EXHIBIT 4.1
POOLING AND SERVICING AGREEMENT
dated as of March 1, 2003
by and among
BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES, INC.
(Depositor)
AMERICAN BUSINESS CREDIT, INC.
(Servicer)
and
JPMORGAN CHASE BANK
(Trustee, Collateral Agent and Back-up Servicer)
ABFS MORTGAGE LOAN TRUST 2003-1
Mortgage Pass-Through Certificates, Series 2003-1,
Class A, Class A-IO, Class M,
Class X, Class I and Class R
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms................................................................. 1
Section 1.02 Provisions of General Application..................................................... 39
Section 1.03 Business Day Certificate.............................................................. 39
ARTICLE II
ESTABLISHMENT OF THE TRUST
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 Establishment of the Trust............................................................ 39
Section 2.02 Purchase and Sale of Initial Mortgage Loans........................................... 40
Section 2.03 Purchase and Sale of Subsequent Mortgage Loans........................................ 40
Section 2.04 Possession of Mortgage Files; Access to Mortgage Files................................ 42
Section 2.05 Delivery of Mortgage Loan Documents................................................... 43
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain Substitutions; Certification by
Collateral Agent...................................................................... 46
Section 2.07 Designations under REMIC Provisions; Designation of Startup Day....................... 48
Section 2.08 Execution of Certificates............................................................. 54
Section 2.09 Application of Principal and Interest................................................. 54
Section 2.10 Grant of Security Interest............................................................ 55
Section 2.11 Further Action Evidencing Assignments................................................. 55
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01 Representations of the Servicer and the Unaffiliated Seller........................... 55
Section 3.02 Representations, Warranties and Covenants of the Depositor............................ 58
Section 3.03 Purchase and Substitution............................................................. 60
Section 3.04 Representations, Warranties and Covenants of the Trustee, the Collateral Agent and
the Back-up Servicer.................................................................. 62
Section 3.05 Negative Covenants of the Trustee and the Servicer.................................... 63
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates...................................................................... 63
Section 4.02 Registration of Transfer and Exchange of Certificates................................. 64
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates..................................... 70
Section 4.04 Persons Deemed Owners................................................................. 70
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 REMIC Matters; The Servicer........................................................... 71
Section 5.02 Collection of Certain Mortgage Loan Payments; Collection Account...................... 73
Section 5.03 Permitted Withdrawals from the Collection Account..................................... 74
Section 5.04 Hazard Insurance Policies; Property Protection Expenses............................... 75
Section 5.05 Assumption and Modification Agreements................................................ 76
Section 5.06 Realization Upon Defaulted Mortgage Loans............................................. 76
Section 5.07 Trustee to Cooperate.................................................................. 78
Section 5.08 Servicing Compensation; Payment of Certain Expenses by Servicer....................... 79
Section 5.09 Annual Statement as to Compliance..................................................... 79
Section 5.10 Annual Independent Public Accountants' Servicing Report............................... 79
Section 5.11 Access to Certain Documentation....................................................... 79
Section 5.12 Maintenance of Fidelity Bond.......................................................... 80
Section 5.13 The Subservicers...................................................................... 80
Section 5.14 Reports to the Trustee; Collection Account Statements................................. 80
Section 5.15 Optional Purchase of Defaulted Mortgage Loans......................................... 80
Section 5.16 Reports to be Provided by the Servicer................................................ 81
Section 5.17 Adjustment of Servicing Compensation in Respect of Prepaid Mortgage Loans............. 82
Section 5.18 Periodic Advances; Special Advance.................................................... 82
Section 5.19 Indemnification; Third Party Claims................................................... 83
Section 5.20 Maintenance of Corporate Existence and Licenses; Merger or Consolidation of the
Servicer.............................................................................. 83
Section 5.21 Assignment of Agreement by Servicer; Servicer Not to Resign........................... 84
Section 5.22 Periodic Filings with the Securities and Exchange Commission; Additional
Information........................................................................... 84
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01 Establishment of Accounts; Withdrawals from Accounts; Deposits to the Distribution
Account............................................................................... 85
Section 6.02 Permitted Withdrawals From the Distribution Account................................... 87
Section 6.03 Collection of Money................................................................... 87
Section 6.04 The Certificate Insurance Policy...................................................... 87
Section 6.05 Distributions......................................................................... 89
Section 6.06 Investment of Accounts................................................................ 91
Section 6.07 Reports............................................................................... 92
Section 6.08 Additional Reports by Trustee......................................................... 95
Section 6.09 Compensating Interest................................................................. 95
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Section 6.10 Supplemental Interest Trust; Net WAC Cap Carryover Fund; Interest Rate Hedge
Payment Fund.......................................................................... 95
Section 6.11 Effect of Payments by the Certificate Insurer; Subrogation............................ 97
Section 6.12 Additional Rights of Certificate Insurer.............................................. 97
Section 6.13 Special Reserve Account............................................................... 99
ARTICLE VII
DEFAULT
Section 7.01 Events of Default..................................................................... 99
Section 7.02 Back-up Servicer to Act; Appointment of Successor..................................... 101
Section 7.03 Waiver of Defaults.................................................................... 103
Section 7.04 Rights of the Certificate Insurer to Exercise Rights of Certificateholders............ 103
Section 7.05 Trustee To Act Solely with Consent of the Certificate Insurer......................... 104
Section 7.06 Mortgage Loans, Trust Fund and Accounts Held for Benefit of the Certificate Insurer... 104
Section 7.07 Certificate Insurer Default........................................................... 105
ARTICLE VIII
TERMINATION
Section 8.01 Termination........................................................................... 106
Section 8.02 Additional Termination Requirements................................................... 107
Section 8.03 Accounting Upon Termination of Servicer............................................... 108
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of Trustee..................................................................... 109
Section 9.02 Certain Matters Affecting the Trustee................................................. 111
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans................................. 112
Section 9.04 Trustee May Own Certificates.......................................................... 112
Section 9.05 Trustee's Fees and Expenses; Indemnity................................................ 113
Section 9.06 Eligibility Requirements for Trustee.................................................. 113
Section 9.07 Resignation and Removal of the Trustee................................................ 114
Section 9.08 Successor Trustee..................................................................... 115
Section 9.09 Merger or Consolidation of Trustee.................................................... 115
Section 9.10 Appointment of Co-Trustee or Separate Trustee......................................... 115
Section 9.11 Tax Returns........................................................................... 116
Section 9.12 Retirement of Certificates............................................................ 116
Section 9.13 Trustee May Enforce Claims Without Possession of Certificates......................... 117
Section 9.14 Suits for Enforcement................................................................. 117
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ARTICLE X
THE COLLATERAL AGENT
Section 10.01 Duties of the Collateral Agent........................................................ 117
Section 10.02 Certain Matters Affecting the Collateral Agent........................................ 119
Section 10.03 Collateral Agent Not Liable for Certificates or Mortgage Loans........................ 120
Section 10.04 Collateral Agent May Own Certificates................................................. 120
Section 10.05 Collateral Agent's Fees and Expenses; Indemnity....................................... 120
Section 10.06 Eligibility Requirements for Collateral Agent......................................... 120
Section 10.07 Resignation and Removal of the Collateral Agent....................................... 121
Section 10.08 Successor Collateral Agent............................................................ 121
Section 10.09 Merger or Consolidation of Collateral Agent........................................... 122
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Limitation on Liability of the Depositor, the Back-up Servicer and the Servicer....... 122
Section 11.02 Acts of Certificateholders............................................................ 123
Section 11.03 Amendment............................................................................. 123
Section 11.04 Recordation of Agreement.............................................................. 124
Section 11.05 Duration of Agreement................................................................. 124
Section 11.06 Notices............................................................................... 124
Section 11.07 Severability of Provisions............................................................ 125
Section 11.08 No Partnership........................................................................ 125
Section 11.09 Counterparts.......................................................................... 125
Section 11.10 Successors and Assigns................................................................ 125
Section 11.11 Headings.............................................................................. 125
Section 11.12 Third Party Beneficiary............................................................... 125
Section 11.13 Appointment of Tax Matters Person; Certain Taxes...................................... 125
Section 11.14 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.......................... 129
EXHIBITS
EXHIBIT A Class A Certificate
EXHIBIT B Class A-IO Certificate
EXHIBIT C Class M Certificate
EXHIBIT D Class R Certificate
EXHIBIT E Class X Certificate
EXHIBIT F Class I Certificate
EXHIBIT G Contents of the Mortgage File
EXHIBIT H Certificate Re: Prepaid Loans
EXHIBIT I Initial Certification of Collateral Agent
EXHIBIT J Final Certification of Collateral Agent
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EXHIBIT K Request for Release of Documents
EXHIBIT L Transfer Affidavit and Agreement
EXHIBIT M Transferor's Certificate
EXHIBIT N ERISA Investment Representation Letter
EXHIBIT O Resale Certification
EXHIBIT P Assignment
EXHIBIT Q Wiring Instruction Form
EXHIBIT R Trustee's Acknowledgement of Receipt
EXHIBIT S Collateral Agent's Acknowledgment of Receipt
EXHIBIT T Form of Subsequent Transfer Agreement
SCHEDULES
SCHEDULE I Mortgage Loan Schedule
POOLING AND SERVICING AGREEMENT, relating to ABFS MORTGAGE
LOAN TRUST 2003-1, dated as of March 1, 2003 (this "Agreement"), by and among
BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES, INC., a Delaware corporation, in its
capacity as depositor (the "Depositor"), AMERICAN BUSINESS CREDIT, INC., a
Pennsylvania corporation, in its capacity as servicer (the "Servicer"), and
JPMORGAN CHASE BANK, a New York banking corporation, in its capacity as trustee,
collateral agent and back-up servicer (the "Trustee", the "Collateral Agent" and
the "Back-up Servicer", respectively).
WHEREAS, the Depositor wishes to establish a trust which
provides for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the trust estate;
WHEREAS, JPMorgan Chase Bank is willing to serve in the
capacities of Trustee, Collateral Agent and Back-up Servicer hereunder; and
WHEREAS, Radian Asset Assurance Inc. (the "Certificate
Insurer") is intended to be a third-party beneficiary of this Agreement and is
hereby recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Depositor, the Servicer, the Trustee,
the Collateral Agent and the Back-up Servicer hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms. Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
ABFS: American Business Financial Services, Inc.
ACCEPTED SERVICING PRACTICES: The Servicer's normal servicing
practices including practices regarding reconciliation of bank accounts,
processing of mortgage payments, processing of disbursements for tax and
insurance payments, maintenance of mortgage loan records, performance of
collection efforts including disposition of delinquent loans, foreclosure
activities and disposition of real estate owned and performance of investor
accounting and reporting processes. Such practices will conform to the mortgage
servicing practices of prudent mortgage lending institutions which service, for
their own account, mortgage loans of the same type as the Mortgage Loans in the
jurisdiction in which the related Mortgaged Properties are located, which may
change from time to time; provided, that such practices shall at all times
conform to the Credit and Servicing Policy Manuals.
ACCOUNT: Any of the Collection Account, the Distribution
Account, the Interest Reserve Account, the Capitalized Interest Account, if
any, the Pre-Funding Account, if any, the Certificate Insurance Payment Account,
the Net WAC Cap Carryover Fund, the Interest Rate Hedge Payment Fund or the
Special Reserve Account.
ACCRUAL PERIOD: With respect to (x) the Class A and Class A-IO
Certificates and any Distribution Date, the prior calendar month, and (y) the
Class M Certificates, the period from and including the prior Distribution Date
(or the Closing Date in the case of the first Distribution Date) to but
excluding the applicable Distribution Date.
ADDITION NOTICE: A written notice from the Unaffiliated Seller
to the Trustee, the Rating Agencies and the Certificate Insurer that the
Unaffiliated Seller desires to make a Subsequent Transfer.
ADJUSTED PASS-THROUGH RATE: With respect to any Distribution
Date, the weighted average (weighted by Certificate Principal Balance or Class
A-IO Notional Balance, as applicable) of (a) the Class A Pass-through Rate, (b)
the Class A-IO Pass-through Rate and (c) the percentage equal to the sum of (i)
the Class M Pass-through Rate, plus (ii) the Premium Percentage.
AFFILIATE: With respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
AGGREGATE PRINCIPAL BALANCE: With respect to the Mortgage
Loans and any date of determination, the aggregate Principal Balance of the
Mortgage Loans as of such date of determination.
AGREEMENT: This Pooling and Servicing Agreement, including the
Exhibits hereto, and all amendments hereof and supplements hereto.
APPLIED REALIZED LOSS AMOUNT: With respect to any Distribution
Date, the amount, if any, by which the aggregate Certificate Principal Balance
of the Offered Certificates after distributions of principal on such
Distribution Date exceeds the Current Pool Principal Balance for that
Distribution Date.
APPRAISED VALUE: As to any Mortgaged Property and time
referred to herein, the appraised value of the Mortgaged Property based upon the
appraisal made by or on behalf of the related Originator at the time referred to
herein or, in the case of a Mortgage Loan that is a purchase money mortgage
loan, the sales price of the Mortgaged Property, if such sales price is less
than such appraised value.
ASSIGNMENT OF MORTGAGE: With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage to the Trustee
for the benefit of the Certificateholders and the Certificate Insurer.
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AUTHORIZED DENOMINATIONS: Each of the Offered Certificates is
issuable only in the minimum Percentage Interest corresponding to a minimum
denomination of $1,000 or integral multiples of $1,000 in excess thereof, in
each case of Certificate Principal Balance; provided, however, that one
Certificate of each Class is issuable in a denomination equal to any such
multiple plus an additional amount such that the aggregate denomination of each
Class of Offered Certificates shall be equal to the applicable Original
Certificate Principal Balance or the Class A-IO Notional Balance, as applicable.
AVAILABLE AMOUNT: For any Distribution Date, the amount on
deposit in the Distribution Account, exclusive of the amount of any Class M
Insured Payment, on that Distribution Date.
BACK-UP SERVICER: JPMorgan Chase Bank, a New York banking
corporation, its successors and assigns.
BACK-UP SERVICING FEE: As to any Distribution Date, the fee
payable to the Back-up Servicer in respect of its services as Back-up Servicer
that accrues at a monthly rate equal to one-twelfth of 0.01125% on the Principal
Balance of each Mortgage Loan as of the immediately preceding Due Date.
BANKRUPTCY CODE: The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
BASIC DOCUMENTS: This Agreement, the Unaffiliated Seller's
Agreement, the Insurance and Indemnity Agreement and the Underwriting Agreement.
BUSINESS DAY: Any day other than (a) a Saturday or Sunday, or
(b) a day on which banking institutions in the States of Pennsylvania, New York,
Delaware or New Jersey are authorized or obligated by law or executive order to
be closed.
BUSINESS PURPOSE PROPERTY: Any mixed-use property, commercial
property, or four or more unit multifamily property.
CAPITALIZED INTEREST ACCOUNT: The Capitalized Interest
Account, if any, established in accordance with Section 6.01(a) hereof and
maintained by the Trustee.
CAPITALIZED INTEREST REQUIREMENT: With respect to the
Pre-Funding Distribution Dates, if any, an amount equal to (A) the product of
(i) one twelfth of the Adjusted Pass-Through Rate as calculated as of such
Distribution Date and (ii) the Pre-Funding Amount as of the first day of the
related Due Period, minus (B) 30 days' interest, at the related Mortgage
Interest Rate, on the Subsequent Mortgage Loans transferred to the Trust during
the related Due Period which had a Due Date after the related Subsequent Cut-Off
Date during the related Due Period, minus (C) the amount of any Pre-Funding
Earnings earned from the last Distribution Date (or the Closing Date with
respect to the first Distribution Date). In no event will the Capitalized
Interest Requirement be less than zero.
CAPPED CERTIFICATES: The Class A and Class M Certificates.
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CERCLA: The Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
CERTIFICATE: Any Class A, Class A-IO, Class M, Class X, Class
I or Class R Certificate executed by the Trustee on behalf of the Trust Fund and
authenticated by the Trustee.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Certificate registered in the name of the Servicer or any
Subservicer or the Unaffiliated Seller, or any Affiliate of any of them, shall
be deemed not to be outstanding and the undivided Percentage Interest evidenced
thereby shall not be taken into account in determining whether the requisite
percentage of Certificates necessary to effect any such consent, waiver, request
or demand has been obtained. For purposes of any consent, waiver, request or
demand of Certificateholders pursuant to this Agreement, upon the Trustee's
request, the Servicer and the Unaffiliated Seller shall provide to the Trustee a
notice identifying any of their respective Affiliates or the Affiliates of any
Subservicer that is a Certificateholder as of the date(s) specified by the
Trustee in such request. Any Certificates on which payments are made under the
Certificate Insurance Policy shall be deemed to be outstanding and held by the
Certificate Insurer to the extent of such payment.
CERTIFICATE INSURANCE PAYMENT ACCOUNT: The Certificate
Insurance Payment Account established in accordance with Section 6.04(c) hereof
and maintained by the Trustee.
CERTIFICATE INSURANCE POLICY: The Financial Guaranty Insurance
Policy No. FANI-0509-03090-NY issued by the Certificate Insurer, and all
endorsements thereto dated the Closing Date, issued by the Certificate Insurer
for the benefit of the Class M Certificateholders.
CERTIFICATE INSURER: Radian Asset Assurance Inc., a New York
stock insurance company, its successors and assigns.
CERTIFICATE INSURER DEFAULT: The existence and continuance of
any of the following:
(a) the Certificate Insurer shall have failed to make a
required payment when due under the Certificate Insurance Policy;
(b) the Certificate Insurer shall have (i) filed a
petition or commenced any case or proceeding under any provision or
chapter of the United States Bankruptcy Code, the New York State
Insurance Law, the New York Department of Insurance or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization, (ii) made a general
assignment for the benefit of its creditors or (iii) had an order for
relief entered against it under the United States Bankruptcy Code, the
New York State Insurance Law or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization that is final and nonappealable; or
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(c) a court of competent jurisdiction, the New York
Department of Insurance or any other competent regulatory authority
shall have entered a final and nonappealable order, judgment or decree
(i) appointing a custodian, trustee, agent, or receiver for the
Certificate Insurer or for all of any material portion of its property
or (ii) authorizing the taking of possession by a custodian, trustee,
agent, or receiver of the Certificate Insurer or of all or any material
portion of its property.
CERTIFICATE PRINCIPAL BALANCE: With respect to any Class of
Certificates, other than the Class A-IO, Class X, Class I or Class R
Certificates, as of any date of determination, the maximum dollar amount of
principal to which the Holders thereof are then entitled hereunder, such amount
being equal to the Original Certificate Principal Balance of such Class minus
(i) the amount of all distributions of principal previously made with respect
thereto and (ii) in the case of any Subordinate Certificates, reduced by any
Applied Realized Loss Amounts applicable to such Class of Subordinate
Certificates. The Class A-IO, Class X, Class I and Class R Certificates do not
have a "Certificate Principal Balance".
CERTIFICATE REGISTER: As defined in Section 4.02(a).
CERTIFICATE REGISTRAR: As defined in Section 4.02(a).
CHANGE OF CONTROL: Any of the following: (a) ABFS shall cease
to own, beneficially and of record, 100% of the issued and outstanding Stock of
the Servicer; (b) the consummation of a merger or consolidation of ABFS with or
into another entity or any other corporate reorganization, if more that 50% of
the combined voting power of the continuing or surviving entity's Stock
outstanding immediately after such merger, consolidation or such other
reorganization is owned by persons who were not stockholders of ABFS immediately
prior to such merger, consolidation or other reorganization; or (c) the sale,
transfer, or other disposition of all or substantially all of ABFS's assets. For
purposes of the foregoing, "Stock" means all shares, options, warrants,
interests, participation or other equivalents (regardless of how designated) of
or in a corporation or equivalent entity, whether voting or nonvoting, including
common stock, preferred stock, convertible debentures and all agreements,
instruments and documents convertible, in whole or in part, into any one or more
or all of the foregoing.
CIVIL RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act
of 1940, as amended or similar state statutes.
CIVIL RELIEF ACT INTEREST SHORTFALL: With respect to any
Distribution Date, for any Mortgage Loan as to which there has been a reduction
in the amount of interest collectible thereon for the most recently ended Due
Period as a result of the application of the Civil Relief Act, the amount, if
any, by which (a) interest collectible on such Mortgage Loan during the most
recently ended calendar month is less than (b) the sum of one month's interest
on the Principal Balance of such Mortgage Loan, calculated at a rate equal to
the Mortgage Interest Rate.
CLASS: Each class of Certificates designated as the Class A,
Class A-IO, Class M, Class X, Class I or Class R Certificates and, for the
purposes of Section 2.07, any class of interests referenced in Section 2.07.
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CLASS A CERTIFICATE: Any Certificate designated as a "Class A
Certificate" on the face thereof, in the form of Exhibit A hereto. The Class A
Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
CLASS A PASS-THROUGH RATE: With respect to any Distribution
Date, the lesser of (1) for any Distribution Date which occurs on or prior to
the Clean-Up Call Date, the per annum rate equal to 3.78%, and for any
Distribution Date thereafter, the per annum rate equal to 4.28% and (2) the Net
WAC Cap for such Distribution Date.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date (a) prior to the Stepdown Date and on any Distribution Date
thereafter on which a Trigger Event is in effect, the lesser of (i) 100% of the
Principal Distribution Amount and (ii) the Certificate Principal Balance of the
Class A Certificates immediately prior to the related Distribution Date and (b)
on or after the related Stepdown Date, to the extent a Trigger Event is not in
effect, the least of:
(i) the Principal Distribution Amount;
(ii) the excess of (1) the Certificate Principal Balance
of the Class A Certificates immediately prior to the related
Distribution Date over (2) the lesser of (a) 61.00% of the Current Pool
Principal Balance for that Distribution Date and (b) the Current Pool
Principal Balance for that Distribution Date minus the OC Floor (but
not less than zero); and
(iii) the Certificate Principal Balance of the Class A
Certificates immediately prior to the related Distribution Date.
CLASS A-IO CERTIFICATE: Any Certificate designated as a "Class
A-IO Certificate" on the face thereof, in the form of Exhibit B hereto.
CLASS A-IO NOTIONAL BALANCE: With respect to any Distribution
Date (i) prior to the Distribution Date occurring in October 2005, an amount
equal to the lesser of (x) the Class A-IO Scheduled Notional Balance and (y) the
Aggregate Principal Balance of the Mortgage Loans as of the first day of the
related Due Period and (ii) on and after the Distribution Date occurring in
October 2005, an amount equal to $0.
CLASS A-IO PASS-THROUGH RATE: With respect to any Distribution
Date, a per annum rate equal to 4.00%.
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CLASS A-IO SCHEDULED NOTIONAL BALANCE: With respect to any
Distribution Date, the applicable amount set forth in the following schedule:
Class A-IO Class A-IO
Scheduled Scheduled
Distribution Date Notional Balance Distribution Date Notional Balance
----------------- ---------------- ----------------- ----------------
April 2003 $118,125,000 August 2004 $92,362,500
May 2003 $118,125,000 September 2004 $92,362,500
June 2003 $118,125,000 October 2004 $91,350,000
July 2003 $117,562,500 November 2004 $91,350,000
August 2003 $117,562,500 December 2004 $91,350,000
September 2003 $117,562,500 January 2005 $72,337,500
October 2003 $112,106,250 February 2005 $72,337,500
November 2003 $112,106,250 March 2005 $72,337,500
December 2003 $112,106,250 April 2005 $57,375,000
January 2004 $105,975,000 May 2005 $57,375,000
February 2004 $105,975,000 June 2005 $57,375,000
March 2004 $105,975,000 July 2005 $48,937,500
April 2004 $ 98,718,750 August 2005 $48,937,500
May 2004 $ 98,718,750 September 2005 $48,937,500
June 2004 $ 98,718,750 October 2005
July 2004 $ 92,362,500 and thereafter $ 0
CLASS I CERTIFICATE: Any Certificate designated as a "Class I
Certificate" on the face thereof, in the form of Exhibit F hereto.
CLASS I CERTIFICATEHOLDER: A Holder of a Class I Certificate.
CLASS I DISTRIBUTION AMOUNT: With respect to each Distribution
Date from the initial Distribution Date through the Distribution Date in
September, 2005, $125,517.00, and with respect to each Distribution Date
thereafter, $0.
CLASS INTEREST CARRYOVER SHORTFALL: With respect to any Class
of Offered Certificates and any Distribution Date, an amount equal to the sum of
(a) the excess, if any, of (i) the Class Monthly Interest for such Class (the
amount to which the Class is entitled in the absence of any shortfall but after
giving effect to the Net WAC Cap, if applicable) for the preceding Distribution
Date plus any outstanding Class Interest Carryover Shortfall with respect to
that Class from any preceding Distribution Dates over (ii) the amount in respect
of interest that is actually distributed to the Holders of that Class on the
preceding Distribution Date, plus (b) one-month's interest on the amount
described in clause (a), to the extent permitted by law, at the related
Pass-Through Rate.
CLASS M CERTIFICATE: Any Certificate designated as a "Class M
Certificate" on the face thereof, in the form of Exhibit C hereto. The Class M
Certificates shall be comprised of the Class M Components and shall be issued
with an initial aggregate Certificate Principal Balance equal to the Original
Certificate Principal Balance therefor. Following the
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occurrence of a Separation Event, references herein to the Class M Certificates
shall be deemed to be references to the Class M-1, Class M-2 and Class M-3
Certificates, as applicable.
CLASS M COLLATERALIZATION DEFICIT: With respect to any
Distribution Date immediately prior to which the Class M Certificates are
outstanding, the lesser of (i) the amount, if any, by which (A) the aggregate
Certificate Principal Balance of the Class A and Class M Certificates (after
giving effect to all distributions to be made thereon on such Distribution Date
other than any portion thereof consisting of a Class M Insured Principal Payment
in respect of a Class M Collateralization Deficit) exceeds (B) the Aggregate
Principal Balance of the Mortgage Loans on the last day of the immediately
preceding Due Period (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the preceding calendar
month), and (ii) the Certificate Principal Balance of the Class M Certificates
(after giving effect to all distributions to be made thereon on such
Distribution Date other than any portion thereof consisting of a Class M Insured
Principal Payment in respect of a Class M Collateralization Deficit).
CLASS M COMPONENT: The Class M-1 Component, the Class M-2
Component and the Class M-3 Component, as applicable.
CLASS M DEFICIENCY AMOUNT: For any Distribution Date and the
Class M Certificates, the sum of (i) any Class M Insured Interest Payment for
such Distribution Date and (ii) any Class M Insured Principal Payment for such
Distribution Date.
CLASS M INSURED AMOUNTS: With respect to any Distribution
Date, any Class M Deficiency Amount for such Distribution Date plus any Class M
Preference Amount for such Distribution Date. A Class M Insured Amount will not
include any Prepayment Interest Shortfalls, any Civil Relief Act Interest
Shortfalls or any Net WAC Cap Carryover Amounts.
CLASS M INSURED INTEREST PAYMENT: With respect to any
Distribution Date and the Class M Certificates, the excess, if any, of (i) the
sum of the Class Monthly Interest and any Class Interest Carryover Shortfall for
the Class M Certificates for such Distribution Date over (ii) the Net Available
Amount remaining on deposit in the Distribution Account following the payment of
the Class Monthly Interest and any Class Interest Carryover Shortfall on the
Class A and Class A-IO Certificates on that Distribution Date.
CLASS M INSURED PAYMENTS: With respect to any Distribution
Date, the aggregate amount actually paid by the Certificate Insurer pursuant to
the Certificate Insurance Policy in respect of Class M Insured Amounts for such
Distribution Date.
CLASS M INSURED PRINCIPAL PAYMENT: With respect to (x) any
Distribution Date other than the Final Insured Distribution Date and the Class M
Certificates, the lesser of (i) the Class M Collateralization Deficit, if any,
for such Distribution Date and (ii) the Applied Realized Loss Amount applied in
reduction of the Certificate Principal Balance of the Class M Certificates on
such Distribution Date (after taking into account any funds in the Interest Rate
Hedge Payment Fund which are applied on such Distribution Date towards the
payment of such Applied Realized Loss Amount pursuant to Section 6.10(d) of this
Agreement), and (y) the
8
Final Insured Distribution Date and the Class M Certificates, the aggregate
Certificate Principal Balance of the Class M Certificates (after giving effect
to all distributions of principal to be made thereon on such Distribution Date
other than any portion thereof consisting of a Class M Insured Principal
Payment).
CLASS M PASS-THROUGH RATE: With respect to any Distribution
Date, the lesser of (1) for any Distribution Date which occurs on or prior to
the Clean-Up Call Date, the per annum rate equal to LIBOR plus 1.50%, and for
any Distribution Date thereafter, the per annum rate equal to LIBOR plus 2.25%
and (2) the Net WAC Cap for such Distribution Date.
CLASS M PREFERENCE AMOUNT: Any amount previously paid in
respect of the Class M Certificates that is recoverable and sought to be
recovered as a voidable preference by a trustee in bankruptcy pursuant to the
United States Bankruptcy Code (11 U.S.C. ss.ss.101 et seq.), as amended from
time to time in accordance with a final, nonappealable order of a court having
competent jurisdiction.
CLASS M PREFERENCE CLAIM: As defined in Section 6.04(f).
CLASS M PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, sum of the Class M-1 Principal Distribution Amount, the Class
M-2 Principal Distribution Amount and the Class M-3 Principal Distribution
Amount for such Distribution Date.
CLASS M-1 COMPONENT: The component portion of the Class M
Certificates designated as the "Class M-1 Component" and having an initial
Component Principal Balance equal to $25,875,000. The Class M-1 Component will
not be transferable separately from the other Class M Components except upon the
occurrence of a Separation Event, at which time the Class M-1 Component will be
issued as a Class M-1 Certificate.
CLASS M-1 CERTIFICATE: Any Certificate designated as a "Class
M-1 Certificate" on the face thereof, in the form of Exhibit C hereto. The Class
M-1 Certificates will be issued upon the occurrence of a Separation Event with
an initial aggregate Certificate Principal Balance equal to the Component
Principal Balance of the Class M-1 Component on the date of the Separation
Event. The CUSIP number for the Class M-1 Certificates is 000759 OH0.
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date:
(a) prior to the Stepdown Date and on any Distribution
Date thereafter on which a Trigger Event is in effect:
(i) if any Class A Certificates remain outstanding, zero
($0); or
(ii) if the Certificate Principal Balance of the Class A
Certificates has been reduced to zero ($0), the
lesser of (A) the Certificate Principal Balance of
the Class M-1 Component immediately prior to that
Distribution Date and (B) 100% of the Principal
Distribution Amount; and
9
(b) on an after the Stepdown Date, to the extent a
Trigger Event is not in effect, the least of:
(i) the Principal Distribution Amount remaining after
distribution of the Class A Principal Distribution
Amount on the related Distribution Date;
(ii) the excess of (A) the sum of (1) the Certificate
Principal Balance of the Class A Certificates after
distribution of the Class A Principal Distribution
Amount on the related Distribution Date and (2) the
Certificate Principal Balance of the Class M-1
Component immediately prior to the related
Distribution Date over (B) the lesser of (1) 72.50%
of the Current Pool Principal Balance for that
Distribution Date and (2) the Current Pool Principal
Balance for that Distribution Date minus the OC Floor
(but not less than zero); and
(iii) the Certificate Principal Balance of the Class M-1
Component immediately prior to the related
Distribution Date.
CLASS M-2 COMPONENT: The component portion of the Class M
Certificates designated as the "Class M-2 Component" and having an initial
Component Principal Balance equal to $23,625,000. The Class M-2 Component will
not be transferable separately from the other Class M Components except upon the
occurrence of a Separation Event, at which time the Class M-2 Component will be
issued as a Class M-2 Certificate.
CLASS M-2 CERTIFICATE: Any Certificate designated as a "Class
M-2 Certificate" on the face thereof, in the form of Exhibit C hereto. The Class
M-2 Certificates will be issued upon the occurrence of a Separation Event with
an initial aggregate Certificate Principal Balance equal to the Component
Principal Balance of the Class M-2 Component on the date of the Separation
Event. The CUSIP number for the Class M-2 Certificates is 000759 DJ6.
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date:
(a) prior to the Stepdown Date and on any Distribution
Date thereafter on which a Trigger Event is in effect:
(i) if any Class A Certificates or Class M-1 Component
remain outstanding, zero ($0); or
(ii) if the Certificate Principal Balance of the Class A
Certificates and Class M-1 Component have been
reduced to zero ($0), the lesser of (A) the
Certificate Principal Balance of the Class M-2
Component immediately prior to that Distribution Date
and (B) 100% of the Principal Distribution Amount;
and
10
(b) on an after the Stepdown Date, to the extent a
Trigger Event is not in effect, the least of:
(i) the Principal Distribution Amount remaining after
distribution of the Class A and Class M-1 Principal
Distribution Amounts on the related Distribution
Date;
(ii) the excess of (A) the sum of (1) the aggregate
Certificate Principal Balance of the Class A
Certificates and the Class M-1 Component after
distribution of the Class A and Class M-1 Principal
Distribution Amounts on the related Distribution Date
and (2) the Certificate Principal Balance of the
Class M-2 Component immediately prior to the related
Distribution Date over (B) the lesser of (1) 83.00%
of the Current Pool Principal Balance for that
Distribution Date and (2) the Current Pool Principal
Balance for that Distribution Date minus the OC Floor
(but not less than zero); and
(iii) the Certificate Principal Balance of the Class M-1
Component immediately prior to the related
Distribution Date.
CLASS M-3 COMPONENT: The component portion of the Class M
Certificates designated as the "Class M-3 Component" and having an initial
Component Principal Balance equal to $13,500,000. The Class M-3 Component will
not be transferable separately from the other Class M Components except upon the
occurrence of a Separation Event, at which time the Class M-3 Component will be
issued as a Class M-3 Certificate.
CLASS M-3 CERTIFICATE: Any Certificate designated as a "Class
M-3 Certificate" on the face thereof, in the form of Exhibit C hereto. The Class
M-3 Certificates will be issued upon the occurrence of a Separation Event with
an initial aggregate Certificate Principal Balance equal to the Component
Principal Balance of the Class M-3 Component on the date of the Separation
Event. The CUSIP number for the Class M-3 Certificates is 000759 DK3.
CLASS M-3 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date:
(a) prior to the Stepdown Date and on any Distribution
Date thereafter on which a Trigger Event is in effect:
(i) if any Class A Certificates or Class M-1 or Class M-2
Component remain outstanding, zero ($0); or
(ii) if the Certificate Principal Balance of the Class A
Certificates and Class M-1 and Class M-2 Component
have been reduced to zero ($0), the lesser of (A) the
Certificate Principal Balance of the Class M-3
Component immediately prior to that Distribution Date
and (B) 100% of the Principal Distribution Amount;
and
11
(b) on an after the Stepdown Date, to the extent a
Trigger Event is not in effect, the least of:
(i) the Principal Distribution Amount remaining after
distribution of the Class A, Class M-1 and Class M-2
Principal Distribution Amounts on the related
Distribution Date;
(ii) the excess of (A) the sum of (1) the aggregate
Certificate Principal Balance of the Class A
Certificates and the Class M-1 and Class M-2
Component after distribution of the Class A, Class
M-1 and Class M-2 Principal Distribution Amounts on
the related Distribution Date and (2) the Certificate
Principal Balance of the Class M-3 Component
immediately prior to the related Distribution Date
over (B) the lesser of (1) 89.00% of the Current Pool
Principal Balance for that Distribution Date and (2)
the Current Pool Principal Balance for that
Distribution Date minus the OC Floor (but not less
than zero); and
(iii) the Certificate Principal Balance of the Class M-3
Component immediately prior to the related
Distribution Date.
CLASS MONTHLY INTEREST: With respect to any Class of Offered
Certificates and any Distribution Date, the amount of interest accrued during
the related Accrual Period on the Certificate Principal Balance of such Class
(or the Class A-IO Notional Balance in the case of the Class A-IO Certificates)
immediately prior to such Distribution Date at the related Pass-Through Rate, as
reduced by that Class's pro rata share of Mortgage Loan Interest Shortfalls for
such Distribution Date allocated to such Class pursuant to Section 6.05(c) of
this Agreement and, with respect to the Class M Certificates only, as further
reduced by the amount of any distribution to the Holder of the Class M
Certificates in respect of Class Monthly Interest on such Distribution Date
pursuant to Section 6.10(d) hereof.
CLASS R CERTIFICATE: Any Certificate designated as a "Class R
Certificate" on the face thereof, in the form of Exhibit D hereto.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLASS X CERTIFICATE: Any Certificate designated as a "Class X
Certificate" on the face thereof, in the form of Exhibit E hereto.
CLASS X CERTIFICATEHOLDER: A Holder of a Class X Certificate.
CLASS X DISTRIBUTION AMOUNT: With respect to any Distribution
Date, the sum of (i) the Overcollateralization Reduction Amount and (ii) the
product of the notional principal balance of the Class X Certificate and the
Pass-Through Rate of the Class X Certificate each as described in footnotes (5)
and (6), respectively, of Section 2.07(b) hereof for the current and for all
prior Distribution Dates less amounts distributed to the Class X Certificates on
prior Distribution Dates pursuant to Sections 6.05(a)(ix) and (xiii) hereof.
CLEAN-UP CALL DATE: As defined in Section 8.01(b).
12
CLOSING DATE: March 31, 2003.
CODE: The Internal Revenue Code of 1986, as amended.
COLLATERAL AGENT: JPMorgan Chase Bank, a New York banking
corporation, its successors and assigns.
COLLECTION ACCOUNT: The Eligible Account established and
maintained by the Servicer pursuant to Section 5.02(b).
COMBINED LOAN-TO-VALUE RATIO or CLTV: As to any Mortgage Loan
at any time, the fraction, expressed as a percentage, the numerator of which is
the sum of (i) the Principal Balance thereof at such time and (ii) if such
Mortgage Loan is subject to a second mortgage, the unpaid principal balance of
any related first mortgage loan or loans, if any, as of such time, and the
denominator of which is the Appraised Value of any related Mortgaged Property or
Properties as of the date of the appraisal used by or on behalf of the
Unaffiliated Seller to underwrite such Mortgage Loan.
COMMISSION: The Securities and Exchange Commission.
COMPENSATING INTEREST: As defined in Section 6.09 hereof.
COMPONENT PRINCIPAL BALANCE: With respect to any Class M
Component and any Distribution Date, the initial component principal balance of
such Class M Component, reduced by the aggregate amount of principal payments on
the Class M Certificates prior to such Distribution Date which were allocable to
such Class M Component.
CORRESPONDING CLASS: Means the Class of Master REMIC Regular
Interests as used in the Table in Section 2.07.
CREDIT AND SERVICING POLICY MANUALS: With respect to an
Originator, its written policies and procedures regarding underwriting,
origination and servicing of mortgage loans, as delivered to the Certificate
Insurer on or prior to the Closing Date, with such changes notified to the
Certificate Insurer (a) that do not have a material adverse effect on such
policies and procedures, or (b) that are approved by the Certificate Insurer,
such approval not to be unreasonably withheld, conditional or delayed, or (c)
that the Servicer does not apply to the Mortgage Loans.
CUMULATIVE LOSS PERCENTAGE: As of any date of determination
thereof, the percentage obtained by dividing (x) the aggregate of all Liquidated
Loan Losses incurred since the Closing Date through the last day of the related
Due Period by (y) the Maximum Pool Principal Balance.
13
CUMULATIVE LOSS TRIGGER EVENT: With respect to any
Distribution Date, the event that occurs if the Cumulative Loss Percentage for
such Distribution Date exceeds the following percentages with respect to the
applicable Distribution Date specified below:
Distribution Date Loss Percentage
---------------------------- --------------------------------------------------
January 2006 - December 2006 2.75% for the first month, plus an additional 1/12
of 1.75% for each month thereafter
January 2007 - December 2007 4.50% for the first month, plus an additional 1/12
of 1.50% for each month thereafter
January 2008 - December 2008 6.00% for the first month, plus an additional 1/12
of 1.00% for each month thereafter
January 2009 - December 2009 7.00% for the first month, plus an additional 1/12
of 0.25% for each month thereafter
January 2010 and thereafter 7.25%
CURRENT POOL PRINCIPAL BALANCE: With respect to any
Distribution Date, the sum of (i) the Aggregate Principal Balance of the
Mortgage Loans on the last day of the related Due Period, and (ii) the
Pre-Funding Amount (net of Pre-Funding Earnings), if any, immediately prior to
the Distribution Date.
CUT-OFF DATE: With respect to Initial Mortgage Loans, the
Initial Cut-Off Date, and, with respect to Subsequent Mortgage Loans, if any,
the Subsequent Cut-Off Date.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the United States Bankruptcy Code,
except such a reduction that constitutes a Deficient Valuation or a permanent
forgiveness of principal.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the United
States Bankruptcy Code.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced by or to be
replaced by a Qualified Substitute Mortgage Loan.
DELINQUENCY RATIO: With respect to any Distribution Date, the
percentage equivalent of a fraction (a) the numerator of which equals the
aggregate Principal Balances of all Mortgage Loans that are 60 or more days
Delinquent, in foreclosure, converted to REO Property or in bankruptcy and are
60 or more days Delinquent, as of the last day of the related Due Period and (b)
the denominator of which is the Current Pool Principal Balance for that
Distribution Date.
14
DELINQUENCY TRIGGER EVENT: The event that occurs when the
Rolling Three Month Delinquency Rate exceeds 45% of the Senior Enhancement
Percentage.
DELINQUENT: A Mortgage Loan is "delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
DEPOSITOR: Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc., a
Delaware corporation, and any successor thereto.
DEPOSITORY: The Depository Trust Company, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and any successor Depository hereafter named.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial
institution for which the Depository holds Offered Certificates from time to
time as a securities depository.
DISTRIBUTION ACCOUNT: The Distribution Account established in
accordance with Section 6.01(a) hereof and maintained by the Trustee.
DISTRIBUTION DATE: The 15th day of any month or if such 15th
day is not a Business Day, the first Business Day immediately following,
commencing on April 15, 2003.
DUE DATE: With respect to each Mortgage Loan and any
Distribution Date, the day of the calendar month preceding the calendar month in
which such Distribution Date occurs on which the Monthly Payment for such
Mortgage Loan was due.
DUE PERIOD: With respect to each Distribution Date, the
calendar month preceding the related Distribution Date.
ELIGIBLE ACCOUNT: Either (A) an account or accounts maintained
with an institution (which may include the Trustee, provided such institution
otherwise meets these requirements) whose deposits are insured by the FDIC, the
unsecured and uncollateralized debt obligations of which institution shall be
rated "AA" or better by S&P and "Aa2" or better by ▇▇▇▇▇'▇ and in the highest
short term rating category by S&P and ▇▇▇▇▇'▇, and which is (i) a federal
savings and loan association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution (including the
Trustee) duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Certificate Insurer and the Rating Agencies or (B) a trust
account or accounts maintained with the trust department of a federal or state
chartered depository institution or trust company (which may include the
Trustee, provided that the Trustee otherwise meets these requirements), having
capital and surplus of not less than $50,000,000, acting in its fiduciary
capacity.
15
ERISA: As defined in Section 4.02(n) hereof.
EVENT OF DEFAULT: As described in Section 7.01.
EXCESS INTEREST: For any Distribution Date is equal to the
excess of (a) the Net Available Amount for such Distribution Date over (b) the
sum of:
(i) the Interest Distribution Amount for such
Distribution Date;
(ii) the Principal Distribution Amount for such
Distribution Date (calculated for this purpose without regard to any
Overcollateralization Increase Amount or portion thereof included
therein); and
(iii) any Reimbursement Amount or other amount owed to the
Certificate Insurer on such Distribution Date.
EXCESS OVERCOLLATERALIZED AMOUNT: With respect to any
Distribution Date, the excess, if any, of (a) the Overcollateralized Amount that
would apply on such Distribution Date after taking into account all
distributions that would be made on such Distribution Date (other than the
Overcollateralization Reduction Amount) over (b) the Specified
Overcollateralization Amount.
FDIC: The Federal Deposit Insurance Corporation, and any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, and any
successor thereto.
FINAL CERTIFICATION: As defined in Section 2.06(b) hereof.
FINAL INSURED DISTRIBUTION DATE: The earlier of (i) the
Distribution Date on August 15, 2033 or (ii) the final Distribution Date that
occurs in connection with any earlier termination of the Trust pursuant to
Section 8.01 of this Pooling and Servicing Agreement.
FINAL SCHEDULED MATURITY DATE: With respect to any Class of
Offered Certificates (other than the Class A-IO Certificates), the Distribution
Date occurring in the month specified below:
Final Scheduled
Class Maturity Date
----- ---------------
A August 2033
M August 2033
FITCH: Fitch Ratings, a corporation organized and existing
under Delaware law, or any successor thereto and if such corporation no longer
for any reason performs the services of a securities rating agency, "Fitch"
shall be deemed to refer to any other nationally recognized rating agency
designated by the Certificate Insurer.
16
FNMA: The Federal National Mortgage Association, and any
successor thereto.
FORECLOSURE PROFITS: As to any Servicer Remittance Date, the
excess, if any, of (i) Net Liquidation Proceeds in respect of each Mortgage Loan
that became a Liquidated Mortgage Loan during the related Due Period over (ii)
the sum of the unpaid Principal Balance of each such Liquidated Mortgage Loan
plus accrued and unpaid interest at the applicable Mortgage Interest Rate on the
unpaid Principal Balance thereof from the Due Date to which interest was last
paid by the Mortgagor (or, in the case of a Liquidated Mortgage Loan that had
been an REO Mortgage Loan, from the Due Date to which interest was last deemed
to have been paid pursuant to Section 5.06 to the first day of the month
following the month in which such Mortgage Loan became a Liquidated Mortgage
Loan).
GAAP: Generally accepted accounting principles, consistently
applied, as of the date of such application.
HEDGE COUNTERPARTY: Bear ▇▇▇▇▇▇▇ Financial Products Inc., a
Delaware corporation, its successors and assigns.
HEDGE PAYMENTS: With respect to any Distribution Date, any
amounts paid by the Hedge Counterparty under the Interest Rate Hedge Agreement
to the Trustee for deposit into the Interest Rate Hedge Payment Fund, other than
any Hedge Termination Payments.
HEDGE PREMIUM: With respect to any Distribution Date, the
Fixed Amount (as defined in the Interest Rate Hedge Agreement) owing to the
Hedge Counterparty pursuant to the Interest Rate Hedge Agreement on such
Distribution Date.
HEDGE TERMINATION PAYMENTS: Any termination payments paid by
the Hedge Counterparty under the Interest Rate Hedge Agreement to the Trustee
for deposit into the Interest Rate Hedge Payment Fund, including any termination
payments in respect of a Additional Termination Event (as defined in the
Interest Rate Hedge Agreement).
INDIRECT PARTICIPANT: Any financial institution for whom any
Direct Participant holds an interest in an Offered Certificate.
INITIAL CERTIFICATION: As defined in Section 2.06(a) hereof.
INITIAL CUT-OFF DATE: With respect to any Initial Mortgage
Loan, the close of business on February 28, 2003, or, if such Initial Mortgage
Loan was originated or otherwise acquired by an Originator after February 28,
2003, the date of origination or acquisition of such Initial Mortgage Loan.
INITIAL MORTGAGE LOANS: The Mortgage Loans delivered by the
Depositor on the Closing Date.
INSURANCE AND INDEMNITY AGREEMENT: The Insurance and Indemnity
Agreement, dated as of March 31, 2003, among the Certificate Insurer, the
Depositor, the Trustee, the Collateral Agent, the Back up Servicer, the
Servicer, the Unaffiliated Seller and the
17
Originators, as such agreement may be amended or supplemented in accordance with
the provisions thereof.
INSURANCE POLICIES: All insurance policies insuring any
Mortgage Loan or Mortgaged Property to the extent the Trust or the Trustee has
any interest therein.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to
any insurance policy covering a Mortgage Loan to the extent such proceeds are
not applied to the restoration of the related Mortgaged Property or released to
the related Mortgagor in accordance with Accepted Servicing Practices.
"Insurance Proceeds" do not include "Class M Insured Payments".
INTEREST DISTRIBUTION AMOUNT: With respect to any Distribution
Date, an amount equal to the sum of the Class Monthly Interest and any Class
Interest Carryover Shortfall for the Class A, Class A-IO and Class M
Certificates, in each case, as of such Distribution Date.
INTEREST RATE HEDGE AGREEMENT: The Interest Rate Hedge
Agreement, dated as of March 31, 2003, between the Hedge Counterparty and the
Trustee, on behalf of the Supplemental Interest Trust.
INTEREST RATE HEDGE PAYMENT FUND: The Eligible Account
established and maintained in accordance with Section 6.10(a).
INTEREST RATE HEDGE PAYMENT RIGHT: The right of the Holders of
the Class M Certificates to receive Hedge Payments in accordance with Section
6.10(d).
INTEREST REMITTANCE AMOUNT: With respect to any Distribution
Date, the sum, without duplication, of:
(i) all scheduled installments of interest due (or
advanced by the Servicer) on the Mortgage Loans during the related Due
Period; plus
(ii) Compensating Interest paid by the Servicer on the
related Servicer Remittance Date; plus
(iii) the interest component of all related Substitution
Adjustments and Loan Repurchase Prices; plus
(iv) the interest component, if any, of all Insurance
Proceeds and Liquidation Proceeds received by the Servicer during the
related Due Period (in each case, net (but not to be reduced below
zero) of unreimbursed expenses incurred in connection with a
liquidation or foreclosure and unreimbursed Periodic Advances and
Servicing Advances, if any); plus
(v) the interest component of the proceeds of any
termination of the Trust Fund; plus
18
(vi) any Special Advance amounts transferred to the
Distribution Account pursuant to Section 5.18(b) hereof; plus
(vii) on the Pre-Funding Distribution Dates, if any, the
Capitalized Interest Requirement for such Distribution Date, if any;
plus
(viii) on the Pre-Funding Distribution Dates, if any, the
Pre-Funding Earnings, if any; minus
(xi) to the extent previously retained by the Servicer,
the Servicing Fee for the related Due Period, together with amounts in
reimbursement for Periodic Advances or Servicing Advances previously
made with respect to the Mortgage Loans and other amounts as to which
the Servicer is entitled to be reimbursed pursuant to this Agreement.
INTEREST RESERVE ACCOUNT: The Eligible Account established in
accordance with Section 6.01(a) hereof and maintained by the Trustee.
LATE PAYMENT RATE: Has the meaning given in the Insurance and
Indemnity Agreement.
LIBOR: With respect to any Accrual Period for the Class M
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rates of the Reference Banks for
one-month U.S. dollar deposits, as such rates appear on Telerate Page 3750, as
of 11:00 a.m. (London time) on such LIBOR Determination Date. On each LIBOR
Determination Date, LIBOR for the related Accrual Period will be established by
the Trustee as follows:
(a) if on such LIBOR Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period for the Class M Certificates shall be the arithmetic
mean of such offered quotations (rounded upwards if necessary to the
nearest whole multiple of 1/16%); or
(b) if on such LIBOR Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period for the Class M Certificates shall be the higher of (i)
LIBOR as determined on the previous LIBOR Determination Date and (ii)
the Reserve Interest Rate.
LIBOR Determination Date: With respect to any Accrual Period
for the Class M Certificates, the second London Business Day preceding the first
day of such Accrual Period.
LIQUIDATED LOAN LOSS: With respect to any Servicer Remittance
Date as of the related Due Date, an amount equal to the excess of (i) the unpaid
principal balance of a Liquidated Mortgage Loan, plus accrued interest thereon
in accordance with the amortization schedule at the time applicable thereto at
the applicable Mortgage Interest Rate from the Due Date as to which interest was
last paid with respect thereto through the last day of the month in which such
Mortgage Loan became a Liquidated Mortgage Loan, over (ii) Net Liquidation
Proceeds with respect to such Liquidated Mortgage Loan.
19
LIQUIDATED MORTGAGE LOAN: A Mortgage Loan with respect to
which the related Mortgaged Property has been acquired, liquidated or foreclosed
in connection with (i) the taking of all or a part of Mortgaged Property by
exercise of the power of eminent domain or condemnation, (ii) the liquidation of
a defaulted Mortgage Loan through a trustee's sale, foreclosure sale, REO
Disposition or otherwise and with respect to which the Servicer determines that
all Liquidation Proceeds which it expects to recover have been recovered.
LIQUIDATION EXPENSES: Without limitation, expenses incurred by
the Servicer in connection with the liquidation of any Liquidated Mortgage Loan
or property acquired in respect thereof (including, without limitation, legal
fees and expenses, committee or referee fees, and, if applicable, brokerage
commissions and conveyance taxes), any unreimbursed amount expended by the
Servicer pursuant to Sections 5.04 and 5.06 hereof in respect of the related
Mortgage Loan and any unreimbursed expenditures for real property taxes or for
property restoration or preservation of the related Mortgaged Property.
Liquidation Expenses shall not include any previously incurred expenses in
respect of an REO Mortgage Loan which have been netted against related REO
Proceeds. In no event may Liquidation Expenses with respect to a Liquidated
Mortgage Loan exceed the related Liquidation Proceeds.
LIQUIDATION PROCEEDS: The amount (other than Insurance
Proceeds) received by the Servicer in connection with (i) the taking of all or a
part of Mortgaged Property by exercise of the power of eminent domain or
condemnation, (ii) the liquidation of a defaulted Mortgage Loan through a
trustee's sale, foreclosure sale, REO Disposition or otherwise or (iii) the
liquidation of any other security for such Mortgage Loan, including, without
limitation, pledged equipment, inventory and working capital and assignments of
rights and interests made by the related mortgagor.
LOAN REPURCHASE PRICE: As defined in Section 2.06(c).
LONDON BUSINESS DAY: A day on which banks are open for dealing
in foreign currency and exchange in London and New York City.
MAJORITY CERTIFICATEHOLDERS: For so long as any of the Offered
Certificates are outstanding, the Holder or Holders of Offered Certificates
evidencing Percentage Interests in excess of 51% in the aggregate, and
thereafter, the Holder or Holders of Class R Certificates evidencing Percentage
Interests in excess of 51% in the aggregate.
MASTER REMIC: As defined in Section 2.07.
MASTER REMIC REGULAR INTERESTS: As defined in Section 2.07.
MAXIMUM POOL PRINCIPAL BALANCE: The sum of (i) the Aggregate
Principal Balance of the Initial Mortgage Loans as of their respective Initial
Cut-Off Dates and (ii) the Original Pre-Funded Amount, if any.
MONTHLY PAYMENT: As to any Mortgage Loan (including any REO
Mortgage Loan) and any Due Date, the payment of principal and interest due
thereon as specified for such Due Date in the related amortization schedule at
the time applicable thereto (after adjustment for any Deficient Valuations
occurring prior to such Due Date but before any
20
adjustment to such amortization schedule by reason of any bankruptcy, other than
Deficient Valuations or similar proceeding or any moratorium or similar waiver
or grace period).
MONTHLY SERVICING FEE: As defined in Section 5.08 hereof.
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc., a corporation
organized and existing under Delaware law, or any successor thereto and if such
corporation no longer for any reason performs the services of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized rating agency designated by the Certificate Insurer.
MORTGAGE: The mortgage, deed of trust or other instrument
creating a first or second lien on the Mortgaged Property.
MORTGAGED PROPERTY: The underlying property or properties
securing a Mortgage Loan, consisting of a fee simple estate in such real
property.
MORTGAGE FILE: As described in Exhibit G.
MORTGAGE INTEREST RATE: As to any Mortgage Loan, the per annum
fixed rate at which interest accrues on the unpaid principal balance thereof as
set forth on the related Mortgage Note.
MORTGAGE LOAN INTEREST SHORTFALL: With respect to any
Distribution Date, as to any Mortgage Loan, the sum of (a) any Prepayment
Interest Shortfall for which no payment of Compensating Interest is paid and (b)
any Civil Relief Act Interest Shortfall in respect of such Mortgage Loan for
such Distribution Date.
MORTGAGE LOAN POOL: Those Initial Mortgage Loans listed on the
initial Mortgage Loan Schedule together with any Subsequent Mortgage Loans
listed on any subsequent Mortgage Loan Schedules.
MORTGAGE LOANS: The Initial Mortgage Loans and the Subsequent
Mortgage Loans, if any, together with any Qualified Substitute Mortgage Loans
submitted therefor in accordance with this Agreement, as from time to time are
held as a part of the Trust Fund. When used in respect of any Distribution Date,
the term Mortgage Loans shall mean all Mortgage Loans (including those in
respect of which the Trustee has acquired the related Mortgaged Property) which
have not been repaid in full prior to the related Due Period, did not become
Liquidated Mortgage Loans prior to such related Due Period or were not
repurchased or replaced by the Unaffiliated Seller prior to such related Due
Period.
MORTGAGE LOAN SCHEDULE: The initial schedule of Initial
Mortgage Loans as of the Initial Cut-Off Date as attached hereto as Schedule I,
which will be deemed to be modified automatically upon any replacement, sale,
substitution, liquidation, transfer or addition of any Mortgage Loan, including
the addition of a Subsequent Mortgage Loan, pursuant to the terms hereof. The
initial Mortgage Loan Schedule sets forth as to each Initial Mortgage Loan, and
any subsequent Mortgage Loan Schedule provided in connection with the Subsequent
Mortgage Loans will set forth as to each Subsequent Mortgage Loan: (i) its
identifying number and the name of the related Mortgagor; (ii) the billing
address for the related Mortgaged Property
21
including the state and zip code; (iii) its date of origination; (iv) the
original number of months to stated maturity; (v) the original stated maturity;
(vi) the original Principal Balance; (vii) the Principal Balance as of its
Cut-Off Date; (viii) the Mortgage Interest Rate; and (ix) the scheduled monthly
payment of principal and interest.
MORTGAGE NOTE: The original, executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
MORTGAGED PROPERTY: The underlying property or properties
securing a Mortgage Loan, consisting of a fee simple interest in such real
property.
MORTGAGOR: The obligor on a Mortgage Note.
NET AVAILABLE AMOUNT: With respect to any Distribution Date,
the Available Amount, less the sum of the Servicing Fee, the Back-up Servicing
Fee, the Trustee Fee, the Class I Distribution Amount and the Premium Amount due
on such Distribution Date and any applicable expenses due on such Distribution
Date.
NET FORECLOSURE PROFITS: As to any Servicer Remittance Date,
the excess, if any, of (i) the aggregate Foreclosure Profits with respect to
such Servicer Remittance Date over (ii) Liquidated Loan Losses with respect to
such Servicer Remittance Date.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances made by the Servicer out of its own funds. For all purposes of
this Agreement, Net Liquidation Proceeds shall be allocated first to accrued and
unpaid interest on the related Mortgage Loan and then to the unpaid principal
balance thereof.
NET REO PROCEEDS: As to any REO Mortgage Loan, REO Proceeds
net of any related expenses of the Servicer.
NET WAC CAP: As of any Distribution Date, a per annum rate
equal to:
(a) in the case of the Class A Certificates, (i) the Net
Weighted Average Mortgage Interest Rate less (ii) a per annum rate
equal to the product of (A) 4.00% per annum and (B) a per annum rate
equal to a fraction, the numerator of which is the Class A-IO Notional
Balance for that Distribution Date and the denominator of which is the
sum of (x) the Aggregate Principal Balance of the Mortgage Loans as of
the beginning of the related Due Period and (y) the Pre-Funding Amount,
if any, immediately prior to such Distribution Date (net of the
Pre-Funding Earnings); and
(b) in the case of the Class M Certificates, (i) the sum
of (A) the Net Weighted Average Mortgage Interest Rate and (B) any
Hedge Payment and any Hedge Termination Payment for such Distribution
Date (converted to a per annum rate based upon the Certificate
Principal Balance of the Class M Certificates) less (ii) a per annum
rate equal to the sum of (1) the Premium Percentage, (2) the Class I
Distribution Amount (converted to a per annum rate based upon the
Certificate Principal Balance of the Class M Certificates) and (3) the
product of (A) 4.00% per annum and (B) a per annum rate
22
equal to a fraction, the numerator of which is the Class A-IO Notional
Balance for that Distribution Date and the denominator of which is the
sum of (x) the Aggregate Principal Balance of the Mortgage Loans as of
the beginning of the related Due Period and (y) the Pre-Funding Amount,
if any, immediately prior to such Distribution Date (net of the
Pre-Funding Earnings).
NET WAC CAP CARRYOVER AMOUNT: With respect to each Class of
the Capped Certificates and any Distribution Date, the sum of (a) the excess, if
any, of the Class Monthly Interest for such Class, calculated at the applicable
Pass-Through Rate without regard to the Net WAC Cap, over the Class Monthly
Interest for such Class for the applicable Distribution Date, (b) any Net WAC
Cap Carryover Amount remaining unpaid from prior Distribution Dates, and (c) one
month's interest on the amount in clause (b) calculated at the applicable
Pass-Through Rate without regard to the Net WAC Cap.
NET WAC CAP CARRYOVER FUND: The Eligible Account established
and maintained in accordance with Section 6.10(a).
NET WAC CAP CARRYOVER RIGHT: The right of the Holders of the
Capped Certificates to receive Net WAC Cap Carryover Amounts in accordance with
Section 6.10(b).
NET WEIGHTED AVERAGE MORTGAGE INTEREST RATE: With respect to
any Due Period, the weighted average Mortgage Interest Rates (weighted by
Principal Balances) of the Mortgage Loans, calculated at the opening of business
on the first day of such Due Period, less the rate at which the Servicing Fee is
then calculated, less the rate at which the Back-up Servicing Fee is then
calculated, less the rate at which the Trustee Fee is then calculated.
NONRECOVERABLE ADVANCES: With respect to any Mortgage Loan,
(a) any Periodic Advance previously made and not reimbursed from late
collections pursuant to Section 5.03, or (b) a Periodic Advance proposed to be
made in respect of a Mortgage Loan or REO Property either of which, in the good
faith business judgment of the Servicer, as evidenced by an Officer's
Certificate delivered to the Certificate Insurer and the Trustee no later than
the Business Day following such determination, would not ultimately be
recoverable pursuant to Sections 5.03.
OC FLOOR: 0.50% of the Maximum Pool Principal Balance.
OFFERED CERTIFICATES: The Senior Certificates and the
Subordinate Certificates.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of
the Board, the President or a Vice President, the Treasurer, the Secretary or
one of the Assistant Treasurers or Assistant Secretaries of the Unaffiliated
Seller and/or the Servicer, or the Depositor, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may,
without limitation, be counsel for the Unaffiliated Seller, the Servicer, the
Trustee, a Certificateholder or a Certificateholder's prospective transferee or
the Certificate Insurer (including except as
23
otherwise provided herein, in-house counsel) reasonably acceptable to each
addressee of such opinion and experienced in matters relating to the subject of
such opinion; except that any opinion of counsel relating to (a) the
qualification of any of the REMICs described in Section 2.07 hereof as a REMIC
or (b) compliance with the REMIC Provisions must be an opinion of counsel who
(i) is in fact independent of the Unaffiliated Seller, the Servicer and the
Trustee, (ii) does not have any direct financial interest or any material
indirect financial interest in the Unaffiliated Seller or the Servicer or the
Trustee or in an Affiliate thereof, (iii) is not connected with the Unaffiliated
Seller or the Servicer or the Trustee as an officer, employee, director or
person performing similar functions and (iv) is reasonably acceptable to the
Certificate Insurer.
ORIGINAL AGGREGATE PRINCIPAL BALANCE: The Aggregate Principal
Balance of the Mortgage Loan Pool on the Closing Date, calculated as of the
Initial Cut-Off Date, which amount is equal to $450,000,068.12.
ORIGINAL CERTIFICATE PRINCIPAL BALANCE: As of the Startup Day
and with respect to each Class of Certificates, the amount set forth below:
Original Certificate
Class Principal Balance
----- --------------------
A $ 387,000,000
M $ 63,000,000
The Class A-IO, Class X, Class I and Class R Certificates do not have an
Original Certificate Principal Balance.
ORIGINAL PRE-FUNDED AMOUNT: $0.
ORIGINATORS: American Business Credit, Inc., HomeAmerican
Credit, Inc., d/b/a Upland Mortgage and American Business Mortgage Services,
Inc.
OVERCOLLATERALIZATION DEFICIT: With respect to any
Distribution Date, the amount, if any, by which (i) the aggregate Certificate
Principal Balance of the Offered Certificates as of such Distribution Date
(after taking into account the distribution of the Principal Distribution Amount
on such Distribution Date, except for any portion thereof in respect of the
Overcollateralization Deficit) exceeds (ii) the Current Pool Principal
Balance for such Distribution Date.
OVERCOLLATERALIZATION INCREASE AMOUNT: With respect to any
Distribution Date, the lesser of (x) the Excess Interest for such Distribution
Date and (y) the Specified Overcollateralization Amount for such Distribution
Date, minus the Overcollateralized Amount immediately prior to such Distribution
Date.
OVERCOLLATERALIZATION REDUCTION AMOUNT: With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralized Amount for
24
such Distribution Date and (b) the Principal Distribution Amount for such
Distribution Date (without regard to clause (b)(10) of the definition of
Principal Distribution Amount).
OVERCOLLATERALIZED AMOUNT: With respect to any Distribution
Date, the excess, if any, of (a) the Current Pool Principal Balance for that
Distribution Date, over (b) the aggregate Certificate Principal Balance of the
Offered Certificates as of such Distribution Date (after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date,
except for any portion thereof related to any Overcollateralization Increase
Amount).
OVERFUNDED INTEREST AMOUNT: With respect to each Subsequent
Transfer Date, if any, occurring in the first calendar month of the Pre-Funding
Period, if any, the excess, if any, of (i) the amount on deposit in the
Capitalized Interest Account, over (ii) three-months' interest calculated at the
Adjusted Pass-Through Rate on the Pre-Funding Amount (net of any Pre-Funding
Earnings) immediately following such Subsequent Transfer Date (disregarding any
amount applied from the Pre-Funding Account to a Subsequent Mortgage Loan that
does not have a Due Date in such month).
With respect to each Subsequent Transfer Date, if any,
occurring in the second calendar month of the Pre-Funding Period, if any, the
excess of (i) the amount on deposit in the Capitalized Interest Account, over
(ii) two-month's interest calculated at the Adjusted Pass-Through Rate on the
Pre-Funding Amount (net of any Pre-Funding Earnings) immediately following such
Subsequent Transfer Date (disregarding any amount applied from the Pre-Funding
Account to a Subsequent Mortgage Loan that does not have a Due Date in such
month).
With respect to each Subsequent Transfer Date, if any,
occurring in the third calendar month of the Pre-Funding Period, if any, the
excess of (i) the amount on deposit in the Capitalized Interest Account, over
(ii) one-month's interest calculated at the Adjusted Pass-Through Rate on the
Pre-Funding Amount (net of any Pre-Funding Earnings) immediately following such
Subsequent Transfer Date (disregarding any amount applied from the Pre-Funding
Account to a Subsequent Mortgage Loan that does not have a Due Date in such
month).
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as
to which (a) the related Mortgagor represented an intent to occupy as such
Mortgagor's primary, secondary or vacation residence at the origination of the
Mortgage Loan, and (b) the Unaffiliated Seller has no actual knowledge that such
Residential Dwelling is not so occupied.
OWNERSHIP INTEREST: As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
PASS-THROUGH RATE: The Class A, Class A-IO and Class M
Pass-Through Rate and, for the purposes of Section 2.07, the pass-through rate
for any class of interests referenced in Section 2.07.
PAYING AGENT: As defined in Section 6.05(a) hereof.
25
PERCENTAGE INTEREST: With respect to any Offered Certificate,
other than a Class A-IO Certificate, the portion evidenced by such Certificate,
expressed as a percentage rounded to four decimal places, equal to a fraction
the numerator of which is the denomination represented by such Certificate and
the denominator of which is the Original Certificate Principal Balance of such
Class. With respect to a Class A-IO, Class X, Class I or Class R Certificate,
the portion evidenced thereby as stated on the face of such Certificate.
PERIODIC ADVANCE: The aggregate of the advances required to be
made by the Servicer on any Servicer Remittance Date pursuant to Section 5.18
hereof, the amount of any such advances being equal to the sum of:
(a) with respect to each Mortgage Loan that was
Delinquent as of the close of business on the last day of the Due
Period preceding the related Servicer Remittance Date, the product of
(i) the Principal Balance of such Mortgage Loan and (ii) one-twelfth of
the Mortgage Interest Rate for such Mortgage Loan net of the Servicing
Fee; and
(b) with respect to each REO Property which was acquired
during or prior to the related Due Period and as to which an REO
Disposition did not occur during the related Due Period, an amount
equal to the excess, if any, of (i) interest on the Principal Balance
of such REO Mortgage Loan at the Mortgage Interest Rate for such REO
Mortgage Loan net of the Servicing Fee, for the most recently ended Due
Period over (ii) the net income from the REO Property transferred to
the Distribution Account for such Distribution Date;
provided, however, that in each such case such advance has not been determined
by the Servicer to be a Nonrecoverable Advance.
PERMITTED INVESTMENTS: As used herein, Permitted Investments
shall include the following:
(i) obligations of, or guaranteed as to principal and
interest by, the United States or any agency or instrumentality thereof
when such obligations are backed by the full faith and credit of the
United States;
(ii) repurchase agreements on obligations specified in
clause (i) maturing not more than three months from the date of
acquisition thereof, provided that the unsecured obligations of the
party agreeing to repurchase such obligations are at the time rated in
one of the two highest rating categories by the Rating Agencies;
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days) of any U.S.
depository institution or trust company, incorporated under the laws of
the United States or any state; provided, that the debt obligations of
such depository institution or trust company at the date of acquisition
thereof have been rated in one of the two highest rating categories by
the Rating Agencies;
(iv) commercial paper (having original maturities of not
more than 270 days) of any corporation incorporated under the laws of
the United States or any state thereof
26
which on the date of acquisition has been rated in the highest
short-term rating category by the Rating Agencies;
(v) the JPMorgan Funds U.S. Government Money Market Fund,
the JPMorgan Prime Money Market Fund and the JPMorgan Treasury Plus
Fund, so long as any such fund is rated in the highest rating category
by ▇▇▇▇▇'▇ or S&P;
provided, that each such Permitted Investment shall be a "permitted investment"
within the meaning of Section 860G(a)(5) of the Code and that no instrument
described hereunder shall evidence either the right to receive (x) only interest
with respect to the obligations underlying such instrument or (y) both principal
and interest payments derived from obligations underlying such instrument and
the interest and principal payments with respect to such instrument provided a
yield to maturity at par greater than 120% of the yield to maturity at par of
the underlying obligations; provided, further, that no instrument described
hereunder may: (x) be purchased at a price greater than par if such instrument
may be prepaid or called at a price less than its purchase price prior to stated
maturity; or (y) provide any voting right or substantially equivalent interest
in the producer of such investment, whether directly or indirectly, through
conversion or any other manner or method. or be disposed of prior to its
maturity.
PERMITTED TRANSFEREE: Any Person other than (a) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (b) a foreign government, international
organization or any agency or instrumentality of either of the foregoing, (c) an
organization (except certain farmers' cooperatives described in Section 521 of
the Code) which is exempt from tax imposed by Chapter 1 of the Code (including
the tax imposed by Section 511 of the Code on unrelated business taxable income)
on any excess inclusions (as defined in Section 860E(c)(1) of the Code) with
respect to any Class R Certificate, (d) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (e) an "electing
large partnership" within the meaning Section 775 of the Code and (f) any other
Person so designated by the Trustee based upon an Opinion of Counsel to the
Trustee and the Certificate Insurer that the transfer of an Ownership Interest
in a Class R Certificate to such Person may cause either (i) any of the REMICs
described in Section 2.07 hereof to fail to qualify as a REMIC at any time that
the Offered Certificates or Class X Certificates are outstanding or (ii) the
Trust Fund or any Person having an Ownership Interest in any Class of
Certificates, other than such Person, to incur a liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the Transfer
of an Ownership Interest in a Class R Certificate to such Person. The terms
"United States," "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of FHLMC, a majority of
its board of directors is not selected by such governmental unit.
PERSON: Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
PLAN: As defined in Section 4.02(n).
27
PRE-FUNDING ACCOUNT: The Pre-Funding Account, if any,
established in accordance with Section 6.01 hereof and maintained by the
Trustee.
PRE-FUNDING AMOUNT: With respect to any date, the amount, if
any, on deposit in the Pre-Funding Account.
PRE-FUNDING DISTRIBUTION DATES: Each Distribution Date
occurring during the Pre-Funding Period, if any, and the Distribution Date
immediately following the end of the Pre-Funding Period, if any.
PRE-FUNDING EARNINGS: The actual investment earnings realized
on amounts deposited in the Pre-Funding Account, if any.
PRE-FUNDING PERIOD: If the Original Pre-Funded Amount is
greater than zero, the period commencing on the Startup Day and ending on the
earliest to occur of (i) the date on which the Pre-Funding Amount (net of any
Pre-Funding Earnings) is less than $100,000, (ii) the date on which any Event of
Default occurs and (iii) the close of business on May 31, 2003.
PREMIUM AMOUNT: The product of the Premium Percentage and the
Certificate Principal Balance of the Class M Certificates for the related
Distribution Date.
PREMIUM PERCENTAGE: Has the meaning given in the Insurance and
Indemnity Agreement.
PREPAYMENT ASSUMPTION: A constant prepayment rate of 23% HEP
for the Offered Certificates and Class X Certificates used solely for
determining the accrual of original issue discount and market discount on the
Certificates for federal income tax purposes.
PREPAYMENT INTEREST SHORTFALL: With respect to any
Distribution Date, for each Mortgage Loan that was the subject during the
related Due Period of a Principal Prepayment in full, an amount equal to the
excess, if any, of (a) 30 days' interest on the Principal Balance, prior to
giving effect to a principal distribution for the related Due Period, of such
Mortgage Loan at a per annum rate equal to (i) the Mortgage Interest Rate (or at
such lower rate as may be in effect for such Mortgage Loan pursuant to
application of the Civil Relief Act, any Deficient Valuation and/or any Debt
Service Reduction) minus (ii) the rate at which the Servicing Fee is calculated
over (b) the amount of interest actually remitted by the Mortgagor in connection
with such Principal Prepayment less the Servicing Fee for such Mortgage Loan in
such month.
PRINCIPAL BALANCE: As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination after giving effect to Principal Prepayments received
prior to the end of the related Due Period and Deficient Valuations incurred
prior to the related Due Date. The Principal Balance of a Mortgage Loan which
becomes a Liquidated Mortgage Loan on or prior to the related Due Date shall be
zero (except for purposes of calculating the Loan Repurchase Price of such
Mortgage Loan).
28
PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, will be the lesser of:
(a) the excess of (x) the sum, as of such Distribution
Date, of (1) the Net Available Amount and (2) any Class M Insured
Payment (to be applied to the Class M Principal Distribution Amount
only) over (y) the Interest Distribution Amount for such Distribution
Date; and
(b) the sum, without duplication, of:
(1) all principal in respect of the Mortgage Loans
actually collected during the related Due Period;
(2) the Principal Balance of each Mortgage Loan that
either was repurchased by the Unaffiliated Seller or
purchased by the Servicer on the related Servicer
Remittance Date, to the extent such Principal Balance
is actually received by the Trustee;
(3) any Substitution Adjustments delivered by the
Unaffiliated Seller on the related Servicer
Remittance Date in connection with a substitution of
a Mortgage Loan, to the extent such Substitution
Adjustments are actually received by the Trustee;
(4) the Net Liquidation Proceeds actually collected by
the Servicer on all Mortgage Loans during the related
Due Period (to the extent such Net Liquidation
Proceeds relate to principal);
(5) on the Pre-Funding Distribution Dates, if any, moneys
released from the Pre-Funding Account pursuant to
Section 6.01(g);
(6) the proceeds received by the Trustee upon the
exercise by the Servicer of its option to repurchase
the Mortgage Loans on or after the Clean-up Call Date
(to the extent that such proceeds relate to
principal);
(7) the amount of any Overcollateralization Deficit for
such Distribution Date;
(8) the proceeds received by the Trustee on any
termination of the Trust (to the extent such proceeds
relate to principal);
(9) the amount of any Overcollateralization Increase
Amount for such Distribution Date, to the extent of
any Excess Interest available for such purpose; and
(10) if the Certificate Insurer so elects in its sole
discretion, an amount of principal (including
Liquidated Loan Losses) that would have been
distributed pursuant to clauses (1) through (9) above
if sufficient funds were available therefore;
29
minus
(11) the amount of any Overcollateralization Reduction
Amount for such Distribution Date.
PRINCIPAL PREPAYMENT: Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated March
26, 2003 relating to the Offered Certificates filed with the Commission in
connection with the Registration Statement heretofore filed or to be filed with
the Commission pursuant to Rule 424(b)(2) or 424(b)(5).
QUALIFIED APPRAISER: An appraiser, duly appointed by the
Unaffiliated Seller, who had no interest, direct or indirect, in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of the Mortgage Loan, and such
appraiser and the appraisal made by such appraiser both satisfy the requirements
of Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
QUALIFIED MORTGAGE: "Qualified Mortgage" shall have the
meaning set forth from time to time in the definition thereof at Section
860G(a)(3) of the Code (or any successor statute thereto).
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or
mortgage loans substituted for a Deleted Mortgage Loan pursuant to Section
2.06(c) or 3.03 hereof, which (a) has or have an interest rate at least equal to
that applicable to the Deleted Mortgage Loan, (b) relates or relate to a
detached one-family residence or to the same type of Residential Dwelling or
Business Purpose Property, or any combination thereof, as the Deleted Mortgage
Loan and in each case has or have the same or a better lien priority as the
Deleted Mortgage Loan and has the same occupancy status or is an Owner Occupied
Mortgaged Property, (c) matures or mature no later than (and not more than one
year earlier than) the Deleted Mortgage Loan, (d) has or have a Loan-to-Value
Ratio at the time of such substitution no higher than the Loan-to-Value Ratio of
the Deleted Mortgage Loan, (e) has or have a Combined Loan-to-Value Ratio or
Combined Loan-to-Value Ratios at the time of such substitution no higher than
the Combined Loan-to-Value Ratio of the Deleted Mortgage Loan, (f) has or have a
Principal Balance or Principal Balances (after application of all payments
received on or prior to the date of substitution) not substantially less and not
more than the Principal Balance of the Deleted Mortgage Loan as of such date,
(g) satisfies or satisfy the criteria set forth from time to time in the
definition of "qualified replacement mortgage" at Section 860G(a)(4) of the Code
(or any successor statute thereto), and (h) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01,
3.02 and 3.03 of the Unaffiliated Seller's Agreement.
RATING AGENCY: S&P, ▇▇▇▇▇'▇ or Fitch.
30
RATING AGENCY CONDITION: With respect to any action, written
confirmation from the Rating Agencies that such action will not result in the
withdrawal, downgrade or qualification of the then-current rating (including, in
the case of the Class M Certificates, the rating of such Certificates without
giving effect to the Certificate Insurance Policy) of any of the Offered
Certificates.
RECORD DATE: With respect to (i) the first Distribution Date,
for all of the Offered Certificates, the Closing Date and (ii) thereafter, with
respect to (x) the Class A Certificates and Class A-IO Certificates, the last
Business Day of the calendar month immediately preceding the month in which a
Distribution Date occurs and (y) the Class M Certificates, the Business Day
preceding the applicable Distribution Date.
REFERENCE BANKS: Citibank, ▇▇▇▇▇▇▇'▇ Bank PLC, The Bank of
Tokyo-Mitsubishi and National Westminster Bank PLC; provided, that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market whose quotations appear on the Telerate Page
3750 on the relevant LIBOR Determination Date.
REGULAR INTEREST: As defined in Section 2.07 herein.
REIMBURSEMENT AMOUNT: As of any Distribution Date, the sum of
(a)(i) all Class M Insured Payments paid by the Certificate Insurer pursuant to
the Certificate Insurance Policy but for which the Certificate Insurer has not
been reimbursed prior to such Distribution Date pursuant to Sections 6.05(a)
hereof plus (ii) interest accrued thereon, calculated at the Late Payment Rate
from the date the Trustee (or other party entitled thereto, in case of a Class M
Preference Amount) received the related Class M Insured Payments or the date
such Class M Insured Payments were made and (b)(i) any other amounts then due
and owing to the Certificate Insurer hereunder and under the Insurance and
Indemnity Agreement but for which the Certificate Insurer has not been
reimbursed prior to such Distribution Date, as certified to the Trustee by the
Certificate Insurer plus (ii) interest on such amounts at the Late Payment Rate.
The Certificate Insurer shall notify the Trustee, the Servicer and the Depositor
of the amount of any Reimbursement Amount.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC I: As described in Section 2.07 herein.
REMIC I REGULAR INTERESTS: As described in Section 2.07
herein.
REMIC II: As described in Section 2.07 herein.
REMIC II NET WAC CAP: As described in Section 2.07 herein.
REMIC II REGULAR INTERESTS: As described in Section 2.07
herein.
REMIC III: As described in Section 2.07 herein.
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REMIC III NET WAC CAP: As described in Section 2.07 herein.
REMIC III REGULAR INTERESTS: As described in Section 2.07
herein.
REMIC PROVISIONS: Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and temporary and final regulations promulgated thereunder and
published rulings, notices and announcements, as the foregoing may be in effect
from time to time.
REMIC TRUST: The segregated pool of assets consisting of the
Trust Fund; provided, however, that the Pre-Funding Account, if any, the
Capitalized Interest Account, if any, the Net WAC Cap Carryover Fund and the
Interest Rate Hedge Payment Fund shall not be part of the REMIC Trust.
REO DISPOSITION: The final sale by the Servicer of a Mortgaged
Property acquired by the Servicer in foreclosure or by deed-in-lieu of
foreclosure.
REO MORTGAGE LOAN: Any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the related Mortgage
Note is discharged and the related Mortgaged Property is held as part of the
Trust Fund.
REO PROCEEDS: Proceeds received in respect of any REO Mortgage
Loan (including, without limitation, proceeds from the rental of the related
Mortgaged Property).
REO PROPERTY: A Mortgaged Property acquired by the Servicer in
the name of the Trustee on behalf of the Certificateholders through foreclosure
or deed-in-lieu of foreclosure following a default on the related Mortgage Loan.
REPRESENTATION LETTER: Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Offered
Certificates registered in the Certificate Register under the nominee name of
the Depository.
REPRESENTATIVE: Bear ▇▇▇▇▇▇▇ & Co. Inc., as the representative
underwriter for the Underwriters listed on Schedule A to the Underwriting
Agreement.
REQUEST FOR RELEASE: A request for release in substantially
the form attached as Exhibit K hereto.
REQUIRED INFORMATION: With respect to each Mortgage Loan and
any date of determination: (a) the name and address of the obligor; (b) the
aggregate Principal Balance of the Mortgage Loan as of the end of the
immediately preceding Due Period; (c) the maturity date; and (d) the Mortgage
Interest Rate as of the end of the immediately preceding Due Period; provided,
that the Servicer's obligation to furnish any portion of the Required
Information to any Person shall not require the Servicer to fail to observe any
applicable law prohibiting disclosure of information regarding the obligors.
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RESERVE INTEREST RATE: The rate per annum that the Trustee
determines to be either:
(a) the arithmetic mean (rounded upwards if necessary to
the nearest whole multiple of 1/16%) of the one-month U.S. dollar
lending rates which New York City banks selected by the Trustee are
quoting on the relevant LIBOR Determination Date to the principal
London offices of leading banks in the London interbank market; or
(b) in the event that the Trustee can determine no such
arithmetic mean as described in clause (a), the lowest one-month U.S.
dollar lending rate which New York City banks selected by the Trustee
are quoting on such LIBOR Determination Date to leading European banks.
RESIDENTIAL DWELLING: A one- to four-family dwelling, a unit
in a planned unit development, a unit in a condominium development, a townhouse
or a manufactured housing unit which is non-mobile.
RESPONSIBLE OFFICER: When used with respect to the Trustee,
the Collateral Agent and the Back-up Servicer, any officer assigned to the
Corporate Trust Division (or any successor thereto), including any Vice
President, Assistant Vice President, Trust Officer, any Assistant Secretary or
any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject in each case
having direct responsibility for the administration of this Agreement. When used
with respect to the Unaffiliated Seller or the Servicer, the President or any
Vice President, Assistant Vice President, or any Secretary or Assistant
Secretary.
RETAINED INTEREST: An interest in a pool of promissory notes,
mortgage loans, or other financial assets which entitles the holder to receive
excess cash flows derived from such assets after payments to senior holders of
direct or indirect beneficial or other interests in such assets as well as
expenses and other payments accorded priority in right or payment to such
residual interest.
ROLLING THREE MONTH DELINQUENCY RATE: For any Distribution
Date, the percentage, equal to the average of the Delinquency Ratio for each of
the three (1 or 2 in the case of the first three Distribution Dates, as the case
may be) immediately preceding Due Periods.
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or any successor thereto and if such corporation no longer for
any reason performs the services of a securities rating agency, "S&P" shall be
deemed to refer to any other nationally recognized statistical rating
organization designated by the Certificate Insurer.
SENIOR CERTIFICATES: The Class A and Class A-IO Certificates.
SENIOR ENHANCEMENT PERCENTAGE: With respect to any
Distribution Date, the percentage obtained by dividing (x) the sum of (i) the
aggregate Certificate Principal Balance of the Subordinate Certificates and (ii)
the Overcollateralized Amount (in each case
33
after taking into account the distributions of the Principal Distribution
Amount on such Distribution Date) by (y) the Current Pool Principal Balance
for that Distribution Date.
SEPARATION EVENT: The occurrence of a Certificate Insurer
Default.
SERVICER: American Business Credit, Inc., a Pennsylvania
corporation, or any successor appointed as herein provided.
SERVICER REMITTANCE AMOUNT: With respect to any Servicer
Remittance Date, an amount equal to the sum of (i) all collections of principal
and interest on the Mortgage Loans (including Principal Prepayments, Net REO
Proceeds and Net Liquidation Proceeds, if any) collected by the Servicer during
the related Due Period, (ii) all Periodic Advances made by the Servicer with
respect to interest payments due to be received on the Mortgage Loans on the
related Due Date and (iii) any other amounts required to be placed in the
Collection Account by the Servicer pursuant to this Agreement (including
Insurance Proceeds), but excluding the following:
(a) amounts received on particular Mortgage Loans as late
payments of interest and respecting which the Servicer has previously
made an unreimbursed Periodic Advance out of its own funds;
(b) those portions of each payment of interest on a
particular Mortgage Loan which represent the Servicing Fee;
(c) that portion of Liquidation Proceeds and REO Proceeds
to the extent of any unpaid Servicing Fee;
(d) all income from Permitted Investments that is held in
the Collection Account for the account of the Servicer;
(e) all amounts in respect of late fees, assumption fees,
prepayment fees and similar fees;
(f) certain other amounts which are reimbursable to the
Servicer, as provided in this Pooling and Servicing Agreement; and
(g) Net Foreclosure Profits.
SERVICER REMITTANCE DATE: With respect to any Distribution
Date, the 10th day of the month in which such Distribution Date occurs, or if
such 10th day is not a Business Day, the Business Day preceding such 10th day.
SERVICER REMITTANCE REPORT: As defined in Section 6.07 hereof.
SERVICER TERMINATION LOSS TRIGGER EVENT: With respect to any
Distribution Date, the event that occurs if the Cumulative Loss Percentage for
such Distribution
34
Date exceeds the following percentages with respect to the applicable
Distribution Date specified below:
Distribution Date Loss Percentage
---------------------------- --------------------------------------------------
January 2006 - December 2006 4.00% for the first month, plus an additional 1/12
of 1.75% for each month thereafter
January 2007 - December 2007 5.75% for the first month, plus an additional 1/12
of 1.50% for each month thereafter
January 2008 - December 2008 7.25% for the first month, plus an additional 1/12
of 1.00% for each month thereafter
January 2009 - December 2009 8.25% for the first month, plus an additional 1/12
of 0.25% for each month thereafter
January 2010 and thereafter 8.50%
SERVICING ADVANCES: All reasonable and customary
"out-of-pocket" costs and expenses (including legal fees) incurred in the
performance by the Servicer of its servicing obligations, including, but not
limited to, the cost and expenses relating to (a) the preservation, restoration,
inspection and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures, (c) the management and liquidation
of the REO Property, including reasonable fees paid to any independent
contractor in connection therewith, (d) compliance with the obligations under
Section 5.22, all of which reasonable and customary out-of-pocket costs and
expenses are reimbursable to the Servicer to the extent provided in Sections
5.03 and 5.22.
SERVICING COMPENSATION: The Servicing Fee and other amounts to
which the Servicer is entitled pursuant to Section 5.08.
SERVICING FEE: As to each Mortgage Loan, the annual fee
payable to the Servicer, which is calculated as an amount equal to the product
of (a) 0.50% per annum, and (b) the Principal Balance thereof (or, in the case
of any successor Servicer, such other amount as the Certificate Insurer and such
successor may agree upon in writing; provided, however, that if the Back-up
Servicer is acting as successor Servicer in no event shall the Servicing Fee be
less than the amount paid to the initial Servicer hereunder). Such fee shall be
calculated and payable monthly only from the amounts received in respect of
interest on such Mortgage Loan and shall be computed on the basis of the same
principal amount and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The Servicing Fee includes any servicing
fees owed or payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee and the Certificateholders by the Servicer on the Closing Date, as
such list may from time to time be amended.
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SPECIAL ADVANCE: As defined in Section 5.18(b) hereof.
SPECIAL RESERVE ACCOUNT: The Eligible Account established in
accordance with Section 6.13 hereof and maintained by the Trustee.
SPECIFIED OVERCOLLATERALIZATION AMOUNT: With respect to any
Distribution Date, (i) prior to the Stepdown Date 5.50% of the Maximum Pool
Principal Balance or (ii) on or after the Stepdown Date 11.00% of the Current
Pool Principal Balance for that Distribution Date; provided, that the Specified
Overcollateralization Amount shall never be less than the OC Floor; provided,
further, that on any Distribution Date on which a Trigger Event is in effect,
the Specified Overcollateralization Amount shall be equal to 100.00% of the
Current Pool Principal Balance for such Distribution Date.
STARTUP DAY: The day designated as such pursuant to Section
2.07(g) hereof.
STEPDOWN DATE: The earlier to occur of (i) the Distribution
Date on which the aggregate Certificate Principal Balance of the Class A
Certificates has been reduced to zero and (ii) the later to occur of (a) the
Distribution Date in April 2006 and (b) the first Distribution Date on which the
Current Pool Principal Balance (after giving effect to distributions on that
Distribution Date) has been reduced to less than 50% of the Maximum Pool
Principal Balance.
SUBORDINATE CERTIFICATES: The Class M Certificates.
SUBSERVICERS: HomeAmerican Credit, Inc., d/b/a Upland
Mortgage, a Pennsylvania corporation, or its successor in interest and American
Business Mortgage Services, Inc., a New Jersey corporation, or its successor in
interest.
SUBSEQUENT CUT-OFF DATE: With respect to any Subsequent
Mortgage Loan, the date specified in the Addition Notice delivered in connection
therewith, which date shall be the close of business on the last day of the
month immediately preceding the month in which such Subsequent Mortgage Loan
will be conveyed to the Trust or, if such Subsequent Mortgage Loan was
originated, or otherwise required by an Originator after such day, the date of
origination or acquisition of such Mortgage Loan.
SUBSEQUENT MORTGAGE LOANS: The Mortgage Loans, if any,
transferred and assigned to the Trust pursuant to Section 2.03 hereof.
SUBSEQUENT TRANSFER: The transfer and assignment by the
Depositor to the Trust of any Subsequent Mortgage Loans pursuant to the terms
hereof.
SUBSEQUENT TRANSFER DATE: The Business Day, if any, on which a
Subsequent Transfer occurs.
SUBSERVICING AGREEMENT: The agreement between the Servicer and
the Subservicers relating to subservicing and/or administration of certain
Mortgage Loans as provided in Section 5.13, a copy of which shall be delivered,
along with any modifications thereto, to the Trustee and the Certificate
Insurer.
36
SUBSTITUTION ADJUSTMENT: As to any date on which a
substitution occurs pursuant to Sections 2.06 or 3.03 hereof, the amount (if
any) by which the aggregate unpaid principal balance (after application of
principal payments received on or before the date of substitution) of any
Qualified Substitute Mortgage Loans as of the date of substitution, are less
than the aggregate of the Principal Balances of the related Deleted Mortgage
Loans together with 30 days' interest thereon at the Mortgage Interest Rate.
SUPPLEMENTAL INTEREST TRUST: The trust established in
accordance with Section 6.10(a) to hold (x) the Net WAC Cap Carryover Fund and
the Interest Rate Hedge Payment Fund and (y) the Interest Rate Hedge Agreement.
The Supplemental Interest Trust will not be an asset of any REMIC.
TAX MATTERS PERSON: The Person or Persons appointed pursuant
to Section 11.13 from time to time to act as the "tax matters person" (within
the meaning of the REMIC Provisions) for each of the REMICs created hereunder.
TAX RETURN: The federal income tax return on Internal Revenue
Service Form 1066, "U.S. Real Estate Mortgage Investment Conduit (REMIC) Income
Tax Return," including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of each REMIC created hereunder due to its classification
as a REMIC under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provision of federal, state
or local tax laws.
TELERATE PAGE 3750: The display designated as page 3750 on the
Telerate Service (or such other page as may replace the page 3750 on that
service for the purpose of displaying London interbank offered rates of major
banks).
TRANSFER: Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
TRANSFER AFFIDAVIT AND AGREEMENT: As defined in Section
4.02(l)(ii).
TRANSFEREE: Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
TRANSFEROR: Any Person who is disposing by Transfer any
Ownership Interest in a Certificate.
TRIGGER EVENT: Either a Delinquency Trigger Event or
Cumulative Loss Trigger Event.
TRUST: ABFS Mortgage Loan Trust 2003-1, the express trust
created hereunder in Section 2.01(a).
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TRUST FUND: The segregated pool of assets subject hereto,
constituting the trust created hereby and to be administered hereunder,
consisting of: (i) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all principal collected and interest due and accruing thereon after the related
Cut-Off Date, and any proceeds thereof; (ii) any REO Property, together with all
collections thereon and proceeds thereof; (iii) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof; any other
security for such Mortgage Loan, including, without limitation, pledged
equipment, inventory and working capital and assignments of rights and interests
made by the related mortgagor; (v) the rights and remedies of the Trustee
against any Person making any representation or warranty to the Trustee
hereunder, to the extent provided herein; (vi) all rights of the Depositor under
the Unaffiliated Seller's Agreement; (vii) each Account and such assets that are
deposited therein from time to time and any investments thereof, together with
any and all income, proceeds and payments with respect thereto; and (viii) all
proceeds of the foregoing.
TRUSTEE: JPMorgan Chase Bank, a New York banking corporation,
or its successor-in-interest, or any successor trustee appointed as herein
provided.
TRUSTEE FEE: As to any Distribution Date, the fee payable to
the Trustee in respect of its services as Trustee that accrues at a monthly rate
equal to one-twelfth of 0.00625% on the Principal Balance of each Mortgage Loan
as of the immediately preceding Due Date.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the
Trustee or its designated agent pursuant to Section 2.05.
TRUSTEE'S REMITTANCE REPORT: As defined in Section 6.07.
UNAFFILIATED SELLER: ABFS 2003-1, Inc.
UNAFFILIATED SELLER'S AGREEMENT: The Unaffiliated Seller's
Agreement, dated as of the date hereof, among the Unaffiliated Seller, the
Originators and the Depositor relating to the sale of the Mortgage Loans from
the Originators to the Unaffiliated Seller and from the Unaffiliated Seller to
the Depositor.
UNDERWRITERS: The Representative and Credit Suisse First
Boston LLC.
UNDERWRITING AGREEMENT: The Underwriting Agreement, dated as
of March 27, 2003 between the Depositor and the Representative.
UNITED STATES PERSON: A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States, any state thereof or the District of
Columbia, an estate whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States or a trust if a court within the United States can exercise
primary jurisdiction over its administration and at least one United States
fiduciary has the authority to control all substantial decisions of the trust.
38
WAC EXCESS: The sum of the Net WAC Cap Carryover Amounts
allocable to each of the Capped Certificates.
Section 1.02 Provisions of General Application. (a) All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
(b) The terms defined in this Article include the plural
as well as the singular.
(c) The words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole. All references
to Articles and Sections shall be deemed to refer to Articles and Sections of
this Agreement.
(d) Any reference to statutes are to be construed as
including all statutory provisions consolidating, amending or replacing the
statute to which reference is made and all regulations promulgated pursuant to
such statutes.
(e) All calculations of interest (other than with respect
to the Mortgage Loans and the Class M Certificates) provided for herein shall be
made on the basis of a 360-day year consisting of twelve 30-day months. All
calculations of interest with respect to the Class M Certificates shall be made
on the basis of a 360-day year consisting of the actual number of days elapsed
in the applicable Accrual Period. All calculations of interest with respect to
any Mortgage Loan provided for herein shall be made in accordance with the terms
of the related Mortgage Note and Mortgage or, if such documents do not specify
the basis upon which interest accrues thereon, on the basis of a 360-day year
consisting of twelve 30-day months, to the extent permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on
the date such payment is actually received by the Servicer; provided, however,
that for purposes of calculating distributions on the Certificates prepayments
with respect to any Mortgage Loan are deemed to be received on the date they are
applied in accordance with Accepted Servicing Practices consistent with the
terms of the related Mortgage Note and Mortgage to reduce the outstanding
principal balance of such Mortgage Loan on which interest accrues.
Section 1.03 Business Day Certificate. On the Closing Date
(with respect to the calendar year 2003) and thereafter, within 15 days prior to
the end of each calendar year while this Agreement remains in effect (with
respect to the succeeding calendar years), the Servicer shall provide to the
Trustee, the Depositor and the Certificate Insurer a certificate of a Servicing
Officer specifying the days on which banking institutions in the State of
Pennsylvania are authorized or obligated by law, executive order or governmental
decree to be closed.
ARTICLE II
ESTABLISHMENT OF THE TRUST
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 Establishment of the Trust. (a) The Depositor
does hereby establish, pursuant to the further provisions of this Agreement and
the laws of the State of New York, an express trust to be known, for
convenience, as "ABFS Mortgage Loan Trust 2003-1"
39
and does hereby appoint JPMorgan Chase Bank as Trustee in accordance with the
provisions of this Agreement.
(b) The Trust may perform the following permitted
activities:
(i) hold receivables transferred from the Unaffiliated
Seller and other passive assets of the Trust, which assets cannot be
contrary to the status of the Trust as a qualified special purpose
entity under existing accounting literature, including passive
derivative financial instruments that pertain to beneficial interests
issued or sold to parties other than the Unaffiliated Seller, its
affiliates or agents;
(ii) issue the Certificates and other interests in the
Trust;
(iii) receive collections and make payments on such
Certificates and interests in accordance with the terms of this
Agreement; and
(iv) engage in other activities that are necessary or
incidental to accomplish these limited purposes, which activities
cannot be contrary to the status of the Trust as a qualified special
purpose entity under existing accounting literature.
Section 2.02 Purchase and Sale of Initial Mortgage Loans. The
Depositor does hereby sell, transfer, assign, set over and convey to the
Trustee, on behalf of the Trust, without recourse but subject to the terms and
provisions of this Agreement, all of the right, title and interest of the
Depositor in and to the Initial Mortgage Loans, including the outstanding
principal as of and interest due and accruing after the Initial Cut-Off Date on
such Mortgage Loans, and all other assets included or to be included in the
Trust Fund for the benefit of the Certificateholders and the Certificate
Insurer. In connection with such transfer and assignment, and pursuant to
Section 2.07 of the Unaffiliated Seller's Agreement, the Depositor does hereby
also irrevocably transfer, assign, set over and otherwise convey to the Trustee,
on behalf of the Trust, all of its rights under the Unaffiliated Seller's
Agreement, including, without limitation, its right to exercise the remedies
created by Sections 2.06 and 3.05 of the Unaffiliated Seller's Agreement for
defective documentation and for breaches of representations and warranties,
agreements and covenants of the Unaffiliated Seller and the Originators
contained in Sections 3.01, 3.02 and 3.03 of the Unaffiliated Seller's
Agreement.
Section 2.03 Purchase and Sale of Subsequent Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth in paragraph (b)
below and provided that the Original Pre-Funded Amount is greater than zero, in
consideration of the Trustee's delivery on the related Subsequent Transfer
Dates, if any, upon the order of the Depositor of all or a portion of the
balance of funds in the Pre-Funding Account (net of the Pre-Funding Earnings),
if any, the Depositor shall on any Subsequent Transfer Date sell, transfer,
assign, set over and convey to the Trustee without recourse but subject to terms
and provisions of this Agreement, all of the right, title and interest of the
Depositor in and to the Subsequent Mortgage Loans, including the outstanding
principal of and interest due on such Subsequent Mortgage Loans, and all other
assets included or to be included in the Trust Fund for the benefit of the
Certificateholders and the Certificate Insurer. In connection with such transfer
and assignment, and pursuant to Section 2.07 of the Unaffiliated Seller's
Agreement, the Depositor does hereby also irrevocably
40
transfer, assign, set over and otherwise convey to the Trustee, for the benefit
of the Certificateholders and the Certificate Insurer, all of its rights under
the Unaffiliated Seller's Agreement, including, without limitation, its right to
exercise the remedies arising under Sections 2.06 and 3.05 of the Unaffiliated
Seller's Agreement for defective documentation and for breaches of
representations and warranties, agreements and covenants of the Unaffiliated
Seller contained in Sections 3.01, 3.02 and 3.03 of the Unaffiliated Seller's
Agreement.
The amount released from the Pre-Funding Account with respect
to a transfer of Subsequent Mortgage Loans shall be one-hundred percent (100%)
of the aggregate Principal Balance of the Subsequent Mortgage Loans so
transferred as of the related Subsequent Cut-Off Date.
(b) The Subsequent Mortgage Loans, if any, and the other
property and rights related thereto described in paragraph (a) above shall be
transferred by the Depositor to the Trust only upon the satisfaction of each of
the following conditions on or prior to the related Subsequent Transfer Date:
(i) the Unaffiliated Seller shall have provided the
Trustee, the Rating Agencies and the Certificate Insurer with a timely
Addition Notice, which shall include a Mortgage Loan Schedule, listing
the Subsequent Mortgage Loans and shall provide any other information
reasonably requested by any of the foregoing with respect to the
Subsequent Mortgage Loans or required by this Agreement;
(ii) the Unaffiliated Seller shall have deposited in the
Collection Account all collections of (x) principal in respect of the
Subsequent Mortgage Loans received after the related Subsequent Cut-Off
Date and (y) interest due on the Subsequent Mortgage Loans after the
related Subsequent Cut-Off Date;
(iii) as of each Subsequent Transfer Date, the Depositor
was not insolvent nor will be made insolvent by such transfer nor is
the Depositor aware of any pending insolvency;
(iv) such addition will not result in a material adverse
tax consequence to the Trust or the Holders of the Certificates;
(v) the Pre-Funding Period shall not have terminated;
(vi) the Unaffiliated Seller shall have delivered to the
Trustee and the Certificate Insurer an Officer's Certificate confirming
the satisfaction of each condition precedent specified in this
paragraph (b) and that the Subsequent Mortgage Loans comply with the
provisions of this Section 2.03 and the terms of the Unaffiliated
Seller's Agreement, including each of the representations and
warranties made with respect thereto;
(vii) there shall have been delivered to the Certificate
Insurer, the Rating Agencies and the Trustee, Independent Opinions of
Counsel with respect to the transfer of the Subsequent Mortgage Loans
substantially in the form of the Opinions of Counsel
41
delivered to the Certificate Insurer and the Trustee on the Startup Day
(bankruptcy, corporate and tax opinions); and
(viii) the Originators, the Certificate Insurer, the
Unaffiliated Seller and the Depositor shall have delivered to the
Trustee an executed copy of a Subsequent Transfer Agreement,
substantially in the form of Exhibit T hereto.
(c) The obligation of the Trust to purchase the
Subsequent Mortgage Loans on a Subsequent Transfer Date is subject to the
requirements in Section 2.02 of the Unaffiliated Seller's Agreement.
(d) In connection with the transfer and assignment of any
Subsequent Mortgage Loans, the Depositor shall satisfy the document delivery
requirements set forth in Section 2.05.
(e) On each Subsequent Transfer Date, if any, upon
written instruction from the Unaffiliated Seller, the Trustee shall withdraw
from the Capitalized Interest Account and pay to the Unaffiliated Seller on such
Subsequent Transfer Date the Overfunded Interest Amount for such Subsequent
Transfer Date, as calculated by the Servicer with the cooperation of the
Unaffiliated Seller and subject to the approval of the Certificate Insurer.
(f) For any Subsequent Mortgage Loan that has a first Due
Date that occurs later than the last day of the Due Period in which the
Subsequent Mortgage Loan was sold to the Trust, on the Servicer Remittance Date
following such Subsequent Transfer Date, the Servicer will deposit into the
Distribution Account a Special Advance in the amount of 30 days' interest at the
Mortgage Interest Rate, net of the Servicing Fee, for the month in which the
Subsequent Transfer Date occurs and any month thereafter until, but not
including, the month in which the first Due Date occurs.
Section 2.04 Possession of Mortgage Files; Access to Mortgage
Files. (a) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage and the contents of the related Mortgage File related to each
Initial Mortgage Loan is vested, and on each Subsequent Transfer Date, if any,
the ownership of each Mortgage Note, the Mortgage and the contents of the
related Mortgage File related to each Subsequent Mortgage Loan will be vested in
the Trustee for the benefit of the Certificateholders and the Certificate
Insurer.
(b) Pursuant to Section 2.05 of the Unaffiliated Seller's
Agreement, the Depositor has delivered or caused to be delivered the Trustee's
Mortgage File related to each Mortgage Loan to the Trustee.
(c) The Collateral Agent, on behalf of the Trustee, will
be the custodian or may, with the consent of the Certificate Insurer, enter into
a custodial agreement pursuant to which the Trustee will appoint a custodian to
hold the Mortgage Files in trust for the benefit of all present and future
Certificateholders and the Certificate Insurer; provided, however, that the
custodian so appointed shall satisfy the eligibility requirements for the
Collateral Agent as described in Section 10.06 hereof, shall in no event be the
Depositor or the Servicer or any Person known to a Responsible Officer of the
Trustee to be an Affiliate of the Depositor or the Servicer and shall be
approved by the Certificate Insurer.
42
(d) The Collateral Agent shall afford the Depositor, the
Certificate Insurer, the Servicer and the Back-up Servicer reasonable access to
all records and documentation regarding the Mortgage Loans relating to this
Agreement, such access being afforded upon reasonable request and during normal
business hours at the offices of the Collateral Agent at customary charges.
Section 2.05 Delivery of Mortgage Loan Documents. (a) In
connection with the transfer and assignment of the Mortgage Loans, the Depositor
does hereby with respect to the Initial Mortgage Loans, and will, on or before
each Subsequent Transfer Date, if any, with respect to Subsequent Mortgage
Loans, deliver or cause to be delivered to the Collateral Agent, on behalf of
the Trustee the following documents or instruments with respect to each Mortgage
Loan so transferred or assigned:
(i) the original Mortgage Note, endorsed without recourse
in blank by the related Originator, including all intervening
endorsements showing a complete chain of endorsement;
(ii) the related original Mortgage with evidence of
recording indicated thereon and the original recorded power of attorney
or a copy thereof certified by the applicable recording office;
(iii) the original recorded Assignment of Mortgage, or copy
thereof certified by the applicable recording office, if any, showing a
complete chain of assignment from the original mortgagee/secured party
of the related Mortgage Loan to the related Originator (which
assignment may, at such Originator's option, be combined with the
assignment referred to in subpart (iv) hereof);
(iv) an Assignment of Mortgage in recordable form (which,
if acceptable for recording in the relevant jurisdiction, may be
included in a blanket assignment or assignments) of each Mortgage from
the related Originator to the Trustee;
(v) originals of all assumption, modification and
substitution agreements in those instances where the terms or
provisions of a Mortgage or Mortgage Note have been modified or such
Mortgage or Mortgage Note has been assumed; and
(vi) an original title insurance policy (or (A) a copy of
the title insurance policy, or (B) a binder thereof or copy of such
binder together with a certificate from the related Originator that the
original Mortgage has been delivered to the title insurance company
that issued such binder for recordation).
In instances where the original recorded Mortgage and any
original recorded Assignment of Mortgage thereof pursuant to clause (iii) above
cannot be delivered by the Depositor to the Collateral Agent on behalf of the
Trustee prior to or concurrently with the execution and delivery of this
Agreement (or, with respect to any Subsequent Mortgage Loans, prior to or on the
Subsequent Transfer Date), due to a delay in connection with recording, the
Depositor may:
43
(x) in lieu of delivering such original recorded
Mortgage, deliver to the Collateral Agent on behalf of the Trustee a
copy thereof provided that the related Originator certifies that the
original Mortgage has been delivered to a title insurance company for
recordation after receipt of its policy of title insurance or binder
therefor; and
(y) in lieu of delivering the original recorded
Assignment of Mortgage, deliver to the Collateral Agent on behalf of
the Trustee a copy of the Assignment of Mortgage certified by the
related Originator.
The Trustee shall promptly upon receipt thereof, with respect
to each Mortgage Note described in (i) above and each Assignment of Mortgage
described in (iv) above, endorse such Mortgage Note and Assignment of Mortgage
as follows: "JPMorgan Chase Bank, as Trustee under the Pooling and Servicing
Agreement dated as of March 1, 2003, ABFS Mortgage Loan Trust 2003-1."
As promptly as practicable, but in any event within thirty
(30) days from the Closing Date, or any Subsequent Transfer Date, as applicable,
the related Originator shall cause to be recorded, at the related Originator's
expense, in the appropriate public office for real property records, the
Assignments of Mortgages to the Trustee.
All original documents relating to the Mortgage Loans which
are not delivered to the Trustee, as permitted by Section 2.05(a) of the
Unaffiliated Seller's Agreement and this Section 2.05(a), are and shall be held
by the related Originator, the Unaffiliated Seller or the Servicer in trust for
the benefit of the Trustee on behalf of the Certificateholders and the
Certificate Insurer.
(b) Within thirty (30) days following delivery of the
Mortgage Files to the Collateral Agent on behalf of the Trustee, the Collateral
Agent will review each Mortgage File to ascertain that all required documents
set forth in Section 2.05(a) (other than clause (v) thereof) have been executed
and received, and that such documents relate to the Mortgage Loans identified on
the Mortgage Loan Schedule, and in so doing the Trustee may rely on the
purported due execution and genuineness of any signature thereon. If within such
30-day period (or, with respect to any Qualified Substitute Mortgage Loan,
within thirty (30) days after the assignment thereof) the Collateral Agent on
behalf of the Trustee finds any document constituting a part of a Mortgage File
not to have been executed or received or to be unrelated to the Mortgage Loans
identified in the Mortgage Loan Schedule, the Collateral Agent shall promptly
notify the Certificate Insurer, the Servicer, the Back-up Servicer and the
Trustee, and the Servicer shall have a period of sixty (60) days after such
notice within which to correct or cure any such defect. Each original recorded
Assignment of Mortgage shall be delivered to the Trustee within ten (10) days
following the date on which it is returned to the Servicer by the office with
which such Assignment of Mortgage was filed for recording and within ten (10)
days following receipt by the Trustee, the Trustee shall review such Assignment
of Mortgage to confirm the information specified above with respect to the
documents constituting the Mortgage File. Upon receipt by the Trustee of the
recorded assignment such recorded assignment shall become part of the Mortgage
File. The Trustee shall notify the Servicer of any defect in such assignment
based on such review. The Servicer shall have a period of 60 days following such
notice to correct or cure
44
such defect. In the event that the Servicer fails to record an Assignment of
Mortgage as herein provided the Trustee shall, at the Servicer's expense, use
reasonable efforts to prepare and, if required hereunder, file such assignments
for recordation in the appropriate real property or other records and the
Servicer hereby appoints the Collateral Agent, on behalf of the Trustee as its
attorney-in-fact with full power and authority acting in its stead for the
purpose of such preparation, execution and filing.
(c) It is intended that the conveyance of the Mortgage
Loans and other property by the Depositor to the Trustee as provided in this
Section 2.05 and Section 2.02 be, and be construed as, a sale of the Mortgage
Loans and such other property by the Depositor to the Trustee for the benefit of
the Certificateholders and the Certificate Insurer. It is, further, not intended
that such conveyance be deemed a pledge of the Mortgage Loans or such other
property by the Depositor to the Trustee to secure a debt or other obligation of
the Depositor. However, in the event that the Mortgage Loans or any of such
other property are held to be property of the Depositor, or if for any reason
this Agreement is held or deemed to create a security interest in the Mortgage
Loans or any of such other property, then it is intended that: (i) this
Agreement shall also be deemed to be a security agreement within the meaning of
the Uniform Commercial Code; (ii) the conveyance provided for in this Section
shall be deemed to be a grant by the Depositor to the Trustee of a security
interest in all of the Depositor's right, title and interest in and to the
Mortgage Loans, the Trust Fund and such other property and all amounts payable
to the holders of the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including, without limitation,
all amounts from time to time held or invested in the Distribution Account,
whether in the form of cash, instruments, securities or other property; (iii)
the possession by the Trustee or its agent of the Mortgage Notes and such other
items of property as constitute instruments, money, negotiable documents or
chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to the Uniform Commercial
Code; and (iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law. The
Depositor and the Trustee shall, to the extent consistent with this Agreement,
take such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans, the Trust Fund or
any of such other property, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.
(d) Without diminution of the requirements of Sections
2.04(c) and this Section 2.05, all original documents relating to the Mortgage
Loans that are not delivered to the Trustee, are and shall be held by the
Servicer in trust for the benefit of the Trustee on behalf of the
Certificateholders and the Certificate Insurer. In the event that any such
original document is required pursuant to the terms of this Section 2.05 to be a
part of a Mortgage File, such document shall be delivered promptly to the
Trustee pursuant to the Unaffiliated Seller's Agreement. In acting as custodian
of any such original document, the Servicer agrees further that it does not and
will not have or assert any beneficial ownership interest in the Mortgage Loans
or the Mortgage Files. Promptly upon the Depositor's and the Trust's acquisition
thereof and the Servicer's
45
receipt thereof, the Servicer on behalf of the Trust shall ▇▇▇▇ conspicuously
each original document not delivered to the Trustee, and the Unaffiliated
Seller's master data processing records evidencing each Mortgage Loan with a
legend, acceptable to the Trustee, evidencing that the Trust has purchased the
Mortgage Loans and all right and title thereto and interest therein pursuant to
the Unaffiliated Seller's Agreement and this Agreement.
(e) In connection with the execution of this Agreement,
the Depositor shall deliver to the Trustee an executed copy of the Unaffiliated
Seller's Agreement.
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Collateral Agent. (a) The Trustee agrees to
execute and deliver to the Depositor, the Back-up Servicer, the Servicer, the
Certificate Insurer and the Unaffiliated Seller on or prior to the Closing Date
an acknowledgement of receipt of the Certificate Insurance Policy, in the form
attached as Exhibit R hereto, and the Collateral Agent agrees to execute and
deliver to the Depositor, the Back-up Servicer, the Servicer, the Certificate
Insurer and the Unaffiliated Seller, on or prior to the Closing Date or any
Subsequent Transfer Date an acknowledgement of receipt of, with respect to each
Mortgage Loan transferred on such date, the original Mortgage Note (with any
exceptions noted), and the Trustee declares that it will hold or cause the
Collateral Agent, on its behalf to hold such documents and any amendments,
replacements or supplements thereto, as well as any other assets included in the
definition of Trust Fund and delivered to the Trustee or the Collateral Agent on
its behalf, as Trustee in trust upon and subject to the conditions set forth
herein for the benefit of the Certificateholders and the Certificate Insurer.
The Collateral Agent agrees, for the benefit of the Certificateholders and the
Certificate Insurer, to review (or cause to be reviewed) each Trustee's Mortgage
File within thirty (30) days after the Closing Date (with respect to the Initial
Mortgage Loans), within thirty (30) days after receipt by the Collateral Agent,
on behalf of the Trustee, thereof (with respect to Qualified Substitute Mortgage
Loans) or any Subsequent Transfer Date (with respect to the Subsequent Mortgage
Loans), as applicable, and to deliver to the Unaffiliated Seller, the Servicer,
the Back-up Servicer, the Certificate Insurer and the Depositor a certification
in the form attached hereto as Exhibit I (the "Initial Certification")
certifying that, as to each Mortgage Loan listed in the related Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), and unless otherwise noted, (i) all documents required to be
delivered to it pursuant to Section 2.05 hereof (other than the items listed in
clause (a)(v) thereof) are in its possession, (ii) each such document has been
reviewed by it and has not been mutilated, damaged, torn or otherwise physically
altered (handwritten additions, changes or corrections shall not constitute
physical alteration if initialed by the Mortgagor), appears regular on its face
and relates to such Mortgage Loan, and (iii) based on its examination and only
as to the foregoing documents, the information set forth on the Mortgage Loan
Schedule as to the information set forth in (i), (ii), (v) and (vi) of the
definition of "Mortgage Loan Schedule" set forth herein accurately reflects the
information set forth in the Trustee's Mortgage File delivered on such date. The
Collateral Agent, on behalf of the Trustee shall be under no duty or obligation
to inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are genuine, enforceable, or appropriate for
the represented purpose or that they are other than what they purport to be on
their face.
46
(b) Within ninety (90) days of the Closing Date, with
respect to the Initial Mortgage Loans, and within ninety (90) days of any
Subsequent Transfer Date, with respect to the Subsequent Mortgage Loans
transferred on such date, the Collateral Agent shall deliver (or cause to be
delivered) to the Servicer, the Back-up Servicer, the Unaffiliated Seller, the
Depositor, the Rating Agencies and the Certificate Insurer a final certification
in the form attached hereto as Exhibit J (the "Final Certification") certifying
that, as to each Mortgage Loan listed in the related Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as not covered by such certification), and
unless otherwise noted, (i) all documents required to be delivered to it
pursuant to Section 2.05 (other than the items listed in clause (a)(v) thereof)
are in its possession, (ii) each such document has been reviewed by it and has
not been mutilated, damaged, torn or otherwise physically altered (handwritten
additions, changes or corrections shall not constitute physical alteration if
initialed by the Mortgagor), appears regular on its face and relates to such
Mortgage Loan, and (iii) based on its examination and only as to the foregoing
documents, the information set forth in (i), (ii), (v) and (vi) of the
definition of "Mortgage Loan Schedule" set forth herein accurately reflects the
information set forth in the Trustee's Mortgage File delivered on such date.
(c) If the Collateral Agent on behalf of the Trustee
during the process of reviewing the Trustee's Mortgage Files finds any document
constituting a part of a Trustee's Mortgage File which is not executed, has not
been received, is unrelated to the Mortgage Loan identified in the related
Mortgage Loan Schedule, or does not conform to the requirements of Section 2.05
or the description thereof as set forth in the related Mortgage Loan Schedule,
the Trustee or the Collateral Agent, as applicable, shall promptly so notify the
Servicer, the Back-up Servicer, the Certificate Insurer and the Unaffiliated
Seller. In performing any such review, the Collateral Agent on behalf of the
Trustee may conclusively rely on the Unaffiliated Seller as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Collateral Agent or the Trustee's review of the Mortgage
Files is limited solely to confirming that the documents listed in Section 2.05
(other than those listed in clause (v) thereof) have been executed and received
and relate to the Mortgage Files identified in the related Mortgage Loan
Schedule. The Collateral Agent on behalf of the Trustee shall have no
responsibility for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form, whether any document has been recorded in accordance with the requirements
of any applicable jurisdiction, or whether a blanket assignment is permitted in
any applicable jurisdiction. Pursuant to the Unaffiliated Seller's Agreement,
the Unaffiliated Seller and the Originators have agreed to use reasonable
efforts to cause to be remedied a material defect in a document constituting
part of a Mortgage File of which it is so notified by the Collateral Agent or
the Trustee. If, however, within sixty (60) days after the Collateral Agent or
the Trustee's notice to it respecting such defect the Unaffiliated Seller has
not caused to be remedied the defect and the defect materially and adversely
affects the value of, or the interest of the Certificateholders in the related
Mortgage Loan or the interest of the Certificate Insurer, the Unaffiliated
Seller and the Originators will be obligated, pursuant to the Unaffiliated
Seller's Agreement, to either (i) substitute in lieu of such Mortgage Loan a
Qualified Substitute Mortgage Loan in the manner and subject to the conditions
set forth in Section 3.03 or (ii) purchase such Mortgage Loan at a purchase
price equal to the Principal Balance of such Mortgage Loan as of the date of
purchase, plus all accrued and unpaid interest on such Principal Balance
computed at the Mortgage Interest Rate, net of the Servicing Fee if the
47
Unaffiliated Seller or an Originator, as applicable, is the Servicer, plus the
amount of any unreimbursed Servicing Advances made by the Servicer with respect
to such Mortgage Loan, which purchase price shall be deposited in the Collection
Account on the next succeeding Servicer Remittance Date, after deducting
therefrom any amounts received in respect of such repurchased Mortgage Loan or
Loans and being held in the Collection Account for future distribution to the
extent such amounts have not yet been applied to principal or interest on such
Mortgage Loan (the "Loan Repurchase Price"). For purposes of calculating the
Interest Remittance Amount and the Principal Remittance Amount, any Loan
Repurchase Price or Substitution Adjustment that is paid shall be deemed
deposited in the Distribution Account in the Due Period preceding such Servicer
Remittance Date.
(d) Upon receipt by the Trustee of a certification of a
Servicing Officer of such substitution or purchase and, in the case of a
substitution, upon receipt of the related Trustee's Mortgage File, and the
deposit of the amounts described above in the Collection Account (which
certification shall be in the form of Exhibit M hereto), the Trustee shall
release to the Servicer for release or cause the Collateral Agent to release to
the Unaffiliated Seller the related Trustee's Mortgage File and shall execute,
without recourse, and deliver such instruments of transfer furnished by the
Unaffiliated Seller as may be necessary to transfer such Mortgage Loan to the
Unaffiliated Seller. The Trustee shall notify the Certificate Insurer if the
Unaffiliated Seller fails to repurchase or substitute for a Mortgage Loan in
accordance with the foregoing.
Section 2.07 Designations under REMIC Provisions; Designation
of Startup Day. (a) REMIC I will consist of all of the assets of the Trust Fund
(other than the Pre-Funding Account, if any, the Capitalized Interest Account,
if any, the Net WAC Cap Carryover Fund, the Special Reserve Account and the
Interest Rate Hedge Payment Fund) and will be evidenced by the Class I-1
Interest and the Class Q-1 Interest (collectively, the "REMIC I Regular
Interests") which will be uncertificated and will represent the "regular
interests" in REMIC I. REMIC II will consist of the REMIC I Regular Interests
and will be evidenced by the Class I-2 Interest, the Class AIO-2i, AIO-2ii,
AIO-2iii, AIO-2iv, AIO-2v, AIO-2vi, AIO-2vii, AIO-2viii, AIO-2ix and AIO-2x
Interests (collectively, the Class AIO-2 Interests) and the Class Q-2 Interest
(collectively, the "REMIC II Regular Interests") which will be uncertificated
and will represent the "regular interests" in REMIC II. REMIC III will consist
of the REMIC II Regular Interests and will be evidenced by the Class I-3
Interest, the Class A-3 Interest, the Class AIO-3 Interest, the Class M1-3
Interest, the Class M2-3 Interest, the Class M3-3 Interest and the Class Q-3
Interest (collectively, the "REMIC III Regular Interests") which will be
uncertificated and will represent the "regular interests" in REMIC III. The
Class R-1 Interest, the Class R-2 Interest and the Class R-3 Interest will
represent the sole class of "residual interest" in each of REMIC I, REMIC II and
REMIC III, respectively. The Trustee will hold the REMIC I Regular Interests,
the REMIC II Regular Interests and the REMIC III Regular Interests. The Master
REMIC will consist of the REMIC III Regular Interests and will be evidenced by
Class A (other than the Net WAC Cap Carryover Right of the Class A
Certificates), Class A-IO, Class I, Class M-1, Class M-2, Class M-3 (for each of
Class ▇-▇, ▇-▇ ▇▇▇ ▇-▇, other than the Net WAC Cap Carryover Right and the
Interest Rate Hedge Payment Right of the Class M Certificates) and Class X
Certificates (collectively, the "Master REMIC Regular Interests") which will
represent the "regular interests" in the Master REMIC (also known as REMIC IV).
The Class R-4 Interest will represent the sole class of "residual interest" in
the Master REMIC. The Class R Certificates will represent the beneficial
ownership of the Class ▇-▇, ▇-▇, ▇-▇ and R-4 Interests. The Final
48
Scheduled Maturity Date for each of the REMIC I Regular Interests, the REMIC II
Regular Interests (other than Class I-2), the REMIC III Regular Interests (other
than Class AIO-3 and Class I-3) and the Master REMIC Regular Interests (other
than the Class A-IO Certificate and the Class I Certificate) shall be the
Distribution Date in August, 2033. The Final Scheduled Maturity Date for the
Class I, Class I-2 and Class I-3 Interests shall be the Distribution Date in
September, 2005 and the Final Scheduled Maturity Date for the Class A-IO
Certificate and Class AIO-3 Interest shall be the Distribution Date in
September, 2005.
(b) The Master REMIC Regular Interests and the Class R-4
Interest shall have the initial principal balances and Pass-Through Rates set
forth in the following table:
Class Initial Principal Balance Pass-Through Rate
----- ------------------------- -----------------
Class A (1) $387,000,000 (4)
Class A-IO (3) (9)
Class M-1 (2) 25,875,000 (5)
Class M-2 (2) 23,625,000 (5)
Class M-3 (2) 13,500,000 (5)
Class X $ 0(6) (7)
Class I (3) (9)
Class R/R-4 (8) (8)
(1) The Class A Certificates represent two separate investments:
(i) a regular interest in a REMIC (a "Regular Interest")
represented by the Class A Certificates, without the Net WAC
Cap Carryover Rights and (ii) the Net WAC Cap Carryover
Rights. Only the Regular Interests will be treated as regular
interests in the Master REMIC.
(2) The Class M Certificates represent five separate investments:
(i) three Regular Interests represented by the Class M-1,
Class M-2 and Class M-3 Components, without the Net WAC Cap
Carryover Rights or Interest Rate Hedge Payment Rights, (ii)
the Net WAC Cap Carryover Rights and (iii) the Interest Rate
Hedge Payment Rights. In the event that separate Class M-1,
Class M-2 and Class M-3 Certificates are issued, each such
Class will represent three separate investments: (i) a Regular
Interest represented by such Class, without the Net WAC Cap
Carryover Rights or Interest Rate Hedge Payment Rights, (ii)
the Net WAC Cap Carryover Rights and (iii) the Interest Rate
Hedge Payment Rights. In each case, only the Regular Interests
will be treated as regular interests in the Master REMIC.
(3) On the first Distribution Date through the Distribution Date
in September, 2005, the Class A-IO Certificates will have a
notional balance equal to the notional balance of Class AIO-3,
and for each Distribution Date thereafter, $0. On the first
Distribution Date through the Distribution Date in September,
2005, the Class I Certificates will have a notional balance
equal to the notational balance of Class I-3, and for each
Distribution Date thereafter, $0.
49
(4) With respect to any Distribution Date prior to the Clean-up
Call Date, the lesser of (1) 3.78% per annum and (2) the REMIC
III Net WAC Cap for such Distribution Date. With respect to
any Distribution Date after the Clean-up Call Date, the lesser
of (1) 4.28% per annum and (2) the REMIC III Net WAC Cap for
such Distribution Date.
(5) With respect to any Distribution Date prior to the Clean-up
Call Date, the lesser of (1) LIBOR plus 1.50 per annum, (2)
the REMIC III Net WAC Cap for such Distribution Date and (3)
prior to the termination of the Interest Rate Hedge Agreement,
5.50%. With respect to any Distribution Date after the
Clean-up Call Date, the lesser of (1) LIBOR plus 2.25% per
annum, (2) the REMIC III Net WAC Cap for such Distribution
Date and (3) prior to the termination of the Interest Rate
Hedge Agreement, 6.25%.
(6) The Class X has an initial principal balance of $68, but will
not earn interest on its principal balance. Any principal on
the Class X Certificates will be paid after all other regular
interests have been paid in full. The Class X Certificates
have a notional balance, on which the Class X Certificates
will earn interest, equal to the Aggregate Principal Balance
of the Mortgage Loans.
(7) The Pass-Through Rate of the Class X Certificates will be the
excess of: (i) the REMIC III Net WAC Cap over (ii) the product
of: (A) 10,000 and (B) the weighted average of the
Pass-Through Rates on the REMIC III Regular Interests (other
than the Class AIO-3 and I-3), where the Class Q-3 is subject
to a cap equal to zero and the Class A-3, Class M1-3, Class
M2-3 and Class M3-3 are each subject to a cap equal to the
Pass-Through Rate on its Corresponding Class. With respect to
any Distribution Date, interest that so accrues on the
notional principal balance of the Class X Certificates shall
be deferred in an amount equal to the Overcollateralization
Increase Amount on such Distribution Date. Such deferred
interest shall not itself bear interest.
(8) The Class R Certificates will represent the beneficial
ownership of the Class ▇-▇, ▇-▇, ▇-▇ and R-4 Interests. The
Class R-4 Interest does not have a principal balance or a
Pass-Through Rate but is entitled to any remaining
distributions of principal and interest after the Master REMIC
Regular Interests have been paid in full.
(9) On each Distribution Date up to and including the Distribution
Date in September, 2005, a per annum rate equal to 4.00% and
(ii) thereafter, a Pass-Through Rate equal to 0%.
50
(c) The REMIC III Regular Interests and the Class R-3
Interest shall have the initial principal balances, Pass-Through Rates and
Corresponding Classes of Certificates set forth in the following table:
Corresponding
REMIC Initial Principal Class of Master
Interests Balance Pass-Through Rate REMIC Interest
--------- ------------------------ ----------------- --------------
Q-3 $449,955,068 (1) N/A
A-3 $ 38,700 (1) A
AIO-3 (2) (3) A-IO
M1-3 $ 2,587.50 (1) ▇▇
▇▇-▇ $ 2,362.50 (1) ▇▇
▇▇-▇ $ 1,350 (1) M3
I-3 $37,655,100 notional (5) (3) I
R-3 (4) (4) N/A
(1) On any Distribution Date, a Pass-Through Rate equal to the
REMIC III Net WAC Cap.
(2) The Class AIO-3 will have a notional balance equal to (a) on
the first Distribution Date through the Distribution Date in
June 2003, the sum of the principal balances of Class AIO-2i,
AIO-2ii, AIO-2iii, AIO-2iv, AIO-2v, AIO-2vi, AIO-2vii,
AIO-2viii, AIO-2ix and AIO-2x; (b) from the Distribution Date
in July 2003 through the Distribution Date in September 2003,
the sum of the principal balances of AIO-2ii, AIO-2iii,
AIO-2iv, AIO-2v, AIO-2vi, AIO-2vii, AIO-2viii, AIO-2ix and
AIO-2x; (c) from the Distribution Date in October 2003 through
the Distribution Date in December 2003, the sum of the
principal balances of AIO-2iii, AIO-2iv, AIO-2v, AIO-2vi,
AIO-2vii, AIO-2viii, AIO-2ix and AIO-2x; (d) from the
Distribution Date in January 2004 through the Distribution
Date in March 2004, the sum of the principal balances of
AIO-2iv, AIO-2v, AIO-2vi, AIO-2vii, AIO-2viii, AIO-2ix and
AIO-2x; (e) from the Distribution Date in April 2004 through
the Distribution Date in June 2004, the sum of the principal
balances of Class AIO-2v, AIO-2vi, AIO-2vii, AIO-2viii,
AIO-2ix and AIO-2x; (f) from the Distribution Date in July
2004 through the Distribution Date in September 2004, the sum
of the principal balances of AIO-2vi, AIO-2vii, AIO-2viii,
AIO-2ix and AIO-2x; (g) from the Distribution Date in October
2004 through the Distribution Date in December 2004, the sum
of the principal balances of AIO-2vii, AIO-2viii, AIO-2ix and
AIO-2x; (h) from the Distribution Date in January 2005 through
the Distribution Date in March 2005, the sum of the principal
balances of AIO-2viii, AIO-2ix and AIO-2x; (i) from the
Distribution Date in April 2005 through the Distribution Date
in June 2005, the sum of the principal balances of AIO-2ix and
AIO-2x; (j) from the Distribution Date in July 2005 through
the Distribution Date in
51
September 2005, the principal balance of Class AIO-2x; and (k)
on each Distribution Date thereafter, $0.
(3) On each Distribution Date up to and including the Distribution
Date in September 2005, a per annum rate equal to 4.0% and
(ii) thereafter, a Pass Through Rate equal to 0%.
(4) The Class R-3 Interest does not have a principal balance or a
Pass-Through Rate but is entitled to any remaining
distributions of principal and interest after the REMIC II
Regular Interests have been paid in full.
(5) The Class I-3 notional balance is equal to the notional
balance of Class I-2.
On each Distribution Date, 0.01% of the increase in the
Overcollateralized Amount will be payable as a reduction of the principal
balances of Class A-3, Class M1-3, Class M2-3 and Class M3-3 (in the order and
amount of such reduction to the principal balance of each classes' Corresponding
Class) and will be accrued and added to the principal balance of the Class Q-3.
The remaining 99.99% increase in the Overcollateralized Amount will be allocable
to Class Q-3.
On each Distribution Date, the Principal Remittance Amount
shall be allocated 99.99% to Class Q-3 and 0.01% to Class A-3, Class M1-3, Class
M2-3 and Class M3-3 (in the order and amount of reductions to the principal
balances of each classes' Corresponding Class) until paid in full.
Notwithstanding the above, payments allocated to the Class X Certificates that
result in the reduction of the Overcollateralized Amount shall be allocated to
the Class Q-3 Interest (until paid in full). Liquidated Loan Losses shall be
applied so that after all distributions have been made on each Distribution Date
the principal balances of the Class ▇-▇, ▇▇▇▇▇ ▇▇-▇, ▇▇-▇ and M3-3 Interests are
each equal to 0.01% of the principal balance of its Corresponding Class and the
remainder shall be allocated to Class Q-3.
(d) The REMIC II Regular Interests and the Class R-2
Interest shall have the initial principal balances, Pass-Through Rates and
Corresponding Classes of Certificates set forth in the following table:
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Corresponding
REMIC Initial Principal Pass-Through Class of Master
Interests Balance Rate REMIC Interest
--------- ------------------------ ------------ ---------------
Q-2 $331,875,068 (1) N/A
AIO-2i $ 562,500 (1) A-IO
AIO-2ii $ 5,456,250 (1) A-IO
AIO-2iii $ 6,131,250 (1) A-IO
AIO-2iv $ 7,256,250 (1) A-IO
AIO-2v $ 6,356,250 (1) A-IO
AIO-2vi $ 1,012,500 (1) A-IO
AIO-2vii $ 19,012,500 (1) A-IO
AIO-2viii $ 14,962,500 (1) A-IO
AIO-2ix $ 8,437,500 (1) A-IO
AIO-2x $ 48,937,500 (1) A-IO
I-2 $37,655,100 notional (4) (3) I
R-2 (2) (2) N/A
(1) On any Distribution Date, a Pass-Through Rate equal to the
REMIC II Net WAC Cap.
(2) The Class R-2 Interest does not have a principal balance or a
Pass-Through Rate but is entitled to any remaining
distributions of principal and interest after the REMIC II
Regular Interests have been paid in full.
(3) On each Distribution Date up to and including the Distribution
Date in September, 2005, a per annum rate equal to 4.00% and
(ii) thereafter, a Pass-Through Rate equal to 0%.
(4) The Class I-2 notional amount is equal to the Class I-1
principal balance.
On each Distribution Date, the Principal Remittance Amount and
losses will be allocated to Class Q-2 until the Class Q-2 is paid in full or
eliminated by such losses; and thereafter, such amounts will be allocated to the
Class AIO-2i, AIO-2ii, AIO-2iii, AIO-2iv, AIO-2v, AIO-2vi, AIO-2vii, AIO-2viii,
AIO-2ix and AIO-2x in such order until each is paid in full or eliminated.
(e) The REMIC I Regular Interests and the Class R-1
Interest shall have the Initial Principal Balances and Pass-Through Rates set
forth in the following table:
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REMIC Initial Principal Pass-Through
Interests Balance Rate
--------- ----------------- ------------
I-1 $ 37,655,100 (1)
Q-1 $412,344,968 (1)
R-1 (2) (2)
(1) On any Distribution Date, a Pass-Through Rate equal to the Net
Weighted Average Mortgage Interest Rate.
(2) The Class R-1 Interest does not have a principal balance or a
Pass-Through Rate but is entitled to any remaining
distributions of principal and interest after the REMIC I
Regular Interests have been paid in full.
(f) The REMIC II Net WAC Cap equals the weighted average
of Q-1 and I-1, where I-1 is first reduced by 4% through the Distribution Date
in September, 2005. The REMIC III Net WAC Cap is the weighted average of the Q-2
and AIO-2 Interests where each of the AIO-2 Interests is reduced by 4% for the
following periods:
REMIC
Interests Period
--------- ------
AIO-2x through September, 2005
AIO-2ix through June, 2005
AIO-2viii through March, 2005
AIO-2vii through December, 2004
AIO-2vi through September, 2004
AIO-2v through June, 2004
AIO-2iv through March, 2004
AIO-2iii through December, 2003
AIO-2ii through September, 2003
AIO-2i through June, 2003
(g) The Closing Date will be the "startup day" of each
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
Section 2.08 Execution of Certificates. The Trustee
acknowledges the assignment to it of the Mortgage Loans and the delivery of the
Trustee's Mortgage Files relating thereto to it and, concurrently with such
delivery, has executed, authenticated and delivered to or upon the order of the
Depositor, in exchange for the Mortgage Loans, the Trustee's Mortgage Files and
the other assets included in the definition of Trust Fund, Certificates duly
authenticated by the Trustee in Authorized Denominations evidencing the entire
ownership of the Trust Fund.
Section 2.09 Application of Principal and Interest. In the
event that Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than
the Principal Balance of the related Mortgage Loan plus accrued interest
thereon, or any Mortgagor makes a partial payment of any Monthly Payment due on
a Mortgage Loan, such Net Liquidation Proceeds or partial payment shall be
applied as provided in the related Mortgage Note, and if not so provided, first
to interest accrued at the Mortgage Interest Rate and then to principal.
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Section 2.10 Grant of Security Interest. (a) Except with
respect to the REMIC Provisions, it is the intention of the parties hereto that
the conveyance by the Depositor of the Trust Fund to the Trustee on behalf of
the Trust shall constitute a purchase and sale of such Trust Fund and not a
loan. In the event, however, that a court of competent jurisdiction were to hold
that the transaction evidenced hereby constitutes a loan and not a purchase and
sale, it is the intention of the parties hereto that this Agreement shall
constitute a security agreement under applicable law, and that the Depositor
shall be deemed to have granted to the Trustee, on behalf of the Trust, a first
priority perfected security interest in all of the Depositor's right, title and
interest in, to and under the Trust Fund. The conveyance by the Depositor of the
Trust Fund to the Trustee on behalf of the Trust shall not constitute and is not
intended to result in an assumption by the Trustee or any Certificateholder of
any obligation of the Unaffiliated Seller or any other Person in connection with
the Trust Fund.
(b) The Depositor and the Servicer shall take no action
inconsistent with the Trust's ownership of the Trust Fund and each shall
indicate or shall cause to be indicated in its records and records held on its
behalf that ownership of each Mortgage Loan and the assets in the Trust Fund are
held by the Trustee on behalf of the Trust. In addition, the Depositor and the
Servicer shall respond to any inquiries from third parties with respect to
ownership of a Mortgage Loan or any other asset in the Trust Fund by stating
that it is not the owner of such asset and that ownership of such Mortgage Loan
or other Trust Fund asset is held by the Trustee on behalf of the Trust.
Section 2.11 Further Action Evidencing Assignments. (a) The
Servicer agrees that, from time to time, at its expense, it shall cause the
Unaffiliated Seller (and the Depositor on behalf of itself also agrees that it
shall), promptly to execute and deliver all further instruments and documents,
and take all further action, that may be necessary or appropriate, or that the
Servicer, the Certificate Insurer, the Collateral Agent or the Trustee may
reasonably request, in order to perfect, protect or more fully evidence the
transfer of ownership of the Trust Fund or to enable the Trustee to exercise or
enforce any of its rights hereunder. Without limiting the generality of the
foregoing, the Servicer and the Depositor will, upon the request of the
Servicer, the Certificate Insurer, the Collateral Agent or the Trustee, execute
and file (or cause to be executed and filed) such real estate filings, financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or appropriate.
(b) The Depositor hereby grants to the Servicer and the
Trustee powers of attorney to execute all documents on its behalf under this
Agreement and the Unaffiliated Seller's Agreement as may be necessary or
desirable to effectuate the foregoing.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01 Representations of the Servicer and the
Unaffiliated Seller. The Servicer and the Unaffiliated Seller hereby represent
and warrant to the Collateral Agent, the Trustee, the Depositor, the Back-up
Servicer, the Certificate Insurer and the Certificateholders as of the Closing
Date and during the term of this Agreement that:
55
(a) Each of the Unaffiliated Seller, the Servicer and the
Subservicers is a corporation duly organized, validly existing and in
good standing under the laws of their respective states of
incorporation and has the corporate power to own its assets and to
transact the business in which it is currently engaged. Each of the
Unaffiliated Seller, the Servicer and the Subservicers is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it or the performance
of its obligations hereunder requires such qualification and in which
the failure so to qualify could reasonably be expected to have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Unaffiliated Seller, the Servicer
or the Subservicers or the performance of their respective obligations
hereunder or under the Unaffiliated Seller's Agreement;
(b) The Unaffiliated Seller and the Servicer each has the
power and authority to make, execute, deliver and perform this
Agreement and all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement. When
executed and delivered, this Agreement will constitute the legal, valid
and binding obligation of the Unaffiliated Seller and the Servicer,
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting the rights of
creditors generally and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);
(c) Neither the Unaffiliated Seller nor the Servicer is
required to obtain the consent of any other party or any consent,
license, approval or authorization from, or registration or declaration
with, any governmental authority, bureau or agency which consent
already has not been obtained in connection with the execution,
delivery, performance, validity or enforceability of this Agreement,
except such as have been obtained prior to the Closing Date;
(d) The execution, delivery and performance of this
Agreement by the Unaffiliated Seller and the Servicer will not violate
any provision of any existing law or regulation or any order or decree
of any court or the Articles of Incorporation or Bylaws of the
Unaffiliated Seller or the Servicer, respectively, or constitute a
breach of any mortgage, indenture, contract or other agreement to which
the Unaffiliated Seller or the Servicer, respectively, is a party or by
which it may be bound;
(e) There is no action, suit, proceeding or investigation
pending or threatened against the Servicer, the Unaffiliated Seller or
the Subservicers which, either in any one instance or in the aggregate,
is, likely to result in any material adverse change in the business,
operations, financial condition, properties, or assets of the Servicer,
the Unaffiliated Seller or the Subservicers, or in any material
impairment of the right or ability of any of them to carry on its
business substantially as now conducted, or in any material liability
on the part of any of them, or which would draw into question the
validity of this Agreement, the Certificates, or the Mortgage Loans or
of any action taken or to be taken in connection with the obligations
of the Unaffiliated Seller or the Servicer
56
contemplated herein or therein, or which would be likely to impair
materially the ability of the Unaffiliated Seller or the Servicer to
perform its obligations hereunder;
(f) Neither this Agreement nor any statement, report, or
other document furnished or to be furnished by the Servicer, the
Unaffiliated Seller or the Subservicer pursuant to this Agreement or
the Insurance and Indemnity Agreement or in connection with the
transactions contemplated hereby, including, without limitation, the
sale or placement of the Certificates, contains any untrue statement of
fact provided by or on behalf of the Unaffiliated Seller or the
Servicer or omits to state a fact necessary to make the statements
provided by or on behalf of the Unaffiliated Seller or the Servicer
contained herein or therein not misleading;
(g) Neither the Unaffiliated Seller nor the Servicer
believes, nor does either have any reason or cause to believe, that it
cannot perform each and every covenant contained in this Agreement;
(h) The transfer, assignment, and conveyance of the
Mortgage Loans by the Unaffiliated Seller pursuant to the Unaffiliated
Seller's Agreement is not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction;
(i) The Unaffiliated Seller is solvent and will not as a
result of this Agreement and the undertakings of the Unaffiliated
Seller hereunder be rendered insolvent;
(j) None of the Unaffiliated Seller, the Servicer or the
Subservicers is an "investment company" or a company "controlled by an
investment company," within the meaning of the Investment Company Act
of 1940, as amended;
(k) Immediately prior to the transfer and assignment by
the Depositor to the Trustee, the Depositor had good title to, and was
the sole owner of each Mortgage Loan, free of any interest of any other
Person, and the Depositor has transferred all right, title and interest
in each Mortgage Loan to the Trustee. The transfer of the Mortgage Note
and the Mortgage as and in the manner contemplated by this Agreement is
sufficient either (i) fully to transfer to the Trustee, for the benefit
of the Certificateholders and the Certificate Insurer, all right,
title, and interest of the Depositor thereto as note holder and
mortgagee or (ii) to grant to the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, the security interest
referred to in Section 2.10 hereof. The Mortgage has been duly assigned
and the Mortgage Note has been duly endorsed. The Assignment of
Mortgage delivered to the Trustee pursuant to Section 2.05(a)(iv) is in
recordable form and is acceptable for recording under the laws of the
applicable jurisdiction. The endorsement of the Mortgage Note, the
delivery to the Trustee of the endorsed Mortgage Note, and such
Assignment of Mortgage, and the delivery of such Assignment of Mortgage
for recording to, and the due recording of such Assignment of Mortgage
in, the appropriate public recording office in the jurisdiction in
which the Mortgaged Property is located are sufficient to permit the
Trustee to avail itself of all protection available under applicable
law against the claims of any present or future creditors of the
Depositor, and
57
are sufficient to prevent any other sale, transfer, assignment, pledge,
or hypothecation of the Mortgage Note and Mortgage by the Depositor
from being enforceable;
(l) Neither this Agreement nor any information,
certificate of an officer, statement furnished in writing or report
delivered to the Trustee by the Servicer in connection with the
transactions contemplated hereby contains any untrue statement of a
material fact; and
(m) The Servicer covenants that its computer and other
systems used in servicing the Mortgage Loans operate in a manner such
that the Servicer can service the Mortgage Loans in accordance with the
terms of this Agreement.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.01 shall survive the
delivery of the respective Mortgage Files to the Collateral Agent on behalf of
the Trustee or to a custodian, as the case may be, and inure to the benefit of
the Trustee and the Certificate Insurer. Upon discovery by the Unaffiliated
Seller, the Depositor, the Servicer, the Back-up Servicer, any Subservicer, the
Certificate Insurer or the Trustee of a breach of any of the representations and
warranties contained in this Section which materially and adversely affects the
value of the Mortgage Loans or the interest of the Trustee, the Certificate
Insurer or the Certificateholders, the party discovering such breach shall
promptly (and in any event within five (5) Business Days of the discovery) give
written notice to the others.
Section 3.02 Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Collateral Agent, the Servicer, the Back-up Servicer, the Trustee, the
Unaffiliated Seller, the Certificate Insurer and the Certificateholders that as
of the date of this Agreement or as of such date specifically provided herein:
(a) The Depositor is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware;
(b) The Depositor has the corporate power and authority
to convey the Mortgage Loans and to execute, deliver and perform, and
to enter into and consummate the transactions contemplated by, this
Agreement;
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, all requisite corporate action
having been taken, and, upon the due authorization, execution and
delivery hereof by the other parties hereto, will constitute the legal,
valid and binding agreement of the Depositor, enforceable against the
Depositor in accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority
or court is required for the execution, delivery and performance of or
compliance by the Depositor with this Agreement or the
58
consummation by the Depositor of any of the transactions contemplated
hereby, except as have been made on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby or thereby, or
the fulfillment of or compliance with the terms and conditions of this
Agreement, (i) conflicts or will conflict with or results or will
result in a breach of, or constitutes or will constitute a default or
results or will result in an acceleration under (A) the charter or
bylaws of the Depositor, or (B) of any term, condition or provision of
any material indenture, deed of trust, contract or other agreement or
instrument to which the Depositor or any of its subsidiaries is a party
or by which it or any of its subsidiaries is bound; (ii) results or
will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or
governmental authority having jurisdiction over the Depositor or its
subsidiaries; or (iii) results in the creation or imposition of any
lien, charge or encumbrance which would have a material adverse effect
upon the Mortgage Loans or any documents or instruments evidencing or
securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or
against or investigations of, the Depositor pending, or to the
knowledge of the Depositor, threatened, before any court,
administrative agency or other tribunal, and no notice of any such
action, which, in the Depositor's reasonable judgment, might materially
and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of
this Agreement;
(g) The Depositor is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency that may materially
and adversely affect its performance hereunder;
(h) The transfer, assignment, and conveyance of the
Mortgage Loans by the Depositor pursuant to this Agreement is not
subject to the bulk transfer or any similar statutory provisions in
effect in any applicable jurisdiction; and
(i) Immediately prior to the transfer and assignment by
the Depositor to the Trustee, the Depositor had good title to, and was
the sole owner of each Mortgage Loan, free of any interest of any other
Person, and the Depositor has transferred all right, title and interest
in each Mortgage Loan to the Trustee. The transfer of the Mortgage Note
and the Mortgage as and in the manner contemplated by this Agreement is
sufficient either (i) fully to transfer to the Trustee, for the benefit
of the Certificateholders and the Certificate Insurer, all right,
title, and interest of the Depositor thereto as note holder and
mortgagee or (ii) to grant to the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, the security interest
referred to in Section 2.10 hereof. The Mortgage has been duly assigned
and the Mortgage Note has been duly endorsed. The Assignment of
Mortgage delivered to the Collateral Agent on behalf of the Trustee
pursuant to Section 2.05(a)(iv) is in recordable form and is acceptable
for recording under the laws of the applicable jurisdiction. The
endorsement of the Mortgage Note, the delivery to the Collateral Agent
on behalf of the Trustee of the endorsed Mortgage Note, and such
Assignment of Mortgage, and the delivery of such Assignment of Mortgage
for recording
59
to, and the due recording of such Assignment of Mortgage in, the
appropriate public recording office in the jurisdiction in which the
Mortgaged Property is located are sufficient to permit the Trustee to
avail itself of all protection available under applicable law against
the claims of any present or future creditors of the Depositor, and are
sufficient to prevent any other sale, transfer, assignment, pledge, or
hypothecation of the Mortgage Note and Mortgage by the Depositor from
being enforceable. The Depositor has not transferred the Mortgage Loans
to the Trustee, for the benefit of the Certificateholders and the
Certificate Insurer, with any intent to hinder, delay or defraud any of
its creditors.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.02 shall survive delivery
of the respective Mortgage Files to the Collateral Agent on behalf of the
Trustee or to a custodian, as the case may be, and shall inure to the benefit of
the Trustee and the Certificate Insurer. Upon discovery by the Unaffiliated
Seller, the Depositor, the Servicer, the Back-up Servicer, any Subservicer, the
Certificate Insurer or the Trustee of a breach of any of the representations and
warranties contained in this Section which materially and adversely affects the
value of the Mortgage Loans or the interest of the Trustee, the Certificate
Insurer or the Certificateholders, the party discovering such breach shall
promptly (and in any event within five (5) Business Days of the discovery) give
written notice to the others.
Section 3.03 Purchase and Substitution. (a) It is
understood and agreed that the representations and warranties set forth in
Sections 3.01, 3.02 and 3.03 of the Unaffiliated Seller's Agreement shall
survive delivery of the Certificates to the Certificateholders. Pursuant to the
Unaffiliated Seller's Agreement, with respect to any representation or warranty
contained in Sections 3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement
that is made to the best of the Unaffiliated Seller's knowledge, the
Unaffiliated Seller shall be deemed to have knowledge of all facts and
circumstances in existence as of such date and, if it is discovered by the
Servicer, the Back-up Servicer, any Subservicer, the Trustee, the Certificate
Insurer or any Certificateholder that the substance of such representation and
warranty was inaccurate as of the Closing Date and such inaccuracy materially
and adversely affects the value of the related Mortgage Loan or the interests of
the Trustee or the Certificate Insurer with respect thereto, then
notwithstanding the Unaffiliated Seller's lack of knowledge with respect to the
inaccuracy at the time the representation or warranty was made, such inaccuracy
shall be deemed a breach of the applicable representation or warranty. Upon
discovery by the Unaffiliated Seller, the Servicer, the Back-up Servicer, any
Subservicer, the Certificate Insurer or the Trustee of a breach of any of such
representations and warranties which materially and adversely affects the value
of the Mortgage Loans or the interest of the Trustee, the Certificate Insurer or
the Certificateholders, or which materially and adversely affects the interests
of the Trustee, the Certificate Insurer or the Certificateholders in the related
Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan (notwithstanding that such representation and warranty
was made to the Unaffiliated Seller's best knowledge), the party discovering
such breach shall promptly (and in any event within five (5) Business Days of
the discovery) give written notice to the others. Subject to the last paragraph
of this Section 3.03, within sixty (60) days of the earlier of its discovery or
its receipt of notice of any breach of a representation or warranty, pursuant to
the Unaffiliated Seller's Agreement, the Servicer shall, or shall cause the
Unaffiliated Seller or an Originator to (a) promptly cure such breach in all
material respects, or (b) purchase such
60
Mortgage Loan on the next succeeding Servicer Remittance Date, by depositing an
amount equal to the Loan Repurchase Price into the Collection Account, or (c)
remove such Mortgage Loan from the Trust Fund (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans; provided, that such substitution is effected not later than the date
which is two years after the Startup Day or at such later date, if the Trustee
and the Certificate Insurer receive an Opinion of Counsel, by and at the cost of
the Servicer, to the effect that such substitution will not cause (a) any
federal tax to be imposed on the Trust Fund, including without limitation, any
federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the startup date" under Section 860G(d)(1) of
the code or (b) any REMIC to fail to qualify as a REMIC at any time that any
Certificate is outstanding. If such Opinion of Counsel can not be delivered,
then such substitution may only be effected at such time as the required Opinion
of Counsel can be given. In addition, pursuant to the Unaffiliated Seller's
Agreement, the Unaffiliated Seller and the related Originator shall be obligated
to indemnify the Trustee, the Certificate Insurer and the Certificateholders for
any third party claims arising out of a breach by the Unaffiliated Seller of
representations or warranties regarding the Mortgage Loans. Pursuant to the
Unaffiliated Seller's Agreement any such substitution shall be accompanied by
payment by the Unaffiliated Seller of the Substitution Adjustment, if any, to be
deposited in the Collection Account.
(b) As to any Deleted Mortgage Loan for which the
Unaffiliated Seller substitutes a Qualified Substitute Mortgage Loan or Loans,
the Servicer shall cause the Unaffiliated Seller or an Originator, as
applicable, to effect such substitution by delivering to the Collateral Agent on
behalf of the Trustee a certification in the form attached hereto as Exhibit M,
executed by a Servicing Officer and shall cause the Unaffiliated Seller or an
Originator, as applicable, to deliver the documents described in Sections
2.05(a)(i) through (vi) for such Qualified Substitute Mortgage Loan or Loans to
the Collateral Agent on behalf of the Trustee.
(c) The Servicer shall deposit in the Collection Account
all payments received in connection with such Qualified Substitute Mortgage Loan
or Loans after the date of such substitution. Monthly Payments received with
respect to a Qualified Substitute Mortgage Loan or Loans on or before the date
of substitution will be retained by the Unaffiliated Seller. The Trust Fund will
own all payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Unaffiliated Seller shall thereafter be entitled to retain
all amounts subsequently received in respect of such Deleted Mortgage Loan. The
Servicer shall give written notice to the Trustee, the Certificate Insurer and
the Back-up Servicer that such substitution has taken place and shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan or Loans. Upon such substitution, such Qualified Substitute
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects.
(d) It is understood and agreed that the obligations of
the Unaffiliated Seller and the related Originator set forth in Sections 2.06
and 3.05 of the Unaffiliated Seller's Agreement to, and the Servicer's
obligation to cause the Unaffiliated Seller and the Originator to cure, purchase
or substitute for a defective Mortgage Loan, or to indemnify as described in
clause (a) above, constitute the sole remedies of the Trustee, the Certificate
Insurer and the Certificateholders respecting a breach of the representations
and warranties of the Unaffiliated Seller and the Originators set forth in
Sections 3.01, 3.02 and 3.03 of the Unaffiliated Seller's
61
Agreement. The Trustee shall give prompt written notice to the Certificate
Insurer and the Rating Agencies of any repurchase or substitution made pursuant
to this Section 3.03 or Section 2.06(b).
(e) Upon discovery by the Servicer, the Back-up Servicer,
the Trustee, the Certificate Insurer or any Certificateholder that any Mortgage
Loan does not constitute a Qualified Mortgage, the party discovering such fact
shall promptly (and in any event within five (5) Business Days of the discovery)
give written notice thereof to the other parties. In connection therewith,
pursuant to the Unaffiliated Seller's Agreement, the Unaffiliated Seller shall
be required to repurchase or substitute a Qualified Substitute Mortgage Loan for
the affected Mortgage Loan within sixty (60) days of the earlier of such
discovery by any of the foregoing parties, or the Trustee's or the Unaffiliated
Seller's receipt of notice, in the same manner as it would a Mortgage Loan for a
breach of representation or warranty contained in Sections 3.01, 3.02 or 3.03 of
the Unaffiliated Seller's Agreement. The Trustee shall reconvey to the
Unaffiliated Seller the Mortgage Loan to be released pursuant hereto in the same
manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty contained in Sections
3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement.
(f) Pursuant to Section 3.05(k) of the Unaffiliated
Seller's Agreement, the Unaffiliated Seller and each of the Originators shall be
jointly and severally responsible for any repurchase, cure or substitution
obligation of the Unaffiliated Seller or any of the Originators under this
Agreement or the Unaffiliated Seller's Agreement.
Section 3.04 Representations, Warranties and Covenants of the
Trustee, the Collateral Agent and the Back-up Servicer. Each of the Trustee, the
Collateral Agent and the Back-up Servicer hereby represents, warrants and
covenants to the Servicer, the Certificate Insurer, the Certificateholders, the
Unaffiliated Seller and the Depositor that as of the date of this Agreement or
as of such date specifically provided herein:
(a) It is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of New York;
(b) It has the corporate power and authority to execute,
deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement; and
(c) This Agreement has been duly and validly authorized,
executed and delivered by it, all requisite corporate action having
been taken, and, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes or will constitute the
legal, valid and binding agreement of it, enforceable against it in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.04 shall survive delivery
of the respective Trustee's Mortgage Files to the
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Collateral Agent, on behalf of the Trustee or to another custodian, as the case
may be, and shall inure to the benefit of the Certificateholders and the
Certificate Insurer. Upon discovery by the Unaffiliated Seller, the Depositor,
the Servicer, the Back-up Servicer, any Subservicer, the Certificate Insurer or
the Trustee of a breach of any of the representations and warranties contained
in this Section which materially and adversely affects the value of the Mortgage
Loans or the interest of the Trustee, the Certificate Insurer or the
Certificateholders, the party discovering such breach shall promptly (and in any
event within five (5) Business Days of the discovery) give written notice to the
others.
Section 3.05 Negative Covenants of the Trustee and the
Servicer. Except as otherwise expressly permitted by this Agreement, neither the
Trustee nor the Servicer shall cause the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any
of the assets of the Trust Fund;
(ii) dissolve or liquidate the Trust Fund in whole or in
part;
(iii) engage, directly or indirectly, in any business other
than that arising out of the issue of the Certificates, and the actions
contemplated or required to be performed under this Agreement;
(iv) incur, create or assume any indebtedness for borrowed
money;
(v) voluntarily file a petition for bankruptcy,
reorganization, assignment for the benefit of creditors or similar
proceeding; or
(vi) merge, convert or consolidate with any other Person.
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates. (a) The Class A
Certificates shall be substantially in the form annexed hereto of Exhibit A, the
Class A-IO Certificates shall be substantially in the form annexed hereto as
Exhibit B, the Class M Certificates (including any Class M-1, Class M-2 or Class
M-3 Certificates) shall be substantially in the form annexed hereto of Exhibit C
and the Class R, Class X and Class I Certificates shall be substantially in the
forms annexed hereto as Exhibits D, E and F, respectively. All Certificates
shall be executed by manual or facsimile signature on behalf of the Trustee by
an authorized officer and authenticated by the manual or facsimile signature of
an authorized officer. Certificates bearing the signatures of individuals who
were at the time of the execution of the Certificates the authorized officers of
the Trustee shall bind the Trustee, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the delivery of such
Certificates or did not hold such offices at the date of such Certificates. All
Certificates issued hereunder shall be dated the date of their authentication.
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(b) Solely for purposes of calculating distributions and
allocating losses, the Class M Certificates will be made up of the Class M-1,
Class M-2 and Class M-3 Components. The Pass-Through Rate on each of the
components will be the same as the Pass-Through Rate on the Class M
Certificates. The Component Principal Balance with respect to any component as
of any Distribution Date is the initial Component Principal Balance thereof on
the Closing Date, reduced by all amounts applied, and losses allocated in
reduction of, the Component Principal Balance of such component on previous
Distribution Dates. The Certificate Principal Balance of the Class M
Certificates will be equal to the aggregate of the Component Principal Balances
of the Class M-1, Class M-2 and Class M-3 Components. Until the occurrence of a
Separation Event, the components comprising the Class M Certificates will not be
separately transferable. With respect to each Distribution Date, the Servicer
Remittance Report will include an accounting of the Certificate Principal
Balance of the Class M Certificates and the Component Principal Balance of each
of the components after giving effect to the distribution of the Class M
Principal Distribution Amount on such Distribution Date.
Upon the occurrence of a Separation Event, the Trustee will
notify the holders of the Class M Certificates of the separation of their Class
M Certificates into its component parts. Following the separation, the Class M
Certificates will no longer be outstanding, and each holder of a Class M
Certificate prior to separation will become the holder of Class M-1, Class M-2
and Class M-3 Certificates (which will be separately transferable and fully
registered securities) in Percentage Interests equal to such holder's Percentage
Interest in the Class M Certificates immediately prior to the separation. The
Trustee may require payment from the holders of the Class M Certificates of a
sum sufficient to cover any tax or other governmental charge payable in
connection with such separation. The costs, if any, associated with the
separation of the Class M Certificates will be borne by the holders thereof in
proportion to their Percentage Interests. The Class M-1, Class M-2 and Class M-3
Certificates shall continue to be registered in the same manner as the Class M
Certificates so as to participate a global book-entry system with the Depository
as provided in Section 4.02(e).
Section 4.02 Registration of Transfer and Exchange of
Certificates. (a) The Trustee, as registrar, shall cause to be kept a
register (the "Certificate Register") in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of Certificates and the registration of transfer of Certificates. The Trustee is
hereby appointed registrar (the "Certificate Registrar") for the purpose of
registering Certificates and transfers of Certificates as herein provided. The
Certificate Insurer shall be entitled to inspect and copy the Certificate
Register and the records of the Trustee relating to the Certificates during
normal business hours upon reasonable notice.
(b) All Certificates issued upon any registration of
transfer or exchange of Certificates shall be valid evidence of the same
ownership interests in the Trust and entitled to the same benefits under this
Agreement as the Certificates surrendered upon such registration of transfer or
exchange.
(c) Every Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Trustee duly
executed by the Holder thereof or his attorney duly authorized in writing.
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(d) No service charge shall be made to a Holder for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(e) It is intended that the Offered Certificates be
registered so as to participate in a global book-entry system with the
Depository, as set forth herein. The Offered Certificates shall, except as
otherwise provided in the next paragraph, be initially issued in the form of a
single fully registered Certificate with a denomination equal to the Original
Certificate Principal Balance or Class A-IO Notional Balance, respectively. Upon
initial issuance, the ownership of each such Offered Certificate shall be
registered in the Certificate Register in the name of Cede & Co., or any
successor thereto, as nominee for the Depository. The Depositor and the Trustee
are hereby authorized to execute and deliver the Representation Letter with the
Depository. With respect to the Offered Certificates registered in the
Certificate Register in the name of Cede & Co., as nominee of the Depository,
the Depositor, the Unaffiliated Seller, the Servicer, the Back-up Servicer, the
Certificate Insurer and the Trustee shall have no responsibility or obligation
to Direct or Indirect Participants or beneficial owners for which the Depository
holds Offered Certificates from time to time as a Depository. Without limiting
the immediately preceding sentence, the Depositor, the Unaffiliated Seller, the
Servicer, the Back-up Servicer, the Certificate Insurer and the Trustee shall
have no responsibility or obligation with respect to (i) the accuracy of the
records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to any Ownership Interest, (ii) the delivery to any Direct or
Indirect Participant or any other Person, other than a Certificateholder, of any
notice with respect to the Offered Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a
Certificateholder, of any amount with respect to any distribution of principal
or interest on the Offered Certificates. No Person other than a
Certificateholder shall receive a certificate evidencing such Offered
Certificate. Upon delivery by the Depository to the Trustee of written notice to
the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the Certificateholders
appearing as Certificateholders at the close of business on a Record Date, the
name "Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(f) In the event that (i) the Depository or the Servicer
advises the Trustee in writing that the Depository is no longer willing or able
to discharge properly its responsibilities as nominee and depository with
respect to the Offered Certificates and the Servicer or the Depository is unable
to locate a qualified successor or (ii) the Trustee at its sole option elects to
terminate the book-entry system through the Depository, the Offered Certificates
shall no longer be restricted to being registered in the Certificate Register in
the name of Cede & Co. (or a successor nominee) as nominee of the Depository. At
that time, the Servicer may determine that the Offered Certificates shall be
registered in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable to the Servicer, or such
depository's agent or designee but, if the Servicer does not select such
alternative global book-entry system, then the Offered Certificates may be
registered in whatever name or names Certificateholders transferring Offered
Certificates shall designate, in accordance with the
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provisions hereof; provided, however, that any such reregistration shall be at
the expense of the Servicer.
(g) Notwithstanding any other provision of this Agreement
to the contrary, so long as any Offered Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Offered Certificates, as the case may be, and all notices with
respect to such Offered Certificates, as the case may be, shall be made and
given, respectively, in the manner provided in the Representation Letter.
(h) No transfer, sale, pledge or other disposition of any
Class R, Class I or Class X Certificate shall be made unless such disposition is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act") and effective registration or qualification
under applicable state securities laws or "Blue Sky" laws, or is made in a
transaction that does not require such registration or qualification. In the
event that a transfer of a Certificate is to be made in reliance upon an
exemption from the 1933 Act, the Trustee or the Certificate Registrar shall
require, in order to assure compliance with the 1933 Act, that the
Certificateholder desiring to effect such disposition and such
Certificateholder's prospective transferee each certify to the Trustee or the
Certificate Registrar in writing the facts surrounding such disposition
substantially in the form of Exhibit L hereto (with respect to a transfer made
pursuant to Rule 144A promulgated under the ▇▇▇▇ ▇▇▇) and may, unless such
transfer occurs more than three years after the Closing Date or is made pursuant
to Rule 144A promulgated under the 1933 Act, require an Opinion of Counsel
satisfactory to the Trustee or Certificate Registrar as the case may be, that
such transfer may be made pursuant to an exemption from the 1933 Act, which
Opinion of Counsel shall be at the expense of the Certificateholder. None of the
Servicer, the Back-up Servicer, the Depositor, the Unaffiliated Seller or the
Trustee is obligated under this Agreement to register Certificates under the
1933 Act, as amended or any other securities law or to take any action not
otherwise required under this Agreement to permit the transfer of the Class R,
Class I or Class X Certificates without such registration or qualification.
Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer substantially
in the form of Exhibit M hereto, or such other endorsement or written instrument
of transfer as is satisfactory to the Trustee, duly executed by the Holder
thereof or his attorney duly authorized in writing, together with wiring
instructions, if applicable, in the form of Exhibit Q.
(i) Any such Certificateholder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor,
the Unaffiliated Seller, the Certificate Insurer, the Back-up Servicer and the
Servicer against any liability that may result if the transfer is not exempt or
is not made in accordance with such applicable federal and state laws. Promptly
after receipt by an indemnified party under this paragraph of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this paragraph,
notify the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
paragraph. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to appoint counsel reasonably satisfactory to such
indemnified party to represent the indemnified party in such action; provided,
however, that if the defendants in any such action include both the
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indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of its election so to appoint counsel to defend such
action and approval by the indemnified party of such counsel, the indemnifying
party will not be liable to such indemnified party under this paragraph for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed separate counsel in accordance with the proviso of the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel for any indemnified
party), (ii) the indemnifying party shall not have employed counsel satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. Under no circumstances shall the indemnified
party enter into a settlement agreement with respect to any lawsuit, claim or
other proceeding without the prior written consent of the indemnifying party.
(j) Subject to the restrictions set forth in this
Agreement, upon surrender for registration of transfer of any Certificate at the
office or agency of the Trustee located in New York, New York, the Trustee shall
execute, authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and Percentage Interest and
dated the date of authentication by the Trustee. At the option of the
Certificateholders, Certificates may be exchanged for other Certificates of
Authorized Denominations of a like aggregate Percentage Interest, upon surrender
of the Certificates to be exchanged at such office. Whenever any Certificates
are so surrendered for exchange, the Trustee shall execute, authenticate and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. No service charge shall be made for any transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be cancelled and destroyed by the
Trustee in accordance with the Trustee's standard procedures.
(k) No transfer of an Offered Certificate shall be made
to the Unaffiliated Seller or, to the actual knowledge of a Responsible Officer
of the Trustee, to any of the Unaffiliated Seller's Affiliates, successors or
assigns.
(l) Each Person who has or who acquires any Ownership
Interest in a Class R Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably appointed the Servicer or its
designee as its attorney-in-fact to negotiate the terms of any mandatory sale
under clause (viii) below and to execute all instruments of transfer and to do
all other things necessary in connection with any such sale, and the rights of
each Person acquiring any Ownership Interest in a Class R Certificate are
expressly subject to the following provisions:
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(i) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall be a Permitted Transferee and a
United States Person and shall promptly notify the Trustee of any
change or impending change in its status as either a United States
Person or a Permitted Transferee.
(ii) In connection with any proposed Transfer of any
Ownership Interest in a Class R Certificate, the Trustee shall require
delivery to it of, and shall not register the Transfer of any Class R
Certificate until its receipt of, an affidavit and agreement (a
"Transfer Affidavit and Agreement") attached hereto as Exhibit L from
the proposed Transferee, in form and substance satisfactory to the
Trustee.
(iii) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and
Agreement and all of such other documents as shall have been reasonably
required by the Trustee as a condition to such registration. In
addition, no Transfer of a Class R Certificate shall be made unless the
Trustee shall have received a representation letter from the Transferee
of such Certificate to the effect that such Transferee is a United
States Person and is not a "disqualified organization" (as defined in
Section 860E(e)(5) of the Code).
(iv) Notwithstanding the delivery of a Transfer Affidavit
and Agreement by a proposed Transferee under clause (ii) above, if a
Responsible Officer of the Trustee has actual knowledge that the
proposed Transferee is not a Permitted Transferee, no Transfer of an
Ownership Interest in a Class R Certificate to such proposed Transferee
shall be effected.
(v) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall agree (A) to require a Transfer
Affidavit and Agreement from any other Person to whom such Person
attempts to transfer its Ownership Interest in a Class R Certificate
(B) to require a Transfer Affidavit and Agreement from any Person for
whom such Person is acting as nominee, trustee or agent in connection
with any transfer of its Ownership Interest in a Class R Certificate,
(C) not to transfer any Ownership Interest in a Class R Certificate to
any other Person (1) if it has actual knowledge that such Person is not
a Permitted Transferee or that such Transfer Affidavit and Agreement is
false, (2) if such transfer is for the purpose of impeding the
assessment or collection of tax, (3) if it has actual knowledge or
reason to know that the proposed transferee would be unwilling or
unable to pay taxes attributed to the Class R Certificate, or (4) if it
has actual knowledge or reason to know that the proposed transferee
will not honor the restrictions on subsequent transfers of the Class R
Certificate set forth in this section 4.02(l) and in the Transfer
Affidavit and Agreement, (D) to conduct a reasonable investigation of
the financial condition of the proposed transferee and transfer its
Ownership Interest in the Class R Certificate only if, as a result of
such investigation, it concludes that the proposed transferee has
historically paid its debts as they came due and will continue to pay
its debts as they come due in the future, and (E) to provide a
certificate attached hereto as Exhibit M to the Trustee in connection
with any transfer of its Ownership Interest in a Class R Certificate.
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(vi) Each Person holding or acquiring an Ownership
Interest in a Class R Certificate, by purchasing an Ownership Interest
in such Certificate, agrees to give the Trustee written notice that it
is a "pass-through interest holder" within the meaning of temporary
Treasury regulation Section 1.67-3T(a)(2)(i)(A) immediately upon
acquiring an Ownership Interest in a Class R Certificate, if it is, or
is holding an Ownership Interest in a Class R Certificate on behalf of,
a "pass-through interest holder".
(vii) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 4.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall
become a Holder of a Class R Certificate in violation of the provisions
of this Section 4.02, then the last preceding Permitted Transferee
shall be restored to all rights as Holder thereof retroactive to the
date of registration of transfer of such Class R Certificate. The
Trustee shall notify the Servicer upon receipt of written notice or
discovery by a Responsible Officer that the registration of transfer of
a Class R Certificate was not in fact permitted by this Section 4.02.
Knowledge shall not be imputed to the Trustee with respect to an
impermissible transfer in the absence of such a written notice or
discovery by a Responsible Officer. The Trustee shall be under no
liability to any Person for any registration of transfer of a Class R
Certificate that is in fact not permitted by this Section 4.02 or for
making any payments due on such Certificate to the Holder thereof or
taking any other action with respect to such Holder under the
provisions of this Agreement so long as the transfer was registered
after receipt of the related Transfer Affidavit and Agreement. The
Trustee shall be entitled, but not obligated to, recover from any
Holder of a Class R Certificate that was in fact not a Permitted
Transferee at the time it became a Holder or, at such subsequent time
as it became other than a Permitted Transferee, all payments made on
such Class R Certificate at and after either such time and any and all
costs incurred by the Trustee in reversing the non-permitted transfer.
Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Holder of such
Certificate.
(viii) If any purported transferee shall become a Holder of
a Class R Certificate in violation of the restrictions in this Section
4.02, then the Servicer or its designee shall have the right, without
notice to the Holder or any prior Holder of such Class R Certificate,
to sell such Class R Certificate to a purchaser selected by the
Servicer or its designee on such reasonable terms as the Servicer or
its designee may choose. Such purchaser may be the Servicer itself or
any Affiliate of the Servicer. The proceeds of such sale, net of
commissions, expenses and taxes due, if any, will be remitted by the
Servicer to the last preceding purported transferee of such Class R
Certificate, except that in the event that the Servicer determines that
the Holder or any prior Holder of such Class R Certificate may be
liable for any amount due under this Section 4.02 or any other
provision of this Agreement, the Servicer may withhold a corresponding
amount from such remittance as security for such claim. The terms and
conditions of any sale under this clause (viii) shall be determined in
the sole discretion of the Servicer or its designee, and it shall not
be liable to any Person having an Ownership Interest in a Class R
Certificate as a result of its exercise of such discretion.
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(m) The provisions of Section 4.02(l) may be modified,
added to or eliminated, provided that there shall have been delivered to the
Trustee and the Certificate Insurer an Opinion of Counsel to the effect that
such modification of, addition to or elimination of such provisions will not
cause the transfer to be disregarded under Treasury Regulation ss.1.860E-1(c),
will not cause any of the REMICs included in the Trust Fund to cease to qualify
as a REMIC and will not cause (x) any of the REMICs included in the Trust Fund
to be subject to an entity-level tax caused by the Transfer of any Ownership
Interest in a Class R Certificate to a Person that is not a Permitted Transferee
or (y) a Person other than the prospective transferee to be subject to a
REMIC-related tax caused by the Transfer of an Ownership Interest in a Class R
Certificate to a Person that is not a Permitted Transferee.
(n) The Trustee and the Servicer shall require the
prospective transferee of any Class R, Class I or Class X Certificate to certify
(in the form of Exhibit N hereto) that it is not a pension or benefit plan or
individual retirement arrangement that is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or to Section 4975 of the
Code (a "Plan") or an entity whose underlying assets are deemed to be assets of
a Plan by reason of such plan's or arrangement's investment in the entity, as
determined under U.S. Department of Labor Regulations 29 C.F.R. Section
2510.3-101 or otherwise.
Section 4.03 Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (b) there is delivered to the Servicer, the
Certificate Insurer and the Trustee such security or indemnity as may reasonably
be required by each of them to save each of them harmless, then, in the absence
of notice to the Servicer and the Trustee that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest, but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate under this Section 4.03, the Servicer and the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and their fees and expenses connected
therewith. Any duplicate Certificate issued pursuant to this Section 4.03 shall
constitute complete and indefeasible evidence of ownership in the Trust Fund, as
if originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time.
Section 4.04 Persons Deemed Owners. Prior to due presentation
of a Certificate for registration of transfer and subject to the provisions of
Section 4.02 and Article X, the Servicer, the Back-up Servicer, the Depositor,
the Unaffiliated Seller, the Certificate Insurer and the Trustee may treat the
Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving remittances pursuant to Section 6.05
and for all other purposes whatsoever, and the Servicer, the Back-up Servicer,
the Depositor, the Unaffiliated Seller, the Certificate Insurer and the Trustee
shall not be affected by notice to the contrary.
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ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 REMIC Matters; The Servicer. (a) The parties
intend that the Trust Fund formed hereunder shall, except for the Pre-Funding
Account, if any, the Capitalized Interest Account, if any, the Net WAC Cap
Carryover Fund, the Special Reserve Account, the Interest Rate Hedge Agreement
and the Interest Rate Hedge Payment Fund, constitute, and that the affairs of
the Trust Fund shall be conducted and this Agreement shall be construed so as to
qualify the Trust Fund as, four separate "real estate mortgage investment
conduits" as defined in and in accordance with the REMIC Provisions. In
furtherance of such intention, the Servicer covenants and agrees that it shall,
to the extent permitted by applicable law, act as agent (and the Servicer is
hereby appointed to act as agent) on behalf of the Trust Fund and that in such
capacity it shall: (a) prepare and file, or cause to be prepared and filed, all
required federal, state and local tax returns for each REMIC using a calendar
year as the taxable year for the Trust Fund when and as required by the REMIC
Provisions and other applicable federal, state and local income tax laws; (b)
maintain or cause the maintenance of the books of each REMIC on the accrual
method of accounting; (c) make elections, on behalf of each REMIC, to be treated
as a REMIC on the federal tax return of the Trust Fund for its first taxable
year, in accordance with the REMIC Provisions; provided, however, that such
election shall not be made with respect to the Pre-Funding Account, if any, the
Capitalized Interest Account, if any, the Net WAC Cap Carryover Fund, the
Special Reserve Account, the Interest Rate Hedge Payment Fund and the Interest
Rate Hedge Agreement and shall specifically exclude the Pre-Funding Account, if
any, the Capitalized Interest Account, if any, the Net WAC Cap Carryover Fund,
the Special Reserve Account, the Interest Rate Hedge Payment Fund and the
Interest Rate Hedge Payment Agreement from the assets for which a REMIC election
is made; (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders all information reports as and when required to be provided
to them in accordance with the REMIC Provisions; (e) conduct the affairs of each
REMIC at all times that any Certificates are outstanding so as to maintain the
status thereof as a REMIC under the REMIC Provisions; and (f) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of any REMIC created hereunder.
(b) The Capitalized Interest Account, if any, the Net WAC
Cap Carryover Fund and the Interest Rate Hedge Payment Fund are each an "outside
reserve" fund within the meaning of Treasury Regulations Section 1.860G-2(h) and
is not an asset of any REMIC created hereunder. The Unaffiliated Seller is the
owner of the Capitalized Interest Account, if any, the Holder of the Class X
Certificates is the owner of the Net WAC Cap Carryover Fund and the Holder of
the Class I Certificates is the owner of the Interest Rate Hedge Payment Fund
for purposes of Treasury Regulations Section 1.860G-2(h). For all federal income
tax purposes, amounts transferred by the Capitalized Interest Account, if any,
to REMIC III, if any, will be treated as amounts contributed by the Unaffiliated
Seller to REMIC III.
(c) In the event that any income tax (including any tax
with regard to "prohibited transactions" of any REMIC created hereunder as
defined in Section 860F of the Code) is imposed on the Trust Fund, such tax
shall be charged against amounts otherwise distributable to the Holders of the
Class R or Class X Certificates on a pro rata basis to the extent
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hereinafter provided. In the event that any such tax shall be due and owing at a
time when amounts otherwise distributable to the Holders of the Class R or Class
X Certificates are not available, the Servicer shall pay such tax from its own
funds. In such event, and upon receipt of written instruction from the Servicer,
signed by a Responsible Officer, the Trustee is hereby authorized to retain from
amounts otherwise distributable to the Holders of the Class R and Class X
Certificates on any Distribution Date sufficient funds to reimburse the Servicer
for the payment of such tax (but such obligation shall not prevent the Trustee
or any other appropriate Person from contesting any such tax in appropriate
proceedings and shall prevent the Trustee from withholding payment of such tax,
if permitted by law, pending the outcome of such proceedings).
(d) The Servicer shall service and administer the
Mortgage Loans in the best interests of and for the benefit of the
Certificateholders in accordance with the Accepted Servicing Practices and shall
have full power and authority to do any and all things not inconsistent
therewith in connection with such servicing and administration which it may deem
necessary or desirable in order to maximize collections on the Mortgage Loans,
subject to the limitations set forth in this Agreement. The Trustee shall
furnish the Servicer with any powers of attorney and other documents necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered
by the Trustee, to execute and deliver, on behalf of itself, the
Certificateholders, the Certificate Insurer and the Trustee or any of them, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments, and to effect such
modifications, waivers, indulgences and other like matters as are in its
judgment necessary or desirable, with respect to the Mortgage Loans and the
Mortgaged Properties and the servicing and administration thereof in order to
maximize collections on the Mortgage Loans subject to the limitations set forth
in this Agreement. The Servicer shall notify the Trustee of any such waiver,
release, discharge, modification, indulgence or other such matter by delivering
to the Trustee an Officer's Certificate certifying that such agreement is in
compliance with this Section 5.01(d) together with the original copy of any
written agreement or other document executed in connection therewith, all of
which written agreements or documents shall, for all purposes, be considered a
part of the related Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Notwithstanding anything in this
Agreement to the contrary, the Servicer shall not (i) permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
reduce or increase the principal balance, change the lien priority, the original
CLTV or change the final maturity date on or of such Mortgage Loan unless (A)
the Mortgagor is in default with respect to the Mortgage Loan or such default
is, in the judgment of the Servicer, imminent and (B) the Certificate Insurer
consents to such modifications in writing; provided, however, that the Servicer
shall be permitted to extend the final maturity date of any Mortgage Loan by 180
days or less without the consent of the Certificate Insurer, so long as such
final maturity date (as so extended) is not later than the latest Final
Scheduled Maturity Date for any outstanding Class of Offered Certificates or
(ii) permit any modification, waiver or amendment of any term of any Mortgage
Loan that would both (A) effect an exchange or reissuance of such Mortgage Loan
under Section 1001 of the Code (or Treasury regulations promulgated thereunder)
and (B) cause any REMIC created hereunder to fail to qualify as a REMIC under
the Code or the imposition of any tax on "prohibited transactions" or
"contributions after the startup date" under the REMIC Provisions.
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(e) The relationship of the Servicer (and of any
successor to the Servicer as servicer under this Agreement) to the Trustee under
this Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
Section 5.02 Collection of Certain Mortgage Loan Payments;
Collection Account. (a) The Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the Mortgage
Loans, and shall, to the extent such procedures shall be consistent with this
Agreement, follow the Accepted Servicing Practices. Consistent with the
foregoing, the Servicer may in its discretion waive any assumption fees or other
fees which may be collected in the ordinary course of servicing such Mortgage
Loans.
(b) The Servicer shall establish and maintain in the name
of the Trustee the Collection Account, in trust for the benefit of the
Certificateholders and the Certificate Insurer. The Collection Account shall be
established and maintained as an Eligible Account.
(c) The Servicer shall deposit in the Collection Account
any amounts representing Monthly Payments on the Mortgage Loans due and accrued
or to be applied as of a date after the respective Cut-Off Date, and thereafter,
on each Business Day (except as otherwise permitted herein), the following
payments and collections received or made by it (other than in respect of
principal collected and interest due and accrued on the Mortgage Loans on or
before the respective Cut-Off Date):
(i) Payments of interest on the Mortgage Loans;
(ii) Payments of principal of the Mortgage Loans;
(iii) The Loan Repurchase Price of Mortgage Loans
repurchased pursuant to Sections 2.06, 3.03, 5.05, 5.15 or otherwise
hereunder;
(iv) The Substitution Adjustment received in connection
with Mortgage Loans for which Qualified Substitute Mortgage Loans are
received pursuant to Sections 2.06 and 3.03;
(v) All Liquidation Proceeds; and
(vi) All Insurance Proceeds (including, for this purpose,
any amounts required to be deposited by the Servicer pursuant to the
last sentence of Section 5.04).
It is understood that the Servicer need not deposit amounts
representing fees, prepayment premiums, late payment charges or extension or
other administrative charges payable by Mortgagors, or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items.
(d) The Trustee shall invest any funds in the Collection
Account in Permitted Investments as directed in writing by the Servicer, which
shall mature not later than the Business Day next preceding the Servicer
Remittance Date next following the date of such investment (except that any
investment held by the Trustee may mature on such Servicer Remittance Date) and
shall not be sold or disposed of prior to its maturity. All net income and gain
realized from
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any such investment shall be for the benefit of the Servicer and shall be
subject to its withdrawal or order on a Distribution Date. The Servicer shall
deposit from its own funds the amount of any loss, to the extent not offset by
investment income or earnings, in the Collection Account upon the realization of
such loss. In the event that the Servicer fails to provide written investment
instructions, the Trustee shall invest such funds pursuant to clause (v) of the
definition of Permitted Investments.
Section 5.03 Permitted Withdrawals from the Collection
Account. The Trustee shall make withdrawals from the Collection Account, on any
Distribution Date, for the following purposes:
(a) to reimburse the Servicer for Liquidation Expenses
theretofore incurred in respect of any Mortgage Loan in an amount not
to exceed the amount of the sum of the related Insurance Proceeds and
Liquidation Proceeds deposited in the Collection Account pursuant to
Section 5.02(c)(v)-(vi);
(b) to reimburse the Servicer for amounts expended by it
pursuant to Section 5.04 in good faith in connection with the
restoration of damaged property, in an amount not to exceed the amount
of the related Insurance Proceeds and Liquidation Proceeds (net of
withdrawals pursuant to clause (a) above) and amounts representing
proceeds of other insurance policies covering the property subject to
the related Mortgage deposited in the Collection Account pursuant to
Section 5.02(c)(v)-(vi);
(c) to pay to the Unaffiliated Seller amounts received in
respect of any Deleted Mortgage Loan purchased or substituted for by
the Unaffiliated Seller to the extent that the distribution to the
Certificateholders of any such amounts on the Distribution Date upon
which the proceeds of such purchase are distributed to the
Certificateholders would make the total amount distributed in respect
of any such Mortgage Loan on such Distribution Date greater than the
Loan Repurchase Price or the Substitution Adjustment therefor;
(d) to reimburse the Servicer for unreimbursed Servicing
Advances, without interest, with respect to the Mortgage Loans for
which it has made a Servicing Advance, from subsequent collections with
respect to interest on such Mortgage Loans and from Liquidation
Proceeds, Insurance Proceeds and/or the Loan Repurchase Price or
Substitution Adjustment of or relating to such Mortgage Loans;
(e) to reimburse the Servicer for any Periodic Advances,
such reimbursement to be made from any collections in respect of the
related Mortgage Loan with respect to which such Periodic Advance was
made;
(f) to withdraw any amount received from a Mortgagor that
is recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having
competent jurisdiction;
(g) to withdraw any funds deposited in the Collection
Account that were not required to be deposited therein;
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(h) to pay the Servicer Servicing Compensation pursuant
to Section 5.08 hereof to the extent not retained or paid; and
(i) to remit funds to the Distribution Account pursuant
to Section 6.01(c) hereof.
The Servicer shall keep and maintain a separate accounting for
each Mortgage Loan for the purpose of accounting for withdrawals from the
Collection Account pursuant to subclause (a).
Section 5.04 Hazard Insurance Policies; Property Protection
Expenses. (a) The Servicer shall cause to be maintained for each Mortgage
Loan a hazard insurance policy with extended coverage which contains a standard
mortgagee's clause with an appropriate endorsement in an amount equal to the
lesser of (a) the maximum insurable value of the related Mortgaged Property or
(b) the sum of the Principal Balance of such Mortgage Loan plus the outstanding
balance of any mortgage loan senior to such Mortgage Loan, but in no event shall
such amount be less than is necessary to prevent the Mortgagor from becoming a
coinsurer thereunder. The Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements which are a part of such
property or (ii) the combined Principal Balance of such Mortgage Loan and the
principal balance of any mortgage loan senior to such Mortgage Loan at the time
of such foreclosure plus accrued interest and the good-faith estimate of the
Servicer of related Liquidation Expenses to be incurred in connection therewith.
Amounts collected by the Servicer under any such policies shall be deposited in
the Collection Account to the extent that they constitute Liquidation Proceeds
or Insurance Proceeds. Each hazard insurance policy shall contain a standard
mortgage clause naming the Originator, its successors and assigns, as mortgagee.
Subject to Section 5.04(c), the Servicer shall be under no obligation to require
that any Mortgagor maintain earthquake or flood or other additional insurance
and shall be under no obligation itself to maintain any such additional
insurance on property acquired in respect of a Mortgage Loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance.
(b) If the Servicer shall obtain and maintain a blanket
policy issued by an insurer acceptable to the Rating Agencies and the
Certificate Insurer insuring against hazard losses on all of the Mortgage Loans,
it shall conclusively be deemed to have satisfied its obligations as set forth
in Section 5.04(a), it being understood and agreed that such policy may contain
a deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with Section 5.04(a), and there shall have been a loss which would
have been covered by such policy, deposit in the Collection Account the amount
not otherwise payable under the blanket policy because of such deductible
clause.
(c) If the Mortgaged Property or REO Property is located
at the time of origination of the Mortgage Loan in a federally designated
special flood hazard area (and if the flood insurance policy referenced herein
has been made available), the Servicer will cause to be maintained flood
insurance in respect thereof. Such flood insurance shall be in an amount equal
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to the lesser of (i) the Principal Balance of the related Mortgage Loan and the
balance of the related first lien, if any, (ii) the maximum insurable value of
the related Mortgaged Property, and (iii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program). Upon the written request of the Trustee or the
Certificate Insurer, the Servicer shall provide copies of such policies to the
Trustee or the Certificate Insurer, as applicable.
Section 5.05 Assumption and Modification Agreements. In any
case in which a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall exercise its right to accelerate the maturity of
the related Mortgage Loan and require that the Principal Balance thereof be paid
in full on or prior to such conveyance by the Mortgagor under any "due-on-sale"
clause applicable thereto. If such "due-on-sale" clause, by its terms, is not
operable or the Servicer is prevented, as provided in the last paragraph of this
Section 5.05, from enforcing any such clause, the Servicer is authorized,
subject to the consent of the Certificate Insurer, to take or enter into an
assumption and modification agreement from or with the Person to whom such
property has been or is about to be conveyed, pursuant to which such Person
becomes liable under the Mortgage Note and the Mortgagor remains liable thereon
or, if the Servicer in its reasonable judgment finds it appropriate, is released
from liability thereon. The Servicer shall notify the Trustee, the Certificate
Insurer and the Collateral Agent that any assumption and modification agreement
has been completed by delivering to the Trustee and the Certificate Insurer an
Officer's Certificate certifying that such agreement is in compliance with this
Section 5.05 together with the original copy of such assumption and modification
agreement. Any such assumption and modification agreement shall, for all
purposes, be considered a part of the related Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. In
connection with any such agreement, the then current Mortgage Interest Rate
thereon shall not be increased or decreased. Any fee collected by the Servicer
for entering into any such agreement will be retained by the Servicer as
additional servicing compensation. At its sole election, the Servicer may
purchase from the Trust Fund any Mortgage Loan that has been assumed in
accordance with this Section 5.05 within one month after the date of such
assumption at a price equal to the greater of (i) the fair market value of such
Mortgage Loan (as determined by the Servicer in its good faith judgment) and
(ii) the Loan Repurchase Price. Such amount, if any, shall be deposited into the
Collection Account in the Due Period in which such repurchase is made.
Notwithstanding the foregoing paragraph of this Section 5.05
or any other provision of this Agreement, the Servicer shall not be deemed to be
in default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Mortgage Loan, or transfer of any Mortgaged Property
without the assumption thereof, by operation of law or any assumption or
transfer which the Servicer reasonably believes it may be restricted by law from
preventing for any reason whatsoever.
Section 5.06 Realization Upon Defaulted Mortgage Loans. (a)
The Servicer shall foreclose upon or otherwise comparably convert to ownership
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments pursuant to Section 5.02(a). Prior to
conducting any sale in a foreclosure proceeding or recording a deed-in-
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lieu of foreclosure with respect to any Mortgaged Property, the Servicer shall
cause an environmental review to be performed, in accordance with Accepted
Servicing Practices on the Mortgaged Property by a company such as Equifax, Inc.
or Toxicheck. In connection with such foreclosure or other conversion, the
Servicer shall follow such practices (including, in the case of any default on a
related senior mortgage loan, the advancing of funds to correct such default)
and procedures which are consistent with Accepted Servicing Practices as it
shall deem necessary or advisable and as shall be normal and usual in its
general first and second mortgage loan servicing activities. If the Servicer
determines, as described above, that it is in the best economic interest of the
Trust Fund to take such actions as are necessary to bring any such Mortgaged
Property into compliance with applicable environmental laws, or to take such
action with respect to the containment, clean-up or remediation of hazardous
substances, hazardous materials, hazardous wastes or petroleum-based materials
affecting any such Mortgaged Property, then the Servicer shall take such action
as it deems to be in the best economic interest of the Trust Fund. The foregoing
is subject to the proviso that the Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the correction of any
default on a related senior mortgage loan or restoration of any property unless,
in the reasonable judgment of the Servicer, such expenses will be recoverable
from Liquidation Proceeds. Notwithstanding the foregoing, if such environmental
audit reveals, or if the Servicer has actual knowledge or notice, that such
Mortgaged Property contains such wastes or substances, the Servicer shall not
foreclose or accept a deed in lieu of foreclosure without the prior written
consent of the Certificate Insurer.
(b) In the event that title to any Mortgaged Property is
acquired in foreclosure or by deed in lieu of foreclosure, the deed or
certificate of sale shall be issued to the Trustee, or to its nominee on behalf
of Certificateholders and the Certificate Insurer. With respect to any REO
Property, the Servicer either itself or through an agent selected by the
Servicer shall manage, conserve, protect and operate such REO Property in the
same manner and to such extent as is customary in the locality where such REO
Property is located. Any net income generated from the REO Property and the
proceeds from a sale of any REO Property shall be deposited in the Collection
Account. Any expenses incurred by the Servicer pursuant to its obligations with
respect to any REO Property shall constitute Servicing Advances. In the event
that the Trust Fund acquires any Mortgaged Property as aforesaid or otherwise in
connection with a default or imminent default on a Mortgage Loan, the Servicer
shall (i) with respect to any REO Property held for a period of one year or
more, the Servicer, at the written direction of the Certificate Insurer, will
write-off the balance of the related Mortgage Loan and treat it as a Liquidated
Mortgage Loan and (ii) either (x) dispose of such Mortgaged Property prior to
the end of the third taxable year after its acquisition by the Trust Fund or (y)
in its capacity as Tax Matters Person, request more than 60 days prior to the
date on which such 3 year period would otherwise expire, an extension of the 3
year period; provided, however, that in the event the Servicer shall have
furnished the Trustee and the Certificate Insurer with an Opinion of Counsel to
the effect that the holding by the Trust Fund of such Mortgaged Property
subsequent to the third taxable year after its acquisition will not result in
the imposition of taxes on "prohibited transactions" of the Trust Fund as
defined in Section 860F of the Code or cause the Trust Fund to fail to qualify
as a REMIC at any time that any Certificates are outstanding, such disposition
or extension shall not be required.
(c) Any Insurance Proceeds or Liquidation Proceeds
received with respect to a Mortgage Loan or REO Property (other than received in
connection with a purchase by the
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Servicer of all the Mortgage Loans and REO Properties in the Trust Fund pursuant
to Section 8.01(b)) will be applied in the following order of priority, in each
case to the extent of available funds: first, to pay the Servicer any accrued
and unpaid Servicing Fees relating to such Mortgage Loan; second, to reimburse
the Servicer or any Subservicer for any related unreimbursed Servicing Advances,
and any related unreimbursed Periodic Advances theretofore funded by the
Servicer or any Subservicer from its own funds, in each case, with respect to
the related Mortgage Loan; third, to accrued and unpaid interest on the Mortgage
Loan, at the Mortgage Interest Rate (or at such lesser rate as may be in effect
for such Mortgage Loan pursuant to application of the Civil Relief Act) on the
Principal Balance of such Mortgage Loan, to the date such Mortgage Loan is
determined to be a Liquidated Mortgage Loan if it is a Liquidated Mortgage Loan,
or to the Due Date in the Due Period prior to the Distribution Date on which
such amounts are to be distributed if such determination has not yet been made,
minus any unpaid Servicing Fees with respect to such Mortgage Loan; fourth, to
the extent of the Principal Balance of the Mortgage Loan outstanding immediately
prior to the receipt of such proceeds, as a recovery of principal of the related
Mortgage Loan; and fifth, to any prepayment or late payment charges or penalty
interest payable in connection with the receipt of such proceeds and to all
other fees and charges due and payable with respect to such Mortgage Loan. The
amount of any gross Insurance Proceeds and Liquidation Proceeds received with
respect to any Mortgage Loan or REO Property minus the amount of any
unreimbursed Servicing Advances, unreimbursed Periodic Advances or unpaid
Servicing Fees, in each case, with respect to the related Mortgage Loan, are the
"Net Recovery Proceeds" with respect to such Mortgage Loan or REO Property.
(d) The Servicer shall manage, conserve, protect and
operate each REO Property for the Certificateholders solely for the purpose of
its prompt disposition and sale in a manner which does not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by any of the REMICs
created hereunder of any "income from non-permitted assets" within the meaning
of Section 860F(a)(2)(B) of the Code, or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions.
Section 5.07 Trustee to Cooperate. Upon the payment in full of
the Principal Balance of any Mortgage Loan, the Servicer will notify the Trustee
by a certification (which certification shall include a statement to the effect
that all amounts received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 5.02 have been so
deposited) of a Servicing Officer. Upon any such payment in full, the Servicer
is authorized to execute, pursuant to the authorization contained in Section
5.01, an instrument of satisfaction regarding the related Mortgage, which
instrument of satisfaction shall be recorded by the Servicer if required by
applicable law and be delivered to the Person entitled thereto, it being
understood and agreed that no expenses incurred in connection with such
instrument of satisfaction shall be reimbursed from the Collection Account. From
time to time and as appropriate for the servicing or foreclosure of any Mortgage
Loan, the Collateral Agent on behalf of the Trustee shall, upon request of the
Servicer and delivery to the Trustee of a trust receipt signed by a Servicing
Officer, release the related Mortgage File to the Servicer and shall execute
such documents as shall be necessary for the prosecution of any such
proceedings. Such trust receipt shall obligate the Servicer to return the
Mortgage File to the Collateral Agent on behalf of the Trustee when the need
therefor by the Servicer no longer exists unless the Mortgage
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Loan shall be liquidated, in which case, upon receipt of a certificate of a
Servicing Officer similar to that hereinabove specified, the trust receipt shall
be released by the Collateral Agent on behalf of the Trustee to the Servicer.
Section 5.08 Servicing Compensation; Payment of Certain
Expenses by Servicer. On each Distribution Date, the Servicer shall be entitled
to receive, and the Trustee shall pay in the event such servicing compensation
is not retained by the Servicer, out of collections on the Mortgage Loans for
the Due Period, as servicing compensation for such Due Period, an amount (the
"Monthly Servicing Fee") equal to the product of one-twelfth of the Servicing
Fee. Additional servicing compensation in the form of assumption fees, late
payment charges or extension and other administrative charges shall be retained
by the Servicer. The Servicer shall be required to pay all expenses incurred by
it in connection with its activities hereunder (including payment of all fees
and expenses of the Subservicer and payment of the Trustee Fee to the extent
that monies in the Collection Account are insufficient therefor, as provided in
Section 9.05 hereof, and all other fees and expenses not expressly stated
hereunder to be payable by or from another source) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 5.09 Annual Statement as to Compliance. The Servicer
will deliver to the Depositor, the Trustee, the Rating Agencies, the Certificate
Insurer and each Certificateholder, on or before April 30 of each year,
beginning April 30, 2004, an Officer's Certificate of the Servicer stating that
(a) a review of the activities of the Servicer during the preceding calendar
year and of its performance under this Agreement has been made under such
Responsible Officer's supervision and (b) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its material
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof.
Section 5.10 Annual Independent Public Accountants' Servicing
Report. On or before April 30 of each year, beginning April 30, 2004, the
Servicer at its expense shall cause a firm of independent public accountants
that is a member of the American Institute of Certified Public Accountants (who
may also render other services to the Servicer) to furnish a report to the
Depositor, the Trustee, the Rating Agencies, the Certificate Insurer and each
Certificateholder to the effect that such firm has examined certain documents
and records relating to the servicing of mortgage loans under pooling and
servicing agreements (including this Agreement) substantially similar to this
Agreement, and that such examination, which has been conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers (to
the extent that the procedures in such audit guide are applicable to the
servicing obligations set forth in such agreements), has disclosed no items of
noncompliance with the provisions of this Agreement which, in the opinion of
such firm, are material, except for such items of noncompliance as shall be set
forth in such report.
Section 5.11 Access to Certain Documentation. Each of the
Servicer, the Depositor and the Unaffiliated Seller shall permit the designated
agents or representatives of each Certificateholder, the Certificate Insurer and
the Trustee (i) to examine and make copies of and abstracts from all books,
records and documents (including computer tapes and disks) in the possession or
under the control of the Servicer, the Depositor or the Unaffiliated Seller
relating
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to the Mortgage Loans and (ii) to visit the offices and properties of the
Servicer and of the Unaffiliated Seller for the purpose of examining such
materials and to discuss matters relating to the Mortgage Loans and the
Servicer's, the Depositor's and the Unaffiliated Seller's performance under this
Agreement with any of the officers or employees of the Servicer, the Depositor
and the Unaffiliated Seller having knowledge thereof and with the independent
public accountants of the Servicer (and by this provision the Servicer and the
Unaffiliated Seller each authorize their respective accountants to discuss their
respective finances and affairs), all at such reasonable times, as often as may
be reasonably requested and without charge to such Certificateholder or the
Trustee.
Section 5.12 Maintenance of Fidelity Bond. The Servicer shall
during the term of its service as servicer maintain in force a fidelity bond and
errors and omissions insurance in respect of its officers, employees or agents.
Such bond and insurance shall comply with the requirements from time to time of
the FNMA for Persons performing servicing for mortgage loans purchased by such
association.
Section 5.13 The Subservicers. The parties acknowledge that
the Servicer intends to appoint the Subservicers as the Servicer's agents for
the purpose of servicing on the Servicer's behalf such of the Mortgage Loans as
were originated by such subservicer. The Servicer agrees to cause the
Subservicers to service such Mortgage Loans in a manner consistent with the
Accepted Servicing Practices set forth in this Agreement, and agrees that
receipt by the Subservicers of any and all amounts which by the terms hereof are
required to be deposited in the Collection Account shall constitute receipt
thereof by the Servicer for all purposes hereof as of the date so received by
the Subservicers. Notwithstanding such designation of the Subservicers, the
Servicer agrees that it is, and it shall remain, fully obligated under the terms
hereof as Servicer with respect to all such Mortgage Loans, and nothing herein
shall relieve or release the Servicer from its obligations to the other parties
hereto to service such Mortgage Loans in the manner provided in this Agreement.
Section 5.14 Reports to the Trustee; Collection Account
Statements. Not later than fifteen (15) days after each Distribution Date, the
Servicer shall provide to the Trustee and the Certificate Insurer a statement,
certified by a Servicing Officer, setting forth the status of the Collection
Account as of the close of business on the related Distribution Date, stating
that all distributions required by this Agreement to be made by the Servicer on
behalf of the Trustee have been made (or if any required distribution has not
been made by the Servicer, specifying the nature and status thereof) and
showing, for the period covered by such statement, the aggregate of deposits
into and withdrawals from the Collection Account for each category of deposit
specified in Section 5.02 and each category of withdrawal specified in Section
5.03 and the aggregate of deposits into the Collection Account as specified in
Section 6.01(c). Such statement shall also state the aggregate unpaid principal
balance of all the Mortgage Loans as of the close of business on the last day of
the month preceding the month in which such Distribution Date occurs. Copies of
such statement shall be provided by the Trustee to any Certificateholder upon
request.
Section 5.15 Optional Purchase of Defaulted Mortgage Loans.
(a) The Unaffiliated Seller, in its sole discretion, shall have the right,
after the aggregate Principal Balance of defaulted Mortgage Loans exceeds 1.50%
of the Maximum Pool Principal Balance,
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to elect (by written notice sent to the Trustee and the Certificate Insurer),
but shall not be obligated, to purchase for its own account from the Trust Fund
any Mortgage Loan which is one hundred and eighty (180) days or more Delinquent
in the manner and at the price specified in Section 2.06(c). The purchase price
for any Mortgage Loan purchased hereunder shall be deposited in the Collection
Account and the Trustee, upon receipt of such deposit, shall release or cause to
be released to the Unaffiliated Seller the related Trustee's Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Unaffiliated Seller, in each case without recourse, as shall be necessary to
vest in the Unaffiliated Seller any Mortgage Loan released pursuant hereto and
the Unaffiliated Seller shall succeed to all the Trustee's right, title and
interest in and to such Mortgage Loan and all security and documents related
thereto. Such assignment shall be an assignment outright and not for security.
The Unaffiliated Seller shall thereupon own such Mortgage Loan, and all security
and documents, free of any further obligation to the Trustee, the Certificate
Insurer or the Certificateholders with respect thereto.
(b) If the Unaffiliated Seller shall have repurchased
Mortgage Loans under this Section 5.15 in an aggregate Principal Balance equal
to 2.00% of the Maximum Pool Principal Balance, the Unaffiliated Seller may not
thereafter exercise its right under this Section 5.15 to purchase any Mortgage
Loan without the prior written consent of the Certificate Insurer. Any request
by the Unaffiliated Seller to the Certificate Insurer for consent to repurchase
Mortgage Loans that are not the most Delinquent shall be accompanied by a
description of the Mortgage Loans that have been Delinquent longer than the
Mortgage Loan or Mortgage Loans the Unaffiliated Seller proposes to repurchase.
If the Certificate Insurer fails to respond to such request within ten (10)
Business Days after receipt thereof, the Unaffiliated Seller shall be deemed to
have been granted consent to repurchase the Mortgage Loan or Mortgage Loans
proposed to be repurchased. Notice to the Certificate Insurer shall be delivered
in accordance with the terms of the Insurance and Indemnity Agreement.
Notwithstanding the foregoing, the Unaffiliated Seller shall in no event
repurchase Mortgage Loans pursuant to this Section 5.15 in an aggregate
Principal Balance in excess of 10.00% of the Maximum Pool Principal Balance.
Section 5.16 Reports to be Provided by the Servicer. (a) In
connection with the transfer of the Certificates, the Trustee on behalf of any
Certificateholder may request that the Servicer make available to any
prospective Certificateholder annual financial statements of the Servicer for
one or more of the most recently completed five fiscal years for which such
statements are available, which request shall not be unreasonably denied or
unreasonably delayed. Such annual financial statements also shall be made
available to the Certificate Insurer upon request.
(b) The Servicer also agrees to make available on a
reasonable basis to the Certificate Insurer or any prospective Certificateholder
a knowledgeable financial or accounting officer for the purpose of answering
reasonable questions respecting recent developments affecting the Servicer or
the financial statements of the Servicer and to permit the Certificate Insurer
or such prospective Certificateholder to inspect the Servicer's servicing
facilities during normal business hours for the purpose of satisfying such
prospective Certificateholder that the Servicer has the ability to service the
Mortgage Loans in accordance with this Agreement.
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Section 5.17 Adjustment of Servicing Compensation in Respect
of Prepaid Mortgage Loans. The Monthly Servicing Fee that the Servicer shall be
entitled to receive with respect to all of the Mortgage Loans and each
Distribution Date shall be offset on such Distribution Date by an amount equal
to the aggregate Prepayment Interest Shortfall with respect to all Mortgage
Loans which were subjects of Principal Prepayments during the month preceding
the month of such Distribution Date. The amount of any offset against the
Monthly Servicing Fee with respect to any Distribution Date under this Section
5.17 shall be limited to the Monthly Servicing Fee otherwise payable to the
Servicer (without adjustment on account of Prepayment Interest Shortfalls) with
respect to such Distribution Date, and the rights of the Certificateholders to
the offset of the aggregate Prepayment Interest Shortfalls shall not be
cumulative.
Section 5.18 Periodic Advances; Special Advance. (a) If,
on any Servicer Remittance Date, the Servicer determines that any Monthly
Payments due on the Due Date immediately preceding such Servicer Remittance Date
have not been received as of the close of business on the Business Day preceding
such Servicer Remittance Date, the Servicer shall determine the amount of any
Periodic Advance required to be made with respect to the related Distribution
Date. The Servicer shall include in the amount to be deposited in the Collection
Account on such Servicer Remittance Date an amount equal to the Periodic
Advance, if any, which deposit may be made in whole or in part from funds in the
Collection Account being held for future distribution or withdrawal on or in
connection with Distribution Dates in subsequent months. Any funds being held
for future distribution to Certificateholders and so used shall be replaced by
the Servicer from its own funds by deposit in the Collection Account on or
before the Business Day preceding the next Servicer Remittance Date on which the
funds in the Collection Account shall be less than the amount necessary to pay
in full the distributions required to be made on such date; provided, that if
such funds are not sufficient the Servicer will use its own funds to the extent
necessary to fulfill its replacement or advance obligation.
The Servicer shall designate on its records the specific
Mortgage Loans and related installments (or portions thereof) as to which such
Periodic Advance shall be deemed to have been made, such determination being
conclusive for purposes of withdrawals from the Collection Account pursuant to
Section 5.03.
(b) In addition to the Periodic Advances the Servicer
shall make a special advance (the "Special Advance") on the Closing Date as set
forth in Section 6.01, with respect to interest on Mortgage Loans not having
their first payment due until after March 2003. The Special Advance will be
deposited into the Interest Reserve Account and, on the immediately succeeding
Distribution Date, an amount equal to the lesser of (1) the difference of (i)
the aggregate Class Monthly Interest for each Class of Offered Certificates for
such Distribution Date over (ii) the sum of (x) the amount of interest collected
for the first Due Period and (y) the amount on deposit in the Interest Reserve
Account immediately prior to such Special Advance and (2) an amount equal to the
amount of interest that would have accrued on all such Mortgage Loans from the
applicable Cut-Off Date to its corresponding scheduled payment date, assuming it
had a payment date in March 2003, will be transferred by the Trustee from the
Interest Reserve Account to the Distribution Account and treated as a portion of
the Interest Remittance Amount. Any funds remaining in the Interest Reserve
Account after the immediately succeeding Distribution Date shall be remitted to
the Servicer on such Distribution Date. The Servicer shall also make the Special
Advance required by Section 2.03(f) in respect of each Subsequent
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Transfer Date. The Special Advance shall be made without regard to
recoverability, and shall not be reimbursable, except as set forth in the
preceding sentences. In no event shall the Trustee, as successor Servicer, be
liable for the payment of the Special Advance except to the extent of the amount
on deposit in the Interest Reserve Account.
Section 5.19 Indemnification; Third Party Claims. (a) The
Servicer agrees to indemnify and to hold each of the Depositor, the Trustee, the
Back-up Servicer, the Collateral Agent, the Unaffiliated Seller, the Certificate
Insurer and each Certificateholder harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Depositor, the Trustee, the Back-up
Servicer, the Collateral Agent, the Unaffiliated Seller, the Certificate Insurer
and any Certificateholder may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance with
the terms of this Agreement. Each indemnified party and the Servicer shall
immediately notify the other indemnified parties if a claim is made by a third
party with respect to this Agreement, and the Servicer shall assume the defense
of any such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Depositor, the Servicer, the Back-up
Servicer, the Trustee, the Unaffiliated Seller, the Certificate Insurer and/or a
Certificateholder in respect of such claim. The obligations of the Servicer
under this Section 5.19 arising prior to any resignation or termination of the
Servicer hereunder shall survive the resignation or termination of the Servicer.
(b) Upon receipt of written instruction from the
Servicer, signed by a Servicing Officer, the Trustee may, if necessary,
reimburse the Servicer from amounts otherwise distributable on the Class X and R
Certificates for all amounts advanced by it pursuant to Section 4.04 of the
Unaffiliated Seller's Agreement, except when the claim relates directly to the
failure of the Servicer, if it is, or is an Affiliate of, the Unaffiliated
Seller, to perform its obligations to service and administer the Mortgages in
compliance with the terms of the Unaffiliated Seller's Agreement, or the failure
of the Unaffiliated Seller to perform its duties in compliance with the terms of
this Agreement.
(c) Upon receipt of written instruction from the
Servicer, signed by a Servicing Officer, the Trustee shall reimburse the
Unaffiliated Seller from amounts otherwise distributable on the Class X and R
Certificates for all amounts advanced by the Unaffiliated Seller pursuant to the
second sentence of Section 4.04(a) of the Unaffiliated Seller's Agreement except
when the relevant claim relates directly to the failure of the Unaffiliated
Seller to perform its duties in compliance with the terms of the Unaffiliated
Seller's Agreement.
Section 5.20 Maintenance of Corporate Existence and Licenses;
Merger or Consolidation of the Servicer. (a) The Servicer will keep in full
effect its existence, rights and franchises as a corporation, will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 3.01 to be true and correct at all
times under this Agreement.
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(b) Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to the business of the Servicer, shall be an established mortgage loan servicing
institution that has a net worth of at least $15,000,000 and is a Permitted
Transferee, and in all events shall be the successor of the Servicer without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding. The Servicer
shall send notice of any such merger or consolidation to the Trustee and the
Certificate Insurer.
Section 5.21 Assignment of Agreement by Servicer; Servicer Not
to Resign. The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Back-up Servicer, the Unaffiliated Seller, the Certificate Insurer
and the Trustee; provided, however, that in the event the Servicer is terminated
pursuant to Section 7.01 hereof, the consent of the Unaffiliated Seller shall no
longer be required, or upon the determination that the Servicer's duties
hereunder are no longer permissible under applicable law and that such
incapacity cannot be cured by the Servicer without incurring, in the reasonable
judgment of the Certificate Insurer, unreasonable expense. Any such
determination that the Servicer's duties hereunder are no longer permissible
under applicable law permitting the resignation of the Servicer shall be
evidenced by a written Opinion of Counsel (who may be outside counsel for the
Servicer) to such effect delivered to the Trustee, the Back-up Servicer, the
Unaffiliated Seller, the Depositor and the Certificate Insurer. No such
resignation shall become effective until the Trustee or a successor appointed in
accordance with the terms of this Agreement has assumed the Servicer's
responsibilities and obligations hereunder in accordance with Section 7.02. The
Servicer shall provide the Trustee, the Back-up Servicer, the Certificate
Insurer and the Rating Agencies with 30 days prior written notice of its
intention to resign pursuant to this Section 5.21.
Section 5.22 Periodic Filings with the Securities and Exchange
Commission; Additional Information. The Trustee shall prepare or cause to be
prepared, and shall execute as trustee on behalf of the Trust (other than any
Form 10-K, which shall be executed by the Servicer, on behalf of the Trust), for
filing with the Commission (other than the initial Current Report on Form 8-K to
be filed by the Depositor in connection with the issuance of the Certificates)
any and all reports, statements and information respecting the Trust and/or the
Certificates required to be filed, and shall solicit any and all proxies of the
Certificateholders whenever such proxies are required to be solicited, pursuant
to the Securities Exchange Act of 1934, as amended. Unless otherwise advised by
the Servicer (with the consent of the Depositor), the reports to be filed shall
consist only of the following: 8-K reports attaching the related Servicer
Remittance Report, to be filed in April of 2003 through December of 2003, a Form
10-K to be filed no later than March 31 of 2004, including any accountant's
report referred to in Section 5.10, and a Form 15 to be filed in January 2004
and to be executed by the Servicer. The Servicer shall prepare, execute and
deliver to the Trustee for filing with the Commission no later than March 15 of
each year in which a Form 10-K is filed with the Commission the certification
required under Section 302(a) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (as such may be
amended from time to time) and any rules or regulations promulgated with respect
thereto (which certification shall be executed by the Servicer). Fees and
expenses incurred by the Trustee in connection with the foregoing shall be
reimbursed pursuant to Section 9.05 and shall not be paid by the Trust.
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The Servicer agrees to promptly furnish to the Trustee, from
time to time upon request, such further information, reports and financial
statements as the Trustee deems appropriate to prepare and file all necessary
reports with the Securities and Exchange Commission.
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01 Establishment of Accounts; Withdrawals from
Accounts; Deposits to the Distribution Account. (a) The Trustee shall
establish and maintain a Distribution Account which shall be titled
"Distribution Account, JPMorgan Chase Bank, as trustee for the registered
holders of ABFS Mortgage Loan Trust 2003-1, Mortgage Pass-Through Certificates,
Series 2003-1", which account shall be an Eligible Account held by the Trustee
on behalf of the Certificateholders and the Certificate Insurer. The Trustee
shall establish and maintain on behalf of the Certificateholders and the
Certificate Insurer the Interest Reserve Account which shall be titled "Interest
Reserve Account, JPMorgan Chase Bank, as trustee for the registered holders of
ABFS Mortgage Loan Trust 2003-1, Mortgage Pass-Through Certificates, Series
2003-1" which account shall be an Eligible Account. If the Original Pre-Funded
Amount is greater than zero, the Trustee shall establish and maintain on behalf
of the Certificateholders and the Certificate Insurer the Pre-Funding Account
which shall be titled "Pre-Funding Account, JPMorgan Chase Bank, as trustee for
the registered holders of ABFS Mortgage Loan Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1", which account shall be an Eligible Account, and
the Capitalized Interest Account which shall be titled "Capitalized Interest
Account, JPMorgan Chase Bank, as trustee for the registered holders of ABFS
Mortgage Loan Trust 2003-1, Mortgage Pass-Through Certificates, Series 2003-1",
which account shall be an Eligible Account. Upon receipt of the proceeds of the
sale of the Certificates, on the Closing Date, the Trustee shall, upon the
Unaffiliated Seller's direction, from the proceeds of the sale of the
Certificates, deposit, on behalf of the Certificateholders and the Certificate
Insurer in the Interest Reserve Account, an amount equal to $1,585,444.20. If
the Original Pre-Funded Amount is greater than zero, upon receipt of the
proceeds of the sale of the Certificates, on the Closing Date, the Trustee
shall, upon the Unaffiliated Seller's direction, from the proceeds of the sale
of the Certificates, deposit, on behalf of the Certificateholders and the
Certificate Insurer (i) in the Pre-Funding Account, the Original Pre-Funded
Amount, and (ii) in the Capitalized Interest Account, an amount equal to three
months' interest calculated at the Adjusted Pass-Through Rate on the Pre-Funding
Amount (net of any Pre-Funding Earnings). Amounts on deposit in the Interest
Reserve Account shall be invested by the Trustee, at the direction of the
Servicer in Permitted Investments. In the event that the Servicer fails to
provide written investment instructions, the Trustee shall invest such funds
pursuant to clause (v) of the definition of Permitted Investments. Any such
Permitted Investment shall mature no later than the Servicer Remittance Date.
All income realized from any such Permitted Investment shall be for the benefit
of the Servicer as additional servicing compensation. The amount of any losses
incurred in respect of any such Permitted Investment shall be deposited in the
Interest Reserve Account by the Servicer out if its own funds immediately as
realized.
(b) The Servicer shall direct the Trustee in writing to
invest the funds in the Distribution Account only in Permitted Investments. Any
such Permitted Investment shall
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mature no later than one Business Day prior to the Distribution Date. No
Permitted Investment shall be sold or disposed of prior to maturity. All income
realized from any such Permitted Investment shall be for the benefit of the
Servicer as additional servicing compensation. The amount of any losses incurred
in respect of any such investments shall be deposited in the Distribution
Account by the Servicer out of its own funds immediately as realized.
(c) On each Servicer Remittance Date, the Servicer shall
cause to be deposited in the Distribution Account, from funds on deposit in the
Collection Account, (a) an amount equal to the Servicer Remittance Amount and
(b) Net Foreclosure Profits, if any with respect to the related Distribution
Date, minus any portion thereof payable to the Servicer pursuant to Section
5.03. On each Servicer Remittance Date, the Servicer shall also deposit into the
Distribution Account any Periodic Advances with respect to the related
Distribution Date calculated in accordance with Section 5.18 and any amounts
required to be deposited in connection with a Subsequent Mortgage Loan pursuant
to Section 2.03(f); on the Servicer Remittance Dates relating to the Pre-Funding
Distribution Dates, if any, the Servicer also will deposit the Special Advance,
if any.
(d) On the Pre-Funding Distribution Dates, if any, the
Trustee shall transfer from the Capitalized Interest Account to the Distribution
Account the Capitalized Interest Requirement, if any, for such Distribution
Date.
(e) On the Distribution Date following either the final
Subsequent Transfer Date or the Final Pre-Funding Distribution Date, whichever
date is earlier, any amounts remaining in the Capitalized Interest Account, if
any, after taking into account the transfers in respect of the Distribution Date
described in clause (d) above, shall be paid to the Unaffiliated Seller, and the
Capitalized Interest Account shall be terminated.
(f) On any Subsequent Transfer Date, the Unaffiliated
Seller shall instruct the Trustee in writing to withdraw from the Pre-Funding
Account an amount equal to 100% of the aggregate Principal Balances as of the
related Subsequent Cut-Off Date of the Subsequent Mortgage Loans sold to the
Trust on such Subsequent Transfer Date and pay such amount to or upon the order
of the Unaffiliated Seller upon satisfaction of the conditions set forth in
Section 2.03(b) and (c) hereof with respect to such transfer. The Trustee may
conclusively rely on such written instructions from the Unaffiliated Seller.
(g) If the Pre-Funding Amount (exclusive of Pre-Funding
Earnings), if any, has been reduced to $100,000 or less by the last day of any
calendar month during the Pre-Funding Period, then, on the related Pre-Funding
Distribution Date, after giving effect to any reductions in the Pre-Funding
Amount on such date, the Trustee shall withdraw from the Pre-Funding Account on
such date and deposit in the Distribution Account the amount on deposit in the
Pre-Funding Account other than any Pre-Funding Earnings and distribute such
amount to the Holders of the Certificates in respect of the Principal
Distribution Amount.
(h) On the Pre-Funding Distribution Dates, if any, the
Trustee shall transfer from the Pre-Funding Account to the Distribution Account
the Pre-Funding Earnings, if any, applicable as of each such Distribution Date.
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Section 6.02 Permitted Withdrawals From the Distribution
Account. The Trustee shall withdraw or cause to be withdrawn funds from the
Distribution Account for the following purposes:
(a) to effect the distributions described in Section
6.05;
(b) to pay to the Unaffiliated Seller with respect to
each Mortgage Loan or property acquired in respect thereof that has
been repurchased or replaced pursuant to Section 2.05 or 3.03 or to pay
to the Servicer with respect to each Mortgage Loan or property acquired
in respect thereof that has been purchased, all amounts received
thereon and not required to be distributed as of the date on which the
related repurchase or purchase price or Principal Balance was
determined;
(c) to pay the Servicer any interest earned on or
investment income earned with respect to funds in the Distribution
Account;
(d) to return to the Collection Account any amount
deposited in the Distribution Account that was not required to be
deposited therein; and
(e) to clear and terminate the Distribution Account upon
termination of the Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Distribution Account pursuant to each of subclauses (a)
through (e) listed above.
Section 6.03 Collection of Money. Except as otherwise
expressly provided herein, the Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Trustee pursuant to
this Agreement, including (a) all payments due on the Mortgage Loans in
accordance with the respective terms and conditions of such Mortgage Loans and
required to be paid over to the Trustee by the Servicer or by any Sub-Servicer
and (b) Class M Insured Payments. The Trustee shall hold all such money and
property received by it, as part of the Trust Fund and shall apply it as
provided in this Agreement.
Section 6.04 The Certificate Insurance Policy. (a) Within
two (2) days of each Servicer Remittance Date and based solely on the Servicer's
Remittance Report delivered to the Trustee, the Trustee shall determine with
respect to the immediately following Distribution Date, the Net Available
Amount.
(b) If on any Distribution Date there is a Class M
Deficiency Amount, the Trustee shall complete a notice and certificate in the
form of Exhibit A to the Certificate Insurance Policy and submit such notice to
the Certificate Insurer no later than 10:00 a.m. New York, New York City time on
the second Business Day preceding such Distribution Date as a claim for an Class
M Insured Payment in an amount equal to such Class M Deficiency Amount.
(c) The Trustee shall establish a separate Eligible
Account for the benefit of Holders of the Certificates and the Certificate
Insurer referred to herein as the "Certificate Insurance Payment Account" over
which the Trustee shall have exclusive control and sole right of withdrawal. The
Trustee shall deposit upon receipt any amount paid under the Certificate
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Insurance Policy in the Certificate Insurance Payment Account and distribute
such amount only for purposes of payment to the Class M Certificateholders of
the Class M Insured Payment for which a claim was made and such amount may not
be applied to satisfy any costs, expenses or liabilities of the Servicer, the
Trustee or the Trust Fund. Amounts paid under the Certificate Insurance Policy,
to the extent needed to pay the Class M Deficiency Amount shall be transferred
to the Distribution Account on the related Distribution Date and disbursed by
the Trustee to the Class M Certificateholders in accordance with Section 6.05.
It shall not be necessary for such payments to be made by checks or wire
transfers separate from the checks or wire transfers used to pay the Class M
Deficiency Amount with other funds available to make such payment. However, the
amount of any payment of principal or of interest on the Class M Certificates to
be paid from funds transferred from the Certificate Insurance Payment Account
shall be noted as provided in paragraph (d) below in the Certificate Register
and in the statement to be furnished to Holders of the Class M Certificates
pursuant to Section 6.07. Funds held in the Certificate Insurance Payment
Account shall not be invested. Any funds remaining in the Certificate Insurance
Payment Account on the first Business Day following a Distribution Date shall be
returned to the Certificate Insurer pursuant to the written instructions of the
Certificate Insurer by the end of such Business Day.
(d) The Trustee shall keep a complete and accurate record
of the amount of interest and principal paid in respect of any Class M
Certificate from moneys received under the Certificate Insurance Policy. The
Certificate Insurer shall have the right to inspect such records at reasonable
times during normal business hours upon one Business Day's prior notice to the
Trustee.
(e) In the event that the Trustee has received a
certified copy of an order of the appropriate court that any Class M Insured
Payment has been voided in whole or in part as a preference payment under
applicable bankruptcy law, the Trustee shall so notify the Certificate Insurer,
shall comply with the provisions of the Certificate Insurance Policy to obtain
payment by the Certificate Insurer of such voided Class M Insured Payment, and
shall, at the time it provides notice to the Certificate Insurer, notify, by
mail to the Certificateholders of the affected Class M Certificates that, in the
event any Certificateholder's Class M Insured Payment is so voided, such
Certificateholder will be entitled to payment pursuant to the Certificate
Insurance Policy, a copy of which shall be made available through the Trustee,
the Certificate Insurer or the Certificate Insurer's fiscal agent, if any, and
the Trustee shall furnish to the Certificate Insurer or its fiscal agent, if
any, its records evidencing the payments which have been made by the Trustee and
subsequently recovered from the Certificateholders, and dates on which such
payments were made.
(f) The Trustee shall promptly notify the Certificate
Insurer of any proceeding or the institution of any action, of which a
Responsible Officer of the Trustee has actual knowledge, seeking the avoidance
as a preferential transfer under applicable bankruptcy, insolvency, receivership
or similar law (a "Class M Preference Claim") of any distribution made with
respect to the Class M Certificates. Each Class M Certificateholder, by its
purchase of a Class M Certificate, the Servicer and the Trustee agree that, the
Certificate Insurer may at any time during the continuation of any proceeding
relating to a Class M Preference Claim direct all matters relating to such Class
M Preference Claim, including, without limitation, (i) the direction of any
appeal of any order relating to such Class M Preference Claim and (ii) the
posting of any
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surety, supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Certificate Insurer shall be subrogated
to, and each Class M Certificateholder, the Servicer and the Trustee hereby
delegate and assign to the Certificate Insurer, to the fullest extent permitted
by law, the rights of the Servicer, the Trustee and each Class M
Certificateholder in the conduct of any such Class M Preference Claim,
including, without limitation, all rights of any party to any adversary
proceeding or action with respect to any court order issued in connection with
any such Class M Preference Claim.
(g) The Trustee shall, upon retirement of the Class M
Certificates, furnish to the Certificate Insurer a notice of such retirement,
and, upon retirement of the Class M Certificates and the expiration of the term
of the Certificate Insurance Policy, surrender the Certificate Insurance Policy
to the Certificate Insurer for cancellation.
Section 6.05 Distributions. No later than 12:00 noon, New
York, New York time on the Servicer Remittance Date, the Servicer shall deliver
to the Trustee and the Back-up Servicer a report in computer-readable form
containing such information as to enable the Trustee to make the distributions
pursuant to clauses (a) through (d) below, and such other information as the
Trustee shall reasonably require. With respect to amounts held in the
Distribution Account, on each Distribution Date, the Trustee shall make the
following allocations, disbursements and transfers in the following order of
priority, and each such allocation, transfer and disbursement shall be treated
as having occurred only after all preceding allocations, transfers and
disbursements have occurred:
(a) Allocations of Available Amount. On each Distribution
Date, the Trustee, as paying agent, or any other paying agent appointed by the
Trustee (the "Paying Agent"), based solely on the information received from the
Servicer in the Servicer Remittance Report prior to such Distribution Date shall
make the following disbursements and transfers from the Available Amount then on
deposit in the Distribution Account and, with respect to the Class M Certificate
only, any Class M Insured Payment for such Distribution Date, in the following
order of priority until such amounts have been fully distributed:
(i) first, to the Servicer, the Servicing Fee, to the
extent such amounts were not retained by the Servicer from collections;
(ii) second, to the Trustee, the Trustee Fee;
(iii) third, to the Back-up Servicer, the Back-up Servicing
Fee and any amounts owing to the Back-up Servicer in connection with
the transfer of servicing after the resignation or removal of the
Servicer, in an amount not to exceed $200,000 in the aggregate for any
servicing transfer that has been effected;
(iv) fourth, concurrently, (i) to the Certificate Insurer,
the Premium Amount then due to it, and (ii) to the Interest Rate Hedge
Payment Fund (as a distribution to the Holders of the Class I
Certificates), the Class I Distribution Amount;
(v) fifth, concurrently, to the Class A and Class A-IO
Certificates and then to the Class M Certificates, in that order, the
Class Monthly Interest and any Class Interest Carryover Shortfall for
each such Class (or, following a Separation Event, concurrently,
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to the Class A and Class A-IO Certificates, and then to the Class M-1,
Class M-2 and Class M-3 Certificates, in that order);
(vi) sixth, to the Class A Certificates, the Class A
Principal Distribution Amount;
(vii) seventh, to the Certificate Insurer, the
Reimbursement Amount, if any;
(viii) eighth, to the Class M Certificates, the Class M
Principal Distribution Amount (or, following a Separation Event, to the
Class M-1, Class M-2 and Class M-3 Certificates, the Class M-1, Class
M-2 and Class M-3 Principal Distribution Amounts, respectively, in that
order);
(ix) ninth, to the Net WAC Cap Carryover Fund (as a
distribution to the Holders of the Class X Certificates), the lesser of
(x) the Class X Distribution Amount and (y) the WAC Excess;
(x) tenth, to the Trustee, to the extent not previously
paid, an amount equal to the sum of all reimbursable expenses incurred
in connection with its duties and obligations under this Agreement and
for any indemnity amounts payable to the Trustee under this Agreement;
(xi) eleventh, to the Back-up Servicer, to the extent not
paid pursuant to clause (iii) above, any amounts owing to the Back-up
Servicer in connection with the transfer of servicing after the
resignation or removal of the Servicer;
(xii) twelfth, to the Servicer to the extent of any
unreimbursed Periodic Advances and Servicing Advances;
(xiii) thirteenth, subject to the provisions of Section
6.13, to the Class X Certificates, the Class X Distribution Amount less
any amounts thereof applied pursuant to clauses (ix) through (xii); and
(xiv) fourteenth, to the Class R Certificates, any
remaining amount.
(b) Allocation of Pre-Funding Amounts. In addition to the
foregoing, if any Pre-Funding Amount remains on deposit in the Pre-Funding
Account, if any, at the end of the Pre-Funding Period, such remaining amount
will be included in the Principal Distribution Amount and applied to the
mandatory payment of the Class A and Class M Certificates, in accordance with
paragraph (a) above, on the first Distribution Date following the end of the
Pre-Funding Period.
(c) Allocation of Mortgage Loan Interest Shortfalls. On
any Distribution Date, any Mortgage Loan Interest Shortfalls for such
Distribution Date will be allocated as a reduction of the following amounts in
the following order of priority:
(i) to the amount payable to or in respect of the Class X
Certificates; and
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(ii) pro rata, as a reduction of the Class Monthly
Interest for the Class A, Class A-IO and Class M Certificates, based on
the amount of interest to which such Classes would otherwise be
entitled.
(d) Allocation of Applied Realized Loss Amounts. If, on
any Distribution Date, after giving effect to all distributions of principal as
described above (excluding any Class M Insured Principal Payment for such
Distribution Date), the aggregate Certificate Principal Balance of the Offered
Certificates exceeds the Current Pool Principal Balance for that Distribution
Date, the Certificate Principal Balance of the Class M Certificates will be
reduced by an amount equal to that excess, until the Certificate Principal
Balance of the Class M Certificates is reduced to zero. Any Applied Realized
Loss Amounts allocated to the Class M Certificates shall be allocated to the
Class M-3 Component, the Class M-2 Component and the Class M-1 Component, in
that order, until the Component Principal Balance of each component is reduced
to zero. The Certificate Insurer will be obligated to pay to the Holders of the
Class M Certificates pursuant to the Certificate Insurance Policy an amount
equal to the Applied Realized Loss Amount for such Distribution Date (after
taking into account any funds in the Interest Rate Hedge Payment Fund to be
applied on such Distribution Date towards the payment of such Applied Realized
Loss Amount pursuant to Section 6.10(d)), but in no event will such payment by
the Certificate Insurer be more than the Class M Collateralization Deficit.
Section 6.06 Investment of Accounts. (a) So long as no Event
of Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account (other than the
Certificate Insurance Payment Account) held by the Trustee shall be invested and
reinvested by the Trustee, as directed in writing by the Servicer, in one or
more Permitted Investments bearing interest or sold at a discount. If an Event
of Default shall have occurred and be continuing or if the Servicer does not
provide investment directions, the Trustee shall invest all Accounts in
Permitted Investments described in paragraph (v) of the definition of Permitted
Investments. No such investment in any Account shall mature later than the
Business Day immediately preceding the next Distribution Date.
(b) Subject to Section 6.01(b), if any amounts are needed
for disbursement from any Account held by the Trustee and sufficient uninvested
funds are not available to make such disbursement, the Trustee shall cause to be
sold or otherwise converted to cash a sufficient amount of the investments in
such Account. The Trustee shall not be, and the Servicer shall be, liable for
any investment loss or other charge resulting therefrom unless the Trustee's
failure to perform in accordance with this Section 6.06 is the cause of such
loss or charge.
(c) Subject to Section 9.01 hereof, the Trustee shall not
in any way be held liable by reason of any insufficiency in any Account held by
the Trustee resulting from any investment loss on any Permitted Investment
included therein (except to the extent that the Trustee is the obligor and has
defaulted thereon or as provided in subsection (b) of this Section 6.06).
(d) So long as no Event of Default shall have occurred
and be continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in any Account (other than the Certificate
Insurance Payment Account) shall be for the benefit of the Servicer as servicing
compensation (in addition to the Servicing Fee). The Servicer shall deposit
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in the related Account the amount of any loss incurred in respect of any
Permitted Investment held therein which is in excess of the income and gain
thereon immediately upon realization of such loss, without any right to
reimbursement therefor from its own funds.
Section 6.07 Reports. (a) On each Distribution Date the
Trustee shall forward to each Holder, the Underwriters, the Depositor, the
Back-up Servicer, the Certificate Insurer and the Rating Agencies the report
provided by the Servicer pursuant to Section 6.05 (the "Servicer Remittance
Report"), setting forth information including, without limitation, the
following:
(i) the amount of the distribution with respect to each
Class of Certificates;
(ii) the amount of such distributions allocable to
principal, separately identifying the aggregate amount of any Principal
Prepayments or other unscheduled recoveries of principal included
therein and separately identifying any Overcollateralization Increase
Amounts;
(iii) the amount of such distributions allocable to
interest and the calculation thereof;
(iv) the Certificate Principal Balance of each Class of
Offered Certificates, other than the Class A-IO Certificates, as of
such Distribution Date, together with the principal amount of each such
Class (based on a Certificate in an original principal amount of
$1,000) then outstanding, in each case after giving effect to any
payment of principal on such Distribution Date;
(v) the Class A-IO Notional Balance then outstanding as
of such Distribution Date, after giving effect to any payment of
interest on such Distribution Date;
(vi) the amount of any Class M Insured Payment included in
the amounts distributed to the Class M Certificateholders on such
Distribution Date;
(vii) the total of any Substitution Adjustments and any
Loan Repurchase Price amounts included in such distribution; and
(viii) the amounts, if any, of any Liquidated Loan Losses
for consumer purpose loans and for business purpose loans for the
related Due Period and cumulative Liquidated Loan Losses since the
Startup Day for consumer purpose loans and for business purpose loans.
Items (i), (ii) and (iii) above shall, with respect to the
Offered Certificates (other than the Class A-IO Certificates), be presented on
the basis of a Certificate having a $1,000 denomination. In addition, by January
31 of each calendar year following any year during which the Certificates are
outstanding, the Trustee shall furnish a report to each Holder of record if so
requested in writing at any time during each calendar year as to the aggregate
of amounts reported pursuant to (i), (ii) and (iii) with respect to the
Certificates for such calendar year.
(b) All distributions made to the Certificateholders of
each Class as a Class on each Distribution Date will be made on a pro rata basis
among the Certificateholders of each
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Class on the next preceding Record Date based on the Percentage Interest
represented by their respective Certificates, and shall be made by wire transfer
of immediately available funds to the account of such Certificateholder at a
bank or other entity having appropriate facilities therefor, if, in the case of
a Holder of an Offered Certificate, such Certificateholder shall own of record
Certificates of the same Class which have denominations aggregating at least
$5,000,000 appearing in the Certificate Register and shall have provided
complete wiring instructions at least five Business Days prior to the Record
Date, and otherwise by check mailed to the address of such Certificateholder
appearing in the Certificate Register.
(c) In addition, the Servicer Remittance Report described
in subsection (a) above forwarded by the Trustee to each Holder, to the
Underwriters, to the Servicer, to the Back-up Servicer, to the Depositor, to the
Certificate Insurer and to the Rating Agencies on each Distribution Date, shall
include the following information with respect to all Mortgage Loans as well as
a break out as to (x) consumer purpose and (y) business purpose Mortgage Loans
as of the close of business on the last Business Day of the prior calendar month
(except as otherwise provided in clause (v) below), which is hereby required to
be prepared by the Servicer and furnished to the Trustee for such purpose and to
the Certificate Insurer on or prior to the related Servicer Remittance Date:
(i) for the related Due Period, the total number of
Mortgage Loans and the aggregate Principal Balances thereof, together
with the number, aggregate principal balances of such Mortgage Loans
and the percentage (based on the aggregate Principal Balances of the
Mortgage Loans) of the aggregate Principal Balances of such Mortgage
Loans to the aggregate Principal Balance of all Mortgage Loans (A)
31-60 days Delinquent, (B) 61-90 days Delinquent and (C) 91 or more
days Delinquent;
(ii) for the related Due Period, the number, aggregate
Principal Balances of all Mortgage Loans and percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of the aggregate
Principal Balances of such Mortgage Loans to the aggregate Principal
Balance of all Mortgage Loans in foreclosure proceedings and the
number, aggregate Principal Balances of all Mortgage Loans and
percentage (based on the aggregate Principal Balances of the Mortgage
Loans) of any such Mortgage Loans also included in any of the
statistics described in the foregoing clause (i);
(iii) for the related Due Period, the number, aggregate
Principal Balances of all Mortgage Loans and percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of the aggregate
Principal Balances of such Mortgage Loans to the aggregate Principal
Balance of all Mortgage Loans relating to Mortgagors in bankruptcy
proceedings and the number, aggregate Principal Balances of all
Mortgage Loans and percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of any such Mortgage Loans also
included in any of the statistics described in the foregoing clause
(i);
(iv) for the related Due Period, the number, aggregate
Principal Balances of all Mortgage Loans and percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of the aggregate
Principal Balances of such Mortgage Loans to the aggregate Principal
Balance of all Mortgage Loans relating to REO Properties and the
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number, aggregate Principal Balances of all Mortgage Loans and
percentage (based on the aggregate Principal Balances of the Mortgage
Loans) of any such Mortgage Loans also included in any of the
statistics described in the foregoing clause (i);
(v) the weighted average Mortgage Interest Rate as of the
Due Date occurring in the Due Period related to such Distribution Date;
(vi) the weighted average remaining term to stated
maturity of all Mortgage Loans;
(vii) the book value of any REO Property;
(viii) the Cumulative Loss Percentage for the related Due
Period and the aggregate Cumulative Loss Percentage since the Closing
Date;
(ix) the Delinquency Ratio and the Rolling Three Month
Delinquency Rate;
(x) the aggregate Principal Balance of the three largest
Mortgage Loans; and
(xi) the total number of Mortgage Loans and the Aggregate
Principal Balance.
(d) No later than 12:00 noon, New York, New York time on
the Servicer Remittance Date, the Servicer shall deliver to the Back-up Servicer
an electronic transmission acceptable to the Back-up Servicer containing the
Servicer Remittance Report and the Required Information with respect to such
Servicer Remittance Date. No later than three (3) Business Days after each
Servicer Remittance Date, the Back-up Servicer shall use such electronic
transmission acceptable to the Back-up Servicer to (i) confirm that such
electronic transmission is in readable form and (ii) compare the following
information contained in the Servicer Remittance Report with that contained in
the Required Information: (A) the total number of Mortgage Loans, (B) the
aggregate Principal Balance of the Mortgage Loans and (C) the weighted average
Mortgage Interest Rate. The Back-up Servicer shall report any inconsistencies to
the Servicer and the Trustee (unless the Back-up Servicer and the Trustee are
the same party). The Back-up Servicer shall only review the information provided
by the Servicer in the Servicer Remittance Report and in the Required
Information and its obligation to report any inconsistencies shall be limited to
those apparent from the Back-up Servicer's review thereof and those relating to
the total number of Mortgage Loans, the aggregate Principal Balance of the
Mortgage Loans or the weighted average Mortgage Interest Rate. In the event that
the Back-up Servicer reports any discrepancies, the Servicer and the Back-up
Servicer shall attempt to reconcile such discrepancies prior to the next
succeeding Distribution Date, but in the absence of a reconciliation, the
Servicer's Remittance Report shall control for the purpose of calculations and
distributions with respect to the next succeeding Distribution Date. In the
event that the Back-up Servicer and the Servicer are unable to reconcile
discrepancies with respect to a Servicer's Remittance Report by the next
succeeding Distribution Date, the Servicer shall cause a firm of independent
certified public accountants, at the Servicer's expense, to audit the Servicer's
Remittance Report and, prior to the last day of the month after the month in
which such Servicer's Remittance Report was delivered, reconcile the
discrepancies. The effect, if any, of such reconciliation shall be reflected in
the Servicer's Remittance Report for the next succeeding Distribution Date.
Other than the duties specifically set forth in this Agreement, the Back-up
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Servicer shall have no obligations hereunder, including, without limitation, to
supervise, verify, monitor or administer the performance of the Servicer. The
Back-up Servicer shall have no liability for any actions taken or omitted by the
Servicer.
Section 6.08 Additional Reports by Trustee. (a) The
Trustee shall report to the Depositor, the Certificate Insurer and the Servicer
with respect to the amount then held in each Account (including investment
earnings accrued or scheduled to accrue) held by the Trustee and the identity of
the investments included therein, as the Depositor, the Certificate Insurer or
the Servicer may from time to time request in writing.
(b) From time to time, at the request of the Certificate
Insurer, the Trustee shall report to the Certificate Insurer with respect to its
actual knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth in
any Unaffiliated Seller's Agreement or in Section 3.01 or 3.02 hereof. The
Trustee shall also provide the Certificate Insurer such other information as may
be reasonably requested by them.
Section 6.09 Compensating Interest. Not later than the
Servicer Remittance Date, the Servicer shall remit to the Trustee (without right
of reimbursement therefor) for deposit into the Distribution Account an amount
equal to the lesser of (a) the aggregate of the Prepayment Interest Shortfalls
for the related Distribution Date resulting from Principal Prepayments during
the related Due Period and (b) its aggregate Monthly Servicing Fees received in
the related Due Period and shall not have the right to reimbursement therefor
(the "Compensating Interest"); provided, however, that Compensating Interest
with respect to any Mortgage Loan and any Distribution Date shall not exceed the
Servicing Fees due in respect of such Mortgage Loan on such Distribution Date.
Section 6.10 Supplemental Interest Trust; Net WAC Cap
Carryover Fund; Interest Rate Hedge Payment Fund. (a) The parties hereto do
hereby create and establish a trust, the "ABFS Mortgage Loan Supplemental
Interest Trust 2003-1" (the "Supplemental Interest Trust"). The Supplemental
Interest Trust shall hold (i) a trust account at the corporate trust office of
the Trustee (the "Net WAC Cap Carryover Fund"), to be held by the Trustee in its
name on behalf of the Supplemental Interest Trust, (ii) a trust account at the
corporate trust office of the Trustee (the "Interest Rate Hedge Payment Fund"),
to be held by the Trustee in its name on behalf of the Supplemental Interest
Trust and (iii) the Interest Rate Hedge Agreement. None of the assets of the
Supplemental Interest Trust shall be considered assets of the REMIC Trust, and
(x) any amounts transferred from the REMIC Trust to the Net WAC Cap Carryover
Fund shall be treated as distributions with respect to the Class X Certificates
and (y) any amounts transferred from the REMIC Trust to the Interest Rate Hedge
Payment Fund shall be treated as distributions with respect to the Class I
Certificates. The Trustee shall deposit all Hedge Payments and Hedge Termination
Payments received from the Hedge Counterparty under the Interest Payment Hedge
Agreement into the Interest Rate Hedge Payment Fund.
(b) On each Distribution Date, the Paying Agent shall,
based on the distribution information provided by the Servicer, withdraw all
amounts on deposit in the Net WAC Cap Carryover Fund on such Distribution Date
and pay to the applicable owners of each Net WAC Cap Carryover Right (which
owners shall, in the absence of contrary instructions
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received by the Trustee from the applicable Holders of the Capped Certificates,
be the Holders of the related Capped Certificates) or the owners of the Class X
Certificates, as applicable, the following amounts in the following priority:
(i) to the Class A Certificates, the Net WAC Cap
Carryover Amount for such Class;
(ii) to the Class M Certificates (or, following a
Separation Event, to the Class M-1, Class M-2 and Class M-3
Certificates, in that order), the Net WAC Cap Carryover Amount; and
(iii) to the owners of the Class X Certificates pro rata in
accordance with their Percentage Interests, any remaining amounts.
(c) On each Distribution Date, the Paying Agent shall,
based on the distribution information provided by the Servicer, withdraw all
amounts on deposit in the Interest Rate Hedge Payment Fund representing the
Class I Distribution Amount for such Distribution Date, and distribute such
amount, first, to the to Hedge Counterparty, an amount equal to the Hedge
Premium for such Distribution Date and, second, for distribution in accordance
with Section 6.10(d) below, any remaining amounts.
(d) On each Distribution Date, the Paying Agent shall,
based on the distribution information provided by the Servicer, withdraw all
amounts on deposit in the Interest Rate Hedge Payment Fund representing Hedge
Payments and any Hedge Termination Payments for such Distribution Date and any
Retained Hedge Amounts (as defined below) from any previous Distribution Dates
and distribute such amounts to the applicable owners of each Interest Rate Hedge
Payment Right, pro rata (which owners shall, in the absence of contrary
instructions received by the Trustee from the applicable Holders of the Class M
Certificates, be the Holders of the related Class M Certificates), in an amount
not greater than the sum of the Class Monthly Interest, any Class Interest
Carryover Shortfall and any Applied Realized Loss Amounts, in each case, for the
Class M Certificates for such Distribution Date. If, on any Distribution Date,
the sum of the Hedge Payments and any Hedge Termination Payments for such
Distribution Date are greater than the sum of the Class Monthly Interest, any
Class Interest Shortfall and any Applied Realized Loss Amounts for the Class M
Certificates for such Distribution Date, 50% of such excess amount shall be
distributed by the Paying Agent to the Holders of the Class I Certificates and
the remaining 50% of such excess amount shall be retained in the Interest Rate
Hedge Payment Fund for distribution on future Distribution Dates (such retained
amount being the "Retained Hedge Amount"). On each Distribution Date on or after
the Stepdown Date, if the aggregate Retained Hedge Amount remaining on deposit
in the Interest Rate Hedge Payment Fund following distributions to the Holders
of the Class M Certificates on such Distribution Date is greater than 0.50% of
the Certificate Principal Balance of the Class M Certificates on such
Distribution Date (after all distributions pursuant to Section 6.05 and this
Section 6.10), such excess amount shall be distributed by the Paying Agent to
the Holders of the Class I Certificates.
(e) The Paying Agent, on behalf of the Supplemental
Interest Trust, shall comply with all requirements of the Code and applicable
state and local law with respect to the withholding from any distributions made
by it to any Person entitled thereto of any applicable
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withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
(f) Notwithstanding any other provision of this Section
6.10, the Net WAC Cap Carryover Rights shall be separately transferable from the
related Capped Certificates, and the Interest Rate Hedge Payment Rights shall be
separately transferable from the related Class M Certificates, in each case,
subject to the restrictions on transfer set forth in Article IV hereof.
Section 6.11 Effect of Payments by the Certificate Insurer;
Subrogation. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Class M Certificates which is made
with moneys received pursuant to the terms of the Certificate Insurance Policy
shall not be considered payment of the Class M Certificates from the Trust Fund.
The Depositor, the Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Class M Certificate agrees, that without the need for any
further action on the part of the Certificate Insurer, the Depositor, the
Servicer, the Trustee or the Certificate Registrar (a) to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on the Class M Certificates to the Holders of such
Class M Certificates, the Certificate Insurer will be fully subrogated to, and
each Class M Certificateholder, the Servicer and the Trustee hereby delegate and
assign to the Certificate Insurer, to the fullest extent permitted by law, the
rights of such Holders to receive such principal and interest from the Trust
Fund, including, without limitation, any amounts due to the Class M
Certificateholders in respect of securities law violations arising from the
offer and sale of the Class M Certificates, and (b) the Certificate Insurer
shall be paid such amounts from the sources and in the manner provided herein
for the payment of such amounts and as provided in the Insurance and Indemnity
Agreement. The Trustee and the Servicer shall cooperate in all respects with any
reasonable request by the Certificate Insurer for action to preserve or enforce
the Certificate Insurer's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Holders as otherwise set
forth herein.
Section 6.12 Additional Rights of Certificate Insurer. (a)
The Trustee, the Depositor and the Servicer shall cooperate in all respects with
any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests hereunder without limiting
the rights or affecting the interests of the Certificateholders as otherwise set
forth herein.
(b) The Certificate Insurer will have the right to
exercise all rights, including voting rights, which the Holders of the Class M
Certificates are entitled to exercise under this Agreement, under the
Unaffiliated Seller Agreement or any other instrument, document or agreement
relating to the foregoing. In addition, the Certificate Insurer shall have the
right to participate in, to direct the enforcement or defense of, and, at the
Certificate Insurer's sole option, to institute or assume the defense of, any
action, proceeding or investigation for any remedy available to the Trustee with
respect to any matter that could adversely affect the Trust, the Trust Fund or
the rights or obligations of the Certificate Insurer hereunder, under the
Unaffiliated Seller Agreement, under the Insurance and Indemnity Agreement or
under the Certificate Insurance Policy or any other instrument, document or
agreement relating to the foregoing (collectively, the "Transaction Documents")
or under the other Transaction Documents, including (without limitation) any
insolvency or bankruptcy proceeding in respect of any
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Originator, the Unaffiliated Seller, the Servicer, the Depositor or any
Affiliate thereof provided, that such participation or direction shall not be in
conflict with any rule of law or with the terms of this Agreement. Following
written notice to the Trustee, the Certificate Insurer shall have exclusive
right to determine, in its sole discretion, the actions necessary to preserve
and protect the Trust and the Trust Fund. The Certificate Insurer shall be
entitled to reimbursement from the Distribution Account as provided for in
Section 6.05 for all out-of-pocket costs and expenses of the Certificate Insurer
in connection with such action, proceeding or investigation, including (without
limitation) reasonable attorneys' fees and any judgment or settlement entered
into affecting the Certificate Insurer or the Certificate Insurer's interests,
all of which shall be included in the Reimbursement Amount.
(c) In connection with any such action, proceeding or
investigation for any remedy available to the Trustee with respect to any matter
that could adversely affect the Trust, the Trust Fund or the rights or
obligations of the Certificate Insurer hereunder or under the Certificate
Insurance Policy or the Transaction Documents, including (without limitation)
any insolvency or bankruptcy proceeding in respect of any Originator, the
Unaffiliated Seller, the Servicer, the Depositor, the Trust or any Affiliate
thereof, the Trustee hereby agrees to cooperate with, and to take such action as
reasonably directed in writing by, the Certificate Insurer, including (without
limitation) entering into such agreements and settlements as the Certificate
Insurer shall direct, in its sole discretion, without the consent of any
Certificateholder. Notwithstanding any other provision herein or in any of the
other Transaction Documents, the Trustee shall not be liable to the Certificate
Insurer or any Certificateholder for any such action that conforms to the
direction of the Certificate Insurer.
(d) Any judgment or settlement entered against or
affecting the Trust or the Trust Fund in connection with any action, proceeding
or investigation shall be paid by the Trustee from the Trust Fund out of funds
that would otherwise be distributed to the Holders of the Class X or R
Certificates.
(e) The Trustee hereby agrees to provide to the
Certificate Insurer prompt written notice of any action, proceeding or
investigation that names the Trust or the Trustee as a party or that could
adversely affect the Trust, the Trust Fund or the rights or obligations of the
Certificate Insurer hereunder or under the Certificate Insurance Policy or the
Transaction Documents, including (without limitation) any insolvency or
bankruptcy proceeding in respect of any Originator, the Unaffiliated Seller, the
Servicer, the Depositor, the Trust or any Affiliate thereof.
(f) Notwithstanding anything contained herein or in any
of the other Transaction Documents to the contrary, the Trustee shall not,
without the Certificate Insurer's prior written consent or unless directed in
writing by the Certificate Insurer, undertake or join any litigation or agree to
any settlement of any action, proceeding or investigation affecting the Trust,
the Trust Fund or the rights or obligations of the Certificate Insurer hereunder
or under the Certificate Insurance Policy or the Transaction Documents.
(g) Each Holder of a Certificate, by acceptance of its
Certificate, and the Trustee agree that Certificate Insurer shall have such
rights as set forth in this Section, which are in addition to any rights of the
Certificate Insurer pursuant to the other provisions of the
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Transaction Documents, that the rights set forth in this Section may be
exercised by the Certificate Insurer, in its sole discretion, without the need
for the consent or approval of any Certificateholder or the Trustee,
notwithstanding any other provision contained herein or in any of the other
Transaction Documents, and that nothing contained in this Section shall be
deemed to be an obligation of the Certificate Insurer to exercise any of the
rights provided for herein.
(h) The Trustee shall, upon reasonable prior written
request, permit any representative of the Certificate Insurer, during the
Trustee's normal business hours, to examine all books of accounts, records,
reports and other information of the Trustee relating to the Certificates and
the Trust Fund (including, without limitation, the Mortgage Files), to make
copies and extracts therefrom and to discuss the Trustee's performance of its
duties with respect to the Transaction Documents with the Responsible Officers
of the Trustee.
Section 6.13 Special Reserve Account. On or prior to the
Distribution Date occurring in October 2005, the Trustee shall establish and
maintain a Special Reserve Account which shall be titled "Special Reserve
Account, JPMorgan Chase Bank, as trustee for the registered holders of the ABFS
Mortgage Loan Trust 2003-1, Mortgage Pass-Through Certificates, Series 2003-1,
Class M", which account shall be an Eligible Account held by the Trustee on
behalf of the Class M Certificateholders and the Certificate Insurer. If, on any
Distribution Date occurring from October 2005 through March 2006, the Current
Pool Principal Balance (after giving effect to distributions on such
Distribution Date) has been reduced to less than 50.0% of the Maximum Pool
Principal Balance, the Paying Agent shall deposit into the Special Reserve
Account, from the amount otherwise distributable to the Holders of the Class X
Certificates pursuant to Section 6.05(a)(xiii) hereof on such Distribution Date,
an amount equal to 28% of the Principal Distribution Amount for such
Distribution Date, or such lesser amount as would have been distributable to the
Holders of the Class X Certificates. Any amounts on deposit in the Special
Reserve Account on any Distribution Date shall be available for the payment of,
and deposited by the Paying Agent into the Distribution Account in satisfaction
of, any Class M Insured Payment that would otherwise be required to be made by
the Certificate Insurer on such Distribution Date. Provided that no Trigger
Event is then in effect, all amounts on deposit in the Special Reserve Account
on the April 2006 Distribution Date (after giving effect to distributions on
such Distribution Date) will be distributed by the Paying Agent to the Holders
of the Class X Certificates. In the event that any amounts remain on deposit in
the Special Reserve Account on the date of termination of this Agreement
pursuant to Article VIII (after the making of all payments to the
Certificateholders, the Trustee and the Certificate Insurer), any remaining
amounts on deposit in the Special Reserve Account shall be distributed to the
Holders of the Class X Certificates.
ARTICLE VII
DEFAULT
Section 7.01 Events of Default. (a) In case one or more of
the following events (each an "Event of Default") shall occur and be continuing:
(i) any failure by the Servicer to remit to the Trustee
any payment required to be made by the Servicer under the terms of this
Agreement, other than Servicing
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Advances covered by clause (ii) below, which continues unremedied for
one (1) Business Day after the date upon which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer and the Certificate Insurer by the Trustee or to the
Servicer and the Trustee by the Certificate Insurer or the
Certificateholders of Offered Certificates evidencing Percentage
Interests of at least 25%;
(ii) the failure by the Servicer to make any required
Servicing Advance which failure continues unremedied for a period of
thirty (30) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer by the Trustee or to the Servicer and the Trustee by any
Certificateholder or the Certificate Insurer;
(iii) any failure on the part of the Servicer duly to
observe or perform in any material respect any other of the covenants
or agreements on the part of the Servicer contained in this Agreement,
or the failure of any representation and warranty made pursuant to
Section 3.01 to be true and correct which continues unremedied for a
period of thirty (30) days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given
to the Servicer, as the case may be, by the Depositor or the Trustee or
to the Servicer and the Trustee by any Certificateholder or the
Certificate Insurer;
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any present
or future federal or state bankruptcy, insolvency or similar law or for
the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer and such decree
or order shall have remained in force, undischarged or unstayed for a
period of forty-five (45) days;
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer or of or relating to all or
substantially all of the Servicer's property;
(vi) the Servicer shall admit in writing its inability to
pay its debts as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of its
obligations;
(vii) if on any Distribution Date a Servicer Termination
Loss Trigger Event occurs;
(viii) the Certificate Insurer shall notify the Trustee and
the Servicer in writing of any "event of default" on the part of the
Servicer under the Insurance and Indemnity Agreement; or
(ix) any Change of Control shall occur;
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then, and in each and every such case, so long as such Event of Default shall
not have been remedied: (x) with respect solely to clause (i) above, if such
payment is in respect of Periodic Advances or Compensating Interest owing by the
Servicer and such payment is not made by 12:00 Noon, New York time on the fourth
Business Day prior to the applicable Distribution Date, the Trustee, upon
receipt of written notice or discovery by a Responsible Officer of such failure,
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer and to the Certificate Insurer and the Trustee may, at the written
direction of the Majority Certificateholders, with the written consent of the
Certificate Insurer, and shall, at the written direction of the Certificate
Insurer, terminate all of the rights and obligations of the Servicer under this
Agreement and the Back-up Servicer, or a successor servicer appointed in
accordance with Section 7.02, shall immediately make such Periodic Advance or
payment of Compensating Interest and assume, pursuant to Section 7.02 hereof,
the duties of a successor Servicer; (y) with respect to clause (ix) above, such
Event of Default shall be waived in the event the Servicer receives the written
consent of the Certificate Insurer, such consent not to be unreasonably
withheld; and (z) with respect to any other Event of Default, the Trustee may,
at the written direction of the Majority Certificateholders, with the written
consent of the Certificate Insurer, and shall, at the written direction of the
Certificate Insurer, by notice in writing to the Servicer and a Responsible
Officer of the Trustee, terminate all the rights and obligations of the Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
as servicer. Upon receipt by the Servicer of such written notice, all authority
and power of the Servicer under this Agreement, whether with respect to the
Mortgage Loans or otherwise, shall, subject to Section 7.02, pass to and be
vested in the Back-up Servicer or such other Person as may be specified by the
Certificate Insurer and the Back-up Servicer is hereby authorized and empowered
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, at the expense of the Servicer, any and all documents and other
instruments and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including, but
not limited to, the transfer and endorsement or assignment of the Mortgage Loans
and related documents. The Servicer agrees to cooperate (and pay any related
costs and expenses) with the Trustee and the Back-up Servicer in effecting the
termination of the Servicer's responsibilities and rights hereunder and the
transfer of such responsibilities and rights to a successor Servicer, including,
without limitation, the transfer to the Back-up Servicer or its designee for
administration by it of all amounts which shall at the time be credited by the
Servicer to the Collection Account or thereafter received with respect to the
Mortgage Loans. The Trustee shall promptly notify the Certificate Insurer and
the Rating Agencies of the occurrence of an Event of Default.
Section 7.02 Back-up Servicer to Act; Appointment of
Successor. (a) On and after the time the Servicer receives a notice of
termination pursuant to Section 7.01, or the Trustee receives the resignation of
the Servicer evidenced by an Opinion of Counsel pursuant to Section 5.21, the
Trustee shall promptly notify the Rating Agencies and the Certificate Insurer
and, except as otherwise provided in Section 7.01, the Back-up Servicer or such
other Person as may be specified by the Certificate Insurer shall be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof arising on or after
the date of succession; provided, however, that the Back-up Servicer shall not
be liable for any actions or the representations and warranties of any servicer
prior to it and including, without limitation, the obligations of the
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Servicer set forth in Sections 2.06 and 3.03. The Back-up Servicer, as successor
servicer, shall be obligated to pay Compensating Interest pursuant to Section
6.09 in any event and to make advances pursuant to Section 5.18 unless, and only
to the extent the Back-up Servicer determines reasonably and in good faith that
such advances would not be recoverable pursuant to Section 5.04, such
determination to be evidenced by a certification of a Responsible Officer of the
Back-up Servicer delivered to the Certificate Insurer.
(b) Notwithstanding the above, the Trustee may, if the
Back-up Servicer shall be unwilling to so act, or shall, if the Back-up Servicer
is unable to so act or if the Certificate Insurer so requests in writing to the
Trustee, appoint, pursuant to such direction of the Certificate Insurer, or if
no such direction is provided to the Trustee, pursuant to the provisions set
forth in paragraph (c) below, or petition a court of competent jurisdiction to
appoint, any established mortgage loan servicing institution acceptable to the
Certificate Insurer that has a net worth of not less than $15,000,000 as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder.
(c) In the event the Back-up Servicer is the successor
servicer, it shall be entitled to the same Servicing Compensation (including the
Servicing Fee as adjusted pursuant to the definition thereof) and other funds
pursuant to Section 5.08 hereof as the Servicer if the Servicer had continued to
act as servicer hereunder; it being understood that, in such event, the Back-up
Servicer would no longer be entitled to the Back-up Servicing Fee. In the event
the Back-up Servicer is unable or unwilling to act as successor servicer, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor servicer shall be entitled to the full amount of the aggregate
Servicing Fees hereunder as servicing compensation, together with the other
Servicing Compensation. Within thirty days after any such public announcement,
the Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest qualifying bid. The Trustee shall deduct from any sum
received by the Trustee from the successor to the Servicer in respect of such
sale, transfer and assignment all costs and expenses of any public announcement
and of any sale, transfer and assignment of the servicing rights and
responsibilities hereunder and the amount of any unreimbursed Servicing Advances
and Periodic Advances owed to the Back-up Servicer. After such deductions, the
remainder of such sum shall be paid by the Trustee to the Servicer at the time
of such sale, transfer and assignment to the Servicer's successor.
(d) The Trustee and such successor servicer (including,
without limitation, the Back-up Servicer) shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
The Servicer agrees to cooperate with the Trustee and any successor servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
servicer, as applicable, at the Servicer's cost and expense, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor servicer, as applicable, all amounts that then have been or should
have been deposited in the Collection Account by the Servicer or that are
thereafter received with respect to the Mortgage Loans. Any collections received
by the Servicer after such removal or resignation shall be endorsed by it to the
Trustee and remitted directly to the Trustee or, at the direction of
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the Trustee, to the successor servicer. In connection with any failure by the
Servicer to make any remittance required to be made by the Servicer to the
Collection Account pursuant to this Section 7.01 on the day and by the time such
remittance is required to be made under the terms of this Section 7.01 (without
giving effect to any grace or cure period), the Servicer shall pay to the
Trustee for the account of the Trustee interest at the Late Payment Rate on any
amount not timely remitted from and including the day such remittance was
required to be made to, but not including, the day on which such remittance was
actually made. Neither the Trustee nor any successor servicer shall be held
liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer hereunder. Notwithstanding anything to the contrary herein, no
appointment of a successor to the Servicer under this Agreement shall be
effective until the Certificate Insurer shall have consented in writing thereto,
and written notice of such proposed appointment shall have been provided by the
Trustee to each Certificateholder and to the Certificate Insurer. The Back-up
Servicer shall not resign as servicer until a successor servicer has been
appointed or until a successor servicer reasonably acceptable to the Certificate
Insurer has been appointed in accordance with paragraph (c) above. The
Certificate Insurer shall have the right to remove the Back-up Servicer (or any
successor Servicer) as successor Servicer under this Section 7.02 without cause,
and the Trustee shall appoint such other successor Servicer as directed in
writing by the Certificate Insurer.
(e) Pending appointment of a successor to the Servicer
hereunder, the Back-up Servicer shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as the Certificate Insurer and such successor shall agree;
provided, however, that unless otherwise agreed by the Certificate Insurer, no
such compensation shall be in excess of that permitted the Servicer pursuant to
Section 5.08, together with other Servicing Compensation. The Servicer, the
Back-up Servicer, the Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
Section 7.03 Waiver of Defaults. The Majority
Certificateholders may, on behalf of all Certificateholders, and subject to the
written consent of the Certificate Insurer, waive any events permitting removal
of the Servicer as servicer pursuant to this Article VII; provided, however,
that the Majority Certificateholders may not waive a default in making a
required distribution on a Certificate without the consent of the holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies and the Certificate Insurer.
Section 7.04 Rights of the Certificate Insurer to Exercise
Rights of Certificateholders. By accepting its Certificate, each
Certificateholder agrees that the Certificate Insurer shall be deemed to be the
Certificateholders for all purposes (other than with respect to the receipt of
payment on the Certificates) and shall have the right to exercise all rights of
the
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Certificateholders under this Agreement and under the Certificates without any
further consent of the Certificateholders, including, without limitation:
(a) the right to require the Unaffiliated Seller to
repurchase Mortgage Loans pursuant to Section 2.06 or 3.03 hereof to
the extent set forth in such Sections;
(b) the right to give notices of breach or to terminate
the rights and obligations of the Servicer as servicer pursuant to
Section 7.01 hereof and to consent to or direct in writing waivers of
Servicer defaults pursuant to Section 7.03 hereof;
(c) the right to direct in writing the actions of the
Trustee during the continuance of an Event of Default pursuant to
Sections 7.01 and 7.02 hereof;
(d) the right to institute proceedings against the
Servicer pursuant to Section 7.01 hereof;
(e) the right to direct in writing the Trustee to
investigate certain matters pursuant to Section 9.02(a)(v) hereof;
(f) the right to direct in writing the removal of the
Trustee pursuant to Section 9.07 hereof;
(g) the right to direct foreclosures upon the failure of
the Servicer to do so in accordance with the provisions of Section 5.06
of this Agreement; and
(h) any rights or remedies expressly given the Majority
Certificateholders.
In addition, each Certificateholder agrees that, subject to
Section 10.02, the rights specifically enumerated above may only be exercised by
the Certificateholders with the prior written consent of the Certificate
Insurer.
Section 7.05 Trustee To Act Solely with Consent of the
Certificate Insurer. The Trustee shall not, without the Certificate Insurer's
written consent or unless directed in writing by the Certificate Insurer:
(a) terminate the rights and obligations of the Servicer
as Servicer pursuant to Section 7.01 hereof;
(b) agree to any amendment pursuant to Section 10.03
hereof; or
(c) undertake any litigation.
The Certificate Insurer may, in writing and in its sole
discretion renounce all or any of its rights under Sections 7.04, 7.05 or 7.06
or any requirement for the Certificate Insurer's consent for any period of time.
Section 7.06 Mortgage Loans, Trust Fund and Accounts Held for
Benefit of the Certificate Insurer. (a) The Trustee shall hold the Trust Fund
and shall cause the Collateral
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Agent on its behalf to hold the Mortgage Files for the benefit of the
Certificateholders and the Certificate Insurer and all references in this
Agreement and in the Certificates to the benefit of Holders of the Certificates
shall be deemed to include the Certificate Insurer. The Trustee shall cooperate
in all reasonable respects with any reasonable request by the Certificate
Insurer for action to preserve or enforce the Certificate Insurer's rights or
interests under this Agreement and the Certificates unless, as stated in an
Opinion of Counsel addressed to the Trustee and the Certificate Insurer, such
action is adverse to the interests of the Certificateholders or diminishes the
rights of the Certificateholders or imposes additional burdens or restrictions
on the Certificateholders.
(b) The Servicer hereby acknowledges and agrees that it
shall service the Mortgage Loans for the benefit of the Certificateholders and
for the benefit of the Certificate Insurer, and all references in this Agreement
to the benefit of or actions on behalf of the Certificateholders shall be deemed
to include the Certificate Insurer.
Section 7.07 Certificate Insurer Default. (a) Except as
specifically set forth in Section 7.07(b) and notwithstanding anything elsewhere
in this Agreement or in the Certificates to the contrary, if a Certificate
Insurer Default exists and is continuing, or if and to the extent the
Certificate Insurer has delivered its written renunciation of all of its rights
under this Agreement, the provisions of this Article VII and all other
provisions of this Agreement which (a) permit the Certificate Insurer to
exercise rights of the Certificateholders, (b) restrict the ability of the
Certificateholders, the Servicer or the Trustee to act without the consent or
approval of the Certificate Insurer, (c) provide that a particular act or thing
must be acceptable to the Certificate Insurer, (d) permit the Certificate
Insurer to direct (or otherwise to require) the actions of the Trustee, the
Servicer or the Certificateholders, (e) provide that any action or omission
taken with the consent, approval or authorization of the Certificate Insurer
shall be authorized hereunder or shall not subject the party taking or omitting
to take such action to any liability hereunder or (f) which have a similar
effect, shall be suspended and shall be of no further force and effect and the
Trustee shall administer the Trust Fund and perform its obligations hereunder
solely for the benefit of the Holders of the Certificates. Nothing in the
foregoing sentence, nor any action taken pursuant thereto or in compliance
therewith, shall be deemed to have released the Certificate Insurer from any
obligation or liability it may have to any party or to the Certificateholders
hereunder, under any other agreement, instrument or document (including, without
limitation, the Certificate Insurance Policy) or under applicable law.
Notwithstanding anything elsewhere in this Agreement to the contrary, at such
time as the Class M Certificates are no longer outstanding hereunder, the
Certificate Insurance Policy has terminated in accordance with its terms and no
amounts owed to the Certificate Insurer hereunder and under the Insurance and
Indemnity Agreement and no Reimbursement Amounts remain unpaid, the Certificate
Insurer's rights hereunder shall terminate.
(b) Notwithstanding anything elsewhere in this Agreement
to the contrary, none of the following rights of the Certificate Insurer shall
be suspended even if a Certificate Insurer Default shall have occurred and be
continuing:
(i) the right to receive any Premium Amount, any
Reimbursement Amounts and any and all other amounts due under this
Agreement and the Insurance and Indemnity Agreement;
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(ii) any subrogation right with respect to payments made
by the Certificate Insurer under the Certificate Insurance Policy;
(iii) the right to receive notices, reports, opinions and
certifications;
(iv) the right to give notice of any Event of Default
under this Agreement and any "event of default" under the Insurance and
Indemnity Agreement;
(v) the right to consent to any amendment pursuant to
Section 11.03; and
(vi) the right to consent to termination of this Agreement
under Section 8.01(a) if such termination would result in a draw under
the Certificate Insurance Policy or failure to pay all amounts owed to
the Certificate Insurer under this Agreement and the Insurance and
Indemnity Agreement.
ARTICLE VIII
TERMINATION
Section 8.01 Termination. (a) Subject to Section 8.02, this
Agreement shall terminate upon notice to the Trustee of the later of the
distribution to Certificateholders of the final payment with respect to the
Certificates and the full and final payment of all Reimbursement Amounts,
Premium Amounts, Trustee Fees and other amounts due and payable to the
Certificate Insurer and Trustee, or the disposition of all funds with respect to
the last Mortgage Loan and the remittance of all funds due hereunder; provided,
however, that in no event shall the Trust established by this Agreement
terminate later than: (i) twenty-one years after the death of the last surviving
lineal descendant of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, late Ambassador of the United States to
the Court of St. ▇▇▇▇▇, alive as of the date hereof or (ii) the Distribution
Date in December 2034.
(b) In addition, subject to Section 8.02, Servicer may,
at its option and at its sole cost and expense, elect to cause this Agreement to
be terminated and all the Offered Certificates to be redeemed in whole, but not
in part, on the first Distribution Date after any Distribution Date on which the
Aggregate Principal Balance is equal to or less than 10% of the Maximum Pool
Principal Balance (the "Clean-Up Call Date") by purchasing, on such succeeding
Distribution Date, all of the outstanding Mortgage Loans and REO Properties at a
price equal to the sum of (i) 100% of the aggregate Principal Balance of each
outstanding Mortgage Loan and each REO Property, (ii) the greater of (1) the
aggregate amount of accrued and unpaid interest on the Mortgage Loans through
the related Due Period and (2) 30 days' accrued interest thereon computed at a
rate equal to the related Mortgage Interest Rate, in each case net of the
Servicing Fee, (iii) any Back-up Servicer Fees or other amounts due to the
Back-up Servicer hereunder, (iv) any and all Reimbursement Amounts and Premium
Amounts and any other amounts due to the Certificate Insurer under this
Agreement and the Insurance and Indemnity Agreement and (v) any Trustee Fees or
other amounts due to the Trustee hereunder (the "Termination Price"); provided,
that in no event will the Termination Price be less than the sum of the
aggregate Certificate Principal Balance of the Offered
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Certificates, plus all accrued and unpaid Premium Amounts, Reimbursement Amounts
and all accrued and unpaid interest on the Offered Certificates plus all amounts
due the Trustee and the Back-up Servicer hereunder plus all unreimbursed
Periodic Advances and Servicing Advances. Any such purchase shall be
accomplished by deposit of the Termination Price into the Distribution Account.
No such termination is permitted without the prior written consent of the
Certificate Insurer if it would result in a draw on the Certificate Insurance
Policy or the failure to pay any and all amounts owed to the Certificate Insurer
under this Agreement or the Insurance and Indemnity Agreement.
(c) If on any Distribution Date, the Servicer determines
that there are no outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than funds in the Distribution Account, the Servicer shall send
a final distribution notice promptly to each such Certificateholder and the
Certificate Insurer in accordance with paragraph (d) below.
(d) Notice of any termination, specifying the
Distribution Date upon which the Trust Fund will terminate and the
Certificateholders shall surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Servicer by letter to the Certificateholders and the Certificate Insurer mailed
during the month of such final distribution before the Servicer Remittance Date
in such month, specifying (i) the Distribution Date upon which final payment of
the Certificates will be made upon presentation and surrender of Certificates at
the office of the Trustee therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Trustee therein specified. The Servicer
shall give such notice to the Trustee therein specified. The Servicer shall give
such notice to the Trustee at the time such notice is given to
Certificateholders. The obligations of the Certificate Insurer hereunder shall
terminate upon the deposit by the Servicer with the Trustee of a sum sufficient
to purchase all of the Mortgage Loans and REO Properties as set forth above or
when the Certificate Principal Balance of the Class M Certificates falls to
zero.
(e) In the event that all of the Certificateholders shall
not surrender their Certificates for cancellation within six months after the
time specified in the above-mentioned written notice, the Servicer shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice, all of the Certificates
shall not have been surrendered for cancellation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates and
the cost thereof shall be paid out of the funds and other assets which remain
subject hereto. If within nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Class R
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds and the Certificateholders shall
look only to the Class R Certificateholders for payment and not to the
Certificate Insurer or the Trustee. Such funds shall remain uninvested.
Section 8.02 Additional Termination Requirements. (a) In the
event that the Servicer exercises its purchase option as provided in Section
8.01, the Trust Fund shall be terminated in accordance with the following
additional requirements, unless the Trustee and the Certificate Insurer have
been furnished with an Opinion of Counsel to the effect that the failure
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of the Trust Fund to comply with the requirements of this Section 8.02 will not
(i) result in the imposition of taxes on "prohibited transactions" of any REMIC
created hereunder as defined in Section 860F of the Code or (ii) cause any REMIC
created hereunder to fail to qualify as a REMIC at any time that any Offered
Certificates or Class X or Class I Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date
the Servicer shall adopt and the Trustee shall sign, a plan of complete
liquidation of each REMIC created hereunder meeting the requirements of
a "Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder;
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date,
the Trustee shall sell all of the assets of the REMIC I to the Servicer
for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (A) to the Class A Certificateholders, the
Class A Certificate Principal Balance, plus one month's interest
thereon at the Class A Pass-Through Rate, (B) to the Class A-IO
Certificateholders, one month's interest on the Class A-IO Notional
Amount, if any, at the Class A-IO Pass-Through Rate, (C) to the Class M
Certificateholders, the Class M Certificate Principal Balance, plus one
month's interest thereon at the Class M Pass-Through Rate, (D) to the
Certificate Insurer any and all amounts due the Certificate Insurer
under this Agreement or the Insurance and Indemnity Agreement and
unpaid, including all Reimbursement Amounts, (E) to the Class X
Certificateholders, all cash on hand after such payment to the Class A,
Class A-IO and Class M Certificateholders and to the Certificate
Insurer (but in no event in excess of the Class X Distribution Amount),
and (F) to the Class R Certificates in respect of the Class R-I
Interest, any remaining amounts (other than cash retained to meet
claims) and the Trust Fund shall terminate at such time; provided,
however, that any such payment will be made after all outstanding fees,
costs and expenses of the Trustee have been paid in full.
(b) By their acceptance of the Certificates, the Holders
thereof hereby agree to appoint the Servicer as their attorney in fact to: (i)
adopt such a plan of complete liquidation (and the Certificateholders hereby
appoint the Trustee as their attorney in fact to sign such plan) as appropriate
or upon the written request of the Certificate Insurer and (ii) to take such
other action in connection therewith as may be reasonably required to carry out
such plan of complete liquidation all in accordance with the terms hereof.
Section 8.03 Accounting Upon Termination of Servicer. Upon
termination of the Servicer, the Servicer shall, at its expense:
(a) deliver to its successor or, if none shall yet have
been appointed, to the Trustee, the funds in any Account;
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(b) deliver to its successor or, if none shall yet have
been appointed, to the Collateral Agent on behalf of the Trustee all
Mortgage Files and related documents and statements held by it
hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have
been appointed, to the Trustee and, upon request, to the
Certificateholders a full accounting of all funds, including a
statement showing the Monthly Payments collected by it and a statement
of monies held in trust by it for the payments or charges with respect
to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all
acts reasonably requested in order to effect the orderly and efficient
transfer of servicing of the Mortgage Loans to its successor and to
more fully and definitively vest in such successor all rights, powers,
duties, responsibilities, obligations and liabilities of the "Servicer"
under this Agreement.
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of Trustee. (a) The Trustee, prior to
the occurrence of an Event of Default of which a Responsible Officer of the
Trustee shall have actual knowledge and after the curing of all Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement. If an Event of Default
of which a Responsible Officer of the Trustee shall have actual knowledge has
occurred and has not been cured or waived, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and use the same degree of
care and skill in its exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform on their face to the requirements of this
Agreement; provided, however, that the Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Servicer, the Back-up
Servicer (if not the Trustee) or the Unaffiliated Seller hereunder. If any such
instrument is found not to conform on its face to the requirements of this
Agreement, the Trustee will, at the expense of the Servicer, notify the
Certificate Insurer of such instrument in the event the Trustee, after so
requesting, does not receive a satisfactorily corrected instrument.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default of
which a Responsible Officer of the Trustee shall have actual knowledge,
and after the curing of all such Events
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of Default which may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee and, in the absence of bad faith on the
part of the Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or other
officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with this Agreement or at the written
direction of the Certificate Insurer or, with the written consent of
the Certificate Insurer, at the written direction of the Majority
Certificateholders, relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement;
(iv) the Trustee shall not be required to take notice or
be deemed to have notice or knowledge of any default, Event of Default
(except an Event of Default with respect to the nonpayment of any
amount described in Section 7.01(a)) or Certificate Insurer Default,
unless a Responsible Officer of the Trustee shall have received written
notice thereof. In the absence of receipt of such notice, the Trustee
may conclusively assume that there is no default, Event of Default or
Certificate Insurer Default;
(v) the Trustee shall not be required to expend or risk
its own funds or otherwise incur financial liability for the
performance of any of its duties hereunder or the exercise of any of
its rights or powers if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it and none of the provisions
contained in this Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer under this Agreement except during such
time, if any, as the Trustee shall be the successor to, and be vested
with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement; and
(vi) subject to the other provisions of this Agreement
(and except in its capacity as successor Servicer) and without limiting
the generality of this Section, the Trustee shall have no duty (A) to
see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance
of any such recording or filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (B) to see to any insurance,
(C) to see to the payment or discharge of any tax, assessment, or other
governmental charge or any lien or encumbrance of any kind owing
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with respect to, assessed or levied against, any part of the Trust, the
Trust Fund, the Certificateholders or the Mortgage Loans, (D) to
confirm or verify the contents of any reports or certificates of the
Servicer delivered to the Trustee pursuant to this Agreement believed
by the Trustee to be genuine and to have been signed or presented by
the proper party or parties or (E) execute the certification required
by the Sarbanes Oxley Act of 2002.
Section 9.02 Certain Matters Affecting the Trustee. (a)
Except as otherwise provided in Section 9.01:
(i) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, Officer's Certificate,
Opinion of Counsel, advice of counsel, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) the Trustee may consult with counsel and any Opinion
of Counsel or written advice of counsel shall be full and complete
authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such
Opinion of Counsel or advice of counsel;
(iii) the Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Agreement or to
institute, conduct or defend by litigation hereunder or in relation
hereto at the request, order or direction of the Certificate Insurer or
any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders or the Certificate Insurer,
as applicable, shall have offered to the Trustee reasonable security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which may be incurred therein by the Trustee or thereby;
nothing contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge (which
has not been cured), to exercise such of the rights and powers vested
in it by this Agreement, and to use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;
(iv) the Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(v) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Certificate Insurer or the
Majority Certificateholders; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity
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satisfactory to the Trustee against such cost, expense or liability as
a condition to taking any such action. The reasonable expense of every
such examination shall be paid by the Servicer or, if paid by the
Trustee, shall be repaid by the Servicer upon demand from the
Servicer's own funds;
(vi) the right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty, and
the Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act;
(vii) the Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the
powers granted hereunder; and
(viii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, attorneys or custodians and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such
agent, attorney or custodian appointed by the Trustee with due care.
(b) Following the Startup Day, the Trustee shall not
knowingly accept any contribution of assets to the Trust Fund, unless the
Trustee and the Certificate Insurer shall have received an Opinion of Counsel
(at the expense of the Servicer) to the effect that the inclusion of such assets
in the Trust Fund will not cause any REMIC created hereunder to fail to qualify
as a REMIC at any time that any Certificates are outstanding or subject any
REMIC created hereunder to any tax under the REMIC Provisions or other
applicable provisions of federal, state and local law or ordinances. The Trustee
agrees to indemnify the Trust Fund, the Certificate Insurer and the Servicer for
any taxes and costs, including any attorney's fees, imposed or incurred by the
Trust Fund or the Servicer as a result of the breach of the Trustee's covenants
set forth within this subsection (b).
Section 9.03 Trustee Not Liable for Certificates or Mortgage
Loans. The recitals, representations, warranties and covenants contained herein
or in the Certificates (other than the certificate of authentication on the
Certificates) shall be taken as the statements, representations, warranties and
covenants of the Unaffiliated Seller or the Servicer as the case may be, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Depositor of any of the Certificates or the proceeds
of the Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Collection Account by the Servicer. The Trustee shall not be responsible for the
legality or validity of the Agreement or the validity, priority, perfection or
sufficiency of the security for the Certificates issued or intended to be issued
hereunder. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgor of Certificates
with the same rights it would have if it were not Trustee, and may otherwise
deal with the parties hereto.
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Section 9.05 Trustee's Fees and Expenses; Indemnity. (a) The
Trustee acknowledges that in consideration of the services rendered by the
Trustee in the execution of the trust hereby created and in the exercise and
performance of any of the powers and duties hereunder it is entitled to receive
the Trustee's Fee in accordance with the provision of Section 6.05(a) (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of any express trust). Additionally, the Trustee hereby covenants, for
the benefit of the Depositor and the Certificate Insurer, that the Trustee has
arranged separately with the Servicer for the payment or reimbursement to the
Trustee of all of the Trustee's expenses in connection with this Agreement,
including, without limitation, all reasonable out of pocket expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ). Notwithstanding any other provision of this Agreement
to the contrary, the Servicer covenants and agrees to indemnify the Trustee and
its officers, directors, employees and agents from, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses incurred
in connection with any legal action relating to this Agreement, the Certificates
or incurred in connection with the administration of the Trust, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence of the Trustee in the performance of its duties hereunder or by
reason of the Trustee's reckless disregard of obligations and duties hereunder.
For the avoidance of doubt, the parties hereto acknowledge that it is the intent
of the parties that the Depositor and the Certificate Insurer shall not pay any
of the Trustee's fees and expenses in connection with this transaction.
(b) The Trust Fund, the Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified by the Servicer
and held harmless against any loss, liability, claim, damage or expense arising
out of, or imposed upon the Trust or the Trustee through the Servicer's acts or
omissions in violation of this Agreement, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence of
the Trustee in the performance of its duties hereunder or by reason of the
Trustee's reckless disregard of obligations and duties hereunder. The Servicer
shall immediately notify the Trustee, the Back-up Servicer, the Custodian, the
Depositor, the Certificate Insurer and all Certificateholders if a claim is made
by a third party with respect to this Agreement, and the Servicer shall assume
(with the consent of the Certificate Insurer) the defense of any such claim and
advance all expenses in connection therewith, including reasonable counsel fees,
and promptly advance funds to pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Back-up Servicer, the Custodian,
the Depositor, the Trustee, the Certificate Insurer and/or any Certificateholder
in respect of such claim. The obligations of the Servicer under this Section
9.05 arising prior to any resignation or termination of the Servicer hereunder
shall survive the resignation or removal of the Trustee, termination of the
Servicer and payment of the Certificates, and shall extend to any co-trustee or
separate trustee appointed pursuant to this Article IX. Anything in this
Agreement to the contrary notwithstanding, in no event shall the Trustee be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Trustee has
been advised of the likelihood of such loss or damage and regardless of the form
of action.
Section 9.06 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a banking entity (a) organized and doing
business under the laws of any state or
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the United States of America subject to supervision or examination by federal or
state authority, (b) authorized under such laws to exercise corporate trust
powers, including taking title to the Trust Fund assets on behalf of the
Certificateholders, (c) be a wholly-owned subsidiary of a bank holding company
having a combined capital and surplus of at least $50,000,000, (d) whose
long-term deposits, if any, shall be rated at least BBB- by S&P and Baa3 by
▇▇▇▇▇'▇ (except as provided herein) or such lower long-term deposit rating as
may be approved in writing by the Certificate Insurer, and (e) reasonably
acceptable to the Certificate Insurer as evidenced in writing. If such banking
entity publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of determining an entity's combined capital and surplus for clause
(c) of this Section, the amount set forth in its most recent report of condition
so published shall be deemed to be its combined capital and surplus. In case at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 9.07.
Section 9.07 Resignation and Removal of the Trustee. (a) The
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Servicer, the Back-up Servicer, the
Rating Agencies, the Certificate Insurer and the Depositor. Upon receiving such
notice of resignation, the Depositor shall, with the consent of the Certificate
Insurer, promptly appoint a successor trustee by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee and to
the successor trustee. A copy of such instrument shall be delivered to the
Depositor, the Back-up Servicer, the Certificateholders, the Certificate Insurer
and the Unaffiliated Seller by the Servicer. Unless a successor trustee shall
have been so appointed and shall have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible
in accordance with the provisions of Section 9.06 and shall fail to resign after
written request therefor by the Servicer or the Certificate Insurer, or if at
any time the Trustee shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, or the Trustee shall breach any of its obligations hereunder in any
material respect, then the Servicer (with the consent of the Certificate
Insurer) or the Certificate Insurer may remove the Trustee and the Servicer
shall, at the direction of the Certificate Insurer, within thirty (30) days
after such removal, appoint a successor trustee by written instrument, in
duplicate, which instrument shall be delivered to the Trustee so removed and to
the successor trustee. A copy of such instrument shall be delivered to the
Depositor, the Back-up Servicer, the Certificateholders, the Certificate Insurer
and the Unaffiliated Seller by the Servicer.
(c) If the Trustee fails to perform in accordance with
the terms of this Agreement, the Majority Certificateholders (with the consent
of the Certificate Insurer) or the Certificate Insurer may remove the Trustee
and the Depositor shall appoint a successor trustee acceptable to the
Certificate Insurer, by written instrument or instruments, in triplicate, signed
by such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments
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shall be delivered to the Servicer, one complete set to the Trustee so removed
and one complete set to the successor Trustee so appointed.
(d) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any of the provisions of this
Section shall not become effective until acceptance of appointment by the
successor trustee as provided in Section 9.08 and the satisfaction of the Rating
Agency Condition.
Section 9.08 Successor Trustee. Any successor trustee
appointed as provided in Section 9.07 shall execute, acknowledge and deliver to
the Depositor, the Certificate Insurer, the Unaffiliated Seller, the Servicer,
the Back-up Servicer and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein. The predecessor trustee
shall deliver to the successor trustee all Mortgage Files and related documents
and statements held by it hereunder, and the Servicer and the predecessor
trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for more fully and certainly vesting and confirming
in the successor trustee all such rights, powers, duties and obligations. No
successor trustee shall accept appointment as provided in this Section unless at
the time of such acceptance such successor trustee shall be eligible under the
provisions of Section 9.06. Upon acceptance of appointment by a successor
trustee as provided in this Section, the Servicer shall mail notice of the
succession of such trustee hereunder to all Holders of Certificates at their
addresses as shown in the Certificate Register and to the Rating Agencies. If
the Servicer fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Servicer.
Section 9.09 Merger or Consolidation of Trustee. Any Person
into which the Trustee may be merged or converted or with which it may be
consolidated or any corporation or national banking association resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation or national banking association succeeding to the business of
the trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 9.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly, with the consent of the Certificate
Insurer, shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust Fund, and to vest in such Person or Persons, in
such capacity, such title to the Trust Fund, or any part thereof, and, subject
to the other provisions of this Section 9.10 and the consent of the Certificate
Insurer, such powers, duties, obligations, rights and trusts as the Servicer and
the Trustee may
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consider necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default shall have occurred and be continuing, the Trustee
alone, with the consent of the Certificate Insurer, shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 9.06
hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.08
hereof.
(b) In the case of any appointment of a co-trustee or
separate trustee pursuant to this Section 9.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly, except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee at the direction of the
Trustee.
(c) Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article IX. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. The Trustee shall not
be responsible for any action or inaction of any such separate trustee or
co-trustee, provided that the Trustee appointed such separate trustee or
co-trustee with due care. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 9.11 Tax Returns. The Tax Matters Person will
prepare, sign and file all Tax Returns required to be filed by the Trust Fund in
accordance with Section 11.13(a)(i). The Servicer, upon request, will promptly
furnish the Trustee with all such information as may be reasonably required by
the Trustee for the purpose of the Trustee responding to reasonable requests for
information made by Certificateholders in connection with tax matters.
Section 9.12 Retirement of Certificates. The Trustee shall,
upon the retirement of the Certificates pursuant hereto or otherwise, furnish to
the Depositor, the Back-up Servicer, the Servicer and the Certificate Insurer a
notice of such retirement, and, upon retirement of the
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Certificates and the expiration of the term of the Certificate Insurance Policy,
shall surrender the Certificate Insurance Policy to the Certificate Insurer for
cancellation.
Section 9.13 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, any such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been recovered.
Section 9.14 Suits for Enforcement. In case an Event of
Default or other default by the Servicer hereunder shall occur and be
continuing, the Trustee shall, at the direction of the Certificate Insurer, or
may, in its discretion, but subject to Section 9.01 and Section 7.01, as
applicable, proceed to protect and enforce its rights and the rights of the
Certificateholders and the Certificate Insurer under this Agreement by a suit,
action or proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificateholders.
ARTICLE X
THE COLLATERAL AGENT
Section 10.01 Duties of the Collateral Agent. (a) The
Collateral Agent, prior to the occurrence of an Event of Default of which a
Responsible Officer shall have actual knowledge and after the curing of all
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. If an Event of
Default of which a Responsible Officer shall have actual knowledge has occurred
and has not been cured or waived, the Collateral Agent shall exercise such of
the rights and powers vested in it by this Agreement, and use the same degree of
care and skill in its exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs.
(b) The Collateral Agent, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Collateral Agent which are specifically
required to be furnished pursuant to any provision of this Agreement, shall
examine them to determine whether they conform on their face to the requirements
of this Agreement; provided, however, that the Collateral Agent shall not be
responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by any
Person hereunder. If any such instrument is found not to conform on its face to
the requirements of this Agreement, the Collateral Agent shall note it as such
on the applicable certification delivered pursuant to Section 2.06.
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(c) No provision of this Agreement shall be construed to
relieve the Collateral Agent from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct; provided, however,
that:
(i) prior to the occurrence of an Event of Default of
which a Responsible Officer shall have actual knowledge, and after the
curing of all such Events of Default which may have occurred, the
duties and obligations of the Collateral Agent shall be determined
solely by the express provisions of this Agreement, the Collateral
Agent shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Collateral Agent and, in the absence of bad faith on the part of the
Collateral Agent, the Collateral Agent may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Collateral
Agent and conforming to the requirements of this Agreement;
(ii) the Collateral Agent shall not be personally liable
for an error of judgment made in good faith by a Responsible Officer or
other officers of the Collateral Agent, unless it shall be proved that
the Collateral Agent was negligent in ascertaining the pertinent facts;
(iii) the Collateral Agent shall not be personally liable
with respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with this Agreement or at the direction of
the Certificate Insurer or the Trustee or with the consent of the
Certificate Insurer or the Trustee;
(iv) the Collateral Agent shall not be required to expend
or risk its own funds or otherwise incur financial liability for the
performance of any of its duties hereunder or the exercise of any of
its rights or powers if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it and none of the provisions
contained in this Agreement shall in any event require the Collateral
Agent to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer or the Trustee under this
Agreement; and
(v) subject to the other provisions of this Agreement and
without limiting the generality of this Section 10.01, the Collateral
Agent shall have no duty (A) to see to any recording, filing, or
depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security
interest, or to see to the maintenance of any such recording or filing
or depositing or to any rerecording, refiling or redepositing of any
thereof, (B) to see to any insurance, (C) to see to the payment or
discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or
levied against, any part of the Trust, the Trust Fund, the
Certificateholders or the Mortgage Loans, (D) to confirm or verify the
contents of any reports or certificates of any Person delivered to the
Collateral Agent pursuant to this Agreement believed by the Collateral
Agent to be genuine and to have been signed or presented by the proper
party or parties.
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Section 10.02 Certain Matters Affecting the Collateral Agent.
Except as otherwise provided in Section 10.01 hereof:
(a) the Collateral Agent may rely and shall be protected
in acting or refraining from acting upon any resolution, Officer's
Certificate, Opinion of Counsel, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) the Collateral Agent may consult with counsel and any
Opinion of Counsel or written advice of such counsel shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance
with such Opinion of Counsel or advice of such counsel;
(c) the Collateral Agent shall be under no obligation to
exercise any of the powers vested in it by this Agreement or to
institute, conduct or defend by litigation hereunder or in relation
hereto at the request, order or direction of the Certificate Insurer or
any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders or the Certificate Insurer,
as applicable, shall have offered to the Trustee reasonable security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which may be incurred therein by the Collateral Agent or
thereby; nothing contained herein shall, however, relieve the
Collateral Agent of the obligation, upon the occurrence of an Event of
Default of which a Responsible Officer shall have actual knowledge
(which has not been cured), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in its exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs;
(d) the Collateral Agent shall not be personally liable
for any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(e) the Collateral Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Certificate Insurer or the
Majority Certificateholders; provided, however, that if the payment
within a reasonable time to the Collateral Agent of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Collateral Agent, not
reasonably assured to the Collateral Agent by the security afforded to
it by the terms of this Agreement, the Collateral Agent may require
reasonable indemnity reasonably satisfactory to the Collateral Agent
against such cost, expense or liability as a condition to taking any
such action. The reasonable expense of every such examination shall be
paid by the Servicer or, if paid by the Collateral Agent, shall be
repaid by the Servicer upon demand from the Servicer's own funds;
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(f) the right of the Collateral Agent to perform any
discretionary act enumerated in this Agreement shall not be construed
as a duty, and the Collateral Agent shall not be answerable for
anything other than its negligence or willful misconduct in the
performance of such act; and
(g) the Collateral Agent may execute any of the powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys.
Section 10.03 Collateral Agent Not Liable for Certificates or
Mortgage Loans. The recitals contained herein shall be taken as the statements
of the Trust and the Servicer, as the case may be, and the Collateral Agent
assumes no responsibility for their correctness. The Collateral Agent makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document. The Collateral Agent shall not be accountable
for the use or application of any funds paid to the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account by the
Servicer. The Collateral Agent shall not be responsible for the legality or
validity of the Agreement or the validity, priority, perfection or sufficiency
of the security for the Certificates issued or intended to be issued under this
Agreement.
Section 10.04 Collateral Agent May Own Certificates. The
Collateral Agent in its individual or any other capacity may become the owner or
pledgor of Certificates with the same rights it would have if it were not
Collateral Agent, and may otherwise deal with the parties hereto.
Section 10.05 Collateral Agent's Fees and Expenses;
Indemnity. (a) The Collateral Agent acknowledges that in consideration of the
performance of its duties hereunder it is entitled to receive its fees and
expenses from the Servicer, as separately agreed between the Servicer and the
Collateral Agent. The Depositor, the Certificate Insurer and the Trustee shall
not pay any of the Collateral Agent fees and expenses in connection with this
transaction. The Collateral Agent shall not be entitled to compensation for any
expense, disbursement or advance as may arise from its negligence or bad faith.
(b) The Collateral Agent and any director, officer,
employee or agent of the Collateral Agent shall be indemnified by the Servicer
and held harmless against any loss, liability, claim, damage or reasonable
expense incurred in connection with this Agreement other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence of the Collateral Agent in the performance of its duties hereunder or
by reason of the Collateral Agent's reckless disregard of obligations and duties
hereunder. The obligations of the Servicer under this Section 10.05 arising
prior to any resignation or termination of the Servicer hereunder shall survive
termination of the Servicer and payment of the Certificates.
Section 10.06 Eligibility Requirements for Collateral Agent.
The Collateral Agent hereunder shall at all times be a banking entity (a)
organized and doing business under the laws of any state or the United States of
America subject to supervision or examination by federal or state authority, (b)
authorized under such laws to exercise corporate trust powers, including taking
title to the Trust Fund on behalf of the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, (c) be a wholly owned subsidiary
of a bank holding
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company having a combined capital and surplus of at least $50,000,000, (d) whose
long-term deposits, if any, shall be rated at least BBB- by S&P and Baa3 by
▇▇▇▇▇'▇ (except as provided herein) or such lower long-term deposit rating as
may be approved in writing by the Certificate Insurer, and (e) reasonably
acceptable to the Certificate Insurer as evidenced in writing. If such banking
entity publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of determining an entity's combined capital and surplus for clause
(c) of this Section 10.06, the amount set forth in its most recent report of
condition so published shall be deemed to be its combined capital and surplus.
In case at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of this Section 10.06, the Collateral Agent shall
resign immediately in the manner and with the effect specified in Section 10.07.
Section 10.07 Resignation and Removal of the Collateral
Agent. (a) The Collateral Agent may at any time resign and be discharged from
the trusts hereby created by giving thirty (30) days' written notice thereof to
the Trustee, the Certificate Insurer and the Servicer.
(b) If at any time the Collateral Agent shall cease to be
eligible in accordance with the provisions of Section 10.06 and shall fail to
resign after written request therefor by the Trustee, the Certificate Insurer or
the Servicer, or if at any time the Collateral Agent shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Collateral Agent or of its property shall be appointed, or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Trustee or the Servicer, with the consent of the Certificate Insurer, may remove
the Collateral Agent.
(c) If the Collateral Agent fails to perform in
accordance with the terms of this Agreement, the Trustee, the Servicer or the or
the Majority Certificateholders, with the consent of the Certificate Insurer, or
the Certificate Insurer may remove the Collateral Agent.
(d) Upon removal or receipt of notice of resignation of
the Collateral Agent, the Trustee shall either (i) take possession of the
Trustee's Mortgage Files and assume the duties of the Collateral Agent hereunder
or (ii) appoint a successor Collateral Agent pursuant to Section 9.08. If the
Trustee shall assume the duties of the Collateral Agent hereunder, it shall
notify the Trust, the Depositor, the Servicer and Certificate Insurer in
writing.
Section 10.08 Successor Collateral Agent. Upon the
resignation or removal of the Collateral Agent, the Trustee may appoint a
successor Collateral Agent, with the written approval of the Certificate
Insurer; provided, however, that the successor Collateral Agent so appointed
shall satisfy the eligibility criteria set forth in Section 10.06 hereof, shall
in no event be the Unaffiliated Seller, the Depositor or the Servicer or any
Person known to a Responsible Officer of the Trustee to be an Affiliate of the
Unaffiliated Seller, the Depositor or the Servicer and shall be approved by the
Certificate Insurer. The Trustee or such custodian, as the case may be, shall
assume the duties of the Collateral Agent hereunder. Any successor Collateral
Agent appointed as provided in this Section 10.08 shall execute, acknowledge and
deliver to the Trust, the Depositor, the Servicer, the Back-up Servicer, the
Trustee, the Certificate Insurer and to its predecessor Collateral Agent an
instrument accepting such appointment hereunder, and
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thereupon the resignation or removal of the predecessor Collateral Agent shall
become effective and such successor Collateral Agent, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as if
originally named as Collateral Agent herein. The predecessor Collateral Agent
shall deliver to the successor Collateral Agent all of the Trustee's Mortgage
Files and related documents and statements held by it hereunder, and the
Servicer and the predecessor Collateral Agent shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor Collateral Agent all
such rights, powers, duties and obligations. The cost of any such transfer to
the successor Collateral Agent shall be for the account of the Collateral Agent
in the event of the resignation of the Collateral Agent, and shall be for the
account of the Servicer in the event of the removal of the Collateral Agent. No
successor Collateral Agent shall accept appointment as provided in this Section
10.08 unless at the time of such acceptance such successor Collateral Agent
shall be eligible under the provisions of Section 10.06. Upon acceptance of
appointment by a successor Collateral Agent as provided in this Section 10.08,
the Servicer shall mail notice of the succession of such Collateral Agent
hereunder to all Certificateholders at their addresses as shown in the
Certificate Register and to the Rating Agencies. If the Servicer fails to mail
such notice within ten (10) days after acceptance of appointment by the
successor Collateral Agent, the successor Collateral Agent shall cause such
notice to be mailed at the expense of the Servicer.
Section 10.09 Merger or Consolidation of Collateral Agent.
Any Person into which the Collateral Agent may be merged or converted or with
which it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation or national banking association
succeeding to the business of the Collateral Agent, shall be the successor of
the Collateral Agent hereunder; provided, that, such corporation or national
banking association shall be eligible under the provisions of Section 10.06,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 10.01 Limitation on Liability of the Depositor, the
Back-up Servicer and the Servicer. None of the Depositor, the Servicer, the
Back-up Servicer or any of the directors, officers, employees or agents of the
Depositor, the Servicer or the Back-up Servicer shall be under any liability to
the Trust, the Certificateholders or the Certificate Insurer for any action
taken, or for refraining from the taking of any action, in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Back-up Servicer or the Servicer
or any such Person against any breach of warranties, representations, covenants
or agreements made herein, or against any specific liability imposed on each
such party pursuant to this Agreement or against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations or duties hereunder. The Depositor, the Back-up Servicer or the
Servicer and any director, officer, employee or agent of the Depositor,
122
the Back-up Servicer or the Servicer may rely in good faith on any document of
any kind which, prima facie, is properly executed and submitted by any
appropriate Person respecting any matters arising hereunder.
Section 11.02 Acts of Certificateholders. (a) Except as
otherwise specifically provided herein, whenever Certificateholder action,
consent or approval is required under this Agreement, such action, consent or
approval shall be deemed to have been taken or given on behalf of, and shall be
binding upon, all Certificateholders if the Majority Certificateholders or the
Certificate Insurer agrees to take such action or give such consent or approval.
(b) The death or incapacity of any Certificateholder
shall not operate to terminate this Agreement or the Trust Fund, nor entitle
such Certificateholder's legal representatives or heirs to claim an accounting
or to take any action or proceeding in any court for a partition or winding up
of the Trust Fund, nor otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
(c) No Certificateholder shall have any right to vote
(except as expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust Fund, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(d) Prior to the execution of any amendment to this
Agreement, the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel (which shall be an expense of the Trust) stating that the execution of
such amendment is authorized and permitted by this Agreement. The Trustee may,
but shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under this Agreement.
Section 11.03 Amendment. (a) This Agreement may be amended
from time to time by the Servicer, the Depositor and the Trustee, by written
agreement, upon the prior written consent of the Certificate Insurer (which
consent shall not be unreasonably withheld, delayed or conditioned if a
Certificate Insurer Default shall have occurred and be continuing), without
notice to or consent of the Certificateholders to cure any ambiguity, to correct
or supplement any provisions herein, to comply with any changes in the Code, or
to make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement or effect a significant change in the permitted activities of the
Trust; provided, however, that such change, as evidenced by an Opinion of
Counsel, at the expense of the party requesting the change, delivered to the
Trustee and the Certificate Insurer, (i) will not adversely affect in any
material respect the interests of any Certificateholder and (ii) (x) will not
adversely affect the status of any REMIC created hereunder as a REMIC, (y) will
not cause a tax to be imposed on any REMIC created hereunder and (z) such change
will not effect a significant change in the permitted activities of the Trust;
provided, further, that no such amendment shall (x) reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, or change the rights or obligations of any other party
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hereto without the consent of such party, or (y) amend or alter Section 2.01(b)
hereof. The Trustee shall give prompt written notice to the Rating Agencies of
any amendment made pursuant to this Section 11.03 or pursuant to Section 6.09 of
the Unaffiliated Seller's Agreement.
(b) This Agreement may be amended from time to time by
the Servicer, the Depositor and the Trustee, with the consent of the Certificate
Insurer and the Majority Certificateholders, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment shall be made unless the Trustee and
the Certificate Insurer receive an Opinion of Counsel, at the expense of the
party requesting the change, that such change (x) will not adversely affect the
status of any REMIC created hereunder as a REMIC, (y) will not cause a tax to be
imposed on any REMIC created hereunder and (z) such change will not effect a
significant change in the permitted activities of the Trust; provided, further,
that no such amendment shall reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Class of Certificates without the consent of the Holders of
such Class of Certificates or reduce the percentage for the Holders of which are
required to consent to any such amendment without the consent of the Holders of
100% of such Class of Certificates affected thereby.
(c) It shall not be necessary for the consent of Holders
under this Section to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof.
Section 10.04 Recordation of Agreement. To the extent
permitted by applicable law, this Agreement, or a memorandum thereof if
permitted under applicable law, is subject to recordation in all appropriate
public offices for real property records in all of the counties or other
comparable jurisdictions in which any or all of the properties subject to the
Mortgages are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at the direction of
the Majority Certificateholders or the Certificate Insurer.
Section 11.05 Duration of Agreement. This Agreement shall
continue in existence and effect until terminated as herein provided.
Section 11.06 Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered to (i) in the case of the Servicer, American Business
Credit, Inc., ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (ii) in the
case of the Unaffiliated Seller, ABFS 2003-1, Inc., ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (iii) in the case of the Trustee, the
Collateral Agent and the Back-up Servicer, JPMorgan Chase Bank, Institutional
Trust Services, ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Structured Finance Services, ABFS 2003-1, (iv) in the case of the
Certificateholders, as set forth in the Certificate Register, (v) in the case of
▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Home Equity Monitoring Group, (vi) in the case of Standard & Poor's,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Residential Mortgage
Surveillance Group, (vii) in the case of Fitch
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Ratings, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage
Surveillance Group, (viii) in the case of the Depositor or the Underwriter, Bear
▇▇▇▇▇▇▇ Asset Backed Securities, Inc. or Bear ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Chief Counsel, or (ix)
in the case of the Certificate Insurer, Radian Asset Assurance Inc., ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Chief Risk Officer and Chief Legal
Officer, Re: ABFS Mortgage Loan Trust, Series 2003-1, Class M. Any such notices
shall be deemed to be effective with respect to any party hereto upon the
receipt of such notice by such party, except that notices to the
Certificateholders shall be effective upon mailing or personal delivery.
Section 11.07 Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall be
held invalid for any reason whatsoever, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect the
validity or enforceability of the other covenants, agreements, provisions or
terms of this Agreement.
Section 11.08 No Partnership. Nothing herein contained shall
be deemed or construed to create a co-partnership or joint venture between the
parties hereto and the services of the Servicer shall be rendered as an
independent contractor and not as agent for the Certificateholders.
Section 11.09 Counterparts. This Agreement may be executed in
one or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement.
Section 11.10 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the Servicer, the Back-up Servicer,
the Depositor, the Trustee, the Collateral Agent and the Certificateholders and
their respective successors and permitted assigns.
Section 11.11 Headings. The headings of the various sections
of this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
Section 11.12 Third Party Beneficiary. The parties agree that
each of the Unaffiliated Seller and the Certificate Insurer is intended and
shall have all rights of a third-party beneficiary of this Agreement to the same
extent as if it were a party hereto, and shall have the right to enforce the
provisions of this Agreement.
Section 11.13 Appointment of Tax Matters Person; Certain
Taxes. (a) The Holders of the Class R Certificates as the Tax Matters Person
hereby appoint the Servicer to act, as their agent in such capacity, for each
REMIC created hereunder for all purposes of the Code. The Tax Matters Person
will perform, or cause to be performed, such duties and take, or cause to be
taken, such actions as are required to be performed or taken by the Tax Matters
Person under the code. The Holders of the Class R Certificates may hereafter
appoint a different entity as their
125
agent, or may appoint one of the Class R Certificateholders to be the Tax
Matters Person. The Tax Matters Person shall:
(i) prepare, sign and file, or cause to be prepared and
filed, in a timely manner, a U.S. Real Estate Mortgage Investment
Conduit (REMIC) Income Tax Return (Form 1066) and any other Tax Return
required to be filed by each REMIC created hereunder, using a calendar
year as the taxable year for each REMIC created hereunder;
(ii) make, or cause to be made, an election, on behalf of
each REMIC created hereunder, to be treated as a REMIC on the federal
tax return of each REMIC created hereunder for its first taxable year;
(iii) prepare and forward, or cause to be prepared and
forwarded, to the Trustee, the Certificateholders and to the Internal
Revenue Service and any other relevant governmental taxing authority
all information returns or reports as and when required to be provided
to them in accordance with the REMIC Provisions;
(iv) to the extent that the affairs of the Trust Fund are
within its control, conduct such affairs of the Trust Fund at all times
that any Certificates are outstanding so as to maintain the status of
each REMIC created hereunder as a REMIC under the REMIC Provisions and
any other applicable federal, state and local laws, including, without
limitation, information reports relating to "original issue discount,"
as defined in the Code, based upon the Prepayment Assumption and
calculated by using the issue price of the Certificates;
(v) not knowingly or intentionally take any action or
omit to take any action that would cause the termination of the REMIC
status of any REMIC created hereunder;
(vi) pay the amount of any and all federal, state, and
local taxes collected from the parties provided for in Section
11.13(b), including, without limitation, upon the Trustee or the
Certificateholders in connection with the Trust, the Trust Fund or the
Mortgage Loans, prohibited transaction taxes as defined in Section 860F
of the Code, other than any amount due as a result of a transfer or
attempted or purported transfer in violation of Section 4.02, imposed
on any REMIC created hereunder when and as the same shall be due and
payable (but such obligation shall not prevent the Unaffiliated Seller
or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Unaffiliated Seller
from withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings);
(vii) ensure that any such returns or reports filed on
behalf of any REMIC created hereunder by the Trustee are properly
executed by the appropriate person and submitted in a timely manner;
(viii) represent any REMIC created hereunder in any
administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative
adjustment as to any taxable year of any REMIC created hereunder, enter
into settlement agreements with any governmental taxing agency, extend
any statute of limitations relating to any item of any REMIC created
hereunder and
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otherwise act on behalf of each REMIC created hereunder in relation to
any tax matter involving any REMIC created hereunder;
(ix) as provided in Section 5.11 hereof, make available
information necessary for the computation of any tax imposed (1) on
transferors of residual interests to transferees that are not Permitted
Transferees or (2) on pass-through entities, any interest in which is
held by an entity which is not a Permitted Transferee. The Trustee
covenants and agrees that it will cooperate with the Servicer in the
foregoing matters and that it will sign, as Trustee, any and all Tax
Returns required to be filed by each REMIC created hereunder.
Notwithstanding the foregoing, at such time as the Trustee becomes the
successor Servicer, the holder of the largest percentage of the Class R
Certificates shall serve as Tax Matters Person until such time as an
entity is appointed to succeed the Trustee as Servicer;
(x) make available to the Internal Revenue Service and
those Persons specified by the REMIC Provisions all information
necessary to compute any tax imposed (A) as a result of the Transfer of
an Ownership Interest in a Class R Certificate to any Person who is not
a Permitted Transferee, including the information described in Treasury
regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to
the "excess inclusions" of such Class R Certificate and (B) as a result
of any regulated investment company, real estate investment trust,
common trust fund, partnership, trust, estate or organization described
in Section 1381 of the Code that holds an Ownership Interest in a Class
R Certificate having as among its record holders at any time any Person
that is not a Permitted Transferee;
(xi) pay out of its own funds, without any right of
reimbursement, any and all tax related expenses of each REMIC created
hereunder (including, but not limited to, tax return preparation and
filing expenses and any professional fees or expenses related to audits
or any administrative or judicial proceedings with respect to each
REMIC created hereunder that involve the Internal Revenue Service or
state tax authorities), other than the expense of obtaining any Opinion
of Counsel required pursuant to Sections 3.03, 5.06(b), 5.10, 8.02,
9.02(b) and 11.03 and other than taxes except as specified herein;
(xii) upon filing with the Internal Revenue Service, the
Tax Matters Person shall furnish to the Holders of the Class R
Certificates the Form 1066 and each Form 1066Q and the Unaffiliated
Seller shall respond promptly to written requests made not more
frequently than quarterly by any Holder of Class R Certificates with
respect to the following matters:
(A) the original projected principal and
interest cash flows on the Closing Date on
the regular and residual interests created
hereunder and on the Mortgage Loans, based
on the Prepayment Assumption;
(B) the projected remaining principal and
interest cash flows as of the end of any
calendar quarter with respect to the regular
and residual
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interests created hereunder and the Mortgage
Loans, based on the Prepayment Assumption;
(C) the Prepayment Assumption and any interest
rate assumptions used in determining the
projected principal and interest cash flows
described above;
(D) the original issue discount (or, in the case
of the Mortgage Loans, market discount) or
premium accrued or amortized through the end
of such calendar quarter with respect to the
regular or residual interests created
hereunder and with respect to the Mortgage
Loans, together with each constant yield to
maturity used in computing the same;
(E) the treatment of losses realized with
respect to the Mortgage Loans or the regular
interests created hereunder, including the
timing and amount of any cancellation of
indebtedness income of any REMIC created
hereunder with respect to such regular
interests or bad debt deductions claimed
with respect to the Mortgage Loans;
(F) the amount and timing of any non-interest
expenses of any REMIC created hereunder; and
(G) any taxes (including penalties and interest)
imposed on any REMIC created hereunder,
including, without limitation, taxes on
"prohibited transactions," "contributions"
or "net income from foreclosure property" or
state or local income or franchise taxes;
and
(xiii) make any other required reports in respect of
interest payments in respect of the Mortgage Loans and acquisitions and
abandonments of Mortgaged Property to the Internal Revenue Service
and/or the borrowers, as applicable.
(b) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of any REMIC created
hereunder as defined in Section 860G(c) of the Code, on any contribution to any
REMIC created hereunder after the Startup Day pursuant to Section 860G(d) of the
Code, or any other tax is imposed, such tax shall be paid by (i) the Trustee, if
such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Agreement, (ii) the Servicer, if such tax arises out of
or results from a breach by the Servicer of any of its obligations under this
Agreement, or otherwise (iii) the holders of the Class R Certificates in
proportion to their Percentage Interests. To the extent such tax is chargeable
against the holders of the Class R Certificates, notwithstanding anything to the
contrary contained herein, the Trustee is hereby authorized to retain from
amounts otherwise distributable to the Holders of the Class R Certificates on
any Distribution Date sufficient funds for the payment of such tax.
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Section 11.14 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
(b) THE DEPOSITOR, THE SERVICER, THE BACK-UP SERVICER,
THE COLLATERAL AGENT AND THE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH IN SECTION 10.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS,
POSTAGE PREPAID. THE DEPOSITOR, THE SERVICER, THE BACK-UP SERVICER, THE
COLLATERAL AGENT AND THE TRUSTEE EACH HEREBY WAIVE ANY OBJECTION BASED ON FORUM
NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER
AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
DEPOSITOR, THE SERVICER, THE BACK-UP SERVICER THE COLLATERAL AGENT OR THE
TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
ANY OF THEIR RIGHTS TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER
JURISDICTION.
(c) THE DEPOSITOR, THE SERVICER, THE BACK-UP SERVICER,
THE COLLATERAL AGENT AND THE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY DISPUTE WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A
JURY.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Depositor, the Servicer, the Trustee,
the Collateral Agent and the Back-up Servicer have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
BEAR ▇▇▇▇▇▇▇ ASSET BACK SECURITIES, INC., as Depositor
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Senior Managing Director
AMERICAN BUSINESS CREDIT, INC., as Servicer
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
JPMORGAN CHASE BANK, as Trustee, Collateral
Agent and Back-up Servicer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Trust Officer
EXHIBIT A
[FORM OF CLASS A CERTIFICATE]
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE. THIS CERTIFICATE ALSO REPRESENTS A RIGHT TO
RECEIVE NET WAC CAP CARRYOVER AMOUNTS.
ABFS MORTGAGE LOAN TRUST 2003-1
MORTGAGE PASS-THROUGH CERTIFICATES
CLASS A
Series: Pass-Through Rate: ___%, subject to the Net WAC Cap
No. A-__ (as defined in the Agreement). The Pass-Through
Rate will step-up to ___%
following Clean-Up Call
Date (as defined below).
Original Certificate Principal
Balance: $
CUSIP: Percentage Interest of this Certificate:
Cut-Off Date: Date of Pooling and Servicing Agreement:
Closing Date:
First Distribution Date: Back-up Servicer: JPMorgan Chase Bank
Servicer: American Business Credit, Inc. Trustee: JPMorgan Chase Bank
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Depositor or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
This certifies that CEDE & CO. is the registered owner of the percentage
interest specified above (the "Percentage Interest") of the Class A
Certificates, which together represent an undivided ownership interest in
certain first and second lien
A-1
mortgage loans or deeds of trust primarily on residential property (the
"Mortgage Loans") serviced by American Business Credit, Inc. (hereinafter called
the "Servicer"), in its capacity as servicer under that certain Pooling and
Servicing Agreement (the "Agreement") dated as of March 1, 2003 among American
Business Credit, Inc., as servicer, Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc.,
as depositor (the "Depositor"), and JPMorgan Chase Bank, as trustee, back-up
servicer and collateral agent (the "Trustee", the "Back-up Servicer" and the
"Collateral Agent"). The Mortgage Loans were originated or acquired by American
Business Credit, Inc. ("ABC"), HomeAmerican Credit, Inc. d/b/a Upland Mortgage
("Upland") and American Business Mortgage Services, Inc. ("ABMS", and together
with ABC and Upland, the "Originators") and sold to ABFS 2003-1, Inc. (the
"Seller"), which in turn sold the Mortgage Loans to the Depositor pursuant to
that certain Unaffiliated Seller's Agreement, dated as of March 1, 2003, among
the Depositor, the Originators and the Seller. The Mortgage Loans will be
serviced by the Servicer pursuant to the terms and conditions of the Agreement,
certain of the pertinent provisions of which are set forth herein. To the extent
not defined herein, the capitalized terms used herein have the meanings assigned
in the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the holder of
this Certificate by virtue of the acceptance hereof assents and by which such
holder is bound.
On each Distribution Date, commencing on _____________, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
last day of the month next preceding the month of such Distribution Date (the
"Record Date") or in the case of the _____________ Distribution Date, on the
Closing Date, an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of the Class A Certificates on such Distribution Date pursuant to
Section 6.05 of the Agreement.
The principal on this Certificate is payable in installments. Therefore,
the actual outstanding Certificate Principal Balance may on any date subsequent
to the first Distribution Date be less than its Original Certificate Principal
Balance.
Radian Asset Assurance Inc. (the "Certificate Insurer") has issued a
Financial Guaranty Insurance Policy (the "Certificate Insurance Policy") with
respect to the Class M Certificates, which guarantees certain payments on the
Class M Certificates, as described in the Agreement.
Distributions on this Certificate will be made by the Trustee by wire
transfer of immediately available funds to the account of the Person entitled
thereto as shall appear on the Certificate Register without the presentation or
surrender of this Certificate (except for the final distribution as described
below) or the making of any notation thereon, at a bank or other entity having
appropriate facilities therefor, if such Person shall own of record Certificates
of the same Class which have denominations aggregating at least $5,000,000
appearing in the Certificate Register and shall have so notified the Trustee at
least five business days prior to the related Record Date, or by check mailed to
the address of such Person appearing in the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after
A-2
due notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in New York, New York.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFS Mortgage Loan Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1, Class A, Class A-IO and Class M Certificates
(collectively, the "Offered Certificates"). The Trust has also issued the Class
I, Class X and Class R Certificates (together with the Offered Certificates, the
"Certificates"). The Certificates collectively represent the entire beneficial
ownership in the trust fund created and held under the Agreement, subject to the
limits and priority of distribution provided for in the Agreement. The trust
fund consists primarily of (i) such Mortgage Loans as from time to time are
subject to the Agreement, together with the Mortgage Files relating thereto, and
together with all principal collected and interest accruing thereon after the
Cut-Off Date, and any proceeds thereof, (ii) such assets as from time to time
are identified as REO Property and collections thereon and proceeds thereof,
(iii) assets that are deposited in the Accounts, including amounts on deposit in
such Accounts and invested in Permitted Investments, (iv) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to the Agreement and any Insurance Proceeds, (v) the
Certificate Insurance Policy and (vi) all proceeds of the foregoing.
The Certificates do not represent an obligation of, or an interest in, the
Depositor, the Seller, the Servicer, the Back-up Servicer, the Originators or
the Trustee and are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, the Federal Housing
Administration or the Veterans Administration or any other governmental agency.
The Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and, with respect to the Class M
Certificates, Class M Insured Payments under the Certificate Insurance Policy
and the Interest Rate Hedge Agreement, all as more specifically set forth herein
and in the Agreement. In the event Servicer funds are advanced with respect to
any Mortgage Loan, such advance is reimbursable to the Servicer from related
recoveries on such Mortgage Loan.
Subject to certain restrictions, the Agreement permits the amendment
thereof by the Depositor, the Servicer, the Back-up Servicer, the Collateral
Agent and the Trustee, with the consent of the Certificate Insurer. Subject to
the rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
A-3
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in New York, New York, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only in fully-registered form. As provided in
the Agreement and subject to certain limitations therein set forth, a
Certificate is exchangeable for a new Certificate evidencing the same undivided
ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Servicer, the Back-up Servicer, the Depositor, the Seller, the
Originators and the Trustee and any agent of any of the foregoing, may treat the
person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon notice to the
Trustee of: (i) the later of (a) the distribution to Certificateholders of the
final payment or collection with respect to the last Mortgage Loan (or Periodic
Advances of same by the Servicer), or the disposition of all funds with respect
to the last Mortgage Loan and the remittance of all funds due under the
Agreement and the payment of all amounts due and payable to the Certificate
Insurer and the Trustee or (b) mutual consent of the Servicer, the Certificate
Insurer and all Certificateholders in writing, or (ii) the purchase by the
Servicer of all outstanding Mortgage Loans and REO Properties at a price
determined as provided in the Agreement (the exercise of the right of the
Servicer to purchase all the Mortgage Loans and property in respect of Mortgage
Loans will result in early retirement of the Certificates), the right of the
Servicer to purchase being subject to the Aggregate Principal Balance of the
Mortgage Loans and REO Properties at the time of purchase being equal to or less
than ten percent (10%) of the Maximum Pool Principal Balance (the "Clean-Up Call
Date"); provided, however, that in no event shall the trust established by the
Pooling and Servicing Agreement terminate later than twenty-one years after the
death of the last surviving lineal descendant of the person named therein.
Unless this Certificate has been countersigned by the Trustee, by manual
signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
A-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed by its authorized officer.
JPMORGAN CHASE BANK, not in its
individual capacity, but solely as
Trustee
By:
--------------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class A Certificate referred to in the within-mentioned
Agreement, which Certificate is issued to Cede & Co. in the initial denomination
of $______________.
JPMORGAN CHASE BANK, not in its
individual capacity, but solely as
Trustee
By:
--------------------------------------
Dated: _____________
A-5
EXHIBIT B
[FORM OF CLASS A-IO CERTIFICATE]
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
ABFS MORTGAGE LOAN TRUST 2002-4
MORTGAGE PASS-THROUGH CERTIFICATES
CLASS A-IO
Series: Pass-Through Rate:
No. A-IO-__
Original Class A-IO Scheduled Notional Balance: $
CUSIP: Percentage Interest of this Certificate:
Cut-Off Date: Date of Pooling and Servicing Agreement:
Closing Date:
First Distribution Date: Back-up Servicer: JPMorgan Chase Bank
Servicer: American Business Credit, Inc. Trustee: JPMorgan Chase Bank
--------------------------------------------------------------------------------
THIS IS AN INTEREST-ONLY CERTIFICATE.
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE.
--------------------------------------------------------------------------------
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Depositor or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
This certifies that CEDE & CO. is the registered owner of the percentage
interest specified above (the "Percentage Interest"), which together represent
an undivided ownership interest in certain first and second lien mortgage loans
or deeds of trust primarily on residential property (the "Mortgage Loans")
serviced by American
B-1
Business Credit, Inc. (hereinafter called the "Servicer"), in its capacity as
servicer under that certain Pooling and Servicing Agreement (the "Agreement")
dated as of March 1, 2003 among American Business Credit, Inc., as servicer,
Bear ▇▇▇▇▇▇▇ Asset backed Securities, Inc., as depositor (the "Depositor"), and
JPMorgan Chase Bank, as trustee, back-up servicer and collateral agent (the
"Trustee", the "Back-up Servicer" and the "Collateral Agent"). The Mortgage
Loans were originated or acquired by American Business Credit, Inc. ("ABC"),
HomeAmerican Credit, Inc. d/b/a Upland Mortgage ("Upland") and American Business
Mortgage Services, Inc. ("ABMS", and together with ABC and Upland, the
"Originators") and sold to ABFS 2003-1, Inc. (the "Seller"), which in turn sold
the Mortgage Loans to the Depositor pursuant to that certain Unaffiliated
Seller's Agreement, dated as of March 1, 2003, among the Depositor, the
Originators and the Seller. The Mortgage Loans will be serviced by the Servicer
pursuant to the terms and conditions of the Agreement, certain of the pertinent
provisions of which are set forth herein. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the holder of this Certificate
by virtue of the acceptance hereof assents and by which such holder is bound.
On each Distribution Date, commencing on ____________, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
last day of the month next preceding the month of such Distribution Date (the
"Record Date") or in the case of the ______________ Distribution Date, on the
Closing Date, an amount equal to the sum of the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of the Class A-IO Certificates on such Distribution Date pursuant to
Section 6.05 of the Agreement.
This is an interest-only Certificate. No principal will be paid on this
Certificate. The notional amount of this certificate (the "Class A-IO Notional
Balance") is set forth in the Agreement and will be equal to the lesser of (x) a
scheduled amount, as described in the Agreement, which decreases over time and
(y) the Aggregate Principal Balance of the Mortgage Loans. Therefore, the actual
outstanding Class A-IO Notional Balance may on any date subsequent to the first
Distribution Date be less than its original Class A-IO Scheduled Notional
Balance.
Radian Asset Assurance Inc. (the "Certificate Insurer") has issued a
Financial Guaranty Insurance Policy (the "Certificate Insurance Policy") with
respect to the Class M Certificates, which guarantees certain payments on the
Class M Certificates, as described in the Agreement.
Distributions on this Certificate will be made by the Trustee by wire
transfer of immediately available funds to the account of the Person entitled
thereto as shall appear on the Certificate Register without the presentation or
surrender of this Certificate (except for the final distribution as described
below) or the making of any notation thereon, at a bank or other entity having
appropriate facilities therefor, if such Person shall own of record Certificates
of the same Class which have denominations aggregating at least $5,000,000
appearing in the Certificate Register and shall have so
B-2
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of such Person appearing in the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Trustee in New York, New
York.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFS Mortgage Loan Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1, Class A, Class A-IO and Class M Certificates
(collectively, the "Offered Certificates"). The Trust has also issued the Class
I, Class X and Class R Certificates (together with the Offered Certificates, the
"Certificates"). The Certificates collectively represent the entire beneficial
ownership in the trust fund created and held under the Agreement, subject to the
limits and priority of distribution provided for in the Agreement. The trust
fund consists primarily of (i) such Mortgage Loans as from time to time are
subject to the Agreement, together with the Mortgage Files relating thereto, and
together with all principal collected and interest accruing thereon after the
Cut-Off Date, and any proceeds thereof, (ii) such assets as from time to time
are identified as REO Property and collections thereon and proceeds thereof,
(iii) assets that are deposited in the Accounts, including amounts on deposit in
such Accounts and invested in Permitted Investments, (iv) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to the Agreement and any Insurance Proceeds, (v) the
Certificate Insurance Policy and (vi) all proceeds of the foregoing.
The Certificates do not represent an obligation of, or an interest in, the
Depositor, the Seller, the Servicer, the Back-up Servicer, the Originators or
the Trustee and are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, the Federal Housing
Administration or the Veterans Administration or any other governmental agency.
The Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and, with respect to the Class M
Certificates, Class M Insured Payments under the Certificate Insurance Policy
and the Interest Rate Hedge Agreement, all as more specifically set forth herein
and in the Agreement. In the event Servicer funds are advanced with respect to
any Mortgage Loan, such advance is reimbursable to the Servicer from related
recoveries on such Mortgage Loan.
Subject to certain restrictions, the Agreement permits the amendment
thereof by the Depositor, the Servicer, the Back-up Servicer, the Collateral
Agent and the Trustee, with the consent of the Certificate Insurer. Subject to
the rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
B-3
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in New York, New York, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only in fully-registered form. As provided in
the Agreement and subject to certain limitations therein set forth, a
Certificate is exchangeable for a new Certificate evidencing the same undivided
ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Servicer, the Back-up Servicer, the Depositor, the Seller, the
Originators and the Trustee and any agent of any of the foregoing, may treat the
person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon notice to the
Trustee of: (i) the later of (a) the distribution to Certificateholders of the
final payment or collection with respect to the last Mortgage Loan (or Periodic
Advances of same by the Servicer), or the disposition of all funds with respect
to the last Mortgage Loan and the remittance of all funds due under the
Agreement and the payment of all amounts due and payable to the Certificate
Insurer and the Trustee or (b) mutual consent of the Servicer, the Certificate
Insurer and all Certificateholders in writing, or (ii) the purchase by the
Servicer of all outstanding Mortgage Loans and REO Properties at a price
determined as provided in the Agreement (the exercise of the right of the
Servicer to purchase all the Mortgage Loans and property in respect of Mortgage
Loans will result in early retirement of the Certificates), the right of the
Servicer to purchase being subject to the Aggregate Principal Balance of the
Mortgage Loans and REO Properties at the time of purchase being equal to or less
than ten percent (10%) of the Maximum Pool Principal Balance (the "Clean-Up Call
Date"); provided, however, that in no event shall the trust established by the
Pooling and Servicing Agreement terminate later than twenty-one years after the
death of the last surviving lineal descendant of the person named therein.
Unless this Certificate has been countersigned by the Trustee, by manual
signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
B-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed by its authorized officer.
JPMORGAN CHASE BANK, not in its
individual capacity, but solely as
Trustee
By:
--------------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class A-IO Certificate referred to in the within-mentioned
Agreement, which Certificate is issued to Cede & Co. in the original Class A-IO
Scheduled Notional Balance of $_____________.
JPMORGAN CHASE BANK, not in its
individual capacity, but solely as
Trustee
By:
--------------------------------------
Dated:__________________
B-5
EXHIBIT C
[FORM OF CLASS [M] [M-1] [M-2] [M-3] CERTIFICATE]
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE. THIS CERTIFICATE ALSO REPRESENTS A RIGHT TO
RECEIVE NET WAC CAP CARRYOVER AMOUNTS.
ABFS MORTGAGE LOAN TRUST 2003-1
MORTGAGE PASS-THROUGH CERTIFICATES
CLASS [M] [M-1] [M-2] [M-3]
Series: Pass-Through Rate: LIBOR plus a margin of ___%,
No. M-__ subject to the Net WAC Cap (as defined in the
Agreement). The margin on Pass-Through Rate will
step-up to ___% following Clean-Up Call Date (as
defined below).
Original Certificate Principal
Balance: $
CUSIP: Percentage Interest of this Certificate:
Cut-Off Date: Date of Pooling and Servicing Agreement:
Closing Date:
First Distribution Date: Back-up Servicer: JPMorgan Chase Bank
Servicer: American Business Credit, Inc. Trustee: JPMorgan Chase Bank
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Depositor or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
This certifies that CEDE & CO. is the registered owner of the percentage
interest specified above (the "Percentage Interest") of the Class [M] [M-1]
[M-2] [M-3]
C-1
Certificates, which together represent an undivided ownership interest in
certain first and second lien mortgage loans or deeds of trust primarily on
residential property (the "Mortgage Loans") serviced by American Business
Credit, Inc. (hereinafter called the "Servicer"), in its capacity as servicer
under that certain Pooling and Servicing Agreement (the "Agreement") dated as of
March 1, 2003 among American Business Credit, Inc., as servicer, Bear ▇▇▇▇▇▇▇
Asset Backed Securities, Inc., as depositor (the "Depositor"), and JPMorgan
Chase Bank, as trustee, back-up servicer and collateral agent (the "Trustee",
the "Back-up Servicer" and the "Collateral Agent"). The Mortgage Loans were
originated or acquired by American Business Credit, Inc. ("ABC"), HomeAmerican
Credit, Inc. d/b/a Upland Mortgage ("Upland") and American Business Mortgage
Services, Inc. ("ABMS", and together with ABC and Upland, the "Originators") and
sold to ABFS 2003-1, Inc. (the "Seller"), which in turn sold the Mortgage Loans
to the Depositor pursuant to that certain Unaffiliated Seller's Agreement, dated
as of March 1, 2003, among the Depositor, the Originators and the Seller. The
Mortgage Loans will be serviced by the Servicer pursuant to the terms and
conditions of the Agreement, certain of the pertinent provisions of which are
set forth herein. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound.
On each Distribution Date, commencing on _____________, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
last day of the month next preceding the month of such Distribution Date (the
"Record Date") or in the case of the _____________ Distribution Date, on the
Closing Date, an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of the Class [M] [M-1] [M-2] [M-3] Certificates on such Distribution
Date pursuant to Section 6.05 of the Agreement.
The principal on this Certificate is payable in installments. In addition,
the outstanding Certificate Principal Balance of this Certificate may be reduced
through the allocation of Applied Realized Loss Amounts in accordance with the
terms of the Agreement. Therefore, the actual outstanding Certificate Principal
Balance may on any date subsequent to the first Distribution Date be less than
its Original Certificate Principal Balance.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND THE
CLASS A-IO CERTIFICATES AS DESCRIBED IN THE AGREEMENT.
[Radian Asset Assurance Inc. (the "Certificate Insurer") has issued a
Financial Guaranty Insurance Policy (the "Certificate Insurance Policy") with
respect to the Class M Certificates, which guarantees certain payments on the
Class M Certificates, as described in the Agreement.
Class M Insured Payments due under the Certificate Insurance Policy, unless
otherwise stated therein, will be disbursed by the Certificate Insurer's fiscal
agent
C-2
to the Trustee, on behalf of the Certificateholders, by wire transfer of
immediately available funds in the amount of the Class M Insured Payments less,
in respect of Class M Insured Payments related to Class M Preference Amounts,
any amount held by the Trustee for the payment of the Class M Insured Payments
and legally available therefore.]
Distributions on this Certificate will be made by the Trustee by wire
transfer of immediately available funds to the account of the Person entitled
thereto as shall appear on the Certificate Register without the presentation or
surrender of this Certificate (except for the final distribution as described
below) or the making of any notation thereon, at a bank or other entity having
appropriate facilities therefor, if such Person shall own of record Certificates
of the same Class which have denominations aggregating at least $5,000,000
appearing in the Certificate Register and shall have so notified the Trustee at
least five business days prior to the related Record Date, or by check mailed to
the address of such Person appearing in the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in New York, New York.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFS Mortgage Loan Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1, Class A, Class A-IO and Class [M] [M-1] [M-2] [M-3]
Certificates (collectively, the "Offered Certificates"). The Trust has also
issued the Class I, Class X and Class R Certificates (together with the Offered
Certificates, the "Certificates"). The Certificates collectively represent the
entire beneficial ownership in the trust fund created and held under the
Agreement, subject to the limits and priority of distribution provided for in
the Agreement. The trust fund consists primarily of (i) such Mortgage Loans as
from time to time are subject to the Agreement, together with the Mortgage Files
relating thereto, and together with all principal collected and interest
accruing thereon after the Cut-Off Date, and any proceeds thereof, (ii) such
assets as from time to time are identified as REO Property and collections
thereon and proceeds thereof, (iii) assets that are deposited in the Accounts,
including amounts on deposit in such Accounts and invested in Permitted
Investments, (iv) the Trustee's rights with respect to the Mortgage Loans under
all insurance policies required to be maintained pursuant to the Agreement and
any Insurance Proceeds, (v) the Certificate Insurance Policy and (vi) all
proceeds of the foregoing.
The Certificates do not represent an obligation of, or an interest in, the
Depositor, the Seller, the Servicer, the Back-up Servicer, the Originators or
the Trustee and are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, the Federal Housing
Administration or the Veterans Administration or any other governmental agency.
The Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans [and, with respect to the Class M
Certificates, Class M Insured Payments under the Certificate Insurance Policy
and the Interest Rate Hedge Agreement, all as more specifically set forth herein
and in the Agreement.] In the event Servicer funds are
C-3
advanced with respect to any Mortgage Loan, such advance is reimbursable to the
Servicer from related recoveries on such Mortgage Loan.
Subject to certain restrictions, the Agreement permits the amendment
thereof by the Depositor, the Servicer, the Back-up Servicer, the Collateral
Agent and the Trustee, with the consent of the Certificate Insurer. Subject to
the rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in New York, New York, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only in fully-registered form. As provided in
the Agreement and subject to certain limitations therein set forth, a
Certificate is exchangeable for a new Certificate evidencing the same undivided
ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Servicer, the Back-up Servicer, the Depositor, the Seller, the
Originators and the Trustee and any agent of any of the foregoing, may treat the
person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon notice to the
Trustee of: (i) the later of (a) the distribution to Certificateholders of the
final payment or collection with respect to the last Mortgage Loan (or Periodic
Advances of same by the Servicer), or the disposition of all funds with respect
to the last Mortgage Loan and the remittance of all funds due under the
Agreement and the payment of all amounts due and payable to the Certificate
Insurer and Trustee or (b) mutual consent of the Servicer, the Certificate
Insurer and all Certificateholders in writing, or (ii) the purchase by the
Servicer of all outstanding Mortgage Loans and REO Properties at a price
determined as provided in the Agreement (the exercise of the right of the
Servicer
C-4
to purchase all the Mortgage Loans and property in respect of Mortgage Loans
will result in early retirement of the Certificates), the right of the Servicer
to purchase being subject to the Aggregate Principal Balance of the Mortgage
Loans and REO Properties at the time of purchase being equal to or less than ten
percent (10%) of the Maximum Pool Principal Balance (the "Clean-Up Call Date");
provided, however, that in no event shall the trust established by the Pooling
and Servicing Agreement terminate later than twenty-one years after the death of
the last surviving lineal descendant of the person named therein.
Unless this Certificate has been countersigned by the Trustee, by manual
signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
C-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed by its authorized officer.
JPMORGAN CHASE BANK, not in its
individual capacity, but solely as
Trustee
By:
--------------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class [M] [M-1] [M-2] [M-3] Certificate referred to in the
within-mentioned Agreement, which Certificate is issued to Cede & Co. in the
initial denomination of $______________.
JPMORGAN CHASE BANK, not in its
individual capacity, but solely as
Trustee
By:
--------------------------------------
Dated: _____________
C-6
EXHIBIT D
[FORM OF CLASS R CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAW OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE
"RESIDUAL INTERESTS" IN FOUR "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN OPINION OF COUNSEL TO THE
TRUSTEE AND (2) AN AFFIDAVIT TO THE TRUSTEE THAT SUCH TRANSFEREE IS A PERMITTED
TRANSFEREE (AS DEFINED IN THE POOLING AND SERVICING AGREEMENT) OR AN AGENT OF A
PERMITTED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OF ANY TRANSFER OF THIS CLASS R CERTIFICATE TO A PERSON OTHER THAN A
PERMITTED TRANSFEREE OR AN AGENT OF A PERMITTED TRANSFEREE SUCH REGISTRATION
SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, INCLUDING INDIVIDUAL
RETIREMENT ACCOUNTS AND ANNUITIES, ▇▇▇▇▇ PLANS AND COLLECTIVE INVESTMENT FUNDS
AND SEPARATE ACCOUNTS IN WHICH SUCH PLANS, ACCOUNTS OR ARRANGEMENTS ARE INVESTED
THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THE CODE, NOR TO AN ENTITY WHOSE UNDERLYING ASSETS ARE
DEEMED TO BE ASSETS OF SUCH A PLAN, ACCOUNT OR ARRANGEMENT BY REASON OF SUCH
PLAN'S, ACCOUNT'S OR ARRANGEMENT'S INVESTMENT IN THE ENTITY, AS DETERMINED UNDER
U.S. DEPARTMENT OF LABOR REGULATIONS 29 C.F.R. Section 2510.3-101 OR OTHERWISE.
D-1
Series: Percentage Interest of this Certificate:
No. R
Cut-Off Date: Date of Pooling and Servicing Agreement:
Closing Date:
First Distribution Date: Back-up Servicer: JPMorgan Chase Bank
Servicer: American Business Credit, Inc. Trustee: JPMorgan Chase Bank
----------------------------------------
This certifies that _______________ is the registered owner of the
percentage interest specified above (the "Percentage Interest") of the Class R
Certificates, which together represent an undivided ownership interest in
certain first or second lien mortgage loans or deeds of trust primarily on
residential property (the "Mortgage Loans") serviced by American Business
Credit, Inc. (hereinafter called the "Servicer"), in its capacity as servicer
under that certain Pooling and Servicing Agreement (the "Agreement") dated as of
March 1, 2003 among American Business Credit, Inc., as servicer, Bear ▇▇▇▇▇▇▇
Asset Backed Securities, Inc., as depositor (the "Depositor"), and JPMorgan
Chase Bank, as trustee, back-up servicer and collateral agent (the "Trustee",
the "Back-up Servicer" and the "Collateral Agent"). The Mortgage Loans were
originated or acquired by American Business Credit, Inc. ("ABC"), HomeAmerican
Credit, Inc. d/b/a Upland Mortgage ("Upland") and American Business Mortgage
Services, Inc. ("ABMS", and together with ABC and Upland, the "Originators") and
sold to ABFS 2003-1, Inc. (the "Seller"), which in turn sold the Mortgage Loans
to the Depositor pursuant to that certain Unaffiliated Seller's Agreement, dated
as of March 1, 2003, among the Depositor, the Originators and the Seller. The
Mortgage Loans will be serviced by the Servicer pursuant to the terms and
conditions of the Agreement, certain of the pertinent provisions of which are
set forth herein. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound.
On each Distribution Date, commencing on ___________, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
last day of the month next preceding the month of such Distribution Date (the
"Record Date") or in the case of the _____________ Distribution Date, on the
Closing Date, an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of the Class R Certificates on such Distribution Date pursuant to
Section 6.05 of the Agreement.
Radian Asset Assurance Inc. (the "Certificate Insurer") has issued a
Financial Guaranty Insurance Policy (the "Certificate Insurance Policy") with
respect to the Class M Certificates, which guarantees certain payments on the
Class M Certificates, as described in the Agreement.
Distributions on this Certificate will be made by the Trustee by wire
transfer of immediately available funds to the account of the Person entitled
thereto as shall appear on the
D-2
Certificate Register without the presentation or surrender of this Certificate
(except for the final distribution as described below) or the making of any
notation thereon, at a bank or other entity having appropriate facilities
therefor, if such Person shall own of record Certificates of the same Class
which have at least a 10% Percentage Interest appearing in the Certificate
Register and shall have so notified the Trustee at least five business days
prior to the related Record Date, or by check mailed to the address of such
Person appearing in the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency maintained for that
purpose by the Trustee in New York, New York.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFS Mortgage Loan Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1, Class A, Class A-IO and Class M Certificates
(collectively, the "Offered Certificates"). The Trust has also issued the Class
I, Class X and Class R Certificates (together with the Offered Certificates, the
"Certificates") and collectively representing the entire beneficial ownership in
the trust fund created and held under the Agreement, subject to the limits and
priority of distribution provided for in the Agreement. The trust fund consists
primarily of (i) such Mortgage Loans as from time to time are subject to the
Agreement, together with the Mortgage Files relating thereto, and together with
all principal collected and interest accruing thereon after the Cut-Off Date,
and any proceeds thereof, (ii) such assets as from time to time are identified
as REO Property and collections thereon and proceeds thereof, (iii) assets that
are deposited in the Accounts, including amounts on deposit in such Accounts and
invested in Permitted Investments, (iv) the Trustee's rights with respect to the
Mortgage Loans under all insurance policies required to be maintained pursuant
to the Agreement,(v) the Certificate Insurance Policy and (vi) all proceeds of
the foregoing.
The Certificates do not represent an obligation of, or an interest in, the
Depositor, the Seller, the Servicer, the Back-up Servicer, the Originators or
the Trustee and are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, the Federal Housing
Administration or the Veterans Administration or any other governmental agency.
The Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and, with respect to the Class M
Certificates, Class M Insured Payments under the Certificate Insurance Policy
and the Interest Rate Hedge Agreement, all as more specifically set forth herein
and in the Agreement. In the event Servicer funds are advanced with respect to
any Mortgage Loan, such advance is reimbursable to the Servicer from related
recoveries on such Mortgage Loan.
Subject to certain restrictions, the Agreement permits the amendment
thereof by the Depositor, the Servicer, the Back-up Servicer, the Collateral
Agent and the Trustee, with the consent of the Certificate Insurer. Subject to
the rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the
D-3
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations therein set
forth, including, without limitation, with respect to the Class R Certificates,
execution and delivery as appropriate of the Transfer Affidavit and Agreement
(attached as an exhibit to the Agreement) and the Transfer Certificate (attached
as an exhibit to the Agreement) described in Section 4.02(l) of the Agreement,
the transfer of this Certificate is registrable in the Certificate Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in New York, New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to, the
Trustee, duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate undivided Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of a Class R Certificate or any interest therein shall be made
to any employee benefit plan or other retirement arrangement, including
individual retirement accounts and annuities, ▇▇▇▇▇ plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested, that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan"), nor to
an entity whose underlying assets are deemed to be assets of such a plan,
account or arrangement by reason of such plan's, account's or arrangement's
investment in the entity, as determined under U.S. Department of Labor
Regulations 29 C.F.R. Section 2510.3-101 or otherwise.
The Certificates are issuable only in fully-registered form. As provided in
the Agreement and subject to certain limitations therein set forth, a
Certificate is exchangeable for a new Certificate evidencing the same undivided
ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Servicer, the Back-up Servicer, the Depositor, the Seller, the
Originators and the Trustee and any agent of any of the foregoing, may treat the
person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon notice to the
Trustee of: (i) the later of (a) the distribution to Certificateholders of the
final payment or collection with respect to the last Mortgage Loan (or Periodic
Advances of same by the Servicer), or the disposition of all funds with respect
to the last Mortgage Loan and the remittance of all funds due under the
Agreement and the payment of all amounts due and payable to the Certificate
Insurer and the Trustee or (b) mutual consent of the Servicer, the Certificate
Insurer and all Certificateholders in writing, or (ii) the purchase by the
Servicer of all outstanding Mortgage Loans and REO Properties at a price
determined as provided in the Agreement (the exercise of the right of the
Servicer to purchase all the Mortgage Loans and property in respect
D-4
of Mortgage Loans will result in early retirement of the Certificates), the
right of the Servicer to purchase being subject to the Aggregate Principal
Balance of the Mortgage Loans and REO Properties at the time of purchase being
equal to or less than ten percent (10%) of the Maximum Pool Principal Balance
(the "Clean-Up Call Date"); provided, however, that in no event shall the trust
established by the Pooling and Servicing Agreement terminate later than
twenty-one years after the death of the last surviving lineal descendant of the
person named therein. By its acceptance of this Certificate, the
Certificateholder hereby appoints the Servicer as its attorney-in-fact to
negotiate the sale and effect the transfer of a Class R Certificate in
accordance with Section 4.02(l) of the Agreement and to adopt a plan of
liquidation of the Trust Fund in accordance with Section 8.02 of the Agreement.
Unless this Certificate has been countersigned by the Trustee, by manual
signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
D-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed by its authorized officer.
JPMORGAN CHASE BANK, not in its
individual capacity, but solely as
Trustee
By:
--------------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class R Certificate referred to in the within-mentioned
Agreement.
JPMORGAN CHASE BANK,
not in its individual capacity, but
solely as Trustee
By:
--------------------------------------
Dated: _________________
D-6
EXHIBIT E
[FORM OF CLASS X CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAW OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS X CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN OPINION OF COUNSEL TO THE
TRUSTEE AND (2) AN AFFIDAVIT TO THE TRUSTEE THAT SUCH TRANSFEREE IS A PERMITTED
TRANSFEREE (AS DEFINED IN THE POOLING AND SERVICING AGREEMENT) OR AN AGENT OF A
PERMITTED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OF ANY TRANSFER OF THIS CLASS X CERTIFICATE TO A PERSON OTHER THAN A
PERMITTED TRANSFEREE OR AN AGENT OF A PERMITTED TRANSFEREE SUCH REGISTRATION
SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, INCLUDING INDIVIDUAL
RETIREMENT ACCOUNTS AND ANNUITIES, ▇▇▇▇▇ PLANS AND COLLECTIVE INVESTMENT FUNDS
AND SEPARATE ACCOUNTS IN WHICH SUCH PLANS, ACCOUNTS OR ARRANGEMENTS ARE INVESTED
THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THE CODE, NOR TO AN ENTITY WHOSE UNDERLYING ASSETS ARE
DEEMED TO BE ASSETS OF SUCH A PLAN, ACCOUNT OR ARRANGEMENT BY REASON OF SUCH
PLAN'S, ACCOUNT'S OR ARRANGEMENT'S INVESTMENT IN THE ENTITY, AS DETERMINED UNDER
U.S. DEPARTMENT OF LABOR REGULATIONS 29 C.F.R. Section 2510.3-101 OR OTHERWISE.
E-1
ABFS MORTGAGE LOAN TRUST 2003-1
MORTGAGE PASS-THROUGH CERTIFICATES
CLASS X
Series: Percentage Interest of this Certificate:
No. X-__
Cut-Off Date: Date of Pooling and Servicing Agreement:
Closing Date:
First Distribution Date: Back-up Servicer: JPMorgan Chase Bank
Servicer: American Business Credit, Inc. Trustee: JPMorgan Chase Bank
------------------------------------
This certifies that _______________ is the registered owner of the
percentage interest specified above (the "Percentage Interest") of the Class X
Certificates, which together represent an undivided ownership interest in
certain first or second lien mortgage loans or deeds of trust primarily on
residential property (the "Mortgage Loans") serviced by American Business
Credit, Inc. (hereinafter called the "Servicer"), in its capacity as servicer
under that certain Pooling and Servicing Agreement (the "Agreement") dated as of
March 1, 2003 among American Business Credit, Inc., as servicer, Bear ▇▇▇▇▇▇▇
Asset Backed Securities, Inc., as depositor (the "Depositor"), and JPMorgan
Chase Bank, as trustee, back-up servicer and collateral agent (the "Trustee",
the "Back-up Servicer" and the "Collateral Agent"). The Mortgage Loans were
originated or acquired by American Business Credit, Inc. ("ABC"), HomeAmerican
Credit, Inc. d/b/a Upland Mortgage ("Upland") and American Business Mortgage
Services, Inc. ("ABMS", and together with ABC and Upland, the "Originators") and
sold to ABFS 2003-1, Inc. (the "Seller"), which in turn sold the Mortgage Loans
to the Depositor pursuant to that certain Unaffiliated Seller's Agreement, dated
as of March 1, 2003, among the Depositor, the Originators and the Seller. The
Mortgage Loans will be serviced by the Servicer pursuant to the terms and
conditions of the Agreement, certain of the pertinent provisions of which are
set forth herein. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound.
On each Distribution Date, commencing on ____________, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
last day of the month next preceding the month of such Distribution Date (the
"Record Date") or in the case of the _____________ Distribution Date, on the
Closing Date, an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of the Class X Certificates on such Distribution Date pursuant to
Section 6.05 of the Agreement.
Radian Asset Assurance Inc. (the "Certificate Insurer") has issued a
Financial Guaranty Insurance Policy (the "Certificate Insurance Policy") with
respect to the Class M
E-2
Certificates, which guarantees certain payments on the Class M Certificates, as
described in the Agreement.
Distributions on this Certificate will be made by the Trustee by wire
transfer of immediately available funds to the account of the Person entitled
thereto as shall appear on the Certificate Register without the presentation or
surrender of this Certificate (except for the final distribution as described
below) or the making of any notation thereon, at a bank or other entity having
appropriate facilities therefor, if such Person shall own of record Certificates
of the same Class which have at least a 10% Percentage Interest appearing in the
Certificate Register and shall have so notified the Trustee at least five
business days prior to the related Record Date, or by check mailed to the
address of such Person appearing in the Certificate Register. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in New York, New York.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFS Mortgage Loan Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1, Class A, Class A-IO and Class M Certificates
(collectively, the "Offered Certificates"). The Trust has also issued the Class
I, Class X and Class R Certificates (together with the Offered Certificates, the
"Certificates") and collectively representing the entire beneficial ownership in
the trust fund created and held under the Agreement, subject to the limits and
priority of distribution provided for in the Agreement. The trust fund consists
primarily of (i) such Mortgage Loans as from time to time are subject to the
Agreement, together with the Mortgage Files relating thereto, and together with
all principal collected and interest accruing thereon after the Cut-Off Date,
and any proceeds thereof, (ii) such assets as from time to time are identified
as REO Property and collections thereon and proceeds thereof, (iii) assets that
are deposited in the Accounts, including amounts on deposit in such Accounts and
invested in Permitted Investments, (iv) the Trustee's rights with respect to the
Mortgage Loans under all insurance policies required to be maintained pursuant
to the Agreement, (v) the Certificate Insurance Policy and (vi) all proceeds of
the foregoing.
The Certificates do not represent an obligation of, or an interest in, the
Depositor, the Seller, the Servicer, the Back-up Servicer, the Originators or
the Trustee and are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, the Federal Housing
Administration or the Veterans Administration or any other governmental agency.
The Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and, with respect to the Class M
Certificates, Class M Insured Payments under the Certificate Insurance Policy
and the Interest Rate Hedge Agreement, all as more specifically set forth herein
and in the Agreement. In the event Servicer funds are advanced with respect to
any Mortgage Loan, such advance is reimbursable to the Servicer from related
recoveries on such Mortgage Loan.
Subject to certain restrictions, the Agreement permits the amendment
thereof by the Depositor, the Servicer, the Back-up Servicer, the Collateral
Agent and the Trustee, with the consent of the Certificate Insurer. Subject to
the rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default
E-3
by the Servicer in the performance of its obligations under the Agreement and
its consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations therein set
forth, including, without limitation, with respect to the Class X Certificates,
execution and delivery as appropriate of the Transfer Affidavit and Agreement
(attached as an exhibit to the Agreement) and the Transfer Certificate (attached
as an exhibit to the Agreement) described in Section 4.02(i) of the Agreement,
the transfer of this Certificate is registrable in the Certificate Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in New York, New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to, the
Trustee, duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate undivided Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of a Class X Certificate or any interest therein shall be made
to any employee benefit plan or other retirement arrangement, including
individual retirement accounts and annuities, ▇▇▇▇▇ plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested, that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan"), nor to
an entity whose underlying assets are deemed to be assets of such a plan,
account or arrangement by reason of such plan's, account's or arrangement's
investment in the entity, as determined under U.S. Department of Labor
Regulations 29 C.F.R. Section 2510.3-101 or otherwise.
The Certificates are issuable only in fully-registered form. As provided in
the Agreement and subject to certain limitations therein set forth, a
Certificate is exchangeable for a new Certificate evidencing the same undivided
ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Servicer, the Back-up Servicer, the Depositor, the Seller, the
Originators and the Trustee and any agent of any of the foregoing, may treat the
person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon notice to the
Trustee of: (i) the later of (a) the distribution to Certificateholders of the
final payment or collection with respect to the last Mortgage Loan (or Periodic
Advances of same by the Servicer), or the disposition of all funds with respect
to the last Mortgage Loan and the remittance of all funds due under the
Agreement and the payment of all amounts due and payable
E-4
to the Certificate Insurer and the Trustee or (b) mutual consent of the
Servicer, the Certificate Insurer and all Certificateholders in writing, or (ii)
the purchase by the Servicer of all outstanding Mortgage Loans and REO
Properties at a price determined as provided in the Agreement (the exercise of
the right of the Servicer to purchase all the Mortgage Loans and property in
respect of Mortgage Loans will result in early retirement of the Certificates),
the right of the Servicer to purchase being subject to the Maximum Pool Balance
of the Mortgage Loans and REO Properties at the time of purchase being equal to
or less than ten percent (10%) of the Original Aggregate Principal Balance (the
"Clean-Up Call Date"); provided, however, that in no event shall the trust
established by the Pooling and Servicing Agreement terminate later than
twenty-one years after the death of the last surviving lineal descendant of the
person named therein. By its acceptance of this Certificate, the
Certificateholder hereby appoints the Servicer as its attorney-in-fact to adopt
a plan of liquidation of the Trust Fund in accordance with Section 8.02 of the
Agreement.
Unless this Certificate has been countersigned by the Trustee, by manual
signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
E-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed by its authorized officer.
JPMORGAN CHASE BANK, not in its
individual capacity, but solely as
Trustee
By:
--------------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class X Certificate referred to in the within-mentioned
Agreement.
JPMORGAN CHASE BANK,
not in its individual capacity, but
solely as Trustee
By:
--------------------------------------
Dated: __________________
E-6
EXHIBIT F
[FORM OF CLASS I CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAW OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE
"RESIDUAL INTERESTS" IN FOUR "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN OPINION OF COUNSEL TO THE
TRUSTEE AND (2) AN AFFIDAVIT TO THE TRUSTEE THAT SUCH TRANSFEREE IS A PERMITTED
TRANSFEREE (AS DEFINED IN THE POOLING AND SERVICING AGREEMENT) OR AN AGENT OF A
PERMITTED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OF ANY TRANSFER OF THIS CLASS R CERTIFICATE TO A PERSON OTHER THAN A
PERMITTED TRANSFEREE OR AN AGENT OF A PERMITTED TRANSFEREE SUCH REGISTRATION
SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, INCLUDING INDIVIDUAL
RETIREMENT ACCOUNTS AND ANNUITIES, ▇▇▇▇▇ PLANS AND COLLECTIVE INVESTMENT FUNDS
AND SEPARATE ACCOUNTS IN WHICH SUCH PLANS, ACCOUNTS OR ARRANGEMENTS ARE INVESTED
THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THE CODE, NOR TO AN ENTITY WHOSE UNDERLYING ASSETS ARE
DEEMED TO BE ASSETS OF SUCH A PLAN, ACCOUNT OR ARRANGEMENT BY REASON OF SUCH
PLAN'S, ACCOUNT'S OR ARRANGEMENT'S INVESTMENT IN THE ENTITY, AS DETERMINED UNDER
U.S. DEPARTMENT OF LABOR REGULATIONS 29 C.F.R. Section 2510.3-101 OR OTHERWISE.
F-1
Series: Percentage Interest of this Certificate:
No. I-_
Cut-Off Date: Date of Pooling and Servicing Agreement:
Closing Date:
First Distribution Date: Back-up Servicer: JPMorgan Chase Bank
Servicer: American Business Credit, Inc. Trustee: JPMorgan Chase Bank
---------------------------------------
This certifies that _______________ is the registered owner of the
percentage interest specified above (the "Percentage Interest") of the Class I
Certificates, which together represent an undivided ownership interest in
certain first or second lien mortgage loans or deeds of trust primarily on
residential property (the "Mortgage Loans") serviced by American Business
Credit, Inc. (hereinafter called the "Servicer"), in its capacity as servicer
under that certain Pooling and Servicing Agreement (the "Agreement") dated as of
March 1, 2003 among American Business Credit, Inc., as servicer, Bear ▇▇▇▇▇▇▇
Asset Backed Securities, Inc., as depositor (the "Depositor"), and JPMorgan
Chase Bank, as trustee, back-up servicer and collateral agent (the "Trustee",
the "Back-up Servicer" and the "Collateral Agent"). The Mortgage Loans were
originated or acquired by American Business Credit, Inc. ("ABC"), HomeAmerican
Credit, Inc. d/b/a Upland Mortgage ("Upland") and American Business Mortgage
Services, Inc. ("ABMS", and together with ABC and Upland, the "Originators") and
sold to ABFS 2003-1, Inc. (the "Seller"), which in turn sold the Mortgage Loans
to the Depositor pursuant to that certain Unaffiliated Seller's Agreement, dated
as of March 1, 2003, among the Depositor, the Originators and the Seller. The
Mortgage Loans will be serviced by the Servicer pursuant to the terms and
conditions of the Agreement, certain of the pertinent provisions of which are
set forth herein. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound.
On each Distribution Date, commencing on ___________, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
last day of the month next preceding the month of such Distribution Date (the
"Record Date") or in the case of the _____________ Distribution Date, on the
Closing Date, an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of the Class I Certificates on such Distribution Date pursuant to
Section 6.05 of the Agreement.
Radian Asset Assurance Inc. (the "Certificate Insurer") has issued a
Financial Guaranty Insurance Policy (the "Certificate Insurance Policy") with
respect to the Class M Certificates, which guarantees certain payments on the
Class M Certificates, as described in the Agreement.
Distributions on this Certificate will be made by the Trustee by wire
transfer of immediately available funds to the account of the Person entitled
thereto as shall appear on the
F-2
Certificate Register without the presentation or surrender of this Certificate
(except for the final distribution as described below) or the making of any
notation thereon, at a bank or other entity having appropriate facilities
therefor, if such Person shall own of record Certificates of the same Class
which have at least a 10% Percentage Interest appearing in the Certificate
Register and shall have so notified the Trustee at least five business days
prior to the related Record Date, or by check mailed to the address of such
Person appearing in the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency maintained for that
purpose by the Trustee in New York, New York.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFS Mortgage Loan Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1, Class A, Class A-IO and Class M Certificates
(collectively, the "Offered Certificates"). The Trust has also issued the Class
I, Class X and Class R Certificates (together with the Offered Certificates, the
"Certificates") and collectively representing the entire beneficial ownership in
the trust fund created and held under the Agreement, subject to the limits and
priority of distribution provided for in the Agreement. The trust fund consists
primarily of (i) such Mortgage Loans as from time to time are subject to the
Agreement, together with the Mortgage Files relating thereto, and together with
all principal collected and interest accruing thereon after the Cut-Off Date,
and any proceeds thereof, (ii) such assets as from time to time are identified
as REO Property and collections thereon and proceeds thereof, (iii) assets that
are deposited in the Accounts, including amounts on deposit in such Accounts and
invested in Permitted Investments, (iv) the Trustee's rights with respect to the
Mortgage Loans under all insurance policies required to be maintained pursuant
to the Agreement, (v) the Certificate Insurance Policy and (vi) all proceeds of
the foregoing.
The Certificates do not represent an obligation of, or an interest in, the
Depositor, the Seller, the Servicer, the Back-up Servicer, the Originators or
the Trustee and are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, the Federal Housing
Administration or the Veterans Administration or any other governmental agency.
The Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and, with respect to the Class M
Certificates, Class M Insured Payments under the Certificate Insurance Policy
and the Interest Rate Hedge Agreement, all as more specifically set forth herein
and in the Agreement. In the event Servicer funds are advanced with respect to
any Mortgage Loan, such advance is reimbursable to the Servicer from related
recoveries on such Mortgage Loan.
Subject to certain restrictions, the Agreement permits the amendment
thereof by the Depositor, the Servicer, the Back-up Servicer, the Collateral
Agent and the Trustee, with respect to consent of the Certificate Insurer.
Subject to the rights of the Certificate Insurer, the Agreement permits the
Majority Certificateholders to waive, on behalf of all Certificateholders, any
default by the Servicer in the performance of its obligations under the
Agreement and its consequences, except in a default in making any required
distribution on a Certificate. Any such consent or waiver by the Majority
Certificateholders shall be conclusive and binding on the holder of this
Certificate and upon all future holders of this Certificate and of any
Certificate
F-3
issued upon the transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations therein set
forth, including, without limitation, with respect to the Class R Certificates,
execution and delivery as appropriate of the Transfer Affidavit and Agreement
(attached as an exhibit to the Agreement) and the Transfer Certificate (attached
as an exhibit to the Agreement) described in Section 4.02(l) of the Agreement,
the transfer of this Certificate is registrable in the Certificate Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in New York, New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to, the
Trustee, duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate undivided Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of a Class I Certificate or any interest therein shall be made
to any employee benefit plan or other retirement arrangement, including
individual retirement accounts and annuities, ▇▇▇▇▇ plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested, that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan"), nor to
an entity whose underlying assets are deemed to be assets of such a plan,
account or arrangement by reason of such plan's, account's or arrangement's
investment in the entity, as determined under U.S. Department of Labor
Regulations 29 C.F.R. Section 2510.3-101 or otherwise.
The Certificates are issuable only in fully-registered form. As provided in
the Agreement and subject to certain limitations therein set forth, a
Certificate is exchangeable for a new Certificate evidencing the same undivided
ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Servicer, the Back-up Servicer, the Depositor, the Seller, the
Originators and the Trustee and any agent of any of the foregoing, may treat the
person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon notice to the
Trustee of: (i) the later of (a) the distribution to Certificateholders of the
final payment or collection with respect to the last Mortgage Loan (or Periodic
Advances of same by the Servicer), or the disposition of all funds with respect
to the last Mortgage Loan and the remittance of all funds due under the
Agreement and the payment of all amounts due and payable to the Certificate
Insurer and the Trustee or (b) mutual consent of the Servicer, the Certificate
Insurer and all Certificateholders in writing, or (ii) the purchase by the
Servicer of all outstanding Mortgage Loans and REO Properties at a price
determined as provided in the Agreement (the exercise of the right of the
Servicer to purchase all the Mortgage Loans and property in respect
F-4
of Mortgage Loans will result in early retirement of the Certificates), the
right of the Servicer to purchase being subject to the Maximum Pool Balance of
the Mortgage Loans and REO Properties at the time of purchase being equal to or
less than ten percent (10%) of the Original Aggregate Principal Balance (the
"Clean-Up Call Date"); provided, however, that in no event shall the trust
established by the Pooling and Servicing Agreement terminate later than
twenty-one years after the death of the last surviving lineal descendant of the
person named therein. By its acceptance of this Certificate, the
Certificateholder hereby appoints the Servicer as its attorney-in-fact to adopt
a plan of liquidation of the Trust Fund in accordance with Section 8.02 of the
Agreement.
Unless this Certificate has been countersigned by the Trustee, by manual
signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
F-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed by its authorized officer.
JPMORGAN CHASE BANK, not in its
individual capacity, but solely as
Trustee
By:
--------------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class I Certificate referred to in the within-mentioned
Agreement.
JPMORGAN CHASE BANK,
not in its individual capacity, but
solely as Trustee
By:
--------------------------------------
Dated: ________________
F-6
EXHIBIT G
CONTENTS OF THE MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items (copies to the extent the originals have been
delivered to the Trustee pursuant to Section 2.03 of the Agreement), all of
which shall be available for inspection by the Certificateholders, to the extent
required by applicable laws:
1. The original Mortgage Note, with all prior and intervening endorsements
showing a complete chain of endorsements from the originator of the
Mortgage Loan to the Person so endorsing the Mortgage Loan to the
Trustee, endorsed by such Person "Pay to the order of ________________
without recourse" and signed, by facsimile or manual signature, in the
name of the Seller by a Responsible Officer.
2. Either: (i) the original Mortgage, and related power of attorney, if
any, with evidence of recording thereon, or (ii) a copy of the Mortgage
and related power of attorney, if any, certified as a true copy of the
original Mortgage or power of attorney by a Responsible Officer of the
Seller on the face of such copy substantially as follows: "certified
true and correct copy of original which has been transmitted for
recordation."
3. Either: (i) The original Assignment of Mortgage in recordable form in
blank or (ii) a copy of the Assignment certified as a true copy of the
original Assignment by a Responsible Officer of the Seller on the face
of such copy substantially as follows: "certified true and correct copy
of original which has been transmitted for recordation." Any such
Assignments of Mortgage may be made by blanket assignments for Mortgage
Loans secured by the Mortgaged Properties located in the same county,
if permitted by applicable law.
4. The original lender's policy of title insurance or a true copy thereof,
or if such original lender's title insurance policy has been lost, a
copy thereof certified by the appropriate title insurer to be true and
complete, or if such lender's title insurance policy has not been
issued as of the Closing Date, a marked up commitment (binder) to issue
such policy.
5. All original intervening assignments, if any, showing a complete chain
of assignments from the originator to the related Originator, including
any recorded warehousing assignments, with evidence of recording
thereon, certified by a Responsible Officer of the related Originator
by facsimile or manual signature as a true copy of the original of such
intervening assignments.
Originals of all assumption, written assurance, substitution and modification
agreements, if any.
G-1
EXHIBIT H
CERTIFICATE RE: PREPAID LOANS
I, ______________, ____________ of ABFS 2003-1, Inc., as Unaffiliated
Seller, hereby certify that between the "Cut-Off Date" (as defined in the
Pooling and Servicing Agreement dated as of March 1, 2003 by and among Bear
▇▇▇▇▇▇▇ Asset Backed Securities Inc., American Business Credit, Inc. and
JPMorgan Chase Bank, as trustee, back-up servicer and collateral agent), and the
"Startup Day" the following schedule of "Mortgage Loans" (each as defined in the
Pooling and Servicing Agreement) have been prepaid in full.
Dated: _________________
By:
-------------------
Name:
-------------------
Title:
-------------------
H-1
EXHIBIT I
INITIAL CERTIFICATION OF COLLATERAL AGENT
____________, 200_
[Depositor]
[Servicer]
[Trustee]
[Back-up Servicer]
Re: The Pooling and Servicing Agreement, dated as of March 1, 2003
among Bear ▇▇▇▇▇▇▇ Asset Backed Securities Inc., as Depositor,
American Business Credit, Inc., as Servicer, and JPMorgan
Chase Bank, as Trustee, Back-up Servicer and Collateral Agent
Ladies and Gentlemen:
In accordance with the provisions of Section 2.06 of the
above-referenced Pooling and Servicing Agreement, the undersigned, as Collateral
Agent, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
listed on the attachment hereto), it has reviewed the documents delivered to it
pursuant to Section 2.05 of the Pooling and Servicing Agreement and has
determined that (i) all documents required to be delivered to it pursuant
Section 2.05 of the above-referenced Pooling and Servicing Agreement (other than
the items in clause (a)(v) thereof) are in its possession, (ii) such documents
have been reviewed by it and appear regular on their face and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
Mortgage Loan, (iii) based on its examination and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule as to the
information set forth in (i), (ii), (v) and (vi) of the definition of Mortgage
Loan Schedule set forth in such Pooling and Servicing Agreement accurately
reflects the information set forth in the Trustee's Mortgage File and (iv) each
Mortgage Note has been endorsed as provided in Section 2.05 of the Pooling and
Servicing Agreement. The Trustee has made no independent examination of such
documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
I-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them
JPMORGAN CHASE BANK
as Collateral Agent
By:
----------------------
Name:
Title:
I-2
EXHIBIT J
FINAL CERTIFICATION OF COLLATERAL AGENT
____________, 200_
[Depositor]
[Servicer]
[Trustee]
[Back-up Servicer]
Re: The Pooling and Servicing Agreement, dated as of March 1, 2003
among Bear ▇▇▇▇▇▇▇ Asset Backed Securities Inc., as Depositor,
American Business Credit, Inc., as Servicer, and JPMorgan
Chase Bank, as Trustee, Back-up Servicer and Collateral Agent
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Collateral Agent, hereby certifies
that, except as noted on the attachment hereto, as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
listed on the attachment hereto) it has reviewed the documents delivered to it
pursuant to Section 2.05 of the Pooling and Servicing Agreement and has
determined that (i) all documents required to be delivered to it pursuant to
Section 2.05 of the above-referenced Pooling and Servicing Agreement (other than
the items in clause (a)(v) thereof) are in its possession, (ii) such documents
have been reviewed by it and appear regular on their face and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
Mortgage Loan, and (iii) based on its examination, and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule as to
information set forth in (i), (ii), (v) and (vi) of the definition of Mortgage
Loan Schedule as set forth in such Pooling and Servicing Agreement accurately
reflects the information set forth in the Trustee's Mortgage File. The Trustee
has made no independent examination of such documents beyond the review
specifically required in the above-referenced Pooling and Servicing Agreement.
The Trustee makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
J-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
JPMORGAN CHASE BANK
as Collateral Agent
By:
----------------------
Name:
Title:
J-2
EXHIBIT K
REQUEST FOR RELEASE OF DOCUMENTS
______________ 2003
To: [Trustee]
Re: The Pooling and Servicing Agreement, dated as of March 1, 2003
among Bear ▇▇▇▇▇▇▇ Asset Backed Securities Inc., as Depositor,
American Business Credit, Inc., as Servicer, and JPMorgan
Chase Bank, as Trustee, Back-up Servicer and Collateral Agent
In connection with the administration of the pool of Mortgage
Loans held by you as Trustee for the Certificateholders, we request the release,
and acknowledge receipt, of the (Trustee's Mortgage File/[specify document]) for
the Mortgage Loan described below, for the reason indicated.
Mortgagor's Name, Address & Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents (check one)
____ 1. Mortgage Loan Paid in Full
(Servicer hereby certifies that all amounts received in
connection herewith have been credited to the Collection
Account.)
____ 2. Mortgage Loan Liquidated
(Servicer hereby certifies that all proceeds of
foreclosure, insurance or other liquidation have been
finally received and credited to the Collection Account.)
____ 3. Mortgage Loan in Foreclosure
____ 4. Mortgage Loan Repurchased Pursuant to Section 5.18 of the
Pooling and Servicing Agreement.
____ 5. Mortgage Loan Repurchased or Substituted pursuant to Article
II or III of the Pooling and Servicing Agreement (Servicer
hereby certifies that the repurchase price or Substitution
Adjustment has been credited to the Distribution Account and
that the substituted mortgage loan is a Qualified Substitute
Mortgage Loan.)
K-1
____ 6. Other
(explain)_____________________________________________________
If box 1 or 2 above is checked, and if all or part of the
Trustee's Mortgage File was previously released to us, please release to us our
previous receipt on file with you, as well as any additional documents in your
possession relating to the above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all
of the above documents to you as Trustee, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
By:
----------------------
Name:
Title:
Documents returned to Trustee:
JPMORGAN CHASE BANK, as
Trustee
By:
-----------------------------------------
Date:
---------------------------------------
K-2
EXHIBIT L
TRANSFER AFFIDAVIT AND AGREEMENT
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or
beneficial owner of ABFS Mortgage Loan Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1, Class R (the "Owner")), a [savings institution]
[corporation] duly organized and existing under the laws of [the State of
______] [the United States], on behalf of which he makes this affidavit and
agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986 (the "Code"), (ii) will endeavor to remain
other than a disqualified organization for so long as it retains its ownership
interest in the Class R Certificates, and (iii) is acquiring the Class R
Certificates for its own account or for the account of another Owner from which
it has received an affidavit and agreement in substantially the same form as
this affidavit and agreement.
3. That the Owner has historically paid its debts as they came due and
will continue to pay its debts as they come due in the future.
4. That the Owner has no present knowledge or expectation that it will
be unable to pay any United States taxes owed by it or that it will become
insolvent or subject to a bankruptcy proceeding for so long as any of the Class
R Certificates remain outstanding.
5. That the Owner has been advised of, and understands that as the
holder of a noneconomic residual interest it may incur tax liabilities in excess
of any cash flows generated by the interest. That the Owner intends to pay such
taxes associated with holding the Class R Certificates as they become due.
6. That the Owner will not cause income from the Class R Certificates
to be attributable to a foreign permanent establishment or fixed base (within
the meaning of an applicable income tax treaty) of the Owner or another U.S.
taxpayer.
7. (1)[A. Formula Test] That the Owner agrees that the present value of
the anticipated tax liabilities associated with holding the Class R Certificates
does not exceed the sum of the present value of any consideration given to the
Owner to acquire the Class R Certificates, the present value of the expected
future distributions on the Class R Certificates, and the present value of the
anticipated tax savings associated with holding the interest as the
--------
(1) Insert either section 7A or 7B.
L-1
REMIC generates losses. That the Owner agrees that it complied with U.S.
Treasury Regulations Section 1.860E-1(c)(8) in making such representation.
That the Owner agrees that it is not a foreign permanent
establishment or fixed base (within the meaning of an applicable income tax
treaty) of the Transferor or another U.S. taxpayer.
[B. Asset Test] That the Owner, at the time of the transfer, and at
the close of the Owner's two fiscal years preceding the year of the transfer,
had gross assets for financial reporting purposes in excess of $100 million and
net assets in excess of $10 million (excluding any obligation of a person
related to the Owner within the meaning of U.S. Treasury Regulations Section
1.860E-1(c)(6)(ii) or any other asset if a principle purpose for holding or
acquiring the other asset was to permit the Owner to satisfy the above stated
minimum asset requirements).
That the Owner is an "eligible corporation," as defined in U.S.
Treasury Regulations Section 1.860E-1(c)(6)(i). That the Owner agrees, in
connection with any subsequent transfer of its ownership interest in the Class R
Certificates, to transfer its ownership interest only to another "eligible
corporation," as defined in U.S. Treasury Regulations Section 1.860E-1(c)(6)(i),
and to honor the restrictions on subsequent transfers of the Class R
Certificates by transferring its ownership interest only in a transaction that
satisfies the requirements of U.S. Treasury Regulations Section
1.860E-1(c)(4)(i), (ii) and (iii) and U.S. Treasury Regulations Section
1.860E-1(c)(5).
That the Owner determined the consideration paid to it to acquire the
Class R Certificates in good faith and based on reasonable market assumptions
(including, but not limited to, borrowing and investment rates, prepayment and
loss assumptions, expense and reinvestment assumptions, tax rates and other
factors specific to the Owner).
8. That the Owner certifies that it is a U.S. Person.
9. That the Owner's Taxpayer Identification Number is ____________.
10. That the Owner has reviewed the restrictions set forth on the face
of the Class R Certificates and the provisions of Section 4.02(l) of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (in
particular, clauses (vii) and (viii) of Section 4.02(l) which authorize the
Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such
Certificates in violation of Section 4.02. That the Owner expressly agrees to be
bound by and to comply with all the provisions of Section 4.02(l) of the Pooling
and Servicing Agreement and the restrictions on the face of the Class R
Certificates.
11. That the Owner will, in connection with any transfer that it makes
of the Class R Certificates, deliver to the Trustee a certificate, in form and
substance satisfactory to the Trustee, that is in substantially the same form as
Exhibit N attached to the Pooling and Servicing Agreement and that contains the
same representations set forth therein.
L-2
12. That the Owner will not transfer any of its interest in the Class R
Certificates unless (i) it has received from any subsequent transferee an
affidavit in substantially the same form as this affidavit containing the same
representations set forth herein, and (ii) as of the time of the transfer, it
does not have actual knowledge that such affidavit is false. That the Owner will
cause such affidavit to be delivered to the Trustee upon receipt. That the Owner
is aware that the Trustee will not register the transfer of any Class R
Certificates unless and until such affidavit is received.
13. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is not a disqualified
organization.
14. That the Owner hereby agrees to cooperate with the Trustee and to
take any action required of it by the Code or Treasury regulations thereunder
(whether now or hereafter promulgated) in order to create or maintain the REMIC
status of the Trust.
15. That the Owner hereby agrees that it will not take any action that
could endanger the REMIC status of the Trust or result in the imposition of tax
on the Trust unless counsel for, or acceptable to, the Trustee has provided an
opinion that such action will not result in the loss of such REMIC status or the
imposition of such tax, as applicable.
16. The Owner is not an employee benefit plan or other plan subject to
the prohibited transaction provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"), or an investment manager, named fiduciary or a
trustee of any such plan, or any other Person acting, directly or indirectly, on
behalf of or purchasing any Certificate with "plan assets" of any such plan
within the meaning of the Department of Labor regulation at 29 C.F.R.
Section 2510.3-101.
17. That the Owner understands and agrees that any breach of any of the
representations included herein shall render the transfer to the Owner
contemplated hereby null and void and shall cause not rights in the Class R
Certificate to vest in the Owner.
For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Code), any
organization (other than a cooperative described in Section 521 of the Code)
that is exempt from taxation under the Code (unless such organization is subject
to tax on excess inclusions) and any organization that is described in Section
1381(a)(2)(C) of the Code. The term "U.S. Person" means a citizen or resident of
the United States, a corporation or partnership (unless, in the case of a
partnership, Treasury regulations are adopted that provide otherwise) created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia, including an entity treated as a corporation or
partnership for federal income tax purposes, an estate whose income is subject
to United States federal income tax regardless of its source, or a trust if a
court within the United States is able to exercise primary supervision over the
administration of such
L-3
trust, and one or more such U.S. Persons have the authority to control all
substantial decisions of such trust, (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996 which are
eligible to elect to be treated as U.S. Persons).
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed
on its behalf, pursuant to the authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this _ day of .
[NAME OF OWNER]
By:
-----------------------
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
-------------------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Owner, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Owner.
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EXHIBIT M
TRANSFEROR'S CERTIFICATE
To: [Trustee]
Re: The Pooling and Servicing Agreement, dated as of March 1, 2003
among Bear ▇▇▇▇▇▇▇ Asset Backed Securities Inc., as Depositor,
American Business Credit, Inc., as Servicer, and JPMorgan
Chase Bank, as Trustee, Back-up Servicer and Collateral Agent
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by ABFS
2003-1, Inc. (the "Seller") to ______________________ (the "Purchaser") of a
___% Percentage Interest of ABFS Mortgage Loan Trust 2003-1, Mortgage
Pass-Through Certificates, Series 2003-1, Class R (the "Certificates"), pursuant
to Section 4.02 of the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of March 1, 2003 among American Business Credit,
Inc., as servicer (the "Servicer"), Bear ▇▇▇▇▇▇▇ Asset Backed Securities Inc.,
as depositor, and JPMorgan Chase Bank, as trustee, back-up servicer and
collateral agent (the "Trustee", the "Back-up Servicer" and the "Collateral
Agent"). All terms used herein and not otherwise defined shall have the meanings
set forth in the Pooling and Servicing Agreement. The Seller hereby certifies,
represents and warrants to, and covenants with, the Company and the Trustee
that:
1. No purpose of the Seller relating to the transfer of the
Certificates by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Seller has conducted a reasonable investigation of the financial
condition of the Purchaser and, as a result of such investigation, has concluded
that the Purchaser has historically paid its debts as they came due and will
continue to pay its debts as they come due in the future. The Seller understands
that the transfer of the Certificates may not be respected for United States
income tax purposes (and the Seller may continue to be liable for United States
income tax associated therewith) unless the Seller has conducted such an
investigation.
3. The Seller has received from the Purchaser and has delivered to the
Trustee and the Company, a Transfer Affidavit and Agreement in the form attached
to the Pooling and Servicing Agreement as Exhibit M. The Seller does not know or
believe that any representation contained therein is false.
4. The Seller does not know or have reason to know that the Purchaser
(i) will be unwilling or unable to pay taxes due on its share of the
Certificates or (ii) will not honor the restrictions on subsequent transfers of
the Certificates set forth in section 4.02(l) of the Pooling and Servicing
Agreement and in the Transfer Affidavit and Agreement.
M-1
5. The Seller has no actual knowledge that the proposed Transferee is a
"disqualified organization" within the meaning of Section 860E(e)(5) of the Code
or is not a United States Person.
Very truly yours,
----------------------------
(Seller)
By:
-----------------------
Name:
Title:
M-2
EXHIBIT N
ERISA INVESTMENT REPRESENTATION LETTER
[Depositor]
[Servicer]
[Trustee]
Re: ABFS Mortgage Loan Trust 2003-1, Mortgage Pass-Through
Certificates, Series 2003-1, Class [I] [X] [R] Certificates
The undersigned (the "Purchaser") proposes to purchase certain
Class [I] [X] [R] Certificates (the "Certificates"). In doing so, the Purchaser
hereby acknowledges and agrees as follows:
Section 1. Definitions. Each capitalized term used herein and
not otherwise defined shall have the meaning given it in the Pooling and
Servicing Agreement, dated as of March 1, 2003 (the "Agreement"), among Bear
▇▇▇▇▇▇▇ Asset Backed Securities Inc., as depositor (the "Depositor"), American
Business Credit, Inc., as servicer (the "Servicer") and JPMorgan Chase Bank, as
trustee, back-up servicer and collateral agent (the "Trustee", the "Back-up
Servicer" and the "Collateral Agent") relating to the Certificates.
Section 2. Representations and Warranties of the Purchaser. In
connection with the proposed transfer, the Purchaser represents and warrants to
the Depositor and the Trustee that the Purchaser is not a pension or benefit
plan or individual retirement arrangement that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or to Section 4975
of the Code or an entity whose underlying assets are deemed to be assets of such
a plan or arrangement by reason of such plan's or arrangement's investment in
the entity, as determined under U.S. Department of Labor Regulations 29 C.F.R.
Section 2510.3-101 or otherwise.
IN WITNESS WHEREOF, the undersigned has caused this ERISA
Investment Representation Letter to be validly executed by its duly authorized
representative as of the date first above written.
[NAME OF PURCHASER]
By:
----------------------
Name:
N-1
EXHIBIT O
RESALE CERTIFICATION
___________, 200_
[Depositor]
[Servicer]
[Back-up Servicer]
[Trustee]
[Certificate Registrar]
Re: Class ___ Certificate, No. __ (the "Certificate"), issued
pursuant to that certain Pooling and Servicing Agreement,
dated as of March 1, 2003 by and among Bear ▇▇▇▇▇▇▇ Asset
Backed Securities Inc., as depositor, American Business
Credit, Inc., as servicer, and JPMorgan Chase Bank, as
trustee, back-up servicer and collateral agent
Dear Sirs:
ABFS 2003-1, Inc. as registered holder ("Seller") intends to
transfer the captioned Certificate to ___________________________ ("Purchaser"),
for registration in the name of ________________________________.
1. In connection with such transfer, and in accordance with
Section 4.02 of the captioned Agreement, Seller hereby certifies to you the
following facts: Neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificate, any
interest in the Certificate or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security from,
or otherwise approached or negotiated with respect to the Certificate, any
interest in the Certificate or any other similar security with, any person in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, which would constitute a
distribution of the Certificate under the Securities Act of 1933, as amended
(the "1933 Act"), or which would render the disposition of the Certificate a
violation of Section 5 of the 1933 Act or require registration pursuant thereto.
2. The Purchaser warrants and represents to, and covenants
with, the Seller, the Trustee and the Servicer pursuant to Section 4.02 of the
Pooling and Servicing Agreement that:
a. The Purchaser agrees to be bound, as Certificateholder, by
all of the terms, covenants and conditions of the Pooling and Servicing
Agreement and the Certificate, and from and after the date hereof, the Purchaser
assumes for the benefit of each of the Servicer and the Seller all of the
Seller's obligations as Certificateholder thereunder;
b. The Purchaser understands that the Certificate has not been
registered under the 1933 Act or the securities laws of any state;
O-1
c. The Purchaser is acquiring the Certificate [for investment]
for its own account only and not for any other person;
d. The Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Certificate;
e. The Purchaser has been furnished with all information
regarding the Certificate that it has requested from the Seller, the Trustee or
the Servicer; and
f. Neither the Purchaser nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Certificate,
any interest in the Certificate or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security from,
or otherwise approached or negotiated with respect to the Certificate, any
interest in the Certificate or any other similar security with, any person in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, which would constitute a
distribution of the Certificate under the 1933 Act or which would render the
disposition of the Certificate a violation of Section 5 of the 1933 Act or
require registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to the
Certificate.
3. The Purchaser warrants and represents to, and covenants
with, the Seller, the Servicer and the Depositor that:
a. The Purchaser agrees to be bound, as Certificateholder, by
the restrictions on transfer contained in the Pooling and Servicing Agreement;
b. [In the case of an assignment of a Class R [Class I or
Class X] Certificate only], it is not acquiring the Certificate with the assets
of an employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or a plan within
the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986 (the
"Code").
4. This Certification may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
O-2
IN WITNESS WHEREOF, the parties have caused this Resale
Certification to be executed by their duly authorized officers as of the date
first above written.
---------------------------- -------------------------
Seller Purchaser
By: By:
------------------------- ----------------------
Name: Name:
Title: Title:
Taxpayer Taxpayer
Identification No. Identification No.
O-3
EXHIBIT P
ASSIGNMENT
THIS ASSIGNMENT dated as of the _____ day of __________, 20__,
by and between __________________________ ("Assignor") and __________________
("Assignee"), provides:
That for and in consideration of the sum of TEN DOLLARS
($10.00) and other valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereby agree as follows:
1. Assignor hereby grants, transfers and assigns to Assignee
all of the right, title and interest of Assignor, as Certificateholder, in, to
and under that certain Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of March 1, 2003, by and among Bear ▇▇▇▇▇▇▇
Asset Backed Securities Inc., as depositor, American Business Credit, Inc., as
servicer, and JPMorgan Chase Bank, as trustee, back-up servicer and collateral
agent (the "Trustee", the "Back-up Servicer" and the "Collateral Agent") and
that certain Certificate, Class _____, No. __, (the "Certificate") issued
thereunder and authenticated by the Trustee.
2. For the purpose of inducing Assignee to purchase the
Certificate from Assignor, Assignor warrants and represents that:
a. Assignor is the lawful owner of the Certificate with the
full right to transfer the Certificate free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice, and has no knowledge
of any offsets, counterclaims or other defenses available to the Servicer with
respect to the Pooling and Servicing Agreement or the Certificate; and
c. [The Assignor has no knowledge of and has not received
notice of any amendments to the Pooling and Servicing Agreement or the
Certificate.] [The Pooling and Servicing Agreement has been amended pursuant to
_____________ dated _________________]
3. By execution hereof Assignee agrees to be bound, as
Certificateholder, by all of the terms, covenants and conditions of the Pooling
and Servicing Agreement and the Certificate, and from and after the date hereof
Assignee assumes for the benefit of each of the Servicer, the Back-up Servicer,
the Depositor, the Trustee, the Certificate Registrar and the Assignor all of
Assignor's obligations as Certificateholder thereunder.
4. The Assignee warrants and represents to, and covenants
with, the Assignor, the Depositor, the Trustee, the Certificate Registrar, the
Back-up Servicer and the Servicer that:
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a. The Assignee agrees to be bound, as Certificateholder, by
the restrictions on transfer contained in the Pooling and Servicing Agreement;
and
b. [In the case of an assignment of a Class R Certificate
[Class I or Class X] only.] It is not acquiring the Certificate with the assets
of an employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or a plan within
the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986 (the
"Code").
5. This Assignment may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same agreement.
WITNESS the following signatures.
---------------------------- -------------------------------
Assignor Assignee
By: By:
------------------------- ---------------------------
Name: Name:
Title: Title:
Taxpayer Taxpayer
Identification No. Identification No.
P-2
EXHIBIT Q
WIRING INSTRUCTIONS FORM
______________, 20__
[Trustee]
Re: Mortgage Pass-Through Certificates, Series 2003-1, Class ___,
No. __, (the Certificate") issued pursuant to that certain
Pooling and Servicing Agreement, dated as of March 1, 2003,
among Bear ▇▇▇▇▇▇▇ Asset Backed Securities Inc., as depositor,
American Business Credit, Inc., as servicer, and JPMorgan
Chase Bank, as trustee, back-up servicer and collateral agent
Dear Sir:
In connection with the sale of the above-captioned Certificate
by to ________________ ("Transferee") you, as paying agent with respect to the
related Certificates, are instructed to make all remittances to Transferee as
Certificateholder as of _________, 2003 by wire transfer. For such wire
transfer, the wiring instructions are as follows:
Bank Name: _______________________________
City & State: _______________________________
ABA No.: _______________________________
Account Name: _________________________
Account No.: _______________________________
Attention: _______________________________
[TRANSFEREE]
By:_________________________
Name:
Title:
Certificateholder's notice address:
Name:
Address:
Q-1
EXHIBIT R
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
________________, 2003
Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc. American Business Credit, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Floor ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
JPMorgan Chase Bank, Radian Asset Assurance Inc.
as Collateral Agent ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: The Pooling and Servicing Agreement, dated as of March 1, 2003
among Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc., as
Depositor, American Business Credit, Inc., as Servicer and
JPMorgan Chase Bank, as Trustee and as Collateral Agent
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby acknowledges receipt by it in
good faith without notice of adverse claims, of the Certificate Insurance
Policy, and declares that it holds and will hold the Certificate Insurance
Policy in trust for the exclusive use and benefit of all present and future
Certificateholders.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the Pooling and Servicing Agreement.
JPMORGAN CHASE BANK
as Trustee
By:
-----------------------------
-----------------------------
Name:
Title:
[Signature Page to Trustee's Acknowledgment of Receipt]
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EXHIBIT S
COLLATERAL AGENT'S ACKNOWLEDGMENT OF RECEIPT
_________________, 2003
Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc. American Business Credit, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Floor ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
JPMorgan Chase Bank,
as Collateral Agent and Back-up Servicer
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: The Pooling and Servicing Agreement, dated as of March 1,
2003, among Bear ▇▇▇▇▇▇▇ Asset Backed Securities Inc., as
Depositor, American Business Credit, Inc., as Servicer, and
JPMorgan Chase Bank, as Trustee, Back-up Servicer and
Collateral Agent
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Collateral Agent, hereby
acknowledges receipt by it in good faith without notice of adverse claims,
subject to the provisions of Sections 2.04 and 2.05 of the Pooling and Servicing
Agreement (as such provisions relate to the Mortgage Loans), of, with respect to
each of the Mortgage Loans, the Mortgage File containing the original Mortgage
Note, except with respect to the list of exceptions attached hereto, and based
on its examination and only as to the foregoing, the information set forth in
the Mortgage Loan Schedule accurately reflects information set forth in the
Mortgage Note, and declares that it holds and will hold such documents and the
other documents delivered to it constituting the Trustee's Mortgage Files, and
that it holds or will hold all such assets and such other assets included in the
definition of "Trust Estate" that are delivered to it, on behalf of the Trustee,
in trust for the exclusive use and benefit of all present and future
Certificateholders.
The Collateral Agent has made no independent examination of
any such documents beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Collateral Agent makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any such documents or any of the Mortgage Loans identified on
the Mortgage Loan Schedule, or (ii) the collectibility, insurability,
effectiveness or suitability of any such Mortgage Loan.
The Schedule of Mortgage Loans is attached to this Receipt.
S-1
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
JPMORGAN CHASE BANK,
as Collateral Agent
By:
----------------------------------
Name:
Title:
S-2
EXHIBIT T
FORM OF SUBSEQUENT TRANSFER AGREEMENT
ABFS MORTGAGE LOAN TRUST 2003-1
American Business Credit, Inc., American Business Mortgage
Services, Inc. and HomeAmerican Credit, Inc. d/b/a Upland Mortgage, as
originators (the "Originators"), ABFS 2003-1 Inc., as seller (the "Seller"),
Bear ▇▇▇▇▇▇▇ Asset Backed Securities Inc., as depositor (the "Depositor"), and
ABFS Mortgage Loan Trust 2003-1, as purchaser (the "Purchaser"), pursuant to the
Pooling and Servicing Agreement, dated as of March 1, 2003 (the "Pooling and
Servicing Agreement"), among the Depositor, American Business Credit, Inc., as
servicer (in such capacity, the "Servicer") and JPMorgan Chase Bank, as trustee,
collateral agent and back-up servicer (the "Trustee", the "Collateral Agent" and
the "Back-up Servicer"), hereby confirm, as of this [_____, 20__], their
understanding with respect to the sale by the Originators to the Seller, the
sale by the Seller to the Depositor, and the sale by the Depositor to the
Purchaser of those Mortgage Loans listed on the attached Schedule of Mortgage
Loans (the "Subsequent Mortgage Loans").
Conveyance of Subsequent Mortgage Loans
The Originators do hereby irrevocably sell, transfer, assign,
set over and otherwise convey to the Seller, without recourse (except as
otherwise explicitly provided for herein) all of its right, title and interest
in and to the Subsequent Mortgage Loans, exclusive of the obligations of the
Originators with respect to the Subsequent Mortgage Loans but including
specifically, without limitation, the Mortgages, the Files and all other
documents, materials and properties appurtenant thereto and the Mortgage Notes,
including all interest and principal collected by the Originators on or with
respect to the Subsequent Mortgage Loans on or after the related Subsequent Cut
Off Date, together with all of its right, title and interest in and to the
proceeds received on or after such Subsequent Cut Off Date of any related
insurance policies on behalf of the Seller. The Originators shall deliver the
original Mortgage Note, Mortgage or mortgage assignment with evidence of
recording thereon (except as otherwise provided by the Pooling and Servicing
Agreement) and other required documentation in accordance with the delivery
requirements of the Seller set forth in Section 2.05 of the Unaffiliated
Seller's Agreement, dated as of December 1, 2002 (the "Unaffiliated Seller's
Agreement"), among the Originators, the Seller and the Depositor.
The Seller does hereby irrevocably sell, transfer, assign, set
over and otherwise convey to the Depositor, without recourse (except as
otherwise explicitly provided for herein) all of its right, title and interest
in and to the Subsequent Mortgage Loans, exclusive of the obligations of the
Seller or any other Person with respect to the Subsequent Mortgage Loans but
including specifically, without limitation, the Mortgages, the Files and all
other documents, materials and properties appurtenant thereto and the Mortgage
Notes, including all interest and principal collected by the Seller on or with
respect to the Subsequent Mortgage Loans on or after the related Subsequent Cut
Off Date, together with all of its right, title and interest in and to the
proceeds received on or after such Subsequent Cut Off Date of any related
insurance policies on behalf of the Depositor. The Seller shall deliver the
original Mortgage Note, Mortgage or
T-1
mortgage assignment with evidence of recording thereon (except as otherwise
provided by the Pooling and Servicing Agreement) and other required
documentation in accordance with the terms set forth in Section 2.05 of the
Unaffiliated Seller's Agreement.
The Depositor does hereby irrevocably sell, transfer, assign,
set over and otherwise convey to the Purchaser, without recourse (except as
otherwise explicitly provided for herein) all of its right, title and interest
in and to the Subsequent Mortgage Loans, exclusive of the obligations of the
Depositor or any other Person with respect to the Subsequent Mortgage Loans but
including specifically, without limitation, the Mortgages, the Files and all
other documents, materials and properties appurtenant thereto and the Mortgage
Notes, including all interest and principal collected by the Depositor on or
with respect to the Subsequent Mortgage Loans on or after the related Subsequent
Cut Off Date, together with all of its right, title and interest in and to the
proceeds received on or after such Subsequent Cut Off Date of any related
insurance policies on behalf of the Purchaser. The Depositor shall deliver the
original Mortgage or mortgage assignment with evidence of recording thereon
(except as otherwise provided by the Pooling and Servicing Agreement) and other
required documentation in accordance with the terms set forth in Section 2.05 of
the Pooling and Servicing Agreement.
The expenses and costs relating to the delivery of the
Subsequent Mortgage Loans specified in this Subsequent Transfer Agreement and
the Pooling and Servicing Agreement shall be borne by the Seller.
The Originators and the Seller hereby affirm the
representations and warranties set forth in the Unaffiliated Seller's Agreement,
respectively, that relate to the Subsequent Mortgage Loans on the date hereof.
The Originators and the Seller each hereby deliver notice and confirm that each
of the conditions set forth in Section 2.03(b) of the Pooling and Servicing
Agreement are satisfied as of the date hereof.
The Depositor hereby affirms any of its representations and
warranties set forth in the Unaffiliated Seller's Agreement that relate to the
Subsequent Mortgage Loans as of the date hereof. The Depositor hereby delivers
notice and confirms that each of the conditions set forth in Section 2.03(b) to
the Pooling and Servicing Agreement are satisfied as of the date hereof.
Additional terms of the sale are attached hereto as Attachment
A.
To the extent permitted by applicable law, this Subsequent
Transfer Agreement, or a memorandum thereof if permitted under applicable law,
is subject to recordation in all appropriate public offices for real property
records in all counties or other comparable jurisdictions in which any or all of
the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the Certificateholders' expense on the direction of
the Majority Certificateholders, but only when accompanied by an opinion of
counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders or is necessary for the administration
or servicing of the Mortgage Loans.
Capitalized terms used herein but not defined herein shall
have the meanings ascribed thereto in the Pooling and Servicing Agreement.
F-2
This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to the principles of conflicts of laws.
This Agreement may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same Agreement.
All terms and conditions of the Pooling and Servicing
Agreement are hereby ratified, confirmed and incorporated herein; provided, that
in the event of any conflict the provisions of this Subsequent Transfer
Agreement shall control over the conflicting provisions of the Pooling and
Servicing Agreement.
[Remainder of Page Intentionally Left Blank]
T-3
Terms capitalized herein and not defined herein shall have
their respective meanings as set forth in the Pooling and Servicing Agreement.
AMERICAN BUSINESS CREDIT, INC.,
as Originator
By:_____________________________________
Name:
Title:
AMERICAN BUSINESS MORTGAGE SERVICES,
INC., as Originator
By:_____________________________________
Name:
Title:
HOMEAMERICAN CREDIT, INC.
D/B/A UPLAND MORTGAGE, as Originator
By:_____________________________________
Name:
Title:
ABFS 2003-1, INC., as Seller
By:_____________________________________
Name:
Title:
BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES
INC., as Depositor
By:_____________________________________
Name:
Title:
JPMORGAN CHASE BANK, as Trustee
By:_____________________________________
Name:
Title:
T-4