Reserved]...................................................................................36
Section 11.13 Third-Party Beneficiary......................................................................36
Section 11.14 [Reserved]...................................................................................36
Section 11.15 Servicer.....................................................................................37
Section 11.16 Non-Confidential.............................................................................37
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This TRUST AGREEMENT, dated as of September 22, 2003 (the "Trust
Agreement"), by and between ABFS BALAPOINTE, INC., as depositor (the
"Depositor"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as
owner trustee (the "Owner Trustee").
In consideration of the covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Capitalized Terms. For all purposes of this Agreement,
the following terms shall have the meanings set forth below:
"Affiliate" shall mean, when used with reference to a specified Person,
(i) any Person that, directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with, the specified
Person; (ii) any Person who is an officer, partner, or trustee of, or serves in
a similar capacity with respect to, the specified Person or of which the
specified Person is an officer, partner or trustee, or with respect to which the
specified Person serves in a similar capacity; (iii) any Person that, directly
or indirectly (or collectively with Affiliates of such Person) is the beneficial
owner of fifty percent (50%) or more of any class of equity securities of, or
otherwise has a substantial beneficial interest in, the specified Person; and
(iv) any member of the immediate family of the specified Person. For purposes of
this definition, to "control" means to possess the power to direct the
management, policies or activities of a person or entity, whether directly or
indirectly, and whether through the ownership of voting securities, by contract
or otherwise; the terms "controlling" and "controlled" and the noun "control"
have meanings correlative to the foregoing.
"Agreement" shall mean this Trust Agreement, as may be amended and
supplemented from time to time.
"Annual Tax Reports" shall have the meaning assigned thereto in Section
5.01(k).
"Authorized Officer" shall have the meaning assigned thereto in
Appendix I to the Indenture.
"Basic Documents" shall mean this Agreement, the Sale and Servicing
Agreement, the Purchase Agreement, the Administration Agreement, the Indenture,
the Secured Notes and the Fee Letter.
"Business Day" shall mean any day other than (i) a Saturday or Sunday
or (ii) a day that is either a legal holiday or a day on which banking
institutions in the State of New York, the State of Delaware, the Commonwealth
of Pennsylvania, or the state in which the Indenture Trustee's office from which
payments will be made to Certificateholders, are authorized or obligated by law,
regulation or executive order to be closed.
"Capital Account" shall have the meaning assigned thereto in Section
5.01(a).
"Certificate" shall mean a certificate evidencing the beneficial
interest of a Holder in the assets of the Trust, substantially in the form
attached hereto as Exhibit A.
"Certificate of Trust" shall mean the Certificate of Trust, in the form
of Exhibit B, to be filed with the Secretary of State on September 22, 2003 to
form the Trust pursuant to Section 3810(a) of the Statutory Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.04.
"Certificateholder" or "Holder" shall mean a Person in whose name a
Certificate or Certificates is registered.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and,
where appropriate in context, Treasury Regulations promulgated thereunder.
"Collateral Agent" shall mean JPMorgan Chase Bank--Mortgage Banking and
Warehouse Services, a New York banking corporation, in its capacity as
Collateral Agent under the Sale and Servicing Agreement.
"Collection Account" shall have the meaning assigned thereto in
Appendix I to the Indenture.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at Xxxxxx
Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention:
Corporate Trust Administration; or at such other address in the State of
Delaware as the Owner Trustee may designate by notice to the Certificateholders,
or the principal corporate trust office of any successor Owner Trustee (the
address (which shall be in the State of Delaware) of which the successor owner
trustee will notify the Certificateholders).
"Depositor" shall mean ABFS Balapointe, Inc., a Delaware corporation.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section
8.02.
"Holder Nonrecourse Debt Minimum Gain" shall have the meaning set forth
for "partner nonrecourse debt minimum gain" in Treasury Regulations Section
1.704-2(i)(2). A Holder's share of Holder Nonrecourse Debt Minimum Gain shall be
determined in accordance with Treasury Regulations Section 1.704-2(i)(5).
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"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.02.
"Indenture" shall mean the Indenture, dated as of September 22, 2003,
as the same may be amended or supplemented from time to time, by and between the
Trust and the Indenture Trustee.
"Indenture Trustee" means JPMorgan Chase Bank, a New York banking
corporation, in its capacity as Indenture Trustee under the Indenture.
"Investment Letter" shall have the meaning assigned to such term in
Section 3.04.
"Non-U.S. Person" shall mean an individual, corporation, partnership or
other person other than a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, an estate that
is subject to U.S. federal income tax regardless of the source of its income or
a trust if (i) a court in the United States is able to exercise primary
supervision over the administration of the trust and (ii) one or more United
States Persons have the authority to control all substantial decisions of the
trust.
"Notes" shall mean the Secured Notes.
"Originators" means American Business Credit, Inc., a Pennsylvania
corporation, HomeAmerican Credit, Inc. d/b/a Upland Mortgage, a Pennsylvania
corporation and American Business Mortgage Services, Inc., a New Jersey
corporation.
"Ownership Interest" means, with respect to any Certificate, any
ownership or security interest in such Certificate, including any interest in
such Certificate as the Certificateholder thereof and any other interest
therein, whether direct or indirect, legal or beneficial, as owner or as
pledgee.
"Owner Trust Estate" shall mean the Trust Estate (as defined in
Appendix I to the Indenture), including the contribution of $1 referred to in
Section 2.05 hereof.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor owner trustee hereunder.
"Payment Date" shall mean the 25th day of each month or, if such 25th
day is not a Business Day, the next succeeding Business Day, commencing October
25, 2003.
"Percentage Interest" shall mean with respect to any Certificate, the
percentage portion of all of the Trust Interest evidenced thereby as stated on
the face of such Certificate.
"Prospective Holder" shall have the meaning set forth in Section
3.09(a).
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"Record Date" shall mean, with respect to the Certificates and any
Payment Date, the last Business Day of the month immediately preceding the month
in which such Payment Date occurs.
"REMIC" means a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement, dated as of September 22, 2003, as the same may be amended from time
to time, among the Depositor, the Originators, the Subservicers, the Trust, the
Indenture Trustee, the Collateral Agent, the Sponsor and the Servicer.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Secured Notes" shall mean the ABFS Mortgage Loan Warehouse Trust
2003-1, Secured Notes, Series 2003-1.
"Servicer" means American Business Credit, Inc., a Pennsylvania
corporation.
"Sponsor" means American Business Financial Services, Inc.
"Statutory Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Codess. 3801 et seq., as the same may be amended from
time to time.
"Taxable Year" shall have the meaning assigned thereto in Section
5.01(j).
"Tax Matters Partner" shall have the meaning assigned thereto in
Section 5.01(l).
"Transfer" means any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the ABFS Mortgage Loan Warehouse Trust 2003-1
established by this Agreement.
"Trust Interest" shall mean the right to receive, on each Payment Date,
distributions of the amounts, if any, to the Holders of the Certificates
pursuant to Section 8.02 of the Indenture.
"Trust Minimum Gain" shall have the meaning set forth for "partnership
minimum gain" in Treasury Regulations 1.704-2(b)(2) and 1.704-2(d). In
accordance with Treasury Regulations Section 1.704-2(d), the amount of Trust
Minimum Gain is determined by first computing, for each nonrecourse liability of
the Trust, any gain the Trust would realize if it disposed of the property
subject to that liability for no consideration other than full satisfaction of
the liability, and then aggregating the separately computed gains. A Holder's
share of Trust Minimum Gain shall be determined in accordance with Treasury
Regulations Section 1.704-2(g)(1).
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Section 1.02. Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
Appendix I to the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
ORGANIZATION
Section 2.01. Name. The Trust shall be known as "ABFS Mortgage Loan
Warehouse Trust 2003-1" in which name the Owner Trustee may conduct the business
of the Trust, make and execute contracts and other instruments on behalf of the
Trust and xxx and be sued on behalf of the Trust.
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Section 2.02. Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Certificateholders,
the Indenture Trustee and the Servicer.
Section 2.03. Purposes and Powers. (a) The purpose of the Trust is to
engage in the following activities:
(i) To acquire the Mortgage Loans;
(ii) To issue the Notes pursuant to the Indenture and to sell
such Notes;
(iii) With the proceeds of the sale of the Notes, to pay the
organizational, startup and transactional expenses of the Trust, and,
with the balance of such funds, purchase the Mortgage Loans to be
included in the Owner Trust Estate from the Depositor pursuant to the
Sale and Servicing Agreement;
(iv) To assign, grant, transfer, pledge, mortgage and convey
the Owner Trust Estate pursuant to the Indenture and to hold, manage
and distribute to the Certificateholders any portion of the Owner Trust
Estate released from the lien of, and remitted to the Trust pursuant
to, the Indenture;
(v) To enter into and perform its obligations under the Basic
Documents to which it is or is to be a party;
(vi) To arrange for sale of the Mortgage Loans in connection
with a Disposition of Mortgage Loans;
(vii) Subject to compliance with the Basic Documents, to
engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
and payments to the Holders and the Noteholders;
(viii) To issue the Certificates pursuant to this Agreement;
(ix) To make payments to Noteholders and Certificateholders
from amounts received on Mortgage Loans; and
(x) To engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith.
(b) The Trust will observe the following limitations:
(i) The Trust will not consolidate or merge with any other
person or entity and any such act shall be void ab initio;
(ii) To the extent the Trust's office is located in the
offices of the Originator, Depositor, any Certificateholder or any
Affiliate thereof, the Trust shall pay fair market rent for its office
space located in the officers of such Originator, Depositor,
Certificateholder or any Affiliate and a fair share of any overhead
costs, and otherwise fairly and reasonably allocate any shared overhead
expenses;
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(iii) The Trust shall maintain the Trust's books, financial
statements, accounting records and other corporate documents and
records separate from those of the Originator, the Depositor, any
Certificateholder or any Affiliate thereof or any other entity;
(iv) The Trust shall not commingle the Trust's assets with
those of the Originator, the Depositor, any Certificateholder or any
Affiliate thereof or any other entity, an not hold itself out as being
liable for the debts of another;
(v) The Trust shall maintain its books of account and payroll
separate from those of the Originator, the Depositor, any
Certificateholder or any Affiliate thereof or any other entity;
(vi) The Trust shall separately manage its liabilities form
those of the Originator, the Depositor, any Certificateholder or any
Affiliate thereof or any other entity and pay its own liabilities,
including all administrative expenses, from its own separate assets,
provided the Depositor may pay certain of the organizational expenses
of the Trust;
(vii) The Trust shall pay from the Trust's assets all
obligations and indebtedness of any kind incurred by the Trust;
(viii) The Trust shall at all times hold itself out to the
public and all other persons as a legal entity separate from the
Originator, the Depositor, any Certificateholder or any Affiliate
thereof or any other entity;
(ix) The Trust shall maintain its bank accounts separate from
the Originator, the Depositor, any Certificateholder or any Affiliate
thereof or any other entity;
(x) The Trust shall maintain separate financial statements,
showing its assets and liabilities separate and apart from the
Originator, the Depositor, any Certificateholder or any Affiliate
thereof or any other entity and not have its assets listed on the
financial statements of any other entity;
(xi) The Trust shall maintain an arm's length relationship
with the Originators, the Depositor, any Certificateholder or any
Affiliate thereof or any other entity and enter into transaction with
any of the foregoing only on a commercially reasonable basis with terms
similar to those available in an arms-length transaction;
(xii) The Trust shall not acquire the obligations or
securities of any of its Affiliates or its Certificateholders or
Affiliates thereof;
(xiii) The Trust shall use separate stationary, invoices and
checks bearing its own name;
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(xiv) The Trust shall not pledge its assets for the benefit of
any other person or entity, other than as contemplated in the Basic
Documents;
(xv) The Trust shall correct any known misunderstanding
regarding its separate identity;
(xvi) The Trust shall maintain adequate capital in light of
its contemplated business operations;
(xvii) The Trust will not assume the liabilities of the
Originators, the Depositor, any Certificateholder or any Affiliate
thereof or any other entity, and shall not guarantee the liabilities of
the Originators, the Depositor, any Certificateholder or any Affiliate
thereof or any other entity;
(xviii) The Trust cannot invest in anything other than a
Permitted Investment;
(xix) The Trust shall maintain a sufficient number of
employees in light of its contemplated business operations;
(xx) The Trust shall not hold out its credit as being
available to satisfy the obligations of any other Person;
(xxi) The Trust shall not make loans to any other Person; and
(xxii) The Trust shall observe all procedures required by its
Certificate of Trust and this Agreement and the Statutory Trust
Statute.
The Trust is hereby authorized by the initial Certificateholders to
engage in the activities set forth in Section 2.03(a). The Trust shall not
engage in any activity other than as set forth in Section 2.03(a).
Section 2.04. Appointment of Owner Trustee. The Owner Trustee appointed
by the Depositor hereunder shall constitute the Owner Trustee of the Trust, and
shall have all the rights, powers and duties set forth herein. The Owner Trustee
shall file the Certificate of Trust of the Trust.
Section 2.05. Capital Contribution of Depositor. On the date hereof,
the Depositor has made a contribution to the Trust consisting of $1. The
Depositor shall pay organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee. Concurrently with the
execution of this Agreement, the Trust will enter into the Sale and Servicing
Agreement pursuant to which it will purchase the Mortgage Loans which comprise
the remainder of the Owner Trust Estate.
Section 2.06. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Holders, subject to
the obligations of the Trust under the Basic Documents.
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It is the intention of the parties hereto that the Trust constitutes a
statutory trust under the Statutory Trust Statute and that this Agreement
constitutes the governing instrument of such statutory trust. The parties agree
that no election will be made to treat the Trust as a REMIC. It is the intention
of the parties hereto that, solely for income and franchise tax purposes, after
issuance of the Certificates, the Trust shall be treated as a partnership, with
the assets of the partnership being the Mortgage Loans and other assets held by
the Trust, the partners of the partnership being the Holders of the
Certificates, and the Notes being non-recourse debt of the partnership (or, if
there is only one Certificateholder, that the Trust shall be disregarded as an
entity separate from such Holder, with the assets held by the Trust being
treated as assets of the Holder and the Notes being treated as non-recourse debt
of the Holder). The parties agree that, unless otherwise required by appropriate
tax authorities or unless the Trust is disregarded as an entity separate from
its sole Certificateholder for income and franchise tax purposes, the Owner
Trustee will file or cause to be filed (at the written direction of the Majority
Certificateholders) annual or other necessary returns, reports and other forms
(such returns, reports and other forms to be prepared by the Depositor)
consistent with the characterization of the Trust as a partnership for such tax
purposes pursuant to Section 5.01(k). Effective as of the date hereof, the Owner
Trustee shall have all rights, powers and duties set forth herein and in the
Statutory Trust Statute with respect to accomplishing the purposes of the Trust.
The Owner Trustee shall file the Certificate of Trust with the Secretary of
State.
Section 2.07. Liability of the Holders. Subject to Section 2.05, no
Holder shall have any personal liability for any liability or obligation of the
Trust. The Certificates shall be fully paid and, to the fullest extent permitted
by law, non assessable.
Section 2.08. Title to Trust Property. Legal title to all of the Owner
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee and/or a separate
trustee, as the case may be.
The Certificateholders shall not have legal title to any part of the
Owner Trust Estate. No transfer by operation of law or otherwise of any interest
of the Certificateholders shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of any part of the Owner Trust Estate.
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Section 2.09. Situs of Trust. The Trust will be located and
administered in the State of Delaware. All accounts maintained at a bank by the
Owner Trustee or the Indenture Trustee on behalf of the Trust shall be located
in the State of Delaware, the State of New York or the State of Pennsylvania.
The Trust shall not have any employees; provided, however, nothing herein shall
restrict or prohibit the Owner Trustee from having employees within or without
the State of Delaware. The only office of the Trust will be at the Corporate
Trust Office in the State of Delaware.
Section 2.10. Representations and Warranties of the Depositor; Covenant
of the Certificateholders. (a) The Depositor hereby represents and warrants to
the Owner Trustee that:
(i) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(ii) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has
full power and authority to transfer and assign the property to be
transferred and assigned to and deposited with the Trust and the
Depositor has duly authorized such transfer and assignment and deposit
to the Trust by all necessary corporate action; and the execution,
delivery and performance of this Agreement has been duly authorized by
the Depositor by all necessary corporate action.
(iii) The Depositor has all necessary licenses, permits and
government approval to perform under the Basic Documents.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or by-laws of the Depositor, or any
indenture, agreement or other instrument to which the Depositor is a
party or by which it is bound; nor result in the creation or imposition
of any lien upon any of its properties pursuant to the terms of any
such indenture, agreement or other instrument (other than pursuant to
the Basic Documents); nor violate any law or, to the best of the
Depositor's knowledge, any order, rule or regulation applicable to the
Depositor of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
(v) No consent, license, approval or authorization or
registration or declaration with, any Person or with any governmental
authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the Basic
Documents, except for such as have been obtained, effected or made.
(vi) There are no proceedings or investigations pending or
notice of which has been received in writing before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its
properties: (x) asserting the invalidity of this Agreement, (y) seeking
to prevent the consummation of any of the transactions contemplated by
this Agreement or (z) seeking any determination or ruling that should
reasonably be expected to materially and adversely affect the
performance by the Depositor of its obligations under, or the validity
or enforceability of, this Agreement.
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(vii) The representations and warranties of the Depositor in
Article III of the Sale and Servicing Agreement are true and correct.
(viii) The Depositor has duly executed and delivered this
Agreement, and this Agreement constitutes the legal, valid and binding
obligation of the Depositor, enforceable against the Depositor, in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by the
application of equitable principles.
(b) By its acceptance of its Certificates, each
Certificateholder covenants with the Owner Trustee that during the continuance
of this Agreement, and while it holds Certificates, it will comply in all
respects with the provisions of its governing instruments in effect from time to
time.
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.05 and until the issuance of
the Certificates, the Depositor shall be the sole beneficiary of the Trust.
Section 3.02. The Certificates. The Certificates shall be issued
without a principal amount and shall together evidence the entire beneficial
ownership interest in the Trust. The Certificates shall be printed, lithographed
or engraved or may be produced in any other manner as is reasonably acceptable
to the Owner Trustee, as evidenced by its execution thereof. The Certificates
shall be executed on behalf of the Trust by manual or facsimile signature of an
Authorized Officer of the Owner Trustee. Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Trust, shall be
valid, notwithstanding that such individuals or any of them shall have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of authentication and delivery of such
Certificates.
A transferee of a Certificate shall become a Certificateholder, and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Certificate
duly registered in such transferee's name pursuant to Section 3.04.
Section 3.03. Execution, Authentication and Delivery of Trust
Certificates. Concurrently with the initial transfer of the Mortgage Loans to
the Trust pursuant to the Sale and Servicing Agreement, the Owner Trustee shall
cause the Certificates, representing 100% of the Percentage Interests of the
Trust Interest, to be executed on behalf of the Trust, authenticated and
delivered, to or at the direction of the Depositor. No Certificate shall entitle
its holder to any benefit under this Agreement, or shall be valid for any
purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee or the Owner Trustee's authenticating agent, by manual or
facsimile signature; such authentication shall constitute conclusive evidence
that such Certificate shall have been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
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Section 3.04. Registration of Transfer and Exchange of Trust
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.08, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the
Certificate Registrar shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. The Owner Trustee
shall be the initial "Certificate Registrar".
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.08, the Owner Trustee, at the
written direction of the Depositor, and upon the prior written consent of the
Note Purchaser, as provided in Section 3.09(f), shall execute, authenticate and
deliver (or shall cause its authenticating agent to authenticate and deliver),
in the name of the designated transferee or transferees, one or more new
Certificates of a like Percentage Interest dated the date of authentication by
the Owner Trustee or any authenticating agent. At the option of a
Certificateholder, Certificates may be exchanged for other Certificates of a
like Percentage Interest upon surrender of the Certificates to be exchanged at
the office or agency maintained pursuant to Section 3.08.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in the form
attached to the form of Certificate attached hereto as Exhibit A duly executed
by the Certificateholder or his attorney duly authorized in writing. In
addition, each Certificate presented or surrendered for registration of transfer
and exchange must be accompanied by a representation letter (an "Investment
Letter") from the Prospective Holder, in the form of Exhibit C hereto,
certifying as to the representations set forth in Section 3.09(a), (b) and (c).
Each Certificate surrendered for registration of transfer or exchange shall be
canceled and disposed of by the Certificate Registrar in accordance with its
customary practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar 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.
The preceding provisions of this Section 3.04 notwithstanding, the
Certificate Registrar shall not register transfers or exchanges of Certificates
for a period of fifteen (15) days preceding the Payment Date with respect to the
Certificates.
Notwithstanding anything contained herein to the contrary, neither the
Certificate Registrar nor the Owner Trustee shall be responsible for
ascertaining whether any transfer complies with the registration provisions or
exemptions from the Securities Act of 1933, as amended, the Securities Act of
1934, as amended, applicable state securities law or the Investment Company Act
of 1940, as amended; provided, however, that if an Investment Letter is
specifically required to be delivered to the Owner Trustee by a purchaser or
transferee of a Certificate, the Owner Trustee shall be under a duty to examine
the same to determine whether it conforms to the form of Investment Letter set
forth as Exhibit C hereto and shall promptly notify the party delivering the
same if such Investment Letter does not so conform.
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Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
the Owner Trustee on behalf of the Trust shall execute and the Owner Trustee, or
the Owner Trustee's authenticating agent, shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Percentage Interest. In connection with
the issuance of any new Certificate under this Section 3.05, the Owner Trustee
or the Certificate Registrar may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
Section 3.06. Persons Deemed Owners. Each person by virtue of becoming
a Certificateholder in accordance with this Agreement shall be deemed to be
bound by the terms of this Agreement. Prior to due presentation of a Certificate
for registration of transfer, the Owner Trustee or the Certificate Registrar may
treat the Person in whose name any Certificate shall be registered in the
Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.02 and for all other purposes
whatsoever, and neither the Owner Trustee nor the Certificate Registrar shall be
bound by any notice to the contrary.
Section 3.07. Access to List of Holders' Names and Addresses. The
Certificate Registrar shall furnish or cause to be furnished to the Owner
Trustee, the Servicer and the Indenture Trustee immediately prior to each
Payment Date, a list of the names and addresses of the Certificateholders as of
the most recent Record Date. If one or more Holders of Certificates, together
evidencing Percentage Interests totaling not less than 25%, apply in writing to
the Certificate Registrar, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Certificate Registrar shall, within five (5) Business Days
after the receipt of such application, afford such applicants access during
normal business hours to the current list of Certificateholders. Each
Certificateholder, by receiving and holding a Certificate, shall be deemed to
have agreed not to hold either of the Certificate Registrar or the Owner Trustee
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
Section 3.08. Maintenance of Office or Agency. The Owner Trustee shall
maintain an office or offices or agency or agencies where notices and demands to
or upon the Owner Trustee in respect of the Basic Documents may be served, and
so long as the Owner Trustee is the Certificate Registrar, where Certificates
may be surrendered for registration of transfer or exchange and notices and
demands to or upon the Certificate Registrar in respect of the Certificates, may
be served. The Owner Trustee initially designates the Corporate Trust Office as
its principal corporate trust office for such purposes. The Owner Trustee shall
give prompt written notice to the Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
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Section 3.09. Restrictions on Transfer of Certificates. (a) Each
prospective purchaser and any subsequent transferee of a Certificate (each, a
"Prospective Holder"), shall represent and warrant, in writing, to the Owner
Trustee and the Certificate Registrar and any of their respective successors
that:
(i) Such Person is (A) a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), and is aware that the seller of the Certificate may
be relying on the exemption from the registration requirements of the
Securities Act provided by Rule 144A and is acquiring such Certificate
for its own account or for the account of one or more qualified
institutional buyers for whom it is authorized to act, or (B) a Person
involved in the organization or operation of the Trust or an affiliate
of such Person within the meaning of Rule 3a-7 of the Investment
Company Act of 1940, as amended.
(ii) Such Person understands that the Certificates have not
been and will not be registered under the Securities Act and may be
offered, sold, pledged or otherwise transferred only to a person whom
the seller reasonably believes is (A) a qualified institutional buyer
or (B) a Person involved in the organization or operation of the Trust
or an affiliate of such Person, in a transaction meeting the
requirements of Rule 144A under the Securities Act and in accordance
with any applicable securities laws of any state of the United States.
(iii) Such Person understands that the Certificates bear a
legend to the following effect:
"THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE SECURITIES LAWS. THIS CERTIFICATE MAY BE DIRECTLY OR
INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF (INCLUDING
PLEDGED) BY THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE ACT, IN
A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A PERSON
INVOLVED IN THE ORGANIZATION OR OPERATION OF THE TRUST OR AN
AFFILIATE OF SUCH A PERSON WITHIN THE MEANING OF RULE 3a-7 OF
THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED IN A
TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH LAWS. NO PERSON IS OBLIGATED
TO REGISTER THIS CERTIFICATE UNDER THE ACT OR ANY STATE
SECURITIES LAWS."
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(b) By its acceptance of a Certificate, each Prospective Holder agrees
and acknowledges that no legal or beneficial interest in all or any portion of
any Certificate may be transferred directly or indirectly to an entity that
holds residual securities as nominee to facilitate the clearance and settlement
of such securities through electronic book-entry changes in accounts of
participating organizations (a "Book-Entry Nominee") and any such purported
transfer shall be void and have no effect.
(c) (i) No Certificateholder will be permitted to (A) acquire, sell,
transfer, assign, pledge or otherwise dispose of any of their Certificates or
any interest therein (or any financial contract or instrument with respect to
such) on or through a United States national, regional or local securities
exchange, a foreign securities exchange or an interdealer quotation system that
regularly disseminates firm buy or sell quotations by identified brokers or
dealers or (B) cause any of their Certificates or any interest therein (or any
financial contract or instrument with respect to such) to be marketed on or
through an exchange. Certificateholders will be asked to make a representation
to this effect in the form of Exhibit D.
(ii) The Owner Trustee will not issue a Certificate, or permit
a subdivision or transfer of a Certificate, if as a result there are
more than 99 beneficial owners of Certificates. For this purpose a
beneficial owner of a Certificate will be treated as a single
beneficial owner only if the holder has acquired the Certificate for
its own account, will be the sole beneficial owner thereof, will not
enter into any financial contract or instrument with respect to a
Certificate, and if it is a partnership, grantor trust or S corporation
less than 50% of the value of any person's interest in it is
attributable to its interest in the Trust. Certificateholders will be
asked to make a representation as to their status as a single
beneficial owner under these rules in the form of Exhibit D.
These transfer restrictions contained in section 3.09(c)(i) and (ii)
are intended to permit the Trust to rely, if necessary, on the "private
placement" exemption to classification as a "publicly traded partnership" in
U.S. Treasury Regulations section 1.7704-1(h).
(d) No transfer of a Certificate or any beneficial interest therein
shall be made to any person unless the Owner Trustee has received a
representation letter from the transferee to the effect that such transferee (i)
is not a person which is an employee benefit plan, trust or account subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 4975 of the Code or a governmental plan, as defined in
Section 3(32) of ERISA, subject to any federal, state or local law which is, to
a material extent, similar to the foregoing provisions of ERISA or the Code (any
such person being a "Plan"), (ii) is not an entity, including an insurance
company separate account or general account, whose underlying assets include
"plan assets" by reason of a Plan's investment in the entity and (iii) is not
directly or indirectly purchasing such Certificate or interest therein on behalf
of, as investment manager of, as named fiduciary of, as trustee of, or with the
assets of a Plan.
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(e) The Owner Trustee shall not execute, and shall not countersign and
deliver, a Certificate in connection with any transfer thereof unless the
transferor shall have provided to the Owner Trustee an Investment Letter, signed
by the transferee, which certificate shall contain the consent of the transferee
to any amendments of this Agreement as may be required to effectuate further the
foregoing restrictions on transfer of the Certificates to Book-Entry Nominees,
and an agreement by the transferee that it will not transfer a Certificate
without providing to the Owner Trustee an Investment Letter.
(f) The Certificates shall bear an additional legend referring to the
restrictions contained in paragraph (b) above.
(g) No transfer of a Certificate or any beneficial interest therein
shall be effective unless the Note Purchaser shall have given its prior written
consent thereto.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice to Holders with Respect to Certain Matters.
With respect to the following matters, the Owner Trustee shall not take action
unless (i) at least thirty (30) days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders (unless the
Certificateholders have directed the Owner Trustee to take action) in writing of
the proposed action and the Certificateholders evidencing not less than a
majority of the Percentage Interest of the Certificates shall not have notified
the Owner Trustee in writing prior to the 30th day after such notice is given
that such Certificateholders have withheld consent or the Certificateholders
have provided alternative written direction and (ii) the Note Purchaser shall
have given its prior written consent:
(a) the initiation of any claim or lawsuit by the Trust (except claims
or lawsuits brought in connection with the collection of the Mortgage Loans) and
the compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Mortgage Loans);
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Statutory
Trust Statute);
(c) the amendment or other change to any Basic Document in
circumstances where the consent of any Holder is required;
(d) the amendment or other change to any other Basic Document in
circumstances where the consent of any Holder is not required and such amendment
materially adversely affects the interest of the Certificateholders;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, or Indenture Trustee or pursuant to this Agreement of a successor
Certificate Registrar or the consent to the assignment by the Note Registrar or
Indenture Trustee or Certificate Registrar of their respective obligations under
the Indenture or this Agreement, as applicable;
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(f) the consent to the waiver of any default of any Basic Document;
(g) the consent to the assignment by the Indenture Trustee or Servicer
of their respective obligations under any Basic Document;
(h) do any act which would make it impossible to carry on the ordinary
business of the Trust as described in Section 2.03 hereof;
(i) confess a judgment against the Trust;
(j) possess Trust assets, or assign the Trust's right to property, for
other than a Trust purpose;
(k) cause the Trust to lend any funds to any entity; or
(l) remove or replace the Servicer or the Indenture Trustee.
Section 4.02. Action by Holders with Respect to Bankruptcy. Until one
year and one day following the day on which the Notes have been paid in full,
the Owner Trustee shall not have the power to (i) institute proceedings to have
the Trust declared or adjudicated bankrupt or insolvent, (ii) consent to the
institution of bankruptcy or insolvency proceedings against the Trust, (iii)
file a petition or consent to a petition seeking reorganization or relief on
behalf of the Trust under any applicable federal or state law relating to
bankruptcy, (iv) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or any similar official) of the Trust or a substantial
portion of the property of the Trust, (v) make any assignment for the benefit of
the Trust's creditors, (vi) cause the Trust to admit in writing its inability to
pay its debts generally as they become due, or (vii) take any action, or cause
the Trust to take any action, in furtherance of any of the foregoing without (A)
the unanimous prior written direction of the Note Purchaser and all
Certificateholders and (B) the delivery to the Owner Trustee by each such
Certificateholder of a certification that such Certificateholder reasonably
believes that the Trust is insolvent.
Section 4.03. Restrictions on Holders' Power. The Certificateholders
shall not direct the Owner Trustee to take or refrain from taking any action if
such action or inaction would be contrary to any obligation of the Trust or the
Owner Trustee under this Agreement or any of the other Basic Documents or would
be contrary to Section 2.03 nor shall the Owner Trustee be obligated to follow
any such direction, if given.
Section 4.04. Majority Control. Except as expressly provided herein,
any action that may be taken by the Certificateholders under this Agreement may
be taken by the Holders of Certificates evidencing more than 50% of the
Percentage Interest in each of the Trust Interests and such action shall be
binding upon all Certificateholders. Except as expressly provided herein, any
written notice of the Certificateholders delivered pursuant to this Agreement
shall be effective if signed by Holders of Certificates evidencing more than 50%
of the Percentage Interest in each of the Trust Interests at the time of the
delivery of such notice and such action shall be binding upon all
Certificateholders.
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ARTICLE V
TAX PROVISIONS; CERTAIN DUTIES
Section 5.01. Federal Income Tax Provisions. If the Trust is treated as
a partnership (rather than disregarded as a separate entity) for federal income
tax purposes pursuant to Section 2.06, the following provisions shall apply:
(a) A separate capital account (a "Capital Account") shall be
established and maintained for each Certificateholder by the Depositor, in
accordance with Treasury Regulations Section 1.704-1(b)(2)(iv). No
Certificateholder shall be entitled to interest on its Capital Account or any
capital contribution made by such Holder to the Trust.
(b) Upon termination of the Trust pursuant to Article IX, any amounts
available for distribution to Holders shall be distributed to the Holders with
positive Capital Account balances in accordance with such balances. For purposes
of this Section 5.01(b), the Capital Account of each Holder shall be determined
after all adjustments made in accordance with this Section 5.01 resulting from
the Trust's operations and from all sales and dispositions of all or any part of
the assets of the Trust. Any distributions pursuant to this Section 5.01(b)
shall be made by the end of the Taxable Year in which the termination occurs
(or, if later, within 90 days after the date of the termination).
(c) No Certificateholder shall be required to restore any deficit
balance in its Capital Account. Furthermore, no Holder shall be liable for the
return of the Capital Account of, or of any capital contribution made to the
Trust by, another Holder.
(d) Profit and loss of the Trust for each Taxable Year shall be
allocated to the Certificateholders in accordance with their respective
Percentage Interests.
(e) Notwithstanding any provision to the contrary, (i) any expense of
the Trust that is a "nonrecourse deduction" within the meaning of Treasury
Regulations Section 1.704-2(b)(1) shall be allocated in accordance with the
Holders' respective Percentage Interests, (ii) any expense of the Trust that is
a "partner nonrecourse deduction" within the meaning of Treasury Regulations
Section 1.704-2(i)(2) shall be allocated in accordance with Treasury Regulations
Section 1.704-2(i)(1), (iii) if there is a net decrease in Trust Minimum Gain
within the meaning of Treasury Regulations Section 1.704-2(f)(1) for any Taxable
Year, items of gain and income shall be allocated among the Holders in
accordance with Treasury Regulations Section 1.704-2(f) and the ordering rules
contained in Treasury Regulations Section 1.704-2(i), and (iv) if there is a net
decrease in Holder Nonrecourse Debt Minimum Gain within the meaning of Treasury
Regulations Section 1.704-2(i)(4) for any Taxable Year, items of gain and income
shall be allocated among the Holders in accordance with Treasury Regulations
Section 1.704-2(i)(4) and the ordering rules contained in Treasury Regulations
Section 1.704-2(j). A Holder's "interest in partnership profits" for purposes of
determining its share of the nonrecourse liabilities of the Trust within the
meaning of Treasury Regulations Section 1.752-3(a)(3) shall be such Holder's
Percentage Interest.
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(f) If a Holder receives in any Taxable Year an adjustment, allocation,
or distribution described in subparagraphs (4), (5), or (6) of Treasury
Regulations Section 1.704-l(b)(2)(ii)(d) that causes or increases a negative
balance in such Holder's Capital Account that exceeds the sum of such Holder's
shares of Trust Minimum Gain and Holder Nonrecourse Debt Minimum Gain, as
determined in accordance with Treasury Regulations Sections 1.704-2(g) and
1.704-2(i), such Holder shall be allocated specially for such Taxable Year (and,
if necessary, later Taxable Years) items of income and gain in an amount and
manner sufficient to eliminate such negative Capital Account balance as quickly
as possible as provided in Treasury Regulations Section 1.704-l(b)(2)(ii)(d).
After the occurrence of an allocation of income or gain to a Holder in
accordance with this Section 5.01(f), to the extent permitted by Regulations
Section 1.704-l(b), items of expense or loss shall be allocated to such Holder
in an amount necessary to offset the income or gain previously allocated to such
Holder under this Section 5.01(f).
(g) Loss shall not be allocated to a Holder to the extent that such
allocation would cause a deficit in such Holder's Capital Account (after
reduction to reflect the items described in Treasury Regulations Section
1.704-l(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of such Holder's shares
of Trust Minimum Gain and Holder Nonrecourse Debt Minimum Gain. Any loss in
excess of that limitation shall be allocated to all the Holders in accordance
with their respective Percentage Interests. After the occurrence of an
allocation of loss to a Holder in accordance with this Section 5.01(g), to the
extent permitted by Treasury Regulations Section 1.704-l(b), profit shall be
allocated to such Holder in an amount necessary to offset the loss previously
allocated to such Holder under this Section 5.01(g).
(h) If a Holder transfers any part or all of its Percentage Interest
and the transferee is admitted as a Holder as provided herein (a "Transferee
Holder"), the distributive shares of the various items of profit and loss
allocable among the Holders during such Taxable Year shall be allocated between
the transferor and the Transferee Holder (at the election of the Holders
(including the transferor, but excluding the Transferee Holder)) either (i) as
if the Taxable Year had ended on the date of the transfer or (ii) based on the
number of days of such Taxable Year that each was a Holder without regard to the
results of Trust activities in the respective portions of such Taxable Year in
which the transferor and Transferee Holder were Holders.
(i) "Profit" and "loss" and any items of income, gain, expense or loss
referred to in this Section 5.01 shall be determined in accordance with federal
income tax accounting principles as modified by Treasury Regulations Section
1.704-l(b)(2)(iv), except that profits and losses shall not include items of
income, gain, and expense that are specially allocated pursuant to Sections
5.01(e), 5.01(f) or 5.01(g) hereof. All allocations of income, profits, gains,
expenses, and losses (and all items contained therein) for federal income tax
purposes shall be identical to all allocations of such items set forth in this
Section 5.01, except as otherwise required by Section 704(c) of the Code and
Section 1.704-l(b)(4) of the Treasury Regulations.
(j) The taxable year of the Trust (the "Taxable Year") shall be the
calendar year or such other taxable year as may be required by Section 706(b) of
the Code.
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(k) At the Depositor's expense (as advanced by the Depositor to the
Trust and reimbursed from distributions otherwise payable to the
Certificateholders), the Depositor shall (i) prepare, or cause to be prepared,
and file or cause to be filed such tax returns relating to the Trust (including
a partnership information return, IRS Form 1065) as are required by applicable
federal, state, and local law, (ii) cause such returns to be signed in the
manner required by law, (iii) make such elections as may from time to time be
required or appropriate under any applicable law so as to maintain the Trust's
classification as a partnership for tax purposes, (iv) prepare and deliver, or
cause to be prepared and delivered, to the Holders, no later than 120 days after
the close of each Taxable Year (or no later than April 15th), a Schedule K-1, a
copy of the Trust's informational tax return (IRS Form 1065), and such other
reports (collectively, the "Annual Tax Reports") setting forth in sufficient
detail all such information and data with respect to the transactions effected
by or involving the Trust during such Taxable Year as shall enable each Holder
to prepare its federal, state, and local income tax returns in accordance with
the laws then prevailing, and (v) collect, or cause to be collected, any
withholding tax as described in Section 5.02 with respect to income or
distributions to Certificateholders.
(l) The Depositor shall, if required, be designated as the tax matters
partner for the Trust within the meaning of Section 6231(a)(7) of the Code (the
"Tax Matters Partner"). The Tax Matters Partner shall have the right and
obligation to take all actions authorized and required, respectively, by the
Code for the Tax Matters Partner. The Tax Matters Partner shall have the right
to retain professional assistance in respect of any audit or controversy
proceeding initiated with respect to the Trust by the Internal Revenue Service
or any state or local taxing authority, and all expenses and fees incurred by
the Tax Matters Partner on behalf of the Trust shall be advanced by the
Depositor to the Trust and shall be reimbursed from distributions otherwise
payable to Certificateholders. In the event the Tax Matters Partner receives
notice of a final partnership adjustment under Section 6223(a)(2) of the Code,
the Tax Matters Partner shall either (i) file a court petition for judicial
review of such adjustment within the period provided under Section 6226(a) of
the Code, a copy of which petition shall be mailed to all other Holders on the
date such petition is filed, or (ii) mail a written notice to all other Holders,
within such period, that describes the Tax Matters Partner's reasons for
determining not to file such a petition.
(m) Except as otherwise provided in this Section 5.01 and Section 6.06,
the Holders shall instruct the Depositor in writing as to whether to make any
available election under the Code or any applicable state or local tax law on
behalf of the Trust.
Section 5.02. Withholding Taxes. In the event that any withholding tax
is imposed under federal, state, or local law on the Trust's payment (or
allocations of income) to a Certificateholder, such tax shall reduce the amount
otherwise distributable to such Certificateholder in accordance with this
Section 5.02. The Indenture Trustee, on behalf of the Owner Trustee, is hereby
authorized and directed to retain in the Collection Account from amounts
otherwise distributable to the Certificateholders sufficient funds for the
payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Indenture Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings). The Certificate Registrar will
provide the Indenture Trustee with a statement indicating the amount of any such
withholding tax. The amount of any withholding tax imposed with respect to a
Certificateholder shall be treated as cash distributed to such Certificateholder
at the time it is withheld by the Indenture Trustee and remitted to the
appropriate taxing authority from the Collection Account at the direction of the
Indenture Trustee, on behalf of the Owner Trustee. If there is a possibility
that withholding tax is payable with respect to a distribution (such as a
distribution to a Certificateholder who is a Non-U.S. Person), the Indenture
Trustee may in its sole discretion withhold such amounts in accordance with this
paragraph. In the event that a Certificateholder wishes to apply for a refund of
any such withholding tax, the Owner Trustee and the Indenture Trustee shall
reasonably cooperate with such Certificateholder in making such claim so long as
such Certificateholder agrees in writing to reimburse the Owner Trustee for any
out-of-pocket expenses incurred.
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Any Holder which is organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date such Holder becomes a Holder,
(a) so notify the Owner Trustee and the Indenture Trustee, on behalf of the
Trust, (b) (i) provide the Owner Trustee and the Indenture Trustee, on behalf of
the Trust, with Internal Revenue Service Form W-8BEN, W-8ECI, W-8EXP or W-8IMY,
as appropriate, or (ii) notify the Owner Trustee and the Indenture Trustee, on
behalf of the Trust, that it is not entitled to an exemption from United States
withholding tax or a reduction in the rate thereof on payments of interest. Any
such Holder agrees by its acceptance of a Certificate, on an ongoing basis, to
provide like certification for each taxable year and to notify the Owner Trustee
and the Indenture Trustee, on behalf of the Trust, should subsequent
circumstances arise affecting the information provided. The Trust, the Owner
Trustee and the Indenture Trustee shall be fully protected in relying upon, and
each Holder by its acceptance of a Certificate hereunder agrees to indemnify and
hold the Trust, the Owner Trustee and the Indenture Trustee harmless against all
claims or liability of any kind arising in connection with or related to their
reliance upon any documents, forms or information provided by any Holder. In
addition, if the Indenture Trustee has not withheld taxes on any payment made to
any Holder, and the Indenture Trustee is subsequently required to remit to any
taxing authority any such amount not withheld, such Holder shall return such
amount to the Indenture Trustee upon written demand by the Indenture Trustee.
Neither the Owner Trustee nor the Indenture Trustee shall be liable for damages
to any Holder due to a violation of the Code unless and only to the extent such
liability is caused by the Owner Trustee's or the Indenture Trustee's failure to
act in accordance with its standard of care under this Agreement.
Section 5.03. Accounting and Records to the Noteholders, Owners, the
Internal Revenue Service and Others. The Depositor shall (i) maintain (or cause
to be maintained) the books of the Trust on a calendar year basis on the accrual
method of accounting, including, without limitation, the allocations of net
income under Section 5.01, (ii) deliver (or cause to be delivered) to each
Holder, as may be required by the Code and applicable Treasury Regulations, such
information as may be required (including Schedule K-1, if applicable) to enable
each Holder to prepare its federal and state income tax returns and (iii) file
or cause to be filed, if necessary, such tax returns relating to the Trust
(including a partnership information return, Form 1065), and direct the Owner
Trustee or the Servicer, as the case may be, in writing to make such elections
as may from time to time be required or appropriate under any applicable state
or federal statute or rule or regulation thereunder so as to maintain the
Trust's characterization as a branch, or if applicable, as a partnership, for
federal income tax purposes. The Owner Trustee or the Servicer, as the case may
be, shall make all elections pursuant to this Section 5.03 as directed in
writing by the Depositor. An Authorized Officer of the Trust shall sign all tax
information returns, if any, filed pursuant to this Section 5.03 and any other
returns as may be required by law, and in doing so shall rely entirely upon, and
shall have no liability for information provided by, or calculations provided
by, the Depositor or the Servicer. The Depositor shall elect under Section 1278
of the Code to include in income currently any market discount that accrues with
respect to the Mortgage Loans. The Depositor shall not make the election
provided under Section 754 of the Code.
Section 5.04. Signature on Returns. Notwithstanding the provisions of
Section 5.03 and in the event that the Trust is characterized as a partnership,
the Owner Trustee shall sign, on behalf of the Trust, the tax returns of the
Trust, as directed in writing by the Depositor, unless applicable law requires a
Holder to sign such documents, in which case such documents shall be signed by
the Holders.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority. The Owner Trustee is authorized and
directed to execute and deliver or cause to be executed and delivered the Notes,
the Certificates and the Basic Documents to which the Trust is to be a party and
each certificate or other document attached as an exhibit to or contemplated by
the Basic Documents to which the Trust is to be a party and any amendment or
other agreement or instrument described in Article III, in each case, in such
form as the Depositor shall approve, as evidenced conclusively by the Owner
Trustee's execution thereof. In addition, the Owner Trustee is authorized and
directed, on behalf of the Trust, to execute and deliver to the Authenticating
Agent the Trust Request and the Trust Orders referred to in Section 2.11 of the
Indenture, directly to the Authenticating Agent to authenticate and deliver
Notes in the Note Principal Balance of up to the Maximum Note Balance (as such
term is defined in the Sale and Servicing Agreement).
Section 6.02. General Duties. (a) It shall be the duty of the Owner
Trustee:
(i) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Basic
Documents to which the Trust is a party and to administer the Trust in
the interest of the Certificateholders, subject to the Basic Documents
and in accordance with the provisions of this Agreement; and
(ii) to obtain and preserve the Trust's qualification to do
business in the State of Delaware.
(b) The Owner Trustee shall not be responsible for taking any action on
behalf of the Trust under any Basic Document unless specifically directed in
writing to do so in accordance with Section 6.03 of this Agreement.
(c) The Owner Trustee shall not be responsible for any matter regarding
the Securities Act, the Exchange Act or the Investment Company Act of 1940, as
amended, or the rules or regulations thereunder.
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Section 6.03. Action upon Instruction. (a) Subject to Article IV
hereof, and in accordance with the terms of the Basic Documents, the
Certificateholders may by written instruction direct the Owner Trustee in the
management of the Trust but only to the extent consistent with the limited
purpose of the Trust. Such direction may be exercised at anytime by written
instruction of the Certificateholders pursuant to Article IV hereof. Without
limiting the generality of the foregoing, the Owner Trustee shall act as
directed in writing by the Certificateholders in connection with Note
redemptions requested by the Certificateholders, and shall take all actions and
deliver all documents that the Trust is required to take and deliver in
accordance with Section 4.01 and Article X of the Indenture in order to effect
any redemption requested by the Certificateholders.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any other Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is contrary
to the terms hereof or of any other Basic Document or is otherwise contrary to
law.
(c) Subject to Article IV hereof, whenever the Owner Trustee is unable
to decide between alternative courses of action permitted or required by the
terms of this Agreement or under any other Basic Document, the Owner Trustee
shall promptly give notice (in such form as shall be appropriate under the
circumstances) to the Certificateholders requesting instruction from the
Certificateholders as to the course of action to be adopted, and to the extent
the Owner Trustee acts in good faith in accordance with any written instruction
of the Certificateholders received, the Owner Trustee shall not be liable on
account of such action to any Person. If the Owner Trustee shall not have
received appropriate instruction within ten (10) days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement or
the Basic Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(d) Subject to Article IV hereof, in the event that the Owner Trustee
is unsure as to the application of any provision of this Agreement or any other
Basic Document or any such provision is ambiguous as to its application, or is,
or appears to be, in conflict with any other applicable provision, or in the
event that this Agreement permits any determination by the Owner Trustee or is
silent or is incomplete as to the course of action that the Owner Trustee is
required to take with respect to a particular set of facts, the Owner Trustee
may give notice (in such form as shall be appropriate under the circumstances)
to the Certificateholders requesting instruction and, to the extent that the
Owner Trustee acts or refrains from acting in good faith in accordance with any
such instruction received, the Owner Trustee shall not be liable, on account of
such action or inaction, to any Person. If the Owner Trustee shall not have
received appropriate instruction within ten (10) days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement or
the other Basic Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
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Section 6.04. No Duties Except as Specified in this Agreement, the
Basic Documents or any Instructions. The Owner Trustee shall not have any duty
or obligation to manage, make any payment with respect to, register, record,
sell, dispose of, or otherwise deal with the Owner Trust Estate, or to otherwise
take or refrain from taking any action under, or in connection with, any
document contemplated hereby to which the Trust is a party, except as expressly
provided by the terms of this Agreement, any other Basic Document or in any
document or written instruction received by the Owner Trustee pursuant to
Section 6.03; and no implied duties or obligations shall be read into this
Agreement or any other Basic Document against the Owner Trustee. The Owner
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
prepare or file any Securities and Exchange Commission filing for the Trust or
to record this Agreement or any other Basic Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Owner Trust
Estate that result from actions by, or claims against, the Owner Trustee in its
individual capacity that are not related to the ownership or the administration
of the Owner Trust Estate.
Section 6.05. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the other Basic
Documents and (iii) in accordance with any document or written instruction
delivered to the Owner Trustee pursuant to Section 6.03.
Section 6.06. Restrictions. Neither the Owner Trustee nor the Depositor
shall take any action (a) that violates or results in a breach of or is
inconsistent with the purposes of the Trust set forth in Section 2.03 or (b)
that, to the actual knowledge of the Depositor and the Owner Trustee, would
result in the Trust's becoming taxable as a corporation for Federal income tax
purposes. The Certificateholders shall not direct the Owner Trustee or the
Depositor to take action that would violate the provisions of this Section 6.06.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement and the
other Basic Documents. The Owner Trustee also agrees to disburse all moneys
actually received by it constituting part of the Owner Trust Estate upon the
terms of the other Basic Documents and this Agreement. The Owner Trustee shall
not be answerable or accountable hereunder or under any other Basic Document
under any circumstances, except (i) for its own willful breach or misconduct or
gross negligence or (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.03 expressly made by the Owner Trustee in its
individual capacity. In particular, but not by way of limitation (and subject to
the exceptions set forth in the preceding sentence):
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(a) the Owner Trustee shall not be liable for any error of judgment
made by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Depositor or the Certificateholders given in accordance with this Agreement;
(c) no provision of this Agreement or any other Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any other Basic Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Depositor or for the form, character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate or for or in respect of the validity
or sufficiency of the Basic Documents, other than the Owner Trustee's
certificate of authentication on the Certificates, and the Owner Trustee shall
in no event assume or incur any liability, duty, or obligation to any Noteholder
or to any Certificateholder, other than as expressly provided for herein and in
the other Basic Documents;
(f) the Owner Trustee shall not be responsible for any representation,
warranty or covenant made by the Trust under the Basic Documents;
(g) the Owner Trustee shall not be liable for the default or misconduct
of the Indenture Trustee, the Paying Agent, the Administrator or the Servicer
under any of the Basic Documents or otherwise and the Owner Trustee shall have
no obligation or liability to perform the obligations of the Trust under this
Agreement or the other Basic Documents that are required to be performed by the
Indenture Trustee, the Servicer, the Administrator or the Paying Agent;
(h) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of the
Depositor or any of the Certificateholders, unless such Certificateholders or
the Depositor have offered to the Owner Trustee security or indemnity reasonably
satisfactory to it against the costs, expenses and liabilities that may be
incurred by the Owner Trustee therein or thereby. The right of the Owner Trustee
to perform any discretionary act enumerated in this Agreement or in any other
Basic Document shall not be construed as a duty, and the Owner Trustee shall not
be answerable for other than its gross negligence or willful breach or
misconduct in the performance of any such act; and
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(i) notwithstanding anything contained herein to the contrary, neither
Wilmington Trust Company nor the Owner Trustee shall be required to take any
action in any jurisdiction other than in the State of Delaware if the taking of
such action will (i) require the consent or approval or authorization or order
of or the giving of notice to, or the registration with or the taking of any
other action in respect of, any state or other governmental authority or agency
of any jurisdiction other than the State of Delaware; (ii) result in any fee,
tax or other governmental charge under the laws of any jurisdiction or any
political subdivisions thereof in existence on the date hereof other than the
State of Delaware becoming payable by Wilmington Trust Company; or (iii) subject
Wilmington Trust Company to personal jurisdiction in any jurisdiction other than
the State of Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Wilmington Trust Company or the Owner
Trustee, as the case may be, contemplated hereby. The Owner Trustee shall be
entitled to obtain advice of counsel (which advice shall be an expense of the
Servicer) to determine whether any action required to be taken pursuant to this
Agreement or the other Basic Documents results in the consequences described in
clauses (i), (ii) and (iii) of the preceding sentence. In the event that said
counsel advises the Owner Trustee that such action will result in such
consequences, the Owner Trustee will appoint an additional trustee pursuant to
Section 10.05 hereof to proceed with such action.
Section 7.02. Furnishing of Documents. Subject to Section 3.07, the
Owner Trustee shall furnish to the Certificateholders promptly upon receipt of a
written request therefor, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and any other instruments
furnished to the Owner Trustee under the Basic Documents. On behalf of the Owner
Trustee, the Depositor shall furnish to Noteholders promptly upon written
request therefor, copies of the Sale and Servicing Agreement and the Indenture.
Section 7.03. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Depositor and the Certificateholders, that:
(a) It is a Delaware banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite power and authority to execute, deliver and perform its obligations
under this Agreement.
(b) It has taken all action necessary to authorize the execution and
delivery by it of this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to execute and deliver
this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any federal or
Delaware law, governmental rule or regulation governing the banking or trust
powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws.
(d) This Agreement constitutes the valid and legally binding agreement
of the Owner Trustee, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(e) No consent, approval, authorization, or order of, or filing with,
any court or regulatory, supervisory or governmental agency or body is required
under Delaware law or federal law governing the banking and trust powers of the
Owner Trustee in connection with the execution, delivery and performance by the
Owner Trustee, in its individual capacity, of this Agreement other than the
filing of the Certificate of Trust under the Statutory Trust Statute.
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Section 7.04. Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, note, or
other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a certified
copy of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of the determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer
or other authorized officers of the relevant party, as to such fact or matter
and such certificate shall constitute full protection to the Owner Trustee for
any action taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the other
Basic Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, Accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, Accountants or other such persons and not contrary to this Agreement or
any other Basic Document.
Section 7.05. Not Acting in Individual Capacity. Except as provided in
Section 7.03, in accepting the trusts hereby created, Wilmington Trust Company
acts solely as Owner Trustee hereunder and not in its individual capacity, and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any other Basic Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.
Section 7.06. Owner Trustee Not Liable for Certificates or Mortgage
Loans. The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Owner Trustee on the Certificates) shall
be taken as the statements of the Depositor, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
other Basic Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates and as specified in
Section 7.03 hereof) or the Notes, or of any Mortgage Loans or related
documents. The Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Mortgage Loan, or the perfection and priority of any security interest
created by any Mortgage Loan or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Owner Trust Estate or
its ability to generate the payments to be distributed to Certificateholders
under this Agreement or the Noteholders under the Indenture, including, without
limitation, the existence, condition and ownership of any Mortgaged Property,
the existence and enforceability of any insurance thereon, the existence and
contents of any Mortgage Loan on any computer or other record thereof, the
validity of the assignment of any Mortgage Loan to the Trust or of any
intervening assignment, the completeness of any Mortgage Loan, the performance
or enforcement of any Mortgage Loan, the compliance by the Depositor or the
Servicer with any warranty or representation made under any Basic Document or in
any related document or the accuracy of any such warranty or representation or
any action of the Indenture Trustee or the Servicer or any subservicer taken in
the name of the Owner Trustee.
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Section 7.07. Owner Trustee May Own Certificates and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates or Notes and may deal with the Depositor, the Indenture Trustee
and the Servicer in banking transactions with the same rights as it would have
if it were not Owner Trustee.
Section 7.08. Licenses. The Depositor shall cause the Trust to use its
best efforts to obtain and maintain the effectiveness of any licenses required
in connection with this Agreement and the other Basic Documents and the
transactions contemplated hereby and thereby until such time as the Trust shall
terminate in accordance with the terms hereof.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Servicer and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the
Servicer for its other reasonable expenses hereunder as separately agreed.
Section 8.02. Indemnification. The Depositor shall be liable as obligor
for, and shall indemnify the Owner Trustee (in its individual and trust
capacities) and its successors, assigns, agents and servants (collectively, the
"Indemnified Parties") from and against, any and all liabilities, obligations,
losses, damages, taxes, claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable legal fees and expenses)
of any kind and nature whatsoever (collectively, "Expenses") which may at any
time be imposed on, incurred by, or asserted against any Indemnified Party in
any way relating to or arising out of this Agreement, the Basic Documents, the
Owner Trust Estate, the administration of the Owner Trust Estate or the action
or inaction of the Owner Trustee hereunder, except only that the Depositor shall
not be liable for or required to indemnify an Indemnified Party from and against
Expenses arising or resulting from any of the matters described in the third
sentence of Section 7.01. The indemnities contained in this Section 8.02 shall
survive the resignation or termination of the Owner Trustee or the termination
of this Agreement. In any event of any claim, action or proceeding for which
indemnity will be sought pursuant to this Section, the Depositor will be
entitled to participate therein, with counsel selected by the Depositor and
reasonably satisfactory to the Indemnified Parties, but after notice from an
Indemnified Party to the Depositor of its election to assume the defense
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thereof, the Depositor shall not be liable to the Indemnified Party under this
Section 8.02 for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense of such action; provided,
however, that this sentence shall not be in effect if (1) the Depositor shall
not have employed counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party within a reasonable time after notice of
commencement of the action, (2) the Depositor shall have authorized the
employment of counsel for the Indemnified Party at the expense of the Depositor
or (3) in the event any such claim involves a possible imposition of criminal
liability or penalty or a material civil penalty on such Indemnified Party, a
conflict of interest between such Indemnified Party and the Depositor or another
indemnitee or the granting of material injunctive relief against such
Indemnified Party, and such Indemnified Party informs the Depositor that such
Indemnified Party desires to be represented by separate counsel, in which case,
the reasonable fees and expenses of such separate counsel shall be born by the
Depositor. If the Depositor assumes the defense of any such proceeding, it shall
be entitled to settle such proceeding without any liability being assessed
against any Indemnified Party or, if such settlement provides for release of any
such Indemnified Party without any liability being assessed against any
Indemnified Party in connection with all matters relating to the proceeding
which have been asserted against such Indemnified Party in such proceeding by
the other parties to such settlement, without the prior written consent of such
Indemnified Party, but otherwise only with the prior written consent of such
Indemnified Party.
Section 8.03. Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.01. Termination of Trust Agreement. (a) This Agreement (other
than Article VIII) and the Trust shall terminate and be of no further force or
effect after the payment to the Noteholders of all amounts required to be paid
to them under the Indenture, and the earlier of: (i) the final payment or other
liquidation of the Mortgage Loans and the disposition of all REO Properties and
the remittance of all funds due hereunder with respect to such Mortgage Loans
and REO Properties or the disposition of the Mortgage Loans and REO Properties
at the direction of a majority of a Percentage Interest of the
Certificateholders, in either case after the satisfaction and discharge of the
Indenture pursuant to Section 4.01 of the Indenture and (ii) the expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx (the late ambassador of the United States to the Court of St. Xxxxx).
The bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder or the Depositor shall not (x) operate to terminate this
Agreement or the Trust, nor (y) entitle the Depositor's or 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 all
or any part of the Trust or Owner Trust Estate nor (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a) above, none of the Depositor,
the Servicer nor any Certificateholder shall be entitled to revoke or terminate
the Trust.
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(c) Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Indenture Trustee for payment of the final distributions and cancellation, shall
be given by the Owner Trustee to the Certificateholders and the Indenture
Trustee mailed within five (5) Business Days of receipt by the Owner Trustee
from the Servicer of notice of such termination pursuant to Section 9.01(a)
above, which notice given by the Owner Trustee shall state (i) the Payment Date
upon or with respect to which final payment of the Certificates shall be made
upon presentation and surrender of the Certificates at the office of the
Indenture Trustee therein designated, (ii) the amount of any such final payment
and (iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Indenture Trustee therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Indenture Trustee at the time such notice is given to
Certificateholders. The Indenture Trustee shall give notice to the Owner Trustee
of each presentation and surrender of Certificates promptly, and the Indenture
Trustee shall promptly cause to be distributed to the related
Certificateholders, subject to Section 3808 of the Statutory Trust Statute,
amounts distributable on such Payment Date pursuant to the terms of the
Indenture.
(d) Upon the winding up of the Trust in accordance with Section 3808 of
the Statutory Trust Statute and its termination, the Owner Trustee shall cause
the Certificate of Trust to be canceled by filing a certificate of cancellation
with the Secretary of State in accordance with the provisions of Section 3810 of
the Statutory Trust Statute.
(e) The bankruptcy, death or incapacity of any Owner Trustee shall not
operate to terminate this Agreement, nor entitle such Owner Trustee's legal
representative or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Owner Trust Estate,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation or banking association satisfying
the provisions of Section 3807(a) of the Statutory Trust Statute; authorized to
exercise trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or state
authorities; and having (or having a parent that has) a rating of at least
"Baa3" by Xxxxx'x and "A-1" by S&P. If such entity shall publish reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 10.01, the combined capital and surplus of such entity shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section 10.01, the Owner
Trustee shall resign immediately in the manner and with the effect specified in
Section 10.02.
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Section 10.02. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Depositor, the Servicer and the
Indenture Trustee. Upon receiving such notice of resignation, the Servicer shall
promptly appoint a successor Owner Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Owner Trustee
and one copy to the successor Owner Trustee. If no successor Owner Trustee shall
have been so appointed and have accepted appointment within thirty (30) days
after the giving of such notice of resignation, the resigning Owner Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Certificateholders or the Servicer, or if at any
time the Owner Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Owner Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Owner Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Certificateholders or the Servicer may
remove the Owner Trustee. If the Certificateholders or the Servicer shall remove
the Owner Trustee under the authority of the immediately preceding sentence, the
Servicer shall promptly appoint a successor Owner Trustee by written instrument
in duplicate, one copy of which instrument shall be delivered to the outgoing
Owner Trustee so removed and one copy to the successor Owner Trustee and payment
of all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 10.02
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.03 and payment of all fees and expenses
owed to the outgoing Owner Trustee. The Servicer shall provide notice of such
resignation or removal of the Owner Trustee to each of the Indenture Trustee and
the Paying Agent.
Section 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Indenture Trustee and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon, subject to the
payment of all fees and expenses owed to the outgoing Owner Trustee, the
resignation or removal of the predecessor Owner Trustee shall become effective
and such successor Owner Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties, and obligations
of its predecessor under this Agreement, with like effect as if originally named
as Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees
and expenses deliver to the successor Owner Trustee all documents and statements
and moneys held by it under this Agreement; and the predecessor Owner Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.
-31-
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 10.03, the Depositor shall mail notice of the successor of such
Owner Trustee to all Certificateholders, the Indenture Trustee, the Paying Agent
and the Noteholders. If the Depositor fails to mail such notice within ten (10)
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Depositor.
Any successor Owner Trustee appointed pursuant to this Section 10.03
shall file an amendment to the Certificate of Trust with the Secretary of State
identifying the name and principal place of business of such successor Owner
Trustee in the State of Delaware.
Section 10.04. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section
10.01, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto, except the filing of an amendment to the
Certificate of Trust, if appropriate, anything herein to the contrary
notwithstanding.
Section 10.05. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Mortgaged Property may at the time be located,
and for the purpose of performing certain duties and obligations of the Owner
Trustee with respect to the Trust and the Certificates, the Owner Trustee shall
have the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Owner Trustee to act as co-trustee, jointly with
the Owner Trustee, or separate trustee or separate trustees, of all or any part
of the Owner Trust Estate, and to vest in such Person, in such capacity, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section 10.05, such powers, duties, obligations, rights and trusts as the
Owner Trustee may consider necessary or desirable. No co-trustee or separate
trustee under this Agreement shall be required to meet the terms of eligibility
as a successor trustee pursuant to Section 10.01 and no notice of the
appointment of any co-trustee or separate trustee shall be required pursuant to
Section 10.03.
(b) Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provision and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Owner 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 or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Owner Trustee;
-32-
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Owner Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Owner Trustee
shall be deemed to have been given to the separate trustees and co-trustees, as
if given to each of them. Every instrument appointing any separate trustee or
co-trustee, other than this Agreement, shall refer to this Agreement and to the
conditions of this Article X. Each separate trustee and co-trustee, upon its
acceptance of appointment, shall be vested with the estates specified in its
instrument of appointment, either jointly with the Owner 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 Owner Trustee.
Each such instrument shall be filed with the Owner Trustee.
(d) Any separate trustee or co-trustee may at any time appoint the
Owner Trustee as 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. 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 Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Supplements and Amendments. This Agreement may be
amended by the Depositor and the Owner Trustee, with the consent of the Note
Purchaser, but without the consent of any of the Noteholders or the
Certificateholders or the Indenture Trustee, to cure any ambiguity, to correct
or supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions in
this Agreement; provided, however, that such action shall not (i) as evidenced
by an Opinion of Counsel satisfactory to the Note Purchaser, adversely affect in
any material respect the interests or tax status of any Noteholder or
Certificateholder or (ii) amend all or any portion of Section 2.03 hereof.
-33-
This Agreement may also be amended from time to time by the Depositor
and the Owner Trustee, with the prior written consent of the Indenture Trustee
(acting at the written direction of the Noteholders evidencing more than 50% of
the Outstanding Principal Balance of the Notes and the Holders of Certificates
evidencing more than 50% of the Percentage Interests of the Trust Interest), 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 Noteholders or the Certificateholders; provided, however, no such
amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on the Mortgage Loans
or distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders, (b) reduce the aforesaid percentage of
the Outstanding Principal Balance of the Notes or the Percentage Interests
required to consent to any such amendment, or (c) amend or modify any of Section
2.01, 2.03, 2.08, 4.02, 11.01, 11.02, 11.03, 11.07, 11.08 or 11.11
(collectively, the "Special Purpose Provisions") in either case of clause (a),
(b) or (c) without the consent of the holders of all the outstanding Notes and
the Holders of all the outstanding Certificates. In the event of any conflict
between any of the Special Purpose Provisions and any other provision of this
Agreement, the Special Purpose Provisions shall control.
Promptly after the execution of any such amendment or consent, the
Depositor shall furnish written notification of the substance of such amendment
or consent to each Certificateholder and the Indenture Trustee.
It shall not be necessary for the consent of Certificateholders, the
Noteholders (other than the Note Purchaser) or the Indenture Trustee pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Certificateholders provided for in this Agreement or in any other Basic
Document) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
Section 11.02. No Legal Title to Owner Trust Estate in Holders. The
Certificateholders shall not have legal title to any part of the Owner Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of any right,
title, or interest of the Certificateholders to and in their ownership interest
in the Owner Trust Estate shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of legal title to any part of the Owner Trust Estate.
Section 11.03. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the
Certificateholders and, to the extent expressly provided herein, the Indenture
Trustee and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
-34-
Section 11.04. Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all communications provided for or permitted
hereunder shall be in writing and shall be deemed to have been given if (1)
personally delivered, (2) upon receipt by the intended recipient or three
Business Days after mailing if mailed by certified mail, postage prepaid (except
that notice to the Owner Trustee shall be deemed given only upon actual receipt
by the Owner Trustee), (3) sent by express courier delivery service and received
by the intended recipient or (4) except with respect to notices sent to the
Owner Trustee, transmitted by telex or facsimile transmission (or any other type
of electronic transmission agreed upon by the parties and confirmed by a writing
delivered by any of the means described in (1), (2) or (3)), at the following
addresses: (i) if to the Owner Trustee, at its Corporate Trust Office; (ii) if
to the Depositor, ABFS Balapointe, Inc., c/o American Business Financial
Services, The Xxxxxxxxx Building, 000 Xxxx Xxxxxx Xxxx, 0xx Xxxxx, Xxxxxxxxxxxx,
XX 00000; or, as to each such party, at such other address as shall be
designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
Section 11.05. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Section 11.06. Separate
Counterparts. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 11.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of the
Depositor, the Owner Trustee and their respective successors and each
Certificateholder and its successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by a Certificateholder shall bind the successors and assigns of such
Certificateholder.
Section 11.08. No Petition. The Owner Trustee, by entering into this
Agreement, each Certificateholder, by accepting a Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenant and agree that, prior to the date which is one year and one day after
the payment in full of the Secured Notes, they will not institute against the
Depositor or the Trust, or join in any institution against the Depositor or the
Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy law in connection with any obligations relating to the Certificates,
the Secured Notes, this Agreement or any of the other Basic Documents. This
Section 11.08 shall survive termination of this Trust Agreement.
-35-
Section 11.09. Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificate represents a
beneficial interest in the Trust only and does not represent an interest in or
an obligation of the Servicer, the Depositor, the Owner Trustee or any Affiliate
thereof and no recourse may be had against such parties or their assets, except
as may be expressly set forth or contemplated in this Agreement, the
Certificates or the other Basic Documents.
Section 11.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.11. GOVERNING LAW(a) . (a) THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
(b) THE TRUST, THE DEPOSITOR, AND THE OWNER TRUSTEE HEREBY SUBMIT TO
THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND THE
UNITED STATES DISTRICT COURT LOCATED IN DELAWARE, 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
11.04 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER
THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE
TRUST, THE DEPOSITOR, AND THE OWNER 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 TRUST, THE DEPOSITOR, OR THE OWNER 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.
Section 11.12. [Reserved].
Section 11.13. Third-Party Beneficiary. Each of the Indenture Trustee
and the Note Purchaser is an intended third-party beneficiary of this Agreement,
and this Agreement shall be binding upon and inure to the benefit of the
Indenture Trustee and the Note Purchaser.
Section 11.14. [Reserved].
-36-
Section 11.15. Servicer. The Servicer is authorized to prepare, or
cause to be prepared, execute and deliver on behalf of the Trust all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Trust, the Depositor or Owner Trustee to prepare, file or
deliver pursuant to the Basic Documents. Upon written request, the Owner Trustee
shall execute and deliver to the Servicer a limited power of attorney appointing
the Servicer the Trust's agent and attorney-in-fact to prepare, or cause to be
prepared, execute and deliver all such documents, reports, filings, instruments,
certificates and opinions.
Section 11.16. Non-Confidential. Notwithstanding anything to the
contrary contained in this Agreement, all persons may disclose to any and all
persons, without limitation of any kind, the U.S. federal income tax treatment
of the transaction, any fact that may be relevant to understanding the U.S.
federal income tax treatment of the transaction, and all materials of any kind
(including opinions or other tax analyses) relating to such U.S. federal income
tax treatment.
[Remainder of Page Intentionally Left Blank]
-37-
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
ABFS BALAPOINTE, INC., as Depositor
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Owner Trustee
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Assistant Vice President
EXHIBIT A
FORM OF CERTIFICATE
CERTIFICATE
THE BENEFICIAL INTEREST IN THE TRUST REPRESENTED BY THIS CERTIFICATE
HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS EQUITY INTEREST MAY BE
DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF (INCLUDING
PLEDGED) BY THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE ACT, IN A TRANSACTION THAT IS REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A PERSON
INVOLVED IN THE ORGANIZATION OR OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A
PERSON WITHIN THE MEANING OF RULE 3A-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND SUCH LAWS. NO PERSON IS OBLIGATED TO REGISTER THIS EQUITY INTEREST UNDER THE
ACT OR ANY STATE SECURITIES LAWS.
NO TRANSFER OF THIS CERTIFICATE OR ANY BENEFICIAL INTEREST HEREIN SHALL
BE MADE TO ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED AN INVESTMENT LETTER
FROM THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT A PERSON WHICH
IS AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE CODE OR A GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT
TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO
THE FOREGOING PROVISIONS OF ERISA OR THE CODE (ANY SUCH PERSON BEING A "PLAN"),
(II) IS NOT AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR
GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A
PLAN'S INVESTMENT IN THE ENTITY AND (III) IS NOT DIRECTLY OR INDIRECTLY
PURCHASING THIS CERTIFICATE OR A BENEFICIAL INTEREST HEREIN ON BEHALF OR, AS
INVESTMENT MANAGER OF, AS TRUSTEE OF, OR WITH THE ASSETS OF A PLAN.
THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
UNLESS, PRIOR TO SUCH DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE OWNER
TRUSTEE AND THE CERTIFICATE REGISTRAR A CERTIFICATE STATING THAT SUCH TRANSFEREE
(A) AGREES TO BE BOUND BY AND TO ABIDE BY THE TRANSFER RESTRICTIONS APPLICABLE
TO THIS CERTIFICATE; (B) IS NOT AN ENTITY THAT WILL HOLD THIS CERTIFICATE AS
NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH SECURITY THROUGH
ELECTRONIC BOOK-ENTRY CHANGES IN ACCOUNTS OF PARTICIPATING ORGANIZATIONS; AND
(C) UNDERSTANDS THAT IT MUST TAKE INTO ACCOUNT ITS PERCENTAGE INTEREST OF THE
TAXABLE INCOME RELATING TO THIS CERTIFICATE.
A-1
Certificate No. 1 Percentage Interest: 100%
THIS CERTIFIES THAT ______________ (the "Holder") is the registered
owner of a ___% Percentage Interest of the related Trust Interest in ABFS
Mortgage Loan Warehouse Trust 2003-1 (the "Trust") existing under the laws of
the State of Delaware and created pursuant to that certain Trust Agreement,
dated as of September 22, 2003 (the "Trust Agreement") by and between ABFS
Balapointe, Inc., as depositor, and Wilmington Trust Company, not its individual
capacity but solely as owner trustee under the Trust Agreement (the "Owner
Trustee"). Capitalized terms used but not otherwise defined herein have the
meanings assigned to such terms in the Trust Agreement. The Owner Trustee, on
behalf of the Trust and not in its individual capacity, has executed this
Certificate by one of its duly authorized signatories as set forth below. This
Certificate is one of the Certificates referred to in the Trust Agreement and is
issued under and is subject to the terms, provisions and conditions of the Trust
Agreement to which the Holder of this Certificate by virtue of the acceptance
hereof agrees and by which the Holder hereof is bound. Reference is hereby made
to the Trust Agreement for the rights of the Holder of this Certificate, as well
as for the terms and conditions of the Trust created by the Trust Agreement.
The recitals contained herein (other than the signature and
countersignature of the Owner Trustee) shall be taken as the statements of the
Depositor, and the Owner Trustee assumes no responsibility for the correctness
thereof.
The Holder, by its acceptance hereof, agrees not to transfer this
Certificate except in accordance with terms and provisions of the Trust
Agreement.
The Holder, by its acceptance hereof, acknowledges that such Holder's
Certificate represents a beneficial interest in the Trust only and does not
represent an interest in or an obligation of the Servicer, the Depositor, the
Owner Trustee or any Affiliate thereof and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated
herein, in the Trust Agreement or the other Basic Documents.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-2
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly executed.
ABFS MORTGAGE LOAN WAREHOUSE TRUST 2003-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By:____________________________________________________
Authorized Signatory
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the
within-mentioned Trust Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Owner
Trustee under the Trust Agreement
By:____________________________________________________
Authorized Signatory
Dated:
S-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Instrument, and all rights thereunder, hereby irrevocably
constituting and appointing __________ Attorney to transfer said Instrument on
the books of the Certificate Registrar, with full power of substitution in the
premises.
Dated:
__________________________________*/
Signature Guaranteed:
__________________________________*/
------------------
*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Instrument in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-4
EXHIBIT B
FORM OF CERTIFICATE OF TRUST
CERTIFICATE OF TRUST OF
ABFS MORTGAGE LOAN WAREHOUSE TRUST 2003-1
THIS CERTIFICATE OF TRUST OF ABFS MORTGAGE LOAN WAREHOUSE TRUST 2003-1
(the "Trust"), dated as of September 22, 2003, is being duly executed and filed
by Wilmington Trust Company, a national banking association, as owner trustee
(the "Owner Trustee"), to form a statutory trust under the Delaware Statutory
Trust Act (12 Del. Code, ss. 3801 et seq.) (the "Act").
1. Name. The name of the statutory trust formed hereby is ABFS Mortgage
Loan Warehouse Trust 2003-1
2. Delaware Trustee. The name and business address of the Owner Trustee
of the Trust in the State of Delaware is Wilmington Trust Company, Xxxxxx Square
North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention:
Corporate Trust Administration.
3 Effective Date. This Certificate of Trust shall be effective at
12:01 a.m. on _____, 2003.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above written
in accordance with Section 3811(a) of the Act.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Owner Trust under a Trust Agreement,
dated as of _____, 2003
By: ____________________________________________
Name:
Title:
B-1
EXHIBIT C
FORM OF INVESTMENT LETTER
___________________, ____
ABFS Balapointe, Inc.
c/o American Business Financial Services, Inc.
The Xxxxxxxxx Building
000 Xxxx Xxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Re: ABFS Mortgage Loan Warehouse Trust 2003-1 (the "Trust")
Mortgage Backed Notes, Series 2003-1
-------------------------------------------------------
Ladies and Gentlemen:
_________________________________________ (the "Holder") has purchased
or acquired, or intends to purchase or acquire from ________________, the
current Holder (the "Current Holder"), a Certificate representing a ___%
Percentage Interest (the "___% Certificate") in the related Trust Interest for
the referenced Trust, which represents an interest in the Trust created pursuant
to that certain Trust Agreement, dated as of September 22, 2003 (the "Trust
Agreement"), by and between ABFS Balapointe, Inc., as Depositor, and Wilmington
Trust Company, as Owner Trustee. Capitalized terms used and not otherwise
defined herein have the meanings assigned to such terms in the Trust Agreement.
CERTIFICATION
The undersigned, as an authorized officer or agent of the Holder,
hereby certifies, represents, warrants and agrees on behalf of the Holder as
follows:
The Holder is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it was formed and is authorized to
invest in the ___% Certificate. The person executing this letter on behalf of
the Holder is duly authorized to do so on behalf of the Holder.
C-1
The Holder hereby acknowledges that no transfer of the ___% Certificate
may be made unless such transfer is exempt from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"); and applicable
state securities laws, or is made in accordance with the Securities Act and such
laws.
The Holder understands that the ___% Certificate has not been and will
not be registered under the Securities Act and may be offered, sold, pledged or
otherwise transferred apply to a person whom the transferor reasonably believes
is (A) a qualified institutional buyer (as defined in Rule 144A under the
Securities Act) or (B) a Person involved in the organization or operation of the
Trust or an affiliate of such Person, in a transaction meeting the requirements
of Rule 144A under the Securities Act and in accordance with any applicable
securities laws of any state of the United States. The Holder understands that
the ___% Certificate bears a legend to the foregoing effect.
The Holder is acquiring the ___% Certificate for its own account or for
accounts for which it exercises sole investment discretion, and not with a view
to or for sale or other transfer in connection with any distribution of the ___%
Certificate in any manner that would violate Section 5 of the Securities Act or
any applicable state securities laws, subject nevertheless to any requirement of
law that the disposition of the Holder's property shall at all times be and
remain within its control.
The Holder is (A) a "qualified institutional buyer" (a "QIB") as
defined in Rule 144A under the Securities Act, and is aware that the transferor
of the ___% Certificate may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A and is acquiring such
___% Certificate for its own Account or for the Account of one or more qualified
institutional buyers for whom it is authorized to act, or (B) a Person involved
in the organization or operation of the Trust or an affiliate of such Person
within the meaning of Rule 3a-7 of the Investment Company Act of 1940, as
amended (including, but not limited to, the Transferor). The Holder is able to
bear the economic risks of such an investment. The Holder is a QIB because
[STATE FACTUAL BASIS FOR QIB STATUS]
If the Holder sells or otherwise transfers the registered ownership of
such ___% Certificate, the Holder will comply with the restrictions and
requirements with respect to the transfer of the ownership of the ___%
Certificate under the Trust Agreement, and the Holder will obtain from any
subsequent purchaser or transferee substantially the same certifications,
representations, warranties and covenants as required under the Trust Agreement
in connection with such subsequent sale or transfer thereof.
The Holder is not an entity that will hold a ___% Certificate as
nominee (a "Book Entry Nominee") to facilitate the clearance and settlement of
such security through electronic book-entry changes in Accounts or participating
organizations.
The Holder (i) is not a person which is an employee benefit plan, trust
or account subject to Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Code or a governmental plan,
as defined in Section 3(32) of ERISA, subject to any federal, state or local law
which is, to a material extent, similar to the foregoing provisions of ERISA or
the Code (any such person being a "Plan"), (ii) is not an entity, including an
insurance company separate account or general account, whose underlying assets
include "plan assets" by reason of a Plan's investment in the entity and (iii)
is not directly or indirectly purchasing such ___% Certificate on behalf of, as
investment manager of, as named fiduciary of, as trustee of, or with assets of a
Plan.
C-2
The Holder hereby agrees to indemnify each of the Trust, the Indenture
Trustee and the Owner Trustee against any liability that may result if the
Holder's transfer of a ___% Certificate (or any portion thereof) is not exempt
from the registration requirements of the Securities Act and any applicable
state securities laws or is not made in accordance with such federal and state
laws. Such indemnification of the Trust, the Indenture Trustee and the Owner
Trustee shall survive the termination of the related Trust Agreement.
IN WITNESS WHEREOF, the Holder has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its duly authorized signatory this ____ day of __________, 200_.
[NAME OF HOLDER]
By: _______________________________
Name:
Title:
X-0
XXXXXXX X
XXXX XX
XXXXXXXXX XXXXXXXXXXXXXX, XXXXXXXX AND COVENANT LETTER
Reference in made hereby to the Trust Agreement dated as of September
22, 2003 (as amended, restated, supplemented or otherwise modified from time to
time). Pursuant to the provisions of section 3.09 of the Trust Agreement, the
purchaser makes the following representations, warranties and covenants:
(a) The purchaser will not (i) acquire, sell, transfer, assign, pledge or
otherwise dispose of any of its Certificates or any interest therein, such
interest to include any financial contract or instrument with respect to a
Certificate that is described in U.S. Treasury Regulations Section
1.7704-1(a)(2)(i)(B) (a "Financial Contract"), on or through (A) a United States
national, regional or local securities exchange, (B) a foreign securities
exchange or (C) an interdealer quotation system that regularly disseminates firm
buy or sell quotations by identified brokers or dealers (including, without
limitation, the National Association of Securities Dealers Automated Quotation
System) ((A), (B) and (C), collectively, an "Exchange") or (ii) cause any of its
Certificates or any interest therein (including a Financial Contract) to be
marketed on or through an Exchange;
(b) The purchaser is purchasing the Certificates for its own account, will be
the sole beneficial owner thereof and will not enter into a Financial Contract
with respect thereto, and if it is a partnership, grantor trust or S
corporation, less than 50% of the value of any person's interest in the
purchaser is attributable to its interest in the Trust unless the Trust has
received an opinion of counsel acceptable to the Trust to the effect that it
will not be classified for U.S. federal income tax purposes as a publicly traded
partnership taxable as a corporation. The purchaser understands that this
representation is intended to permit the Trust to rely, if necessary, on the
"private placement" exemption to classification as a publicly traded partnership
in U.S. Treasury Regulations Section 1.7704-1(h);
(c) The purchaser is not and will not become a foreign corporation, foreign
partnership, foreign trust, foreign estate, or nonresident alien with respect to
the United States for federal income tax purposes;
(d) The purchaser's U.S. employer identification number is __________; and
(e) The purchaser's office address is ________________________.
The purchaser hereby agrees to notify the Trustee within sixty (60)
days of the date the purchaser violates any of the foregoing representations,
warranties and covenants. The purchaser understands that this certification may
be disclosed to the Internal Revenue Service by the partnership and that any
false statement contained herein could be punished by fine, imprisonment, or
both.
D-1
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct,
and complete, and I further declare that I have authority to sign this document
on behalf of the purchaser.
The Trustee is entitled to rely upon this letter and is irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
____________________
[Signature and Date]
____________
[Title]
D-2
