POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2001
by and among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc.
(Depositor)
and
American Business Credit, Inc.
(Servicer)
and
The Chase Manhattan Bank
(Trustee and Collateral Agent)
ABFS Mortgage Loan Trust 2001-1
Mortgage Pass-Through Certificates,
Series 2001-1
Class A-1, Class A-IO, Class R and Class X
===============================================================================
Table of Contents
Page
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms.......................................................................1
Section 1.02 Provisions of General Application..........................................................25
Section 1.03 Business Day Certificate...................................................................26
ARTICLE II
ESTABLISHMENT OF THE TRUST SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 Establishment of the Trust.................................................................26
Section 2.02 Purchase and Sale of Mortgage Loans........................................................26
Section 2.03 [Reserved].................................................................................27
Section 2.04 Possession of Mortgage Files; Access to Mortgage Files.....................................27
Section 2.05 Delivery of Mortgage Loan Documents........................................................27
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain Substitutions; Certification by
Trustee....................................................................................30
Section 2.07 Designations under REMIC Provisions; Designation of Startup Day............................32
Section 2.08 Execution of Certificates..................................................................35
Section 2.09 Application of Principal and Interest......................................................35
Section 2.10 Grant of Security Interest.................................................................35
Section 2.11 Further Action Evidencing Assignments......................................................35
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Servicer and the Unaffiliated Seller................................36
Section 3.02 Representations, Warranties and Covenants of the Depositor.................................38
Section 3.03 Purchase and Substitution..................................................................39
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates...........................................................................41
Section 4.02 Registration of Transfer and Exchange of Certificates......................................42
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates..........................................47
Section 4.04 Persons Deemed Owners......................................................................48
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 REMIC Matters; The Servicer................................................................48
Section 5.02 Collection of Certain Mortgage Loan Payments; Collection Account...........................49
Section 5.03 Permitted Withdrawals from the Collection Account..........................................50
Section 5.04 Hazard Insurance Policies; Property Protection Expenses....................................51
Section 5.05 Assumption and Modification Agreements.....................................................52
Section 5.06 Realization Upon Defaulted Mortgage Loans..................................................53
Section 5.07 Trustee to Cooperate.......................................................................54
Section 5.08 Servicing Compensation; Payment of Certain Expenses by Servicer............................55
Section 5.09 Annual Statement as to Compliance..........................................................55
Section 5.10 Annual Independent Public Accountants' Servicing Report....................................55
Section 5.11 Access to Certain Documentation............................................................55
Section 5.12 Maintenance of Fidelity Bond...............................................................56
Section 5.13 The Subservicers...........................................................................56
Section 5.14 Reports to the Trustee; Collection Account Statements......................................56
Section 5.15 Optional Purchase of Defaulted Mortgage Loans..............................................56
Section 5.16 Reports to be Provided by the Servicer.....................................................57
Section 5.17 Adjustment of Servicing Compensation in Respect of Prepaid Mortgage Loans..................57
Section 5.18 Periodic Advances; Special Advance.........................................................58
Section 5.19 Indemnification; Third Party Claims........................................................58
Section 5.20 Maintenance of Corporate Existence and Licenses; Merger or Consolidation of the
Servicer...................................................................................59
Section 5.21 Assignment of Agreement by Servicer; Servicer Not to Resign................................59
Section 5.22 Periodic Filings with the Securities and Exchange Commission; Additional
Information................................................................................60
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01 Establishment of Accounts; Withdrawals from Accounts; Deposits to the Certificate
Account....................................................................................60
Section 6.02 Permitted Withdrawals From the Certificate Account.........................................61
Section 6.03 Collection of Money........................................................................62
Section 6.04 The Certificate Insurance Policy...........................................................62
Section 6.05 Distributions..............................................................................63
Section 6.06 Investment of Accounts.....................................................................65
Section 6.07 Reports by the Trustee.....................................................................65
Section 6.08 Additional Reports by Trustee..............................................................68
Section 6.09 Compensating Interest......................................................................68
Section 6.10 Effect of Payments by the Certificate Insurer; Subrogation.................................68
Section 6.11 Additional Rights of Certificate Insurer...................................................69
ARTICLE VII
DEFAULT
Section 7.01 Events of Default..........................................................................70
Section 7.02 Trustee to Act; Appointment of Successor...................................................72
Section 7.03 Waiver of Defaults.........................................................................74
Section 7.04 Rights of the Certificate Insurer to Exercise Rights of Class A-1 and Class A-IO
Certificateholders.........................................................................74
Section 7.05 Trustee To Act Solely with Consent of the Certificate Insurer..............................75
Section 7.06 Mortgage Loans, Trust Fund and Accounts Held for Benefit of the Certificate
Insurer....................................................................................75
Section 7.07 Certificate Insurer Default................................................................76
ARTICLE VIII
TERMINATION
Section 8.01 Termination................................................................................76
Section 8.02 Additional Termination Requirements........................................................78
Section 8.03 Accounting Upon Termination of Servicer....................................................79
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of Trustee..........................................................................79
Section 9.02 Certain Matters Affecting the Trustee......................................................84
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans......................................85
Section 9.04 Trustee May Own Certificates...............................................................85
Section 9.05 Trustee's Fees and Expenses; Indemnity.....................................................86
Section 9.06 Eligibility Requirements for Trustee.......................................................86
Section 9.07 Resignation and Removal of the Trustee.....................................................87
Section 9.08 Successor Trustee..........................................................................88
Section 9.09 Merger or Consolidation of Trustee.........................................................88
Section 9.10 Appointment of Co-Trustee or Separate Trustee..............................................88
Section 9.11 Tax Returns................................................................................89
Section 9.12 Retirement of Certificates.................................................................89
Section 9.13 Trustee May Enforce Claims Without Possession of Certificates..............................90
Section 9.14 Suits for Enforcement......................................................................90
ARTICLE X
THE COLLATERAL AGENT
Section 10.01 Duties of the Collateral Agent.............................................................90
Section 10.02 Certain Matters Affecting the Collateral Agent.............................................91
Section 10.03 Collateral Agent Not Liable for Certificates or Mortgage Loans.............................93
Section 10.04 Collateral Agent May Own Certificates......................................................93
Section 10.05 Collateral Agent's Fees and Expenses; Indemnity............................................93
Section 10.06 Eligibility Requirements for Collateral Agent..............................................93
Section 10.07 Resignation and Removal of the Collateral Agent............................................94
Section 10.08 Successor Collateral Agent.................................................................94
Section 10.09 Merger or Consolidation of Collateral Agent................................................95
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Limitation on Liability of the Depositor and the Servicer..................................95
Section 11.02 Acts of Certificateholders.................................................................95
Section 11.03 Amendment..................................................................................96
Section 11.04 Recordation of Agreement...................................................................97
Section 11.05 Duration of Agreement......................................................................97
Section 11.06 Notices....................................................................................97
Section 11.07 Severability of Provisions.................................................................97
Section 11.08 No Partnership.............................................................................98
Section 11.09 Counterparts...............................................................................98
Section 11.10 Successors and Assigns.....................................................................98
Section 11.11 Headings...................................................................................98
Section 11.12 The Certificate Insurer Default............................................................98
Section 11.13 Third Party Beneficiary....................................................................98
Section 11.14 [RESERVED].................................................................................98
Section 11.15 Appointment of Tax Matters Person..........................................................98
Section 11.16 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL...............................98
EXHIBITS
EXHIBIT A Class A-1 Certificate
EXHIBIT B Class A-IO Certificate
EXHIBIT C Class R Certificate
EXHIBIT D Class X Certificate
EXHIBIT E Contents of the Mortgage File
EXHIBIT F [RESERVED]
EXHIBIT G Trustee's Acknowledgement of Receipt
EXHIBIT H Initial Certification of Collateral Agent
EXHIBIT I Final Certification of Collateral Agent
EXHIBIT J Request for Release of Documents
EXHIBIT K Transfer Affidavit and Agreement
EXHIBIT L Transferor's Certificate
EXHIBIT M ERISA Investment Representation Letter
EXHIBIT N Resale Certification
EXHIBIT O Assignment
EXHIBIT P Wiring Instruction Form
SCHEDULES
SCHEDULE I........Mortgage Loan Schedule
POOLING AND SERVICING AGREEMENT, relating to ABFS MORTGAGE LOAN TRUST
2001-1, dated as of March 1, 2001 (this "Agreement"), by and among ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ABS CAPITAL I INC., a Delaware corporation, in its capacity as
depositor (the "Depositor"), AMERICAN BUSINESS CREDIT, INC., a Pennsylvania
corporation, in its capacity as servicer (the "Servicer"), and THE CHASE
MANHATTAN BANK, a New York banking corporation, in its capacity as trustee
(the "Trustee").
WHEREAS, the Depositor wishes to establish a trust which provides for
the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Mortgage Loans, which
constitute the principal assets of the trust estate;
WHEREAS, The Chase Manhattan Bank is willing to serve in the capacity
of Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Certificate Insurer") is
intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Servicer and the Trustee
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms. Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings.
ABFS: American Business Financial Services, Inc.
ACCEPTED SERVICING PRACTICES: The Servicer's normal servicing
practices, which in general will conform to the mortgage servicing practices
of prudent mortgage lending institutions which service for their own account
mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Mortgaged Properties are located, which may change from time
to time; provided that such practices shall at all times conform to the Credit
Policy Manual.
ACCOUNT: Any of the Collection Account, the Certificate Account, the
Interest Reserve Account or the Certificate Insurance Payment Account.
ACCRUAL PERIOD: With respect to the Class A-1 and Class A-IO
Certificates and any Distribution Date, the prior calendar month.
ADMINISTRATIVE COSTS: With respect to any Distribution Date, the sum
of the Trustee Fee, the Premium Amount and the Servicing Fee for such
Distribution Date.
AFFILIATE: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
AGREEMENT: This Pooling and Servicing Agreement, including the
Exhibits hereto, and all amendments hereof and supplements hereto.
APPRAISED VALUE: As to any Mortgaged Property and time referred to
herein, the appraised value of the Mortgaged Property based upon the appraisal
made by or on behalf of the related Originator at the time referred to herein
or, in the case of a Mortgage Loan that is a purchase money mortgage loan, the
sales price of the Mortgaged Property, if such sales price is less than such
appraised value.
ASSIGNMENT OF MORTGAGE: With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage to the
Trustee for the benefit of the Certificateholders.
AUTHORIZED DENOMINATIONS: Each of the Class A-1 Certificates and
Class A-IO Certificates is issuable only in the minimum Percentage Interest
corresponding to a minimum denomination of $1,000 or integral multiples of
$1,000 in excess thereof; provided, however, that one Certificate of each
Class is issuable in a denomination equal to any such multiple plus an
additional amount such that the aggregate denomination of all Class A-1
Certificates and Class A-IO Certificates shall be equal to the applicable
Original Certificate Principal Balance or the Class A-IO Notional Amount, as
applicable.
AVAILABLE FUNDS: As defined in Section 6.04(a).
AVAILABLE FUNDS SHORTFALL: With respect to any Distribution Date, an
amount equal to the excess, if any, of (i) the Insured Distribution Amount for
such Distribution Date over (ii) the Available Funds for such Distribution
Date; such amount shall never be less than zero.
BASE SPECIFIED OVERCOLLATERALIZATION AMOUNT: means 4.10% of the
Original Pool Principal Balance.
BUSINESS DAY: Any day other than (a) a Saturday or Sunday, or (b) a
day on which banking institutions in the States of Pennsylvania, New York or
New Jersey are authorized or obligated by law or executive order to be closed.
BUSINESS PURPOSE PROPERTY: Any mixed-use property, commercial
property, or four or more unit multifamily property.
CERCLA: The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
CERTIFICATE: Any Class A-1 Certificate, Class A-IO Certificate, Class
X Certificate or Class R Certificate executed by the Trustee on behalf of the
Trust Fund and authenticated by the Trustee.
CERTIFICATE ACCOUNT: The Certificate Account established in
accordance with Section 6.01(a) hereof and maintained by the Trustee.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Certificate
is registered in the Certificate Register, except that, solely for the
purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Certificate registered in the name of the Servicer or any
Subservicer or the Unaffiliated Seller, or any Affiliate of any of them, shall
be deemed not to be outstanding and the undivided Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite percentage of Certificates necessary to effect any such consent,
waiver, request or demand has been obtained. For purposes of any consent,
waiver, request or demand of Certificateholders pursuant to this Agreement,
upon the Trustee's request, the Servicer and the Unaffiliated Seller shall
provide to the Trustee a notice identifying any of their respective Affiliates
or the Affiliates of any Subservicer that is a Certificateholder as of the
date(s) specified by the Trustee in such request. Any Certificates on which
payments are made under the Certificate Insurance Policy shall be deemed to be
outstanding and held by the Certificate Insurer to the extent of such payment.
CERTIFICATE INSURANCE PAYMENT ACCOUNT: The Certificate Insurance
Payment Account established in accordance with Section 6.04(c) hereof and
maintained by the Trustee.
CERTIFICATE INSURANCE POLICY: The Insurance Policy No. 34726 issued
by the Certificate Insurer and all endorsements thereto dated the Closing
Date, issued by the Certificate Insurer for the benefit of the Class A
Certificateholders.
CERTIFICATE INSURER: MBIA Insurance Corporation.
CERTIFICATE INSURER DEFAULT: The existence and continuance of any of
the following:
(a) the Certificate Insurer shall have failed to make a required
payment when due under the Certificate Insurance Policy;
(b) the Certificate Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the benefit
of its creditors or (iii) had an order for relief entered against it under the
United States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization that is final and
nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or any other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a custodian,
trustee, agent, or receiver for the Certificate Insurer or for all or any
material portion of its property or (ii) authorizing the taking of possession
by a custodian, trustee, agent, or receiver of the Certificate Insurer or of
all or any material portion of its property.
CERTIFICATE PRINCIPAL BALANCE: As to any particular Class A-1
Certificate and date of determination, the product of the Percentage Interest
evidenced thereby and the Class A-1 Certificate Principal Balance as of such
date. The Class A-IO, Class X and Class R Certificates do not have a
"Certificate Principal Balance".
CERTIFICATE REGISTER: As described in Section 4.02.
CHANGE OF CONTROL: Any of the following: ABFS shall cease to own,
beneficially and of record, 100% of the issued and outstanding Stock of the
Servicer; the consummation of a merger or consolidation of ABFS with or into
another entity or any other corporate reorganization, if more that 50% of the
combined voting power of the continuing or surviving entity's Stock
outstanding immediately after such merger, consolidation or such other
reorganization is owned by persons who were not stockholders of ABFS
immediately prior to such merger, consolidation or other reorganization; or
the sale, transfer, or other disposition of all or substantially all of ABFS's
assets. For purposes of the foregoing, "Stock" means all shares, options,
warrants, interests, participation or other equivalents (regardless of how
designated) of or in a corporation or equivalent entity, whether voting or
nonvoting, including common stock, preferred stock, convertible debentures and
all agreements, instruments and documents convertible, in whole or in part,
into any one or more or all of the foregoing.
CIVIL RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
CIVIL RELIEF ACT INTEREST SHORTFALL: With respect to any Distribution
Date, for any Mortgage Loan as to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Due Period
as a result of the application of the Civil Relief Act, the amount, if any, by
which (a) interest collectible on such Mortgage Loan during the most recently
ended calendar month is less than (b) the sum of one month's interest on the
Principal Balance of such Mortgage Loan, calculated at a rate equal to the
Mortgage Interest Rate.
CLASS: Each class of Certificates designated as the Class A-1
Certificates, the Class A-IO Certificates, Class X Certificates or the Class R
Certificates.
CLASS A CERTIFICATES: The Class A-1 Certificates and the Class A-IO
Certificates.
CLASS A-1 CARRY-FORWARD AMOUNT: As of any Distribution Date, the sum
of (a) the amount, if any, by which (i) the Class A-1 Interest Distribution
Amount as of the immediately preceding Distribution Date exceeded (ii) the
amount actually distributed on the Class A-1 Certificates in respect of
interest on such immediately preceding Distribution Date and (b) 30 days'
interest on the amount described in clause (a) calculated at an interest rate
equal to the Class A-1 Pass-Through Rate applicable to such Distribution Date.
CLASS A-1 CERTIFICATE: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A hereto. The Class
A-1 Certificates shall be issued with an initial aggregate Certificate
Principal Balance equal to the Original Certificate Principal Balance
therefor.
CLASS A-1 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-1
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates.
CLASS A-1 CURRENT INTEREST: With respect to the Class A-1
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-1 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-1 Certificate
Principal Balance as of such Distribution Date (and prior to making any
distributions on such Distribution Date).
CLASS A-1 DISTRIBUTION AMOUNT: With respect to the Class A-1
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-1 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be the lesser of (x) the
Class A-1 Formula Distribution Amount for such Distribution Date or (y) the
amount (including any applicable portion of any Insured Payment) available for
distribution on account of the Class A-1 Certificates for such Distribution
Date.
CLASS A-1 FINAL SCHEDULED MATURITY DATE: The May 15, 2031
Distribution Date.
CLASS A-1 FORMULA DISTRIBUTION AMOUNT: With respect to the Class A-1
Certificates for any Distribution Date, the sum of the Class A-1 Interest
Distribution Amount and the Class A-1 Principal Distribution Amount.
CLASS A-1 INTEREST DISTRIBUTION AMOUNT: With respect to the Class A-1
Certificates for any Distribution Date an amount equal to (a) the related
Class A-1 Current Interest, minus (b) the pro rata portion of any Mortgage
Loan Interest Shortfalls allocable to the Class A-1 Certificates, on the basis
of accrued interest thereon, plus (c) any Class A-1 Carry-Forward Amount, less
(d) any amounts paid by the Certificate Insurer in respect of such Class A-1
Carry-Forward Amount.
CLASS A-1 PASS-THROUGH RATE: With respect to any Distribution Date,
the per annum rate equal to the lesser of (x) 6.28% (or, for each Distribution
Date, if any, occurring after the Clean-up Call Date, 6.78%) or (y) the excess
of the Net Weighted Average Mortgage Interest Rate as of the first day of the
related Due Period over the Pro-Rated Class A-IO Pass-Through Rate, such
percentage shall not be less than 0%.
CLASS A-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the Class
A-1 Certificates for any Distribution Date, the lesser of (x) the Principal
Distribution Amount for such Distribution Date, or (y) the Class A-1
Certificate Principal Balance as of such Distribution Date.
CLASS A-IO CARRY-FORWARD AMOUNT: As of any Distribution Date, the sum
of (a) the amount, if any, by which (i) the Class A-IO Interest Distribution
Amount as of the immediately preceding Distribution Date exceeds (ii) the
amount actually paid to the holders of the Class A-IO Certificates on such
immediately preceding Distribution Date and (b) thirty (30) days' interest on
the amount described in clause (a) calculated at an interest rate equal to the
Class A-IO Pass-through Rate.
CLASS A-IO CERTIFICATE: Any Certificate designated as a "Class A-IO
Certificate" on the face thereof, in the form of Exhibit B hereto.
CLASS A-IO CURRENT INTEREST: With respect to the Class A-IO
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-IO Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-IO Notional Amount as
of such Distribution Date.
CLASS A-IO INTEREST DISTRIBUTION AMOUNT: With respect to the Class
A-IO Certificates for any Distribution Date an amount equal to (a) the related
Class A-IO Current Interest, minus (b) the pro rata portion of any Mortgage
Loan Interest Shortfalls allocable to the Class A-IO Certificates, on the
basis of accrued interest thereon, plus (c) any Class A-IO Carry-Forward
Amount, less (d) any amounts paid by the Certificate Insurer in respect of
such Class A-IO Carry-Forward Amount.
CLASS A-IO NOTIONAL AMOUNT: With respect to each Distribution Date
occurring (i) prior to the October 2003 Distribution Date, an amount equal to
the lesser of (x) $27,500,000 or (y) the Pool Principal Balance as of the
first day of the related Due Period; and (ii) on and after the Distribution
Date occurring in October 2003, $0.
CLASS A-IO PASS-THROUGH RATE: A fixed rate equal to 6.00% per annum.
CLASS R CERTIFICATE: Any Certificate denominated as a Class R
Certificate and subordinate to the Class A-1, Class A-IO and Class X
Certificates in right of payment to the extent set forth herein, which
Certificate shall be in the form of Exhibit C hereto.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLASS X CERTIFICATE: Any Certificate denominated as a Class X
Certificate and subordinate to the Class A-1 and Class A-IO Certificates in
right of payment to the extent set forth herein, which Certificate shall be in
the form of Exhibit D hereto.
CLASS X CERTIFICATEHOLDER: A Holder of a Class X Certificate.
CLEAN-UP CALL DATE: As defined in Section 8.01(b).
CLOSING DATE: March 21, 2001.
CODE: The Internal Revenue Code of 1986, as amended.
COLLATERAL AGENT: The Chase Manhattan Bank, its successors and
assigns.
COLLECTION ACCOUNT: The Eligible Account established and maintained
by the Servicer pursuant to Section 5.02(b).
COMBINED LOAN-TO-VALUE RATIO or CLTV: As to any Mortgage Loan at any
time, the fraction, expressed as a percentage, the numerator of which is the
sum of (i) the Principal Balance thereof at such time and (ii) if such
Mortgage Loan is subject to a second mortgage, the unpaid principal balance of
any related first mortgage loan or loans, if any, as of such time, and the
denominator of which is the Appraised Value of any related Mortgaged Property
or Properties as of the date of the appraisal used by or on behalf of the
Unaffiliated Seller to underwrite such Mortgage Loan.
COMMISSION: The Securities and Exchange Commission.
COMPENSATING INTEREST: As defined in Section 6.09 hereof.
CORRESPONDING CLASS: Means the Class of Master REMIC Interest as used
in the Table in Section 2.07.
CREDIT POLICY MANUAL: 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.
CUT-OFF DATE: The close of business on February 28, 2001 (or with
respect to any Mortgage Loan originated or otherwise acquired by an Originator
after February 28, 2001, the date of origination or acquisition of such
Mortgage Loan).
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the United States Bankruptcy Code,
except such a reduction that constitutes a Deficient Valuation or a permanent
forgiveness of principal.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the United States
Bankruptcy Code.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced by or to be replaced
by a Qualified Substitute Mortgage Loan.
DELINQUENCY AMOUNT: means, as of the end of a Due Period, the product
of (i) the Rolling Three Month Delinquency Rate and (ii) the Pool Principal
Balance as of the first day of the applicable three month period.
DELINQUENCY RATIO: With respect to any Distribution Date, the
percentage equivalent of a fraction (a) the numerator of which equals the
aggregate Principal Balances of all Mortgage Loans that are 90 or more days
Delinquent, in foreclosure or converted to REO Property as of the last day of
the related Due Period and (b) the denominator of which is the aggregate
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period.
DELINQUENT: A Mortgage Loan is "delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment
has not been received by the close of business on the corresponding day of the
month immediately succeeding the month in which such payment was due, or, if
there is no such corresponding day (e.g., as when a 30-day month follows a
31-day month in which a payment was due on the 31st day of such month) then on
the last day of such immediately succeeding month. Similarly for "60 days
delinquent," "90 days delinquent" and so on.
DEPOSITOR: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I 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 Class A-1 or Class A-IO
Certificates from time to time as a securities depositary.
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 16, 2001.
DUE DATE: With respect to each Mortgage Loan and any Distribution
Date, the day of the calendar month preceding the calendar month in which such
Distribution Date occurs on which the Monthly Payment for such Mortgage Loan
was due.
DUE PERIOD: With respect to each Distribution Date, the calendar
month preceding the related Distribution Date.
ELIGIBLE ACCOUNT: Either (A) an account or accounts maintained with
an institution (which may include the Trustee, provided such institution
otherwise meets these requirements) whose deposits are insured by the FDIC,
the unsecured and uncollateralized debt obligations of which institution shall
be rated "AA" or better by S&P and "Aa2" or better by Moody's and in the
highest short term rating category by S&P and Moody's, and which is (i) a
federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution (including
the Trustee) duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal
banking laws, (iv) a principal subsidiary of a bank holding company, or (v)
approved in writing by the Certificate Insurer and the Rating Agencies or (B)
a trust account or accounts maintained with the trust department of a federal
or state chartered depository institution or trust company (which may include
the Trustee, provided that the Trustee otherwise meets these requirements),
having capital and surplus of not less than $50,000,000, acting in its
fiduciary capacity.
ERISA: As defined in Section 4.02(m) hereof.
EVENT OF DEFAULT: As described in Section 7.01.
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 if the related
Overcollateralization Reduction Amounts were not deducted from the Principal
Distribution Amount over (b) the Specified Overcollateralized Amount.
FDIC: The Federal Deposit Insurance Corporation, and any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, and any successor
thereto.
FNMA: The Federal National Mortgage Association, and any successor
thereto.
FORECLOSURE PROFITS: As to any Distribution Date, the excess, if any,
of (i) Net Liquidation Proceeds in respect of each Mortgage Loan that became a
Liquidated Mortgage Loan during the related Due Period over (ii) the sum of
the unpaid principal balance of each such Liquidated Mortgage Loan plus
accrued and unpaid interest at the applicable Mortgage Interest Rate on the
unpaid principal balance thereof from the Due Date to which interest was last
paid by the Mortgagor (or, in the case of a Liquidated Mortgage Loan that had
been an REO Mortgage Loan, from the Due Date to which interest was last deemed
to have been paid pursuant to Section 5.06 to the first day of the month
following the month in which such Mortgage Loan became a Liquidated Mortgage
Loan).
GAAP: Generally accepted accounting principles, consistently applied,
as of the date of such application.
I & I PAYMENTS: Payments due and owing under the Insurance and
Reimbursement Agreement other than pursuant to Section 2.4(a) of such
Agreement.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in a Class A-1 or Class A-IO Certificate.
INSURANCE AND REIMBURSEMENT AGREEMENT: The Insurance and
Reimbursement Agreement dated as of March 21, 2001 among the Certificate
Insurer, the Depositor, the Trustee, the Servicer, the Unaffiliated Seller,
HomeAmerican Credit, Inc., d/b/a Upland Mortgage and American Business
Mortgage Services, Inc. as such agreement may be amended or supplemented in
accordance with the provisions thereof.
INSURANCE POLICIES: All insurance policies insuring any Mortgage Loan
or Mortgaged Property to the extent the Trust or the Trustee has any interest
therein.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan to the extent such proceeds are not
applied to the restoration of the related Mortgaged Property or released to
the related Mortgagor in accordance with Accepted Servicing Practices.
"Insurance Proceeds" do not include "Insured Payments."
INSURED DISTRIBUTION AMOUNT: With respect to any Distribution Date,
the sum of (i) the Class A-1 Interest Distribution Amount, (ii) the Class A-IO
Interest Distribution Amount, (iii) the Overcollateralization Deficit for such
Distribution Date and (iv) solely with respect to the Class A-1 Final
Scheduled Maturity Date, the remaining Class A-1 Certificate Principal
Balance.
INSURED PAYMENT: With respect to any Distribution Date, the Available
Funds Shortfall.
INSURER DEFENSE COSTS: All costs and expenses of the Certificate
Insurer (including out of pocket costs and expenses of the Trustee or the
Depositor that the Certificate Insurer may have paid) in connection with any
action, proceeding or investigation that could adversely affect the Trust or
the rights or obligations of the Certificate Insurer under any of the
Insurance and Reimbursement Agreement, this Agreement, the Unaffiliated Seller
Agreement or any other document delivered with respect thereto, including
(without limitation) any judgment or settlement entered into affecting the
Certificate Insurer or the Certificate Insurer's interests, together with
interest thereon at a rate equal to the Late Payment Rate from the date such
expenses are incurred up to but not including the date the Certificate Insurer
is reimbursed for such expenses in full.
INTEREST DISTRIBUTION AMOUNT: Means the sum of the Class A-1 Interest
Distribution Amount and the Class A-IO Interest Distribution Amount.
INTEREST RESERVE ACCOUNT: The Interest Reserve Account established in
accordance with Section 6.01(a) hereof and maintained by the Trustee.
LATE PAYMENT RATE: Has the meaning ascribed thereto in the Insurance
and Reimbursement Agreement.
LIQUIDATED LOAN LOSS: With respect to any Distribution Date as of the
related Due Date, an amount equal to the excess of (i) the unpaid principal
balance of a Liquidated Mortgage Loan, plus accrued interest thereon in
accordance with the amortization schedule at the time applicable thereto at
the applicable Mortgage Interest Rate from the Due Date as to which interest
was last paid with respect thereto through the last day of the month in which
such Mortgage Loan became a Liquidated Mortgage Loan, over (ii) Net
Liquidation Proceeds with respect to such Liquidated Mortgage Loan.
LIQUIDATED MORTGAGE LOAN: A Mortgage Loan with respect to which the
related Mortgaged Property has been acquired, liquidated or foreclosed and
with respect to which the Servicer determines that all Liquidation Proceeds
which it expects to recover have been recovered.
LIQUIDATION EXPENSES: Expenses incurred by the Servicer in connection
with the liquidation of any defaulted Mortgage Loan or property acquired in
respect thereof (including, without limitation, legal fees and expenses,
committee or referee fees, and, if applicable, brokerage commissions and
conveyance taxes), any unreimbursed amount expended by the Servicer pursuant
to Sections 5.04 and 5.06 hereof respecting the related Mortgage Loan and any
unreimbursed expenditures for real property taxes or for property restoration
or preservation of the related Mortgaged Property. Liquidation Expenses shall
not include any previously incurred expenses in respect of an REO Mortgage
Loan which have been netted against related REO Proceeds.
LIQUIDATION PROCEEDS: The amount (other than Insurance Proceeds)
received by the Servicer in connection with (i) the taking of all or a part of
Mortgaged Property by exercise of the power of eminent domain or condemnation,
(ii) the liquidation of a defaulted Mortgage Loan through a trustee's sale,
foreclosure sale, REO Disposition or otherwise or (iii) the liquidation of any
other security for such Mortgage Loan, including, without limitation, pledged
equipment, inventory and working capital and assignments of rights and
interests made by the related mortgagor.
LOAN REPURCHASE PRICE: As defined in Section 2.06(b).
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A-1 and
Class A-IO Certificates evidencing Percentage Interests in excess of 51% in
the aggregate.
MONTHLY PAYMENT: As to any Mortgage Loan (including any REO Mortgage
Loan) and any Due Date, the payment of principal and interest due thereon as
specified for such Due Date in the related amortization schedule at the time
applicable thereto (after adjustment for any Deficient Valuations occurring
prior to such Due Date but before any adjustment to such amortization schedule
by reason of any bankruptcy, other than Deficient Valuations or similar
proceeding or any moratorium or similar waiver or grace period).
MONTHLY SERVICING FEE: As defined in Section 5.08 hereof.
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc., a corporation organized and
existing under Delaware law, or any successor thereto and if such corporation
no longer for any reason performs the services of a securities rating agency,
"Moody's" shall be deemed to refer to any other nationally recognized rating
agency designated by the Certificate Insurer.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
first or second lien on the Mortgaged Property.
MORTGAGED PROPERTY: The underlying property or properties securing a
Mortgage Loan, consisting of a fee simple estate in such real property.
MORTGAGE FILE: As described in Exhibit E.
MORTGAGE INTEREST RATE: As to any Mortgage Loan, the per annum fixed
rate at which interest accrues on the unpaid principal balance thereof as set
forth on the related Mortgage Note.
MORTGAGE LOAN INTEREST SHORTFALL: With respect to any Distribution
Date, as to any Mortgage Loan, the sum of (a) any Prepayment Interest
Shortfall for which no payment of Compensating Interest is paid and (b) any
Civil Relief Act Interest Shortfall in respect of such Mortgage Loan for such
Distribution Date.
MORTGAGE LOANS: The mortgage loans set forth on the Mortgage Loan
Schedule, together with any Qualified Substitute Mortgage Loans substituted
therefor in accordance with this Agreement, as from time to time are held as a
part of the Trust Fund, the Mortgage Loans originally so held being identified
in the Mortgage Loan Schedule. When used in respect of any Distribution Date,
the term Mortgage Loans shall mean all Mortgage Loans (including those in
respect of which the Trustee has acquired the related Mortgaged Property)
which have not been repaid in full prior to the related Due Period, did not
become Liquidated Mortgage Loans prior to such related Due Period or were not
repurchased or replaced by the Unaffiliated Seller prior to such related Due
Period.
MORTGAGE LOAN SCHEDULE: The schedule of Mortgage Loans as of the
Cut-Off Date as attached hereto as Schedule I, which will be deemed to be
modified automatically upon any replacement, sale, substitution, liquidation,
transfer or addition of any Mortgage Loan pursuant to the terms hereof. The
Mortgage Loan Schedule sets forth as to each Mortgage Loan: (i) its
identifying number and the name of the related Mortgagor; (ii) the billing
address for the related Mortgaged Property including the state and zip code;
(iii) its date of origination; (iv) the original number of months to stated
maturity; (v) the original stated maturity; (vi) the original Principal
Balance; (vii) the Principal Balance as of the Cut-Off Date; (viii) the
Mortgage Interest Rate and (ix) the scheduled monthly payment of principal and
interest.
MORTGAGE NOTE: The original, executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGOR: The obligor on a Mortgage Note.
NET FORECLOSURE PROFITS: As to any Distribution Date, the excess, if
any, of (i) the aggregate Foreclosure Profits with respect to such
Distribution Date over (ii) Liquidated Loan Losses with respect to such
Distribution Date.
NET INCOME: For any fiscal quarter of ABFS, the net income (or loss)
of ABFS and its consolidated subsidiaries for such quarter, determined in
accordance with GAAP.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances made by the Servicer out of its own funds. For all purposes
of this Agreement, Net Liquidation Proceeds shall be allocated first to
accrued and unpaid interest on the related Mortgage Loan and then to the
unpaid principal balance thereof.
NET REO PROCEEDS: As to any REO Mortgage Loan, REO Proceeds net of
any related expenses of the Servicer.
NET WEIGHTED AVERAGE MORTGAGE INTEREST RATE: With respect to any Due
Period, the weighted average Mortgage Interest Rates (weighted by Principal
Balances) of the Mortgage Loans, calculated at the opening of business on the
first day of such Due Period, less the rate at which the Servicing Fee is then
calculated, less the rate at which the Trustee Fee is then calculated, less
the Premium Percentage and any taxes imposed on any REMIC created hereunder
pursuant to Section 9.01(d) herein.
NET WORTH: As of any date, the consolidated total stockholder's
equity of ABFS and its consolidated subsidiaries, determined in accordance
with GAAP.
NONRECOVERABLE ADVANCES: With respect to any Mortgage Loan, (a) any
Periodic Advance previously made and not reimbursed from late collections
pursuant to Section 5.03, or (b) a Periodic Advance proposed to be made in
respect of a Mortgage Loan or REO Property either of which, in the good faith
business judgment of the Servicer, as evidenced by an Officer's Certificate
delivered to the Certificate Insurer and the Trustee no later than the
Business Day following such determination, would not ultimately be recoverable
pursuant to Sections 5.03.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the
Board, the President or a Vice President, the Treasurer, the Secretary or one
of the Assistant Treasurers or Assistant Secretaries of the Unaffiliated
Seller and/or the Servicer, or the Depositor, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Unaffiliated Seller, the Servicer, the Trustee,
a Certificateholder or a Certificateholder's prospective transferee or the
Certificate Insurer (including except as otherwise provided herein, in-house
counsel) reasonably acceptable to each addressee of such opinion and
experienced in matters relating to the subject of such opinion; except that
any opinion of counsel relating to (a) the qualification of the REMIC Trust as
a REMIC or (b) compliance with the REMIC Provisions must be an opinion of
counsel who (i) is in fact independent of the Unaffiliated Seller, the
Servicer and the Trustee, (ii) does not have any direct financial interest or
any material indirect financial interest in the Unaffiliated Seller or the
Servicer or the Trustee or in an Affiliate thereof, (iii) is not connected
with the Unaffiliated Seller or the Servicer or the Trustee as an officer,
employee, director or person performing similar functions and (iv) is
reasonably acceptable to the Certificate Insurer.
ORIGINAL CERTIFICATE PRINCIPAL BALANCE: As of the Startup Day and as
to the Class A-1 Certificates, $275,000,000. The Class A-IO, Class X and Class
R Certificates do not have an Original Certificate Principal Balance.
ORIGINAL POOL PRINCIPAL BALANCE: The Pool Principal Balance as of the
Cut-Off Date, which amount is equal to $275,000,000.
ORIGINATORS: American Business Credit, Inc., HomeAmerican Credit,
Inc., d/b/a Upland Mortgage and American Business Mortgage Services, Inc.
OVERCOLLATERALIZATION DEFICIENCY AMOUNT: With respect to any
Distribution Date, the difference, if greater than zero, between (a) the
Specified Overcollateralized Amount applicable to such Distribution Date and
(b) the Overcollateralized Amount applicable to such Distribution Date prior
to taking into account the payment of any related Overcollateralization
Increase Amount on such Distribution Date.
OVERCOLLATERALIZATION DEFICIT: As of any Distribution Date, the
amount, if any, by which (a) the Class A-1 Certificate Principal Balance,
after taking into account the payment of the Principal Distribution Amount
(except for any amount in respect of the Overcollateralization Deficit) on
such date exceeds (b) the Pool Principal Balance determined as of the end of
the immediately preceding Due Period.
OVERCOLLATERALIZATION INCREASE AMOUNT: With respect to any
Distribution Date, the Overcollateralization Deficiency Amount as of such
Distribution Date (after taking into account the payment of the Class A-1
Principal Distribution Amount on such Distribution Date). Such distribution is
limited to the extent of the Available Amount.
OVERCOLLATERALIZATION REDUCTION AMOUNT: With respect to the Class A-1
Certificates and any Distribution Date, an amount equal to the lesser of (a)
the Excess Overcollateralized Amount for such Distribution Date or (b) the
Principal Distribution Amount for such Distribution Date (without regard to
any Overcollateralization Reduction Amounts included in the definition
thereof).
OVERCOLLATERALIZED AMOUNT: As of any Distribution Date, the
difference, if any, between (a) the Pool Principal Balance as of the close of
business on the last day of the related Due Period and (b) the Class A-1
Certificate Principal Balance as of such Distribution Date (after taking into
account the payment of the Class A-1 Principal Distribution Amount on such
Distribution Date except for any portion thereof related to an Insured
Payment); provided, however, that such amount shall not be less than zero.
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as to which
(a) the related Mortgagor represented an intent to occupy as such Mortgagor's
primary, secondary or vacation residence at the origination of the Mortgage
Loan, and (b) the Unaffiliated Seller has no actual knowledge that such
Residential Dwelling is not so occupied.
OWNERSHIP INTEREST: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as
the Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
PERCENTAGE INTEREST: With respect to a Class A-1 Certificate, the
portion evidenced by such Certificate, expressed as a percentage rounded to
four decimal places, equal to a fraction the numerator of which is the
denomination represented by such Certificate and the denominator of which is
the Original Certificate Principal Balance of such Class. With respect to a
Class A-IO, Class X or Class R Certificate, the portion evidenced thereby as
stated on the face of such Certificate.
PERIODIC ADVANCE: The aggregate of the advances required to be made
by the Servicer on any Servicer Distribution 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 Distribution Date, the product of (i) the Principal Balance of such
Mortgage Loan and (ii) one-twelfth of the Mortgage Interest Rate for such
Mortgage Loan net of the Servicing Fee, and
(b) with respect to each REO Property which was acquired during or
prior to the related Due Period and as to which an REO Disposition did not
occur during the related Due Period, an amount equal to the excess, if any, of
(i) interest on the Principal Balance of such REO Mortgage Loan at the
Mortgage Interest Rate for such REO Mortgage Loan net of the Servicing Fee,
for the most recently ended Due Period over (ii) the net income from the REO
Property transferred to the Certificate 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 which on the date of acquisition has been rated in the
highest short-term rating category by the Rating Agencies;
(v) the VISTA U.S. Government Money Market Fund, the VISTA Prime
Money Market Fund and the VISTA Treasury Plus Fund, so long as any such fund
is rated in the highest rating category by Moody's or S&P;
provided, that, each such Permitted Investment shall be a "permitted
investment" within the meaning of Section 860G(a)(5) of the Code and that no
instrument described hereunder shall evidence either the right to receive (x)
only interest with respect to the obligations underlying such instrument or
(y) both principal and interest payments derived from obligations underlying
such instrument and the interest and principal payments with respect to such
instrument provided a yield to maturity at par greater than 120% of the yield
to maturity at par of the underlying obligations; and provided, further, that
no instrument described hereunder may 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.
PERMITTED TRANSFEREE: Any Person other than (a) the United States,
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (b) a foreign government, International Organization
or any agency or instrumentality of either of the foregoing, (c) an
organization (except certain farmers' cooperatives described in Section 521 of
the Code) which is exempt from tax imposed by Chapter 1 of the Code (including
the tax imposed by Section 511 of the Code on unrelated business taxable
income) on any excess inclusions (as defined in Section 860E(c)(1) of the
Code) with respect to any Class R Certificate, (d) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code, (e) an
"electing large partnership" within the meaning Section 775 of the Code' and
(f) any other Person so designated by the Trustee based upon an Opinion of
Counsel to the Trustee and the Certificate Insurer that the transfer of an
Ownership Interest in a Class R Certificate to such Person may cause either
(i) the REMIC Trust to fail to qualify as a REMIC at any time that the Class
A-1 or Class A-IO 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(m).
POOL PRINCIPAL BALANCE: The aggregate Principal Balances of the
Mortgage Loans as of any date of determination.
PREFERENCE AMOUNT: Any amounts distributed in respect of the Class
A-1 and Class A-IO Certificates which are recovered from any Holder of a Class
A-1 or Class A-IO Certificate as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code (11 U.S.C.), as
amended from time to time in accordance with a final, nonappealable order of a
court having competent jurisdiction.
PREFERENCE CLAIM: As defined in Section 6.04(f).
PREMIUM AMOUNT: The product of the Premium Percentage and the Class
A-1 Certificate Principal Balance for the related Distribution Date (after
giving effect to any distributions on that date).
PREMIUM PERCENTAGE: The rate at which the "Premium" is determined as
described in the letter dated March 21, 2001 between ABFS and the Certificate
Insurer.
PREPAYMENT ASSUMPTION: A constant prepayment rate of 23% HEP for the
Class A-1 Certificates for the Class A-IO 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, an amount equal to the excess, if any, of (a) 30 days'
interest on the Principal Balance of such Mortgage Loan at a per annum rate
equal to (i) the Mortgage Interest Rate (or at such lower rate as may be in
effect for such Mortgage Loan pursuant to application of the Civil Relief Act,
any Deficient Valuation and/or any Debt Service Reduction) minus (ii) the rate
at which the Servicing Fee is calculated over (b) the amount of interest
actually remitted by the Mortgagor in connection with such Principal
Prepayment less the Servicing Fee for such Mortgage Loan in such month.
PRINCIPAL BALANCE: As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination after giving effect to Principal Prepayments
received prior to the end of the related Due Period and Deficient Valuations
incurred prior to the related Due Date. The Principal Balance of a Mortgage
Loan which becomes a Liquidated Mortgage Loan on or prior to the related Due
Date shall be zero (except for purposes of calculating the Loan Repurchase
Price of such Mortgage Loan).
PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date will be the
lesser of:
(a) the excess of (i) the sum, as of such Distribution Date, of (A)
the Available Funds and (B) any Insured Payment plus if the Certificate
Insurer, to the extent not obligated hereunder or under the Insurance and
Reimbursement Agreement, shall so elect in its sole discretion, an amount
of principal (including Liquidated Loan Losses) that would have been
payable pursuant to clauses (b)(i)-(ix) below if sufficient funds were
made available to the Trustee in accordance with the terms of the
Certificate Insurance Policy over (ii) sum of (w) the Class A-1 Interest
Distribution Amount, (x) the Class A-IO Interest Distribution Amount, (y)
the Trustee Fees and (z) the amount due to the Certificate Insurer on
such Distribution Date pursuant to Section 6.05; and
(b) the sum, without duplication, of:
(i) all principal in respect of the Mortgage Loans actually
collected during the related Due Period,
(ii) the Principal Balance of each Mortgage Loan that either
was repurchased by the Unaffiliated Seller or by an Originator or
purchased by the Servicer on the related Servicer Distribution Date,
to the extent such Principal Balance is actually received by the
Trustee,
(iii) any Substitution Adjustments delivered on the related
Servicer Distribution Date in connection with a substitution of a
Mortgage Loan, to the extent such Substitution Adjustments are
actually received by the Trustee,
(iv) the Net Liquidation Proceeds actually collected by the
Servicer on all Mortgage Loans during the related Due Period (to the
extent such Net Liquidation Proceeds relate to principal),
(v) the proceeds received by the Trustee upon the exercise by
the Class X Certificateholder or the Servicer of the option to
repurchase the Mortgage Loans on or after the Clean-up Call Date,
(to the extent that such proceeds relate to principal)
(vi) the amount of any Overcollateralization Deficit for such
Distribution Date,
(vii) the proceeds received by the Trustee on any termination
of the Trust to the extent such proceeds relate to principal,
(viii) the amount of any Overcollateralization Increase Amount
for such Distribution Date, and
(ix) if the Certificate Insurer shall so elect in its sole
discretion, an amount of principal (including Liquidated Loan
Losses) that would have been payable pursuant to clauses (i)-(viii)
above if sufficient funds were made available to the Trustee in
accordance with the terms of the Certificate Insurance Policy,
minus
(x) the amount of any 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.
PRO RATED CLASS A-IO PASS-THROUGH RATE: Means, with respect to any
Distribution Date, the Class A-IO Pass-Through Rate multiplied by a fraction
the numerator of which is the Class A-IO Notional Amount for such Distribution
Date and the denominator of which is the Pool Principal Balance as of the
first day of the related Due Period.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated March 9, 2001
relating to the Class A-1 and Class A-IO Certificates filed with the
Commission in connection with the Registration Statement heretofore filed or
to be filed with the Commission pursuant to Rule 424(b)(2) or 424(b)(5).
QUALIFIED APPRAISER: An appraiser, duly appointed by the Unaffiliated
Seller, who had no interest, direct or indirect, in the Mortgaged Property or
in any loan made on the security thereof, and whose compensation is not
affected by the approval or disapproval of the Mortgage Loan, and such
appraiser and the appraisal made by such appraiser both satisfy the
requirements of Title XI of the Federal Institutions Reform, Recovery and
Enforcement Act of 1989 and the regulations promulgated thereunder, all as in
effect on the date the Mortgage Loan was originated.
QUALIFIED MORTGAGE: "Qualified Mortgage" shall have the meaning set
forth from time to time in the definition thereof at Section 860G(a)(3) of the
Code (or any successor statute thereto).
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or mortgage loans
substituted for a Deleted Mortgage Loan pursuant to Section 2.06(c) or 3.03
hereof, which (a) has or have an interest rate at least equal to that
applicable to the Deleted Mortgage Loan, (b) relates or relate to a detached
one-family residence or to the same type of Residential Dwelling or Business
Purpose Property, or any combination thereof, as the Deleted Mortgage Loan and
in each case has or have the same or a better lien priority as the Deleted
Mortgage Loan and has the same occupancy status or is an Owner Occupied
Mortgaged Property, (c) matures or mature no later than (and not more than one
year earlier than) the Deleted Mortgage Loan, (d) has or have a Loan-to-Value
Ratio at the time of such substitution no higher than the Loan-to-Value Ratio
of the Deleted Mortgage Loan, (e) has or have a Combined Loan-to-Value Ratio
or Combined Loan-to-Value Ratios at the time of such substitution no higher
than the Combined Loan-to-Value Ratio of the Deleted Mortgage Loan, (f) has or
have a Principal Balance or Principal Balances (after application of all
payments received on or prior to the date of substitution) not substantially
less and not more than the Principal Balance of the Deleted Mortgage Loan as
of such date, (g) satisfies or satisfy the criteria set forth from time to
time in the definition of "qualified replacement mortgage" at Section
860G(a)(4) of the Code (or any successor statute thereto), and (h) complies or
comply as of the date of substitution with each representation and warranty
set forth in Sections 3.01, 3.02 and 3.03 of the Unaffiliated Seller's
Agreement.
RATING AGENCY: S&P or ▇▇▇▇▇'▇.
RECORD DATE: With respect to the Certificates, the last Business Day
of the month immediately preceding the month in which a Distribution Date
occurs.
REIMBURSEMENT AMOUNT: As of any Distribution Date, the sum of (a)(i)
all payments under the Certificate Insurance Policy previously received by the
Trustee and all Preference Amounts previously paid by the Certificate Insurer
and in each case not previously repaid to the Certificate Insurer pursuant to
Sections 6.05(a) hereof plus (ii) interest accrued on each such payment and
Preference Amounts not previously repaid calculated at the Late Payment Rate
from the date the Trustee received the related payment or Preference Amount
paid by the Certificate Insurer and (b)(i) any amounts then due and owing to
the Certificate Insurer under the Insurance and Reimbursement Agreement
(excluding the Premium Amount due on such Distribution Date), as certified to
the Trustee by the Certificate Insurer plus (ii) interest on such amounts at
the Late Payment Rate and (c) to the extent not otherwise included, all
Insurer Defense Costs. The Certificate Insurer shall notify the Trustee 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 II: As described in Section 2.07 herein.
REMIC III: As described in Section 2.07 herein.
REMIC PROVISIONS: Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and temporary and final regulations promulgated thereunder and published
rulings, notices and announcements, as the foregoing may be in effect from
time to time.
REO DISPOSITION: The final sale by the Servicer of a Mortgaged
Property acquired by the Servicer in foreclosure or by deed-in-lieu of
foreclosure.
REO MORTGAGE LOAN: Any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the related
Mortgage Note is discharged and the related Mortgaged Property is held as part
of the Trust Fund.
REO PROCEEDS: Proceeds received in respect of any REO Mortgage Loan
(including, without limitation, proceeds from the rental of the related
Mortgaged Property).
REO PROPERTY: A Mortgaged Property acquired by the Servicer in the
name of the Trustee on behalf of the Certificateholders through foreclosure or
deed-in-lieu of foreclosure.
REPRESENTATION LETTER: Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Class A-1 Certificates
and Class A-IO Certificates registered in the Certificate Register under the
nominee name of the Depository.
REPRESENTATIVE: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated; as the
representative underwriter for the Underwriters listed on Schedule A to the
Underwriting Agreement.
REQUEST FOR RELEASE: A request for release in substantially the form
attached as Exhibit H hereto.
RESIDENTIAL DWELLING: A one- to four-family dwelling, a unit in a
planned unit development, a unit in a condominium development, a townhouse or
a manufactured housing unit which is non-mobile.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any
officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Assistant Vice President, Trust Officer, any
Assistant Secretary, any trust officer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above designated officers and to whom, with respect to a particular matter,
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject in each case having direct responsibility for the
administration of this Agreement. When used with respect to the Unaffiliated
Seller or the Servicer, the President or any Vice President, Assistant Vice
President, or any Secretary or Assistant Secretary.
RETAINED INTEREST: An interest in a pool of promissory notes,
mortgage loans, or other financial assets which entitles the holder to receive
excess cash flows derived from such assets after payments to senior holders of
direct or indirect beneficial or other interests in such assets as well as
expenses and other payments accorded priority in right or payment to such
residual interest.
ROLLING THREE MONTH DELINQUENCY RATE: For any Distribution Date, a
percentage, equal to the average of the Delinquency Ratio for each of the
three (1 or 2 in the case of the first three Distribution Dates, as the case
may be) immediately preceding Due Periods.
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ 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.
SERVICER: American Business Credit, Inc., a Pennsylvania corporation,
or any successor appointed as herein provided.
SERVICER DISTRIBUTION DATE: With respect to any Distribution Date,
the 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 AMOUNT: With respect to any Servicer Distribution
Date, an amount equal to the sum of (i) all collections of principal and
interest on the Mortgage Loans (including Principal Prepayments, Net REO
Proceeds and Net Liquidation Proceeds, if any) collected by the Servicer
during the related Due Period, (ii) all Periodic Advances made by the Servicer
with respect to interest payments due to be received on the Mortgage Loans on
the related Due Date and (iii) any other amounts required to be placed in the
Collection Account by the Servicer pursuant to this Agreement but excluding
the following:
(a) amounts received on particular Mortgage Loans as late payments of
interest and respecting which the Servicer has previously made an unreimbursed
Periodic Advance out of its own funds;
(b) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(c) that portion of Liquidation Proceeds and REO Proceeds to the
extent of any unpaid Servicing Fee;
(d) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(e) all amounts in respect of late fees, assumption fees, prepayment
fees and similar fees;
(f) certain other amounts which are reimbursable to the Servicer, as
provided in this Pooling and Servicing Agreement; and
(g) Net Foreclosure Profits.
SERVICING ADVANCES: All reasonable and customary "out-of-pocket"
costs and expenses incurred in the performance by the Servicer of its
servicing obligations, including, but not limited to, the cost and expenses
relating to (a) the preservation, restoration and protection of the Mortgaged
Property, (b) any enforcement or judicial proceedings, including foreclosures,
(c) the management and liquidation of the REO Property, including reasonable
fees paid to any independent contractor in connection therewith, (d)
compliance with the obligations under Section 5.22, all of which reasonable
and customary out-of-pocket costs and expenses are reimbursable to the
Servicer to the extent provided in Sections 5.03 and 5.22.
SERVICING COMPENSATION: The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Section 5.08.
SERVICING FEE: As to each Mortgage Loan, the annual fee payable to
the Servicer, which is calculated as an amount equal to the product of (a)
0.50% per annum, and (b) the Principal Balance thereof (or, in the case of any
successor Servicer, such other amount as the Certificate Insurer and such
successor may agree upon in writing; provided however that if the Trustee is
acting as successor Servicer in no event shall the Servicing Fee be less than
the amount paid to the initial Servicer hereunder). Such fee shall be
calculated and payable monthly only from the amounts received in respect of
interest on such Mortgage Loan and shall be computed on the basis of the same
principal amount and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The Servicing Fee includes any
servicing fees owed or payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished
to the Trustee and the Certificateholders by the Servicer, as such list may
from time to time be amended.
SPECIAL ADVANCE: As defined in Section 5.18(b) hereof.
SPECIFIED OVERCOLLATERALIZED AMOUNT: An amount equal to:
(a) during the period commencing on the Closing Date and ending
on the later of the thirtieth Distribution Date following the Closing Date and
the date upon which the Pool Principal Balance is less than or equal to 50% of
the Original Pool Principal Balance, the greater of (i) the Base Specified
Overcollateralization Amount, and (ii) 86.25% of the Delinquency Amount;
(b) thereafter, the greatest of:
(i) the product of 8.2% times the Pool Principal
Balance as of such determination date,
(ii) 86.25% of the Delinquency Amount,
(iii) 0.75% of the Original Pool Principal Balance,
or
(iv) the aggregate Principal Balance of the three
largest Mortgage Loans;
provided, however, that for any date occurring after the end of
the period in clause (a) above, if the average Delinquency
Ratio for the three calendar month period then most recently
ended exceeds 9.25%, the Specified Overcollateralization Amount
shall be no less than the Specified Overcollateralization
Amount as of the previous Distribution Date; and provided
further that the Certificate Insurer may, in its sole
discretion, at the request of the Servicer, reduce the
Specified Overcollateralization Amount for the purpose of
reducing or eliminating, in whole or in part, its application
hereunder. The Trustee and the Rating Agencies shall be
notified in writing of any such modification prior to the
Distribution Date with respect to which such reduction is to
take effect, and such modification shall not take effect unless
each Rating Agency shall have confirmed that such modification
would not result in a reduction or withdrawal of the then
current ratings of the Certificates.
STARTUP DAY: The day designated as such pursuant to Section 2.07(b)
hereof.
SUBSERVICERS: HomeAmerican Credit, Inc., d/b/a Upland Mortgage, a
Pennsylvania corporation, or its successor in interest and American Business
Mortgage Services, Inc., a New Jersey corporation, or its successor in
interest.
SUBSERVICING AGREEMENT: The agreement between the Servicer and the
Subservicers relating to subservicing and/or administration of certain
Mortgage Loans as provided in Section 5.13, a copy of which shall be
delivered, along with any modifications thereto, to the Trustee and the
Certificate Insurer.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution
occurs pursuant to Sections 2.06 or 3.03, the amount (if any) by which the
aggregate principal balances (after application of principal payments received
on or before the date of substitution) of any Qualified Substitute Mortgage
Loans as of the date of substitution, are less than the aggregate of the
Principal Balances of the related Deleted Mortgage Loans together with 30
days' interest thereon at the Mortgage Interest Rate.
TAX MATTERS PERSON: The Person or Persons appointed pursuant to
Section 10.15 from time to time to act as the "tax matters person" (within the
meaning of the REMIC Provisions) of the REMIC Trust.
TAX RETURN: The federal income tax return on Internal Revenue Service
Form 1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax Return,"
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be
filed on behalf of each REMIC created hereunder due to its classification as a
REMIC under the REMIC Provisions, together with any and all other information
reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provision of federal, state
or local tax laws.
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(j)(ii).
TRANSFEREE: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
TRANSFEROR: Any Person who is disposing by Transfer any Ownership
Interest in a Certificate.
TRUST: ABFS Mortgage Loan Trust 2001-1, the trust created hereunder.
TRUSTEE: The Chase Manhattan Bank, a New York banking corporation, or
its successor-in-interest, or any successor trustee appointed as herein
provided.
TRUSTEE FEE: As to any Distribution Date, the fee payable to the
Trustee in respect of its services as Trustee that accrues at a monthly rate
equal to one-twelfth of 0.00625% on the Principal Balance of each Mortgage
Loan as of the immediately preceding Due Date.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the Trustee or
its designated agent pursuant to Section 2.05.
TRUSTEE'S REMITTANCE REPORT: As defined in Section 6.07.
TRUST FUND: The segregated pool of assets subject hereto,
constituting the trust created hereby and to be administered hereunder,
consisting of: (i) such Mortgage Loans as from time to time are subject to
this Agreement, together with the Mortgage Files relating thereto, and
together with all collections thereon and proceeds thereof; (ii) any REO
Property, together with all collections thereon and proceeds thereof; (iii)
the Trustee's rights with respect to the Mortgage Loans under all insurance
policies required to be maintained pursuant to this Agreement and any proceeds
thereof; any other security for such Mortgage Loan, including, without
limitation, pledged equipment, inventory and working capital and assignments
of rights and interests made by the related mortgagor; (v) the rights and
remedies of the Trustee against any Person making any representation or
warranty to the Trustee hereunder, to the extent provided herein; (vi) all
rights of the Depositor under the Unaffiliated Seller's Agreement; (vii) each
Account and such assets that are deposited therein from time to time and any
investments thereof, together with any and all income, proceeds and payments
with respect thereto and (viii) all proceeds of the foregoing.
TWELVE MONTH LOSS AMOUNT: With respect to any Distribution Date, an
amount equal to the aggregate of all Liquidated Loan Losses on the Mortgage
Loans which became Liquidated Mortgage Loans during the 12 preceding Due
Periods.
UNAFFILIATED SELLER: ABFS 2001-1, 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: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and Bear ▇▇▇▇▇▇▇ &
Co. Inc.
UNDERWRITING AGREEMENT: The Underwriting Agreement, dated as of March
9, 2001 between the Depositor and the Representative.
UNDERWRITING GUIDELINES: The underwriting guidelines of the
Originators, a copy of which is attached as an exhibit to the Unaffiliated
Seller's Agreement.
UNITED STATES PERSON: A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States, any state thereof or the District of Columbia, an
estate whose income from sources without the United States is includible in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States or
a trust if a court within the United States can exercise primary jurisdiction
over its administration and at least one United States fiduciary has the
authority to control all substantial decisions of the trust.
Section 1.02 Provisions of General Application. (a) All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.
(b) The terms defined in this Article include the plural as well as
the singular.
(c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Any reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
(e) All calculations of interest (other than with respect to the
Mortgage Loans) provided for herein shall be made on the basis of a 360-day
year consisting of twelve 30-day months. All calculations of interest with
respect to any Mortgage Loan provided for herein shall be made in accordance
with the terms of the related Mortgage Note and Mortgage or, if such documents
do not specify the basis upon which interest accrues thereon, on the basis of
a 360-day year consisting of twelve 30-day months, to the extent permitted by
applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the date
such payment is actually received by the Servicer, provided, however, that for
purposes of calculating distributions on the Certificates prepayments with
respect to any Mortgage Loan are deemed to be received on the date they are
applied in accordance with Accepted Servicing Practices consistent with the
terms of the related Mortgage Note and Mortgage to reduce the outstanding
principal balance of such Mortgage Loan on which interest accrues.
Section 1.03 Business Day Certificate. On the Closing Date (with
respect to the calendar year 2001) and thereafter, within 15 days prior to the
end of each calendar year while this Agreement remains in effect (with respect
to the succeeding calendar years), the Servicer shall provide to the Trustee
and the Depositor a certificate of a Servicing Officer specifying the days on
which banking institutions in the State of Pennsylvania are authorized or
obligated by law, executive order or governmental decree to be closed.
ARTICLE II
ESTABLISHMENT OF THE TRUST
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 Establishment of the Trust. The Depositor does hereby
establish, pursuant to the further provisions of this Agreement and the laws
of the State of New York, an express trust to be known, for convenience, as
"ABFS Mortgage Loan Trust 2001-1" and does hereby appoint The Chase Manhattan
Bank as Trustee in accordance with the provisions of this Agreement.
Section 2.02 Purchase and Sale of Mortgage Loans. The Depositor does
hereby sell, transfer, assign, set over and convey to the Trustee without
recourse but subject to the terms and provisions of this Agreement, all of the
right, title and interest of the Depositor in and to the Mortgage Loans,
including the outstanding principal as of and interest due and accruing after
the Cut-off Date on such Mortgage Loans, and all other assets included or to
be included in the Trust Fund for the benefit of the Certificateholders and
the Certificate Insurer. In connection with such transfer and assignment, and
pursuant to Section 2.07 of the Unaffiliated Seller's Agreement, the Depositor
does hereby also irrevocably transfer, assign, set over and otherwise convey
to the Trustee 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 [Reserved].
Section 2.04 Possession of Mortgage Files; Access to Mortgage Files.
(a) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage and the contents of the related Mortgage File related to
each Mortgage Loan is vested in the Trustee for the benefit of the
Certificateholders and the Certificate Insurer.
(b) Pursuant to Section 2.05 of the Unaffiliated Seller's Agreement,
the Depositor has delivered or caused to be delivered to the Trustee's
Mortgage File related to each Mortgage Loan to the Trustee.
The Collateral Agent, on behalf of the Trustee, will be the custodian
or may, with the consent of the Certificate Insurer, enter into a custodial
agreement pursuant to which the Trustee will appoint a custodian (the
"Collateral Agent") to hold the Mortgage Files in trust for the benefit of all
present and future Certificateholders and the Certificate Insurer; provided,
however, that the custodian so appointed shall in no event be the Depositor or
the Servicer or any Person known to a Responsible Officer of the Trustee to be
an Affiliate of the Depositor or the Servicer and shall be approved by the
Certificate Insurer.
The Custodian shall afford the Depositor, the Certificate Insurer and
the Servicer reasonable access to all records and documentation regarding the
Mortgage Loans relating to this Agreement, such access being afforded upon
reasonable request and during normal business hours at the offices of the
Custodian at customary charges.
Section 2.05 Delivery of Mortgage Loan Documents. (a) In connection
with the transfer and assignment of the Mortgage Loans, the Depositor does
hereby with respect to the Mortgage Loans, deliver or cause to be delivered to
the Collateral Agent, on behalf of the Trustee the following documents or
instruments with respect to each Mortgage Loan so transferred or assigned:
(i) the original Mortgage Note, endorsed without recourse in
blank by the related Originator, including all intervening
endorsements showing a complete chain of endorsement;
(ii) the related Mortgage with evidence of recording indicated
thereon or a copy thereof certified by the applicable recording
office;
(iii) the recorded mortgage assignment, or copy thereof
certified by the applicable recording office, if any, showing a
complete chain of assignment from the originator of the related
Mortgage Loan to the related Originator (which assignment may, at
such Originator's option, be combined with the assignment referred
to in subpart (iv) hereof);
(iv) a mortgage assignment 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 thereof pursuant to clause (iii) above cannot be delivered
by the Depositor to the Collateral Agent on behalf of the Trustee prior to or
concurrently with the execution and delivery of this Agreement, due to a delay
in connection with recording, the Depositor may:
(x) In lieu of delivering such original recorded
Mortgage, deliver to the Collateral Agent on behalf of the Trustee a copy
thereof provided that the related Originator certifies that the original
Mortgage has been delivered to a title insurance company for recordation after
receipt of its policy of title insurance or binder therefor; and
(y) In lieu of delivering the original recorded assignment, deliver
to the Collateral Agent on behalf of the Trustee a copy of the assignment
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 described in (iv)
above, endorse such Mortgage Note and assignment as follows: "The Chase
Manhattan Bank, as Trustee under the Pooling and Servicing Agreement dated as
of March 1, 2001, ABFS Mortgage Loan Trust 2001-1."
As promptly as practicable, but in any event within thirty (30) days
from the Closing Date, the related Originator shall cause to be recorded, at
the related Originator's expense, in the appropriate public office for real
property records, the assignments of the 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.
(b) Within thirty (30) days following delivery of the Mortgage Files
to the Collateral Agent on behalf of the Trustee, the Collateral Agent will
review each Mortgage File to ascertain that all required documents set forth
in Section 2.05(a) (other than clause (v) thereof) have been executed and
received, and that such documents relate to the Mortgage Loans identified on
the Mortgage Loan Schedule, and in so doing the Trustee may rely on the
purported due execution and genuineness of any signature thereon. If within
such 30-day period (or, with respect to any Qualified Substitute Mortgage
Loan, within thirty (30) days after the assignment thereof) the Collateral
Agent on behalf of the Trustee finds any document constituting a part of a
Mortgage File not to have been executed or received or to be unrelated to the
Mortgage Loans identified in the Mortgage Loan Schedule, the Collateral Agent
shall promptly notify the Servicer, the Trustee and the Certificate Insurer,
and the Servicer shall have a period of sixty (60) days after such notice
within which to correct or cure any such defect. Each original recorded
assignment of a 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 was filed for recording and within ten (10) days
following receipt by the Trustee or the Trustee shall review such assignment
to confirm the information specified above with respect to the documents
constituting the Mortgage File. Upon receipt by the Trustee of the recorded
assignment such recorded assignment shall become part of the Mortgage File.
The Trustee shall notify the Servicer of any defect in such assignment based
on such review. The Servicer shall have a period of 60 days following such
notice to correct or cure such defect. In the event that the Servicer fails to
record an assignment of a Mortgage as herein provided the Trustee shall, at
the Servicer's expense, use reasonable efforts to prepare and, if required
hereunder, file such assignments for recordation in the appropriate real
property or other records and the Servicer hereby appoints the Trustee as its
attorney-in-fact with full power and authority acting in its stead for the
purpose of such preparation, execution and filing.
(c) It is intended that the conveyance of the Mortgage Loans and
other property by the Depositor to the Trustee as provided in this Section
2.05 and Section 2.02 be, and be construed as, a sale of the Mortgage Loans
and such other property by the Depositor to the Trustee for the benefit of the
Certificateholders. It is, further, not intended that such conveyance be
deemed a pledge of the Mortgage Loans or such other property by the Depositor
to the Trustee to secure a debt or other obligation of the Depositor. However,
in the event that the Mortgage Loans or any of such other property are held to
be property of the Depositor, or if for any reason this Agreement is held or
deemed to create a security interest in the Mortgage Loans or any of such
other property, then it is intended that: (i) this Agreement shall also be
deemed to be a security agreement within the meaning of the Uniform Commercial
Code; (ii) the conveyance provided for in this Section shall be deemed to be a
grant by the Depositor to the Trustee of a security interest in all of the
Depositor's right, title and interest in and to the Mortgage Loans, the Trust
Fund and such other property and all amounts payable to the holders of the
Mortgage Loans in accordance with the terms thereof and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including, without limitation, all amounts from
time to time held or invested in the Certificate 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 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.
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee. (a) The Trustee, agrees to execute
and deliver to the Depositor, the Certificate Insurer, the Servicer and the
Unaffiliated Seller on or prior to the Closing Date an acknowledgment of
receipt of the Certificate Insurance Policy and, on or prior to the Closing
Date, with respect to each Mortgage Loan transferred on such date, the
original Mortgage Note (with any exceptions noted), in the form attached as
Exhibit G hereto and declares that it will hold such documents and any
amendments, replacements or supplements thereto, as well as any other assets
included in the definition of Trust Fund and delivered to the Trustee, as
Trustee in trust upon and subject to the conditions set forth herein for the
benefit of the Certificateholders and the Certificate Insurer. The Collateral
Agent agrees, for the benefit of the Certificateholders and the Certificate
Insurer, to review (or cause to be reviewed) each Trustee's Mortgage File
within thirty (30) days after the Closing Date, and to deliver to the
Unaffiliated Seller, the Servicer, the Depositor and the Certificate Insurer a
certification in the form attached hereto as Exhibit I to the effect that, as
to each Mortgage Loan listed in the related Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any Mortgage Loan specifically identified in
such certification as not covered by such certification), (i) all documents
required to be delivered to it pursuant to Section 2.05 (other than the items
listed in clause (a)(v) thereof) are in its possession, (ii) each such
document has been reviewed by it and has not been mutilated, damaged, torn or
otherwise physically altered (handwritten additions, changes or corrections
shall not constitute physical alteration if initialed by the Mortgagor),
appears regular on its face and relates to such Mortgage Loan, and (iii) based
on its examination and only as to the foregoing documents, the information set
forth on the Mortgage Loan Schedule as to the information set forth in (i),
(ii), (v) and (vi) of the definition of "Mortgage Loan Schedule" set forth
herein accurately reflects the information set forth in the Trustee's Mortgage
File delivered on such date. The Trustee shall be under no duty or obligation
to inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are genuine, enforceable, or appropriate
for the represented purpose or that they are other than what they purport to
be on their face.
(b) Within ninety (90) days of the Closing Date, with respect to the
Mortgage Loans transferred on such date; the Trustee shall deliver (or cause
to be delivered) to the Servicer, the Unaffiliated Seller, the Depositor, the
Rating Agencies and the Certificate Insurer a final certification in the form
attached hereto as Exhibit G to the effect that, as to each Mortgage Loan
listed in the related Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), (i) all documents
required to be delivered to it pursuant to Section 2.05 (other than the items
listed in clause (a)(v) thereof) are in its possession, (ii) each such
document has been reviewed by it and has not been mutilated, damaged, torn or
otherwise physically altered (handwritten additions, changes or corrections
shall not constitute physical alteration if initialed by the Mortgagor),
appears regular on its face and relates to such Mortgage Loan, and (iii) based
on its examination and only as to the foregoing documents, the information set
forth in (i), (ii), (v) and (vi) of the definition of "Mortgage Loan Schedule"
set forth herein accurately reflects the information set forth in the
Trustee's Mortgage File delivered on such date.
(c) If the Trustee during the process of reviewing the Trustee's
Mortgage Files finds any document constituting a part of a Trustee's Mortgage
File which is not executed, has not been received, is unrelated to the
Mortgage Loan identified in the related Mortgage Loan Schedule, or does not
conform to the requirements of Section 2.05 or the description thereof as set
forth in the related Mortgage Loan Schedule, the Trustee or the Certificate
Insurer, as applicable, shall promptly so notify the Servicer, the
Unaffiliated Seller and the Certificate Insurer. In performing any such
review, the Trustee may conclusively rely on the Unaffiliated Seller as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Trustee's review of the Mortgage Files is
limited solely to confirming that the documents listed in Section 2.05 (other
than those listed in clause (v) thereof) have been executed and received and
relate to the Mortgage Files identified in the related Mortgage Loan Schedule.
The Trustee shall have no responsibility for determining whether any document
is valid and binding, whether the text of any assignment or endorsement is in
proper or recordable form, whether any document has been recorded in
accordance with the requirements of any applicable jurisdiction, or whether a
blanket assignment is permitted in any applicable jurisdiction. Pursuant to
the Unaffiliated Seller's Agreement, the Unaffiliated Seller and the
Originators have agreed to use reasonable efforts to cause to be remedied a
material defect in a document constituting part of a Mortgage File of which it
is so notified by the Trustee. If, however, within sixty (60) days after the
Trustee's notice to it respecting such defect the Unaffiliated Seller has not
caused to be remedied the defect and the defect materially and adversely
affects the value of, or the interest of the Certificateholders in the related
Mortgage Loan or the interests of the Certificate Insurer, the Unaffiliated
Seller and the Originators will be obligated, pursuant to the Unaffiliated
Seller's Agreement, to either (i) substitute in lieu of such Mortgage Loan a
Qualified Substitute Mortgage Loan in the manner and subject to the conditions
set forth in Section 3.03 or (ii) purchase such Mortgage Loan at a purchase
price equal to the Principal Balance of such Mortgage Loan as of the date of
purchase, plus all accrued and unpaid interest on such Principal Balance
computed at the Mortgage Interest Rate, net of the Servicing Fee if the
Unaffiliated Seller or an Originator, as applicable, is the Servicer, plus the
amount of any unreimbursed Servicing Advances made by the Servicer with
respect to such Mortgage Loan, which purchase price shall be deposited in the
Collection Account on the next succeeding Servicer Distribution Date, after
deducting therefrom any amounts received in respect of such repurchased
Mortgage Loan or Loans and being held in the Collection Account for future
distribution to the extent such amounts have not yet been applied to principal
or interest on such Mortgage Loan (the "Loan Repurchase Price"). For purposes
of calculating the Available Funds, any Loan Repurchase Price or Substitution
Adjustment that is paid shall be deemed deposited in the Certificate Account
in the Due Period preceding such Servicer Distribution 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 J hereto), the Trustee shall release to the Servicer
for release to the Unaffiliated Seller the related Trustee's Mortgage File and
shall execute, without recourse, and deliver such instruments of transfer
furnished by the Unaffiliated Seller as may be necessary to transfer such
Mortgage Loan to the Unaffiliated Seller. The Trustee shall notify the
Certificate Insurer if the Unaffiliated Seller fails to repurchase or
substitute for a Mortgage Loan in accordance with the foregoing.
Section 2.07 Designations under REMIC Provisions; Designation of
Startup Day. (a) REMIC I will consist of all of the assets of the Trust Fund
and will be evidenced by the Class LT-1 Interest and LT-AIO Interest (the
"Subsidiary REMIC Regular Interests") which will be uncertificated and will
represent the "regular interests" in REMIC I. REMIC II will consist of the
Subsidiary REMIC Regular Interests and will be evidenced by the IT-A-IO
Interest, the IT-Accrual Interest (the "Intermediate REMIC Accrual Class"),
and the Class IT-A-1 Interest (the "Intermediate REMIC Accretion Directed
Class", together with the Intermediate REMIC Accrual Class and the IT-A-IO
Interest, the "Intermediate REMIC Regular Interests") which will be
uncertificated and will represent the "regular interests" in REMIC II. Class
R-I Interest and Class R-II Interest will represent the sole class of residual
interest in each of REMIC I and REMIC II , respectively. The Trustee will hold
the Subsidiary REMIC Regular Interests and Intermediate REMIC Regular
Interests. The Master REMIC will consist of the Intermediate REMIC Regular
Interests and will be evidenced by the Class A-1, Class A-IO and Class X
Certificates (which will represent the "regular interests" in the Master
REMIC) and the Class R-III Interest as the single "residual interest" in the
Master REMIC. The Class R Certificates will represent the beneficial ownership
of the Class R-I, R-II and R-III Interests.
(i) The following table sets forth characteristics of the
Certificates, each of which, except for the Class R Certificates, is
hereby designated as a "regular interest" in the Master REMIC:
------------------- ------------------------- --------------------
Original Certificate
Principal Pass-Through
Balance Rate
------------------- ------------------------- --------------------
Class A-1 $275,000,000 6.28%(1)
------------------- ------------------------- --------------------
Class A-IO (2) 6%
------------------- ------------------------- --------------------
Class X (3) (4)
------------------- ------------------------- --------------------
Class R (5)
------------------- ------------------------- --------------------
(1) 6.78% for each Distribution Date, after the Clean Up Call
Date. Subject to a cap equal to the weighted average of
Class LT-A1 and Class LT-AIO, with the Class LT-AIO
subject to a cap equal to the excess of the Net Weighted
Average Mortgage Interest Rate over 6% on each
Distribution Date until and including the Distribution
Date in September, 2003.
(2) On each Distribution Date up to and including the
Distribution Date in September, 2003, the Class A-IO
Certificates will have a notional balance equal to the
principal balance of the Class LT-AIO, and for each
Distribution Date thereafter, $0.
(3) The Class X Certificates will be comprised of two
components, Class PO Component and Class IO Component,
each of which is hereby designated a REMIC regular
interest for federal income tax purposes. The Class PO
Component will have a principal balance equal to the
excess of the principal balance of the Mortgage Loans over
the principal balance of the Class A-1 Certificates and
will not bear interest. Class IO Component will have a
notional principal balance equal to the aggregate
principal balance of the Mortgage Loans.
(4) The pass-through rate in respect of the Class IO Component
will be the excess of: (i) the weighted average of Class
LT-A1 and Class LT-AIO, with the Class LT-AIO subject to a
cap equal to the excess of the (x) Net Weighted Average
Mortgage Interest Rate over (y) 6% on each Distribution
Date up to and including the Distribution Date in
September, 2003 over (ii) the product of: (A) two and (B)
the weighted average pass-through rate of the Intermediate
REMIC Regular Interests (other than the Class IT-AIO
Interest), where the Intermediate REMIC Accrual Class is
subject to a cap equal to zero and the Intermediate REMIC
Accretion Directed Class is subject to a cap equal to the
pass-through rate on its corresponding class.
(5) The Class R Certificates will represent the beneficial
ownership of the R-I, R-II and R-III Interests.
(ii) The Intermediate REMIC Regular Interests shall have the
following principal balances, pass-through rates and Corresponding
Classes of Certificates in the manner set forth in the following
table:
----------------- ----------------------------- ------------------------- --------------------
Corresponding
REMIC Initial Interest Class of Master
Interests Balance Rate REMIC Interest
----------------- ----------------------------- ------------------------- --------------------
IT-A-1 1/2 Corresponding Master Net Weighted A-1
REMIC Class balance Average Mortgage
Interest Rate
----------------- ----------------------------- ------------------------- --------------------
IT-Accrual 1/2 Pool Principal Balance Net Weighted Average N/A
plus 1/2 of the initial Mortgage Interest Rate
Overcollateralized Amount
----------------- ----------------------------- ------------------------- --------------------
IT-A-IO (1) 6% N/A
----------------- ----------------------------- ------------------------- --------------------
------------------
(1) On each Distribution Date until and including the Distribution
Date in September, 2003, the Class IT-A-IO Interest will have a
notional balance equal to the principal balance of the Class
LT-A-IO and for each Distribution Date thereafter, $0.
On each Distribution Date, 50% of the increase in the
Overcollateralized Amount will be payable as a reduction of the
principal balances of the Intermediate REMIC Accretion Directed
Class and will be accrued and added to the principal balance of
the Intermediate REMIC Accrual Class. On each Distribution
Date, the increase in the principal balance of the Intermediate
REMIC Accrual Class may not exceed interest accruals for such
Distribution Date for the Intermediate REMIC Accrual Class. In
the event that: (i) 50% of the increase in the
Overcollateralized Amount exceeds (ii) interest accruals on the
Intermediate REMIC Accrual Class for such Distribution Date,
the excess for such Distribution Date (accumulated with all
such excesses for all prior Distribution Dates) will be added
to any increase in the Overcollateralized Amount for purposes
of determining the amount of interest accrual on the
Intermediate REMIC Accrual Class payable as principal on the
Intermediate REMIC Accretion Directed Class on the next
Distribution Date pursuant to the first sentence of this
paragraph. All payments of scheduled principal and prepayments
of principal generated by the Mortgage Loans shall be allocated
50% to the Intermediate REMIC Accrual Class, and 50% to the
Intermediate REMIC Accretion Directed Class, until paid in
full. Notwithstanding the above, principal payments allocated
to the Class X Certificates that result in the reduction in the
Overcollateralized Amount shall be allocated to the
Intermediate REMIC Accrual Class (until paid in full). Realized
losses shall be applied so that after all distributions have
been made on each Distribution Date (i) the principal balances
of each of the Intermediate REMIC Accretion Directed Class is
equal to 50% of the principal balance of their Corresponding
Class, and (ii) the Intermediate REMIC Accrual Class is equal
to 50% of the aggregate principal balance of the Mortgage Pool
plus 50% of the Overcollateralized Amount.
(iii) The Subsidiary REMIC Regular Interests shall have the
following principal balances, pass-through rates and Corresponding
Classes of Certificates in the manner set forth in the following
table:
------------------------ ----------------------------- ---------------------------- ----------------------------
Corresponding
REMIC Initial Interest Class of Master
Interests Balance Rate REMIC Interest
------------------------ ----------------------------- ---------------------------- ----------------------------
LT-A1 Pool Principal Balance Net Weighted Average N/A
less $27,500,000 Mortgage Interest Rate
------------------------ ----------------------------- ---------------------------- ----------------------------
LT-AIO $27,500,000 Net Weighted Average N/A
Mortgage Interest Rate
------------------------ ----------------------------- ---------------------------- ----------------------------
-------------------
On each Distribution Date, all Realized losses, prepayments and
payments of scheduled principal will be allocated to Class LT-A1
until paid in full or eliminated by such losses, and all additional
Realized losses, prepayments and payments of scheduled principal will
be allocated to Class LT-AIO.
(b) The Closing Date will be the "startup day" of each REMIC created
hereunder within the meaning of Section 860G(a)(9) of the Code.
Section 2.08 Execution of Certificates. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the delivery of the Trustee's
Mortgage Files relating thereto to it and, concurrently with such delivery,
has executed, authenticated and delivered to or upon the order of the
Depositor, in exchange for the Mortgage Loans, the Trustee's Mortgage Files
and the other assets included in the definition of Trust Fund, Certificates
duly authenticated by the Trustee in Authorized Denominations evidencing the
entire ownership of the Trust Fund.
Section 2.09 Application of Principal and Interest. In the event that
Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than the
Principal Balance of the related Mortgage Loan plus accrued interest thereon,
or any Mortgagor makes a partial payment of any Monthly Payment due on a
Mortgage Loan, such Net Liquidation Proceeds or partial payment shall be
applied as provided in the related Mortgage Note, and if not so provided,
first to interest accrued at the Mortgage Interest Rate and then to principal.
Section 2.10 Grant of Security Interest. (a) Except with respect to
the REMIC Provisions, it is the intention of the parties hereto that the
conveyance by the Depositor of the Trust Fund to the Trustee on behalf of the
Trust shall constitute a purchase and sale of such Trust Fund and not a loan.
In the event, however, that a court of competent jurisdiction were to hold
that the transaction evidenced hereby constitutes a loan and not a purchase
and sale, it is the intention of the parties hereto that this Agreement shall
constitute a security agreement under applicable law, and that the Depositor
shall be deemed to have granted to the Trustee, on behalf of the Trust, a
first priority perfected security interest in all of the Depositor's right,
title and interest in, to and under the Trust Fund. The conveyance by the
Depositor of the Trust Fund to the Trustee on behalf of the Trust shall not
constitute and is not intended to result in an assumption by the Trustee or
any Certificateholder of any obligation of the Unaffiliated Seller or any
other Person in connection with the Trust Fund.
(b) The Depositor and the Servicer shall take no action inconsistent
with the Trust's ownership of the Trust Fund and each shall indicate or shall
cause to be indicated in its records and records held on its behalf that
ownership of each Mortgage Loan and the assets in the Trust Fund are held by
the Trustee on behalf of the Trust. In addition, the Depositor and the
Servicer shall respond to any inquiries from third parties with respect to
ownership of a Mortgage Loan or any other asset in the Trust Fund by stating
that it is not the owner of such asset and that ownership of such Mortgage
Loan or other Trust Fund asset is held by the Trustee on behalf of the Trust.
Section 2.11 Further Action Evidencing Assignments. (a) The Servicer
agrees that, from time to time, at its expense, it shall cause the
Unaffiliated Seller (and the Depositor on behalf of itself also agrees that it
shall), promptly to execute and deliver all further instruments and documents,
and take all further action, that may be necessary or appropriate, or that the
Servicer, the Certificate Insurer or the Trustee may reasonably request, in
order to perfect, protect or more fully evidence the transfer of ownership of
the Trust Fund or to enable the Trustee to exercise or enforce any of its
rights hereunder. Without limiting the generality of the foregoing, the
Servicer and the Depositor will, upon the request of the Servicer, the
Certificate Insurer or the Trustee, execute and file (or cause to be executed
and filed) such real estate filings, financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate.
(b) The Depositor hereby grants to the Servicer and the Trustee
powers of attorney to execute all documents on its behalf under this Agreement
and the Unaffiliated Seller's Agreement as may be necessary or desirable to
effectuate the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Servicer and the Unaffiliated
Seller. The Servicer hereby represents and warrants to the Trustee, the
Depositor, the Certificate Insurer and the Certificateholders as of the
Closing Date and during the term of this Agreement that:
(a) Each of the Unaffiliated Seller, the Servicer and the
Subservicers is a corporation duly organized, validly existing and in good
standing under the laws of their respective states of incorporation and has
the corporate power to own its assets and to transact the business in which it
is currently engaged. Each of the Unaffiliated Seller, the Servicer and the
Subservicers is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it or the performance of its
obligations hereunder requires such qualification and in which the failure so
to qualify could reasonably be expected to have a material adverse effect on
the business, properties, assets, or condition (financial or other) of the
Unaffiliated Seller, the Servicer or the Subservicers or the performance of
their respective obligations hereunder;
(b) The Unaffiliated Seller and the Servicer each has the power and
authority to make, execute, deliver and perform this Agreement and all of the
transactions contemplated under this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Unaffiliated Seller and the
Servicer, enforceable in accordance with its terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting the rights of creditors
generally and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(c) Neither the Unaffiliated Seller nor the Servicer is required to
obtain the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency which consent already has not been obtained in
connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except such as have been obtained prior to
the Closing Date;
(d) The execution, delivery and performance of this Agreement by the
Unaffiliated Seller and the Servicer will not violate any provision of any
existing law or regulation or any order or decree of any court or the Articles
of Incorporation or Bylaws of the Unaffiliated Seller or the Servicer,
respectively, or constitute a breach of any mortgage, indenture, contract or
other agreement to which the Unaffiliated Seller or the Servicer,
respectively, is a party or by which it may be bound;
(e) There is no action, suit, proceeding or investigation pending or
threatened against the Servicer, the Unaffiliated Seller or the Subservicers
which, either in any one instance or in the aggregate, is, likely to result in
any material adverse change in the business, operations, financial condition,
properties, or assets of the Servicer, the Unaffiliated Seller or the
Subservicers, or in any material impairment of the right or ability of any of
them to carry on its business substantially as now conducted, or in any
material liability on the part of any of them, or which would draw into
question the validity of this Agreement, the Certificates, or the Mortgage
Loans or of any action taken or to be taken in connection with the obligations
of the Unaffiliated Seller or the Servicer contemplated herein or therein, or
which would be likely to impair materially the ability of the Unaffiliated
Seller or the Servicer to perform its obligations hereunder;
(f) Neither this Agreement nor any statement, report, or other
document furnished or to be furnished by the Servicer, the Unaffiliated Seller
or the Subservicer pursuant to this Agreement, or the Insurance and
Reimbursement Agreement or in connection with the transactions contemplated
hereby, including, without limitation, the sale or placement of the
Certificates, contains any untrue statement of fact provided by or on behalf
of the Unaffiliated Seller or the Servicer or omits to state a fact necessary
to make the statements provided by or on behalf of the Unaffiliated Seller or
the Servicer contained herein or therein not misleading:
(g) Neither the Unaffiliated Seller nor the Servicer believes, nor
does either have any reason or cause to believe, that it cannot perform each
and every covenant contained in this Agreement;
(h) The transfer, assignment, and conveyance of the Mortgage Loans by
the Unaffiliated Seller pursuant to this Agreement is not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(i) The Unaffiliated Seller is solvent and will not as a result of
this Agreement and the undertakings of the Unaffiliated Seller hereunder be
rendered insolvent; and
(j) None of the Unaffiliated Seller, the Servicer or the Subservicers
is an "investment company" or a company "controlled by an investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
(k) Immediately prior to the transfer and assignment by the Depositor
to the Trustee, the Depositor had good title to, and was the sole owner of
each Mortgage Loan, free of any interest of any other Person, and the
Depositor has transferred all right, title and interest in each Mortgage Loan
to the Trustee. The transfer of the Mortgage Note and the Mortgage as and in
the manner contemplated by this Agreement is sufficient either (i) fully to
transfer to the Trustee, for the benefit of the Certificateholders and the
Certificate Insurer, all right, title, and interest of the Depositor thereto
as note holder and mortgagee or (ii) to grant to the Trustee, for the benefit
of the Certificateholders and the Certificate Insurer, the security interest
referred to in Section 2.10 hereof. The Mortgage has been duly assigned and
the Mortgage Note has been duly endorsed. The assignment of Mortgage delivered
to the Trustee pursuant to Section 2.05(a)(iv) is in recordable form and is
acceptable for recording under the laws of the applicable jurisdiction. The
endorsement of the Mortgage Note, the delivery to the Trustee of the endorsed
Mortgage Note, and such assignment of Mortgage, and the delivery of such
assignment of Mortgage for recording to, and the due recording of such
assignment of Mortgage in, the appropriate public recording office in the
jurisdiction in which the Mortgaged Property is located are sufficient to
permit the Trustee to avail itself of all protection available under
applicable law against the claims of any present or future creditors of the
Depositor, and are sufficient to prevent any other sale, transfer, assignment,
pledge, or hypothecation of the Mortgage Note and Mortgage by the Depositor
from being enforceable.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.01 shall survive the delivery of the
respective Mortgage Files to the Trustee or to a custodian, as the case may
be, and inure to the benefit of the Trustee and the Certificate Insurer.
Section 3.02 Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Trustee and the Certificate Insurer that as of the date of this Agreement or
as of such date specifically provided herein:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(b) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the
Servicer and the Trustee, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration
or filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the Depositor
with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except as have been made on or prior to the
Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of,
or constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust,
contract or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound;
(ii) results or will result in a violation of any law, rule, regulation,
order, judgment or decree applicable to the Depositor of any court or
governmental authority having jurisdiction over the Depositor or its
subsidiaries; or (iii) results in the creation or imposition of any lien,
charge or encumbrance which would have a material adverse effect upon the
Mortgage Loans or any documents or instruments evidencing or securing the
Mortgage Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the
Depositor, threatened, before any court, administrative agency or other
tribunal, and no notice of any such action, which, in the Depositor's
reasonable judgment, might materially and adversely affect the performance by
the Depositor of its obligations under this Agreement, or the validity or
enforceability of this Agreement; and
(g) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency that may materially and adversely affect its
performance hereunder.
(h) Immediately prior to the transfer and assignment by the Depositor
to the Trustee, the Depositor had good title to, and was the sole owner of
each Mortgage Loan, free of any interest of any other Person, and the
Depositor has transferred all right, title and interest in each Mortgage Loan
to the Trustee. The transfer of the Mortgage Note and the Mortgage as and in
the manner contemplated by this Agreement is sufficient either (i) fully to
transfer to the Trustee, for the benefit of the Certificateholders and the
Certificate Insurer, all right, title, and interest of the Depositor thereto
as note holder and mortgagee or (ii) to grant to the Trustee, for the benefit
of the Certificateholders and the Certificate Insurer, the security interest
referred to in Section 2.10 hereof. The Mortgage has been duly assigned and
the Mortgage Note has been duly endorsed. The assignment of Mortgage delivered
to the Trustee pursuant to Section 2.05(a)(iv) is in recordable form and is
acceptable for recording under the laws of the applicable jurisdiction. The
endorsement of the Mortgage Note, the delivery to the Trustee of the endorsed
Mortgage Note, and such assignment of Mortgage, and the delivery of such
assignment of Mortgage for recording to, and the due recording of such
assignment of Mortgage in, the appropriate public recording office in the
jurisdiction in which the Mortgaged Property is located are sufficient to
permit the Trustee to avail itself of all protection available under
applicable law against the claims of any present or future creditors of the
Depositor, and are sufficient to prevent any other sale, transfer, assignment,
pledge, or hypothecation of the Mortgage Note and Mortgage by the Depositor
from being enforceable.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02 shall survive delivery of the
respective Mortgage Files to the Trustee or to a custodian, as the case may
be, and shall inure to the benefit of the Trustee and the Certificate Insurer.
Section 3.03 Purchase and Substitution. (a) It is understood and
agreed that the representations and warranties set forth in Sections 3.01,
3.02 and 3.03 of the Unaffiliated Seller's Agreement shall survive delivery of
the Certificates to the Certificateholders. Pursuant to the Unaffiliated
Seller's Agreement, with respect to any representation or warranty contained
in Sections 3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement that is
made to the best of the Unaffiliated Seller's knowledge, the Unaffiliated
Seller shall be deemed to have knowledge of all facts and circumstances in
existence as of such date and, if it is discovered by the Servicer, any
Subservicer, the Trustee, the Certificate Insurer or any Certificateholder
that the substance of such representation and warranty was inaccurate as of
the Closing Date and such inaccuracy materially and adversely affects the
value of the related Mortgage Loan or the interests of the Trustee or the
Certificate Insurer with respect thereto, then notwithstanding the
Unaffiliated Seller's lack of knowledge with respect to the inaccuracy at the
time the representation or warranty was made, such inaccuracy shall be deemed
a breach of the applicable representation or warranty. Upon discovery by the
Unaffiliated Seller, the Servicer, any Subservicer, the Trustee or the
Certificate Insurer of a breach of any of such representations and warranties
which materially and adversely affects the value of the Mortgage Loans or the
interest of the Trustee, the Certificateholders or the Certificate Insurer, or
which materially and adversely affects the interests of the Trustee, the
Certificate Insurer or the Certificateholders in the related Mortgage Loan in
the case of a representation and warranty relating to a particular Mortgage
Loan (notwithstanding that such representation and warranty was made to the
Unaffiliated Seller's best knowledge), the party discovering such breach shall
promptly (and in any event within five (5) Business Days of the discovery)
give written notice to the others. Subject to the last paragraph of this
Section 3.03, within sixty (60) days of the earlier of its discovery or its
receipt of notice of any breach of a representation or warranty, pursuant to
the Unaffiliated Seller's Agreement, the Servicer shall, or shall cause the
Unaffiliated Seller or an Originator to (a) promptly cure such breach in all
material respects, or (b) purchase such Mortgage Loan on the next succeeding
Servicer Distribution Date, by depositing an amount equal to the Loan
Repurchase Price into the Collection Account, or (c) remove such Mortgage Loan
from the Trust Fund (in which case it shall become a Deleted Mortgage Loan)
and substitute one or more Qualified Substitute Mortgage Loans; provided,
that, such substitution is effected not later than the date which is two years
after the Startup Day or at such later date, if the Trustee and the
Certificate Insurer receive an Opinion of Counsel to the effect set forth
below in this Section. In addition, pursuant to the Unaffiliated Seller's
Agreement, the Unaffiliated Seller and the related Originator shall be
obligated to indemnify the Trustee, the Certificateholders and the Certificate
Insurer for any third party claims arising out of a breach by the Unaffiliated
Seller of representations or warranties regarding the Mortgage Loans. Pursuant
to the Unaffiliated Seller's Agreement any such substitution shall be
accompanied by payment by the Unaffiliated Seller of the Substitution
Adjustment, if any, to be deposited in the Collection Account.
(b) As to any Deleted Mortgage Loan for which the Unaffiliated Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the Servicer shall
cause the Unaffiliated Seller or an Originator, as applicable, to effect such
substitution by delivering to the Trustee a certification in the form attached
hereto as Exhibit H, executed by a Servicing Officer and the documents
described in Sections 2.05(a)(i)-(vi) for such Qualified Substitute Mortgage
Loan or Loans.
(c) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Loans
after the date of such substitution. Monthly Payments received with respect to
a Qualified Substitute Mortgage Loan or Loans on or before the date of
substitution will be retained by the Unaffiliated Seller. The Trust Fund will
own all payments received on the Deleted Mortgage Loan on or before the date
of substitution, and the Unaffiliated Seller shall thereafter be entitled to
retain all amounts subsequently received in respect of such Deleted Mortgage
Loan. The Servicer shall give written notice to the Trustee and the
Certificate Insurer that such substitution has taken place and shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan
from the terms of this Agreement and the substitution of the Qualified
Substitute Mortgage Loan or Loans. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects.
(d) It is understood and agreed that the obligations of the
Unaffiliated Seller and the related Originator set forth in Sections 2.06 and
3.05 of the Unaffiliated Seller's Agreement to and the Servicer's obligation
to cause the Unaffiliated Seller and the Originator to cure, purchase or
substitute for a defective Mortgage Loan, or to indemnify as described in
clause (a) above, constitute the sole remedies of the Trustee, the Certificate
Insurer and the Certificateholders respecting a breach of the representations
and warranties of the Unaffiliated Seller and the Originators set forth in
Sections 3.01, 3.02 and 3.03 of the Unaffiliated Seller's Agreement. The
Trustee shall give prompt written notice to the Certificate Insurer and the
Rating Agencies of any repurchase or substitution made pursuant to this
Section 3.03 or Section 2.06(b).
(e) Upon discovery by the Servicer, the Trustee, the Certificate
Insurer or any Certificateholder that any Mortgage Loan does not constitute a
Qualified Mortgage, the party discovering such fact shall promptly (and in any
event within five (5) Business Days of the discovery) give written notice
thereof to the other parties. In connection therewith, pursuant to the
Unaffiliated Seller's Agreement, the Unaffiliated Seller shall be required to
repurchase or substitute a Qualified Substitute Mortgage Loan for the affected
Mortgage Loan within sixty (60) days of the earlier of such discovery by any
of the foregoing parties, or the Trustee's or the Unaffiliated Seller's
receipt of notice, in the same manner as it would a Mortgage Loan for a breach
of representation or warranty contained in Sections 3.01, 3.02 or 3.03 of the
Unaffiliated Seller's Agreement. The Trustee shall reconvey to the
Unaffiliated Seller the Mortgage Loan to be released pursuant hereto in the
same manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty contained in Sections
3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement.
(f) Pursuant to Section 3.05(j) of the Unaffiliated Seller's
Agreement the Unaffiliated Seller and each of the Originators shall be jointly
and severally responsible for any repurchase, cure or substitution obligation
of the Unaffiliated Seller or any of the Originators under this Agreement or
the Unaffiliated Seller's Agreement.
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates. The Class A-1, Class A-IO, Class X and
Class R Certificates shall be substantially in the forms annexed hereto as
Exhibits A, B C and D respectively. All Certificates shall be executed by
manual or facsimile signature on behalf of the Trustee by an authorized
officer and authenticated by the manual or facsimile signature of an
authorized officer. Certificates bearing the signatures of individuals who
were at the time of the execution of the Certificates the authorized officers
of the Trustee shall bind the Trustee, notwithstanding that such individuals
or any of them have ceased to hold such offices prior to the delivery of such
Certificates or did not hold such offices at the date of such Certificates.
All Certificates issued hereunder shall be dated the date of their
authentication.
Section 4.02 Registration of Transfer and Exchange of Certificates.
(a) The Trustee, as registrar, shall cause to be kept a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, the Trustee shall provide for the registration of Certificates
and the registration of transfer of Certificates. The Trustee is hereby
appointed registrar for the purpose of registering Certificates and transfers
of Certificates as herein provided. The Certificate Insurer shall be entitled
to inspect and copy the Certificate Register and the records of the Trustee
relating to the Certificates during normal business hours upon reasonable
notice.
(b) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust and entitled to the same benefits under this Agreement
as the Certificates surrendered upon such registration of transfer or
exchange.
(c) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by
the Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made to a Holder for any registration
of transfer or exchange of Certificates, but the Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(e) It is intended that the Class A-1 Certificates and the Class A-IO
Certificates be registered so as to participate in a global book-entry system
with the Depository, as set forth herein. The Class A-1 Certificates and the
Class A-IO Certificates shall, except as otherwise provided in the next
paragraph, be initially issued in the form of a single fully registered
Certificate with a denomination equal to the Original Certificate Principal
Balance or Class A-IO Notional Amount, respectively. Upon initial issuance,
the ownership of each such Class A-1 Certificate and Class A-IO Certificate
shall be registered in the Certificate Register in the name of Cede & Co., or
any successor thereto, as nominee for the Depository. The Depositor and the
Trustee are hereby authorized to execute and deliver the Representation Letter
with the Depository. With respect to Class A-1 Certificates and Class A-IO
Certificates registered in the Certificate Register in the name of Cede & Co.,
as nominee of the Depository, the Depositor, the Unaffiliated Seller, the
Servicer, the Trustee and the Certificate Insurer shall have no responsibility
or obligation to Direct or Indirect Participants or beneficial owners for
which the Depository holds Class A-1 Certificates and Class A-IO Certificates
from time to time as a Depository. Without limiting the immediately preceding
sentence, the Depositor, the Unaffiliated Seller, the Servicer, the Trustee
and the Certificate Insurer shall have no responsibility or obligation with
respect to (i) the accuracy of the records of the Depository, Cede & Co., or
any Direct or Indirect Participant with respect to any Ownership Interest,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a Certificateholder, of any notice with respect to the Class A-1
Certificates and Class A-IO Certificates or (iii) the payment to any Direct or
Indirect Participant or any other Person, other than a Certificateholder, of
any amount with respect to any distribution of principal or interest on the
Class A-1 Certificates or Class A-IO Certificates. No Person other than a
Certificateholder shall receive a certificate evidencing such Class A-1
Certificates or Class A-IO Certificate. Upon delivery by the Depository to the
Trustee of written notice to the effect that the Depository has determined to
substitute a new nominee in place of Cede & Co., and subject to the provisions
hereof with respect to the payment of interest by the mailing of checks or
drafts to the Certificateholders appearing as Certificateholders at the close
of business on a Record Date, the name "Cede & Co." in this Agreement shall
refer to such new nominee of the Depository.
(f) In the event that (i) the Depository or the Servicer advises the
Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Class A-1 Certificates or Class A-IO Certificates and the Servicer or
the Depository is unable to locate a qualified successor or (ii) the Trustee
at its sole option elects to terminate the book-entry system through the
Depository, the Class A-1 Certificates and Class A-IO Certificates shall no
longer be restricted to being registered in the Certificate Register in the
name of Cede & Co. (or a successor nominee) as nominee of the Depository. At
that time, the Servicer may determine that the Class A-1 Certificates and
Class A-IO Certificates shall be registered in the name of and deposited with
a successor depository operating a global book-entry system, as may be
acceptable to the Servicer, or such depository's agent or designee but, if the
Servicer does not select such alternative global book-entry system, then the
Class A-1 Certificates and Class A-IO Certificates may be registered in
whatever name or names Certificateholders transferring Class A-1 Certificates
and Class A-IO Certificates shall designate, in accordance with the provisions
hereof; provided, however, that any such reregistration shall be at the
expense of the Servicer.
(g) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A-1 Certificate or Class A-IO Certificate is
registered in the name of Cede & Co., as nominee of the Depository, all
distributions of principal or interest on such Class A-1 Certificates or Class
A-IO Certificates as the case may be and all notices with respect to such
Class A-1 Certificates or Class A-IO Certificates as the case may be shall be
made and given, respectively, in the manner provided in the Representation
Letter.
(h) No transfer, sale, pledge or other disposition of any Class R or
Class X Certificate shall be made unless such disposition is made pursuant to
an effective registration statement under the Securities Act of 1933, as
amended (the "1933 Act") and effective registration or qualification under
applicable state securities laws or "Blue Sky" laws, or is made in a
transaction that does not require such registration or qualification. In the
event that a transfer of a Certificate is to be made in reliance upon an
exemption from the 1933 Act, the Trustee or the Certificate Registrar shall
require, in order to assure compliance with the 1933 Act, that the
Certificateholder desiring to effect such disposition and such
Certificateholder's prospective transferee each certify to the Trustee or the
Certificate Registrar in writing the facts surrounding such disposition
substantially in the form of Exhibit K hereto (with respect to a transfer made
pursuant to Rule 144A promulgated under the ▇▇▇▇ ▇▇▇) and may, unless such
transfer occurs more than three years after the Closing Date or is made
pursuant to Rule 144A promulgated under the 1933 Act, require an Opinion of
Counsel satisfactory to the Trustee or Certificate Registrar as the case may
be, that such transfer may be made pursuant to an exemption from the 1933 Act,
which Opinion of Counsel shall be at the expense of the Certificateholder.
None of the Servicer, the Depositor, the Unaffiliated Seller or the Trustee is
obligated under this Agreement to register Certificates under the 1933 Act, as
amended or any other securities law or to take any action not otherwise
required under this Agreement to permit the transfer of the Class R or Class X
Certificates without such registration or qualification. Every Certificate
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer substantially in the form of
Exhibit L hereto, or such other endorsement or written instrument of transfer
as is satisfactory to the Trustee, duly executed by the Holder thereof or his
attorney duly authorized in writing, together with wiring instructions, if
applicable, in the form of Exhibit P.
(i) Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the
Unaffiliated Seller, the Servicer and the Certificate Insurer against any
liability that may result if the transfer is not exempt or is not made in
accordance with such applicable federal and state laws. Promptly after receipt
by an indemnified party under this paragraph of notice of the commencement of
any action, such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this paragraph, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under this paragraph. In
case any such action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party
will be entitled to appoint counsel reasonably satisfactory to such
indemnified party to represent the indemnified party in such action; provided,
however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to appoint
counsel to defend such action and approval by the indemnified party of such
counsel, the indemnifying party will not be liable to such indemnified party
under this paragraph for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso of the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel for any indemnified party), (ii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of commencement of
the action or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.
Under no circumstances shall the indemnified party enter into a settlement
agreement with respect to any lawsuit, claim or other proceeding without the
prior written consent of the indemnifying party.
(j) Subject to the restrictions set forth in this Agreement, upon
surrender for registration of transfer of any Certificate at the office or
agency of the Trustee located in New York, New York, the Trustee shall
execute, authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and Percentage Interest and
dated the date of authentication by the Trustee. At the option of the
Certificateholders, Certificates may be exchanged for other Certificates of
Authorized Denominations of a like aggregate Percentage Interest, upon
surrender of the Certificates to be exchanged at such office. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute, ___
authenticate and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. No service charge shall be made for any
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be cancelled and destroyed by the
Trustee in accordance with the Trustee's standard procedures.
(k) No transfer of a Class A-1 Certificate or Class A-IO Certificate
shall be made to the Unaffiliated Seller or, to the actual knowledge of a
Responsible Officer of the Trustee, to any of the Unaffiliated Seller's
Affiliates, successors or assigns.
(l) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Servicer or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause
(viii) below and to execute all instruments of transfer and to do all other
things necessary in connection with any such sale, and the rights of each
Person acquiring any Ownership Interest in a Class R Certificate are expressly
subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and a United States
Person and shall promptly notify the Trustee of any change or impending
change in its status as either a United States Person or a Permitted
Transferee.
(ii) In connection with any proposed Transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall require delivery to
it of, and shall not register the Transfer of any Class R Certificate
until its receipt of, an affidavit and agreement (a "Transfer Affidavit
and Agreement") attached hereto as Exhibit I from the proposed
Transferee, in form and substance satisfactory to the Trustee,
representing and warranting, among other things, that such Transferee is
a Permitted Transferee, that it is not acquiring its Ownership Interest
in the Class R Certificate that is the subject of the proposed Transfer
as a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that as long as it retains its Ownership Interest in a Class
R Certificate, it will endeavor to remain a Permitted Transferee, and
that it has reviewed the provisions of this Section 4.02(j) and agrees to
be bound by them.
(iii) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (ii) above, if a
Responsible Officer of the Trustee has actual knowledge that the proposed
Transferee is not a Permitted Transferee, no Transfer of an Ownership
Interest in a Class R Certificate to such proposed Transferee shall be
effected.
(iv) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (x) to require a Transfer Affidavit and
Agreement from any other Person to whom such Person attempts to transfer
its Ownership Interest in a Class R Certificate and (y) not to transfer
its Ownership Interest unless it provides a certificate (attached hereto
as Exhibit J) to the Trustee stating that, among other things, it has no
actual knowledge that such other Person is not a Permitted Transferee.
(v) Each Person holding or acquiring an Ownership Interest in a
Class R Certificate, by purchasing an Ownership Interest in such
Certificate, agrees to give the Trustee written notice that it is a
"pass-through interest holder" within the meaning of temporary Treasury
regulation Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Class R Certificate, if it is, or is holding an
Ownership Interest in a Class R Certificate on behalf of, a "pass-through
interest holder".
(vi) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and
Agreement and all of such other documents as shall have been reasonably
required by the Trustee as a condition to such registration. In addition,
no Transfer of a Class R Certificate shall be made unless the Trustee
shall have received a representation letter from the Transferee of such
Certificate to the effect that such Transferee is a United States Person
and is not a "disqualified organization" (as defined in Section
860E(e)(5) of the Code).
(vii) Any attempted or purported transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
4.02 shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall become a Holder
of a Class R Certificate in violation of the provisions of this Section
4.02, then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
transfer of such Class R Certificate. The Trustee shall notify the
Servicer upon receipt of written notice or discovery by a Responsible
Officer that the registration of transfer of a Class R Certificate was
not in fact permitted by this Section 4.02. Knowledge shall not be
imputed to the Trustee with respect to an impermissible transfer in the
absence of such a written notice or discovery by a Responsible Officer.
The Trustee shall be under no liability to any Person for any
registration of transfer of a Class R Certificate that is in fact not
permitted by this Section 4.02 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement so long as the
transfer was registered after receipt of the related Transfer Affidavit
and Agreement. The Trustee shall be entitled, but not obligated to,
recover from any Holder of a Class R Certificate that was in fact not a
Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Class R Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid and delivered
by the Trustee to the last preceding Holder of such Certificate.
(viii) If any purported transferee shall become a Holder of a Class
R Certificate in violation of the restrictions in this Section 4.02, then
the Servicer or its designee shall have the right, without notice to the
Holder or any prior Holder of such Class R Certificate, to sell such
Class R Certificate to a purchaser selected by the Servicer or its
designee on such reasonable terms as the Servicer or its designee may
choose. Such purchaser may be the Servicer itself or any Affiliate of the
Servicer. The proceeds of such sale, net of commissions, expenses and
taxes due, if any, will be remitted by the Servicer to the last preceding
purported transferee of such Class R Certificate, except that in the
event that the Servicer determines that the Holder or any prior Holder of
such Class R Certificate may be liable for any amount due under this
Section 4.02 or any other provision of this Agreement, the Servicer may
withhold a corresponding amount from such remittance as security for such
claim. The terms and conditions of any sale under this clause (viii)
shall be determined in the sole discretion of the Servicer or its
designee, and it shall not be liable to any Person having an Ownership
Interest in a Class R Certificate as a result of its exercise of such
discretion.
(m) The provisions of Section 4.02(j) may be modified, added to or
eliminated, provided that there shall have been delivered to the Trustee and
the Certificate Insurer an Opinion of Counsel to the effect that such
modification of, addition to or elimination of such provisions will not cause
the REMIC Trust to cease to qualify as a REMIC and will not cause (x) the
REMIC Trust to be subject to an entity-level tax caused by the Transfer of any
Ownership Interest in a Class R Certificate to a Person that is not a
Permitted Transferee or (y) a Person other than the prospective transferee to
be subject to a REMIC-related tax caused by the Transfer of an Ownership
Interest in a Class R Certificate to a Person that is not a Permitted
Transferee.
(n) The Trustee and the Servicer shall require the prospective
transferee of any Class R or Class X Certificate to certify (in the form of
Exhibit K hereto) that it is not a pension or benefit plan or individual
retirement arrangement that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or to Section 4975 of the Code (a
"Plan") or an entity whose underlying assets are deemed to be assets of a Plan
by reason of such plan's or arrangement's investment in the entity, as
determined under U.S. Department of Labor Regulations 29 C.F.R. ss. 2510.3-101
or otherwise.
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Servicer, the Certificate
Insurer and the Trustee such security or indemnity as may reasonably be
required by each of them to save each of them harmless, then, in the absence
of notice to the Servicer and the Trustee that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest,
but bearing a number not contemporaneously outstanding. Upon the issuance of
any new Certificate under this Section 4.03, the Servicer and the Trustee may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and their fees and expenses
connected therewith. Any duplicate Certificate issued pursuant to this Section
4.03 shall constitute complete and indefeasible evidence of ownership in the
Trust Fund, as if originally issued, whether or not the mutilated, destroyed,
lost or stolen Certificate shall be found at any time.
Section 4.04 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer and subject to the provisions of
Section 4.02 and Article X, the Servicer, the Depositor, the Unaffiliated
Seller, the Certificate Insurer and the Trustee may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving remittances pursuant to Section 6.05 and for all other
purposes whatsoever, and the Servicer, the Depositor, the Unaffiliated Seller,
the Certificate Insurer and the Trustee shall not be affected by notice to the
contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 REMIC Matters; The Servicer. (a) The parties intend that
the Trust Fund formed hereunder shall, constitute, and that the affairs of the
Trust Fund shall be conducted and this Agreement shall be construed so as to
qualify the Trust Fund as, three separate "real estate mortgage investment
conduits" as defined in and in accordance with the REMIC Provisions. In
furtherance of such intention, the Unaffiliated Seller covenants and agrees
that it shall, to the extent permitted by applicable law, act as agent (and
the Unaffiliated Seller is hereby appointed to act as agent) on behalf of the
Trust Fund and that in such capacity it shall: (a) prepare and file, or cause
to be prepared and filed, all required federal, state and local tax returns
for each REMIC using a calendar year as the taxable year for the Trust Fund
when and as required by the REMIC Provisions and other applicable federal,
state and local income tax laws; (b) maintain or cause the maintenance of the
books of each REMIC on the accrual method of accounting; (c) make elections,
on behalf of each REMIC, to be treated as a REMIC on the federal tax return of
the Trust Fund for its first taxable year, in accordance with the REMIC
Provisions; (d) prepare and forward, or cause to be prepared and forwarded, to
the Certificateholders all information reports as and when required to be
provided to them in accordance with the REMIC Provisions; (e) conduct the
affairs of each REMIC at all times that any Certificates are outstanding so as
to maintain the status thereof as a REMIC under the REMIC Provisions; and (f)
not knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status of any REMIC created
hereunder.
(b) In the event that any income tax (including any tax with regard
to "prohibited transactions" of any REMIC created hereunder as defined in
Section 860F of the Code) is imposed on the Trust Fund, such tax shall be
charged against amounts otherwise distributable to the Holders of the Class R
or Class X Certificates on a pro rata basis to the extent hereinafter
provided. In the event that any such tax shall be due and owing at a time when
amounts otherwise distributable to the Holders of the Class R Certificates are
not available, the Servicer shall pay such tax from its own funds. In such
event, the Trustee is hereby authorized to retain from amounts otherwise
distributable to the Holders of the Class R and Class X Certificates on any
Distribution Date sufficient funds to reimburse the Servicer for the payment
of such tax (but such obligation shall not prevent the Trustee or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall prevent the Trustee from withholding payment of such tax, if permitted
by law, pending the outcome of such proceedings).
(c) The Servicer shall service and administer the Mortgage Loans in
accordance with the Accepted Servicing Practices and shall have full power and
authority to do any and all things not inconsistent therewith in connection
with such servicing and administration which it may deem necessary or
desirable in order to maximize collections on the Mortgage Loans, subject to
the limitations set forth in this Agreement. The Trustee shall furnish the
Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered
by the Trustee, to execute and deliver, on behalf of itself, the
Certificateholders and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and
all other comparable instruments, and to effect such modifications, waivers,
indulgences and other like matters as are in its judgment necessary or
desirable, with respect to the Mortgage Loans and the Mortgaged Properties and
the servicing and administration thereof in order to maximize collections on
the Mortgage Loans. The Servicer shall notify the Trustee of any such waiver,
release, discharge, modification, indulgence or other such matter by
delivering to the Trustee an Officer's Certificate certifying that such
agreement is in compliance with this Section 5.01(b) together with the
original copy of any written agreement or other document executed in
connection therewith, all of which written agreements or documents shall, for
all purposes, be considered a part of the related Mortgage File to the same
extent as all other documents and instruments constituting a part thereof.
Notwithstanding anything in this Agreement to the contrary, the Servicer shall
not permit any modification with respect to any Mortgage Loan that would
change the Mortgage Interest Rate, reduce or increase the principal balance,
change the lien priority, the original LTV or change the final maturity date
on or of such Mortgage Loan unless (i) the Mortgagor is in default with
respect to the Mortgage Loan or such default is, in the judgment of the
Servicer, imminent and (ii) the Certificate Insurer consents to such
modifications in writing; provided, however, that the Servicer shall be
permitted to extend the final maturity date on a Mortgage Loan by 180 days or
less without the consent of the Certificate Insurer, so long as such final
maturity date (as so extended) is not later than the Class A-1 Final Scheduled
Maturity Date.
(d) The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Trustee under this Agreement
is intended by the parties to be that of an independent contractor and not
that of a joint venturer, partner or agent.
Section 5.02 Collection of Certain Mortgage Loan Payments; Collection
Account. (a) The Servicer shall make its reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow the Accepted Servicing Practices. Consistent with the foregoing, the
Servicer may in its discretion waive any assumption fees or other fees which
may be collected in the ordinary course of servicing such Mortgage Loans.
(b) The Servicer shall establish and maintain in the name of the
Trustee the Collection Account, in trust for the benefit of the
Certificateholders and the Certificate Insurer. The Collection Account shall
be established and maintained as an Eligible Account.
(c) The Servicer shall deposit in the Collection Account any amounts
representing Monthly Payments on the Mortgage Loans due and accrued or to be
applied as of a date after the Cut-Off Date, and thereafter, on each Business
Day (except as otherwise permitted herein), the following payments and
collections received or made by it (other than in respect of principal
collected and interest accruing on the Mortgage Loans on or before the Cut-Off
Date):
(i) Payments of interest on the Mortgage Loans;
(ii) Payments of principal of the Mortgage Loans;
(iii) The Loan Repurchase Price of Mortgage Loans repurchased
pursuant to Sections 2.06, 3.03, 5.05, 5.15 or otherwise hereunder;
(iv) The Substitution Adjustment received in connection with
Mortgage Loans for which Qualified Substitute Mortgage Loans are received
pursuant to Sections 2.06 and 3.03;
(v) All Liquidation Proceeds; and
(vi) All Insurance Proceeds (including, for this purpose, any
amounts required to be deposited by the Servicer pursuant to the last
sentence of Section 5.04).
It is understood that the Servicer need not deposit amounts
representing fees, prepayment premiums, late payment charges or extension or
other administrative charges payable by Mortgagors, or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items.
(d) The Trustee shall invest any funds in the Collection Account in
Permitted Investments as directed by the Servicer, which shall mature not
later than the Business Day next preceding the Servicer Distribution Date next
following the date of such investment (except that any investment held by the
Trustee may mature on such Servicer Distribution Date) and shall not be sold
or disposed of prior to its maturity. All net income and gain realized from
any such investment shall be for the benefit of the Servicer and shall be
subject to its withdrawal or order on a Distribution Date. The Servicer shall
deposit from its own funds the amount of any loss, to the extent not offset by
investment income or earnings, in the Collection Account upon the realization
of such loss.
Section 5.03 Permitted Withdrawals from the Collection Account. The
Trustee shall make withdrawals from the Collection Account, on any
Distribution Date, for the following purposes:
(a) to reimburse the Servicer for Liquidation Expenses theretofore
incurred in respect of any Mortgage Loan in an amount not to exceed the amount
of the sum of the related Insurance Proceeds and Liquidation Proceeds
deposited in the Collection Account pursuant to Section 5.02(c)(v)-(vi);
(b) to reimburse the Servicer for amounts expended by it pursuant to
Section 5.04 in good faith in connection with the restoration of damaged
property, in an amount not to exceed the amount of the related Insurance
Proceeds and Liquidation Proceeds (net of withdrawals pursuant to clause (a)
above) and amounts representing proceeds of other insurance policies covering
the property subject to the related Mortgage deposited in the Collection
Account pursuant to Section 5.02(c)(v)-(vi);
(c) to pay to the Unaffiliated Seller amounts received in respect of
any Deleted Mortgage Loan purchased or substituted for by the Unaffiliated
Seller to the extent that the distribution to the Certificateholders of any
such amounts on the Distribution Date upon which the proceeds of such purchase
are distributed to the Certificateholders would make the total amount
distributed in respect of any such Mortgage Loan on such Distribution Date
greater than the Loan Repurchase Price or the Substitution Adjustment
therefor;
(d) to reimburse the Servicer for unreimbursed Servicing Advances,
without interest, with respect to the Mortgage Loans for which it has made a
Servicing Advance, from subsequent collections with respect to interest on
such Mortgage Loans and from Liquidation Proceeds, Insurance Proceeds and/or
the Loan Repurchase Price or Substitution Adjustment of or relating to such
Mortgage Loans;
(e) to reimburse the Servicer for any Periodic Advances, such
reimbursement to be made from any collections in respect of the related
Mortgage Loan with respect to which such Periodic Advance was made;
(f) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee
in bankruptcy pursuant to the United States Bankruptcy Code in accordance with
a final, nonappealable order of a court having competent jurisdiction;
(g) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein; and
(h) to pay the Servicer Servicing Compensation pursuant to Section
5.08 hereof to the extent not retained or paid.
The Servicer shall keep and maintain a separate accounting for each
Mortgage Loan for the purpose of accounting for withdrawals from the
Collection Account pursuant to subclause (a).
Section 5.04 Hazard Insurance Policies; Property Protection Expenses.
(a) The Servicer shall cause to be maintained for each Mortgage Loan a hazard
insurance policy with extended coverage which contains a standard mortgagee's
clause with an appropriate endorsement in an amount equal to the lesser of (a)
the maximum insurable value of the related Mortgaged Property or (b) the sum
of the Principal Balance of such Mortgage Loan plus the outstanding balance of
any mortgage loan senior to such Mortgage Loan, but in no event shall such
amount be less than is necessary to prevent the Mortgagor from becoming a
coinsurer thereunder. The Servicer shall also maintain on property acquired
upon foreclosure, or by deed in lieu of foreclosure, hazard insurance with
extended coverage in an amount which is at least equal to the lesser of (i)
the maximum insurable value from time to time of the improvements which are a
part of such property or (ii) the combined Principal Balance of such Mortgage
Loan and the principal balance of any mortgage loan senior to such Mortgage
Loan at the time of such foreclosure plus accrued interest and the good-faith
estimate of the Servicer of related Liquidation Expenses to be incurred in
connection therewith. Amounts collected by the Servicer under any such
policies shall be deposited in the Collection Account to the extent that they
constitute Liquidation Proceeds or Insurance Proceeds. Each hazard insurance
policy shall contain a standard mortgage clause naming the Originator, its
successors and assigns, as mortgagee. The Servicer shall be under no
obligation to require that any Mortgagor maintain earthquake or flood or other
additional insurance and shall be under no obligation itself to maintain any
such additional insurance on property acquired in respect of a Mortgage Loan,
other than pursuant to such applicable laws and regulations as shall at any
time be in force and as shall require such additional insurance.
(b) If the Servicer shall obtain and maintain a blanket policy issued
by an insurer acceptable to the Rating Agencies and the Certificate Insurer
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in
Section 5.04(a), it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with Section 5.04(a), and there shall have been a loss which would
have been covered by such policy, deposit in the Collection Account the amount
not otherwise payable under the blanket policy because of such deductible
clause.
(c) If the Mortgaged Property or REO Property is located at the time
of origination of the Mortgage Loan in a federally designated special flood
hazard area (and if the flood insurance policy referenced herein has been made
available), the Servicer will cause to be maintained flood insurance in
respect thereof. Such flood insurance shall be in an amount equal to the
lesser of (i) the Principal Balance of the related Mortgage Loan and the
balance of the related first lien, if any, (ii) the maximum insurable value of
the related Mortgaged Property, and (iii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program).
Section 5.05 Assumption and Modification Agreements. In any case in
which a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall exercise its right to accelerate the maturity of
the related Mortgage Loan and require that the Principal Balance thereof be
paid in full on or prior to such conveyance by the Mortgagor under any
"due-on-sale" clause applicable thereto. If such "due-on-sale" clause, by its
terms, is not operable or the Servicer is prevented, as provided in the last
paragraph of this Section 5.05, from enforcing any such clause, the Servicer
is authorized, subject to the consent of the Certificate Insurer, to take or
enter into an assumption and modification agreement from or with the Person to
whom such property has been or is about to be conveyed, pursuant to which such
Person becomes liable under the Mortgage Note and the Mortgagor remains liable
thereon or, if the Servicer in its reasonable judgment finds it appropriate,
is released from liability thereon. The Servicer shall notify the Trustee that
any assumption and modification agreement has been completed by delivering to
the Trustee and the Certificate Insurer an Officer's Certificate certifying
that such agreement is in compliance with this Section 5.05 together with the
original copy of such assumption and modification agreement. Any such
assumption and modification agreement shall, for all purposes, be considered a
part of the related Mortgage File to the same extent as all other documents
and instruments constituting a part thereof. In connection with any such
agreement, the then current Mortgage Interest Rate thereon shall not be
increased or decreased. Any fee collected by the Servicer for entering into
any such agreement will be retained by the Servicer as additional servicing
compensation. At its sole election, the Servicer may purchase from the Trust
Fund any Mortgage Loan that has been assumed in accordance with this Section
5.05 within one month after the date of such assumption at a price equal to
the greater of (i) the fair market value of such Mortgage Loan (as determined
by the Servicer in its good faith judgment) and (ii) the Loan Repurchase
Price. Such amount, if any, shall be deposited into the Collection Account in
the Due Period in which such repurchase is made.
Notwithstanding the foregoing paragraph of this Section 5.05 or any
other provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Mortgage Loan, or transfer of any Mortgaged Property
without the assumption thereof, by operation of law or any assumption or
transfer which the Servicer reasonably believes it may be restricted by law
from preventing for any reason whatsoever.
Section 5.06 Realization Upon Defaulted Mortgage Loans. (a) The
Servicer shall foreclose upon or otherwise comparably convert to ownership
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments pursuant to Section 5.02(a). Prior to
conducting any sale in a foreclosure proceeding or accepting a deed-in-lieu of
foreclosure with respect to any Mortgaged Property, the Servicer shall cause
an environmental review to be performed, in accordance with Accepted Servicing
Practices on the Mortgaged Property by a company such as Equifax, Inc. or
Toxicheck. If such review reveals that the Mortgaged Property has on it, under
it or is near hazardous or toxic material or waste or reveals any other
environmental problem, the Servicer shall not foreclose or accept a
deed-in-lieu of foreclosure without the prior written consent of the
Certificate Insurer, such consent not to be unreasonably withheld, conditioned
or delayed. In connection with such foreclosure or other conversion, the
Servicer shall follow such practices (including, in the case of any default on
a related senior mortgage loan, the advancing of funds to correct such
default) and procedures which are consistent with Accepted Servicing Practices
as it shall deem necessary or advisable and as shall be normal and usual in
its general first and second mortgage loan servicing activities. The foregoing
is subject to the proviso that the Servicer shall not be required to expend
its own funds in connection with any foreclosure or towards the correction of
any default on a related senior mortgage loan or restoration of any property
unless, in the reasonable judgment of the Servicer, such expenses will be
recoverable from Liquidation Proceeds.
(b) In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee on behalf of
Certificateholders. In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Trust Fund shall: (i) dispose of such
Mortgaged Property prior to the end of the third taxable year after its
acquisition by the Trust Fund or (ii) request more than 60 days prior to the
date on which such 3 year period would otherwise expire, an extension of the 3
year period, or (iii) unless the Servicer shall have furnished the Trustee
with an Opinion of Counsel to the effect that the holding by the Trust Fund of
such Mortgaged Property subsequent to the third taxable year after its
acquisition will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in Section 860F of the Code or
cause the Trust Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
(c) Any Insurance Proceeds or Liquidation Proceeds received with
respect to a Mortgage Loan or REO Property (other than received in connection
with a purchase by the Class R Certificateholders of all the Mortgage Loans
and REO Properties in the Trust Estate pursuant to Section 8.01(b)) will be
applied in the following order of priority, in each case to the extent of
available funds: first, to pay the Servicer any accrued and unpaid Servicing
Fees relating to such Mortgage Loan; second, to reimburse the Servicer or any
Subservicer for any related unreimbursed Servicing Advances, and any related
unreimbursed Periodic Advances theretofore funded by the Servicer or any
Subservicer from its own funds, in each case, with respect to the related
Mortgage Loan; third, to accrued and unpaid interest on the Mortgage Loan, at
the Mortgage Loan Rate (or at such lesser rate as may be in effect for such
Mortgage Loan pursuant to application of the Civil Relief Act) on the
Principal Balance of such Mortgage Loan, to the date such Mortgage Loan is
determined to be a Liquidated Mortgage Loan if it is a Liquidated Mortgage
Loan, or to the Due Date in the Due Period prior to the Distribution Date on
which such amounts are to be distributed if such determination has not yet
been made, minus any unpaid Servicing Fees with respect to such Mortgage Loan;
fourth, to the extent of the Principal Balance of the Mortgage Loan
outstanding immediately prior to the receipt of such proceeds, as a recovery
of principal of the related Mortgage Loan; and fifth, to any prepayment or
late payment charges or penalty interest payable in connection with the
receipt of such proceeds and to all other fees and charges due and payable
with respect to such Mortgage Loan. The amount of any gross Insurance Proceeds
and Liquidation Proceeds received with respect to any Mortgage Loan or REO
Property minus the amount of any unreimbursed Servicing Advances, unreimbursed
Periodic Advances or unpaid Servicing Fees, in each case, with respect to the
related Mortgage Loan, are the "Net Recovery Proceeds" with respect to such
Mortgage Loan or REO Property.
Section 5.07 Trustee to Cooperate. Upon the payment in full of the
Principal Balance of any Mortgage Loan, the Servicer will notify the Trustee
by a certification (which certification shall include a statement to the
effect that all amounts received in connection with such payment which are
required to be deposited in the Collection Account pursuant to Section 5.02
have been so deposited) of a Servicing Officer. Upon any such payment in full,
the Servicer is authorized to execute, pursuant to the authorization contained
in Section 5.01, an instrument of satisfaction regarding the related Mortgage,
which instrument of satisfaction shall be recorded by the Servicer if required
by applicable law and be delivered to the Person entitled thereto, it being
understood and agreed that no expenses incurred in connection with such
instrument of satisfaction shall be reimbursed from the Collection Account.
From time to time and as appropriate for the servicing or foreclosure of any
Mortgage Loan, the Trustee shall, upon request of the Servicer and delivery to
the Trustee of a trust receipt signed by a Servicing Officer, release the
related Mortgage File to the Servicer and shall execute such documents as
shall be necessary for the prosecution of any such proceedings. Such trust
receipt shall obligate the Servicer to return the Mortgage File to the Trustee
when the need therefor by the Servicer no longer exists unless the Mortgage
Loan shall be liquidated, in which case, upon receipt of a certificate of a
Servicing Officer similar to that hereinabove specified, the trust receipt
shall be released by the Trustee to the Servicer.
Section 5.08 Servicing Compensation; Payment of Certain Expenses by
Servicer. On each Distribution Date, the Servicer shall be entitled to receive
and the Trustee shall pay, out of collections on the Mortgage Loans for the
Due Period, as servicing compensation for such Due Period, an amount (the
"Monthly Servicing Fee") equal to the product of one-twelfth of the servicing
fee rate and the Pool Principal Balance as of the beginning of such Due
Period. Additional servicing compensation in the form of assumption fees, late
payment charges or extension and other administrative charges shall be
retained by the Servicer. The Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder (including payment
of all fees and expenses of the Subservicer and payment of the Trustee Fee to
the extent that monies in the Collection Account are insufficient therefor, as
provided in Section 9.05 hereof, and all other fees and expenses not expressly
stated hereunder to be payable by or from another source) and shall not be
entitled to reimbursement therefor except as specifically provided herein.
Section 5.09 Annual Statement as to Compliance. (a) The Servicer will
deliver to the Trustee, the Rating Agencies, the Certificate Insurer and each
Certificateholder, on or before April 30 of each year, beginning April 30,
2002, an Officer's Certificate of the Servicer stating that (a) a review of
the activities of the Servicer during the preceding calendar year and of its
performance under this Agreement has been made under such Officer's
supervision and (b) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its material obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
Section 5.10 Annual Independent Public Accountants' Servicing Report.
On or before April 30 of each year, beginning April 30, 2002, the Servicer at
its expense shall cause a firm of independent public accountants that is a
member of the American Institute of Certified Public Accountants (who may also
render other services to the Servicer) to furnish a report to the Trustee, the
Rating Agencies, the Certificate Insurer and each Certificateholder to the
effect that such firm has examined certain documents and records relating to
the servicing of mortgage loans under pooling and servicing agreements
(including this Agreement) substantially similar to this Agreement, and that
such examination, which has been conducted substantially in compliance with
the Uniform Single Attestation Program for Mortgage Bankers (to the extent
that the procedures in such audit guide are applicable to the servicing
obligations set forth in such agreements), has disclosed no items of
noncompliance with the provisions of this Agreement which, in the opinion of
such firm, are material, except for such items of noncompliance as shall be
set forth in such report.
Section 5.11 Access to Certain Documentation. Each of the Servicer,
the Depositor and the Unaffiliated Seller shall permit the designated agents
or representatives of each Certificateholder, the Certificate Insurer and the
Trustee (i) to examine and make copies of and abstracts from all books,
records and documents (including computer tapes and disks) in the possession
or under the control of the Servicer, the Depositor or the Unaffiliated Seller
relating to the Mortgage Loans and (ii) to visit the offices and properties of
the Servicer and of the Unaffiliated Seller for the purpose of examining such
materials and to discuss matters relating to the Mortgage Loans and the
Servicer's, the Depositor's and the Unaffiliated Seller's performance under
this Agreement with any of the officers or employees of the Servicer, the
Depositor and the Unaffiliated Seller having knowledge thereof and with the
independent public accountants of the Servicer (and by this provision the
Servicer and the Unaffiliated Seller each authorize their respective
accountants to discuss their respective finances and affairs), all at such
reasonable times, as often as may be reasonably requested and without charge
to such Certificateholder, the Certificate Insurer or the Trustee.
Section 5.12 Maintenance of Fidelity Bond. The Servicer shall during
the term of its service as servicer maintain in force a fidelity bond and
errors and omissions insurance in respect of its officers, employees or
agents. Such bond and insurance shall comply with the requirements from time
to time of the FNMA for Persons performing servicing for mortgage loans
purchased by such association.
Section 5.13 The Subservicers. The parties acknowledge that the
Servicer intends to appoint the Subservicers as the Servicer's agents for the
purpose of servicing on the Servicer's behalf such of the Mortgage Loans as
were originated by such subservicer. The Servicer agrees to cause the
Subservicers to service such Mortgage Loans in a manner consistent with the
Accepted Servicing Practices set forth in this Agreement, and agrees that
receipt by the Subservicers of any and all amounts which by the terms hereof
are required to be deposited in the Collection Account shall constitute
receipt thereof by the Servicer for all purposes hereof as of the date so
received by the Subservicers. Notwithstanding such designation of the
Subservicers, the Servicer agrees that it is, and it shall remain, fully
obligated under the terms hereof as Servicer with respect to all such Mortgage
Loans, and nothing herein shall relieve or release the Servicer from its
obligations to the other parties hereto to service such Mortgage Loans in the
manner provided in this Agreement.
Section 5.14 Reports to the Trustee; Collection Account Statements.
Not later than fifteen (15) days after each Distribution Date, the Servicer
shall provide to the Trustee and the Certificate Insurer a statement,
certified by a Servicing Officer, setting forth the status of the Collection
Account as of the close of business on the related Distribution Date, stating
that all distributions required by this Agreement to be made by the Servicer
on behalf of the Trustee have been made (or if any required distribution has
not been made by the Servicer, specifying the nature and status thereof) and
showing, for the period covered by such statement, the aggregate of deposits
into and withdrawals from the Collection Account for each category of deposit
specified in Section 5.02 and each category of withdrawal specified in Section
5.03 and the aggregate of deposits into the Collection Account as specified in
Section 6.01(c). Such statement shall also state the aggregate unpaid
principal balance of all the Mortgage Loans as of the close of business on the
last day of the month preceding the month in which such Distribution Date
occurs. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request.
Section 5.15 Optional Purchase of Defaulted Mortgage Loans. (a) The
Servicer, in its sole discretion, shall have the right to elect (by written
notice sent to the Trustee and the Certificate Insurer), but shall not be
obligated, to purchase for its own account from the Trust Fund any Mortgage
Loan which is ninety (90) days or more Delinquent in the manner and at the
price specified in Section 2.06(b). The purchase price for any Mortgage Loan
purchased hereunder shall be deposited in the Collection Account and the
Trustee, upon receipt of such deposit, shall release or cause to be released
to the Servicer the related Trustee's Mortgage File and shall execute and
deliver such instruments of transfer or assignment prepared by the Servicer,
in each case without recourse, as shall be necessary to vest in the Servicer
any Mortgage Loan released pursuant hereto and the Servicer 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 Servicer shall thereupon own
such Mortgage Loan, and all security and documents, free of any further
obligation to the Trustee or the Certificateholders with respect thereto.
(b) After the Servicer has repurchased defaulted Mortgage Loans in a
principal amount equal to 2% of the Original Pool Principal Balance, then
notwithstanding the foregoing, unless the Certificate Insurer consents, the
Servicer may only exercise its option pursuant to this Section 5.15 with
respect to the Mortgage Loan or Mortgage Loans that have been Delinquent for
the longest period at the time of such repurchase. If the Servicer shall have
repurchased Mortgage Loans under this Section 5.15 in an aggregate principal
amount equal to 5% of the Original Pool Principal Balance, the Servicer 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 Servicer 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 Servicer proposes to
repurchase. If the Certificate Insurer fails to respond to such request within
ten (10) Business Days after receipt thereof, the Servicer may repurchase the
Mortgage Loan or Mortgage Loans proposed to be repurchased without the consent
of, or any further action by, the Certificate Insurer. Notice to the
Certificate Insurer shall be delivered in accordance with the terms of the
Insurance and Reimbursement Agreement.
Section 5.16 Reports to be Provided by the Servicer. (a) In
connection with the transfer of the Certificates, the Trustee on behalf of any
Certificateholder may request that the Servicer make available to any
prospective Certificateholder annual audited financial statements of the
Servicer for one or more of the most recently completed five fiscal years for
which such statements are available, which request shall not be unreasonably
denied or unreasonably delayed. Such annual audited financial statements also
shall be made available to the Certificate Insurer upon request.
(b) The Servicer also agrees to make available on a reasonable basis
to the Certificate Insurer or any prospective Certificateholder a
knowledgeable financial or accounting officer for the purpose of answering
reasonable questions respecting recent developments affecting the Servicer or
the financial statements of the Servicer and to permit the Certificate Insurer
or any prospective Certificateholder to inspect the Servicer's servicing
facilities during normal business hours for the purpose of satisfying the
Certificate Insurer or such prospective Certificateholder that the Servicer
has the ability to service the Mortgage Loans in accordance with this
Agreement.
Section 5.17 Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans. The Monthly Servicing Fee that the Servicer shall be
entitled to receive with respect to all of the Mortgage Loans and each
Distribution Date shall be offset on such Distribution Date by an amount equal
to the aggregate Prepayment Interest Shortfall with respect to all Mortgage
Loans which were subjects of Principal Prepayments during the month preceding
the month of such Distribution Date. The amount of any offset against the
Monthly Servicing Fee with respect to any Distribution Date under this Section
5.17 shall be limited to the Monthly Servicing Fee otherwise payable to the
Servicer (without adjustment on account of Prepayment Interest Shortfalls)
with respect to such Distribution Date, and the rights of the
Certificateholders to the offset of the aggregate Prepayment Interest
Shortfalls shall not be cumulative.
Section 5.18 Periodic Advances; Special Advance. (a) If, on any
Servicer Distribution Date, the Servicer determines that any Monthly Payments
due on the Due Date immediately preceding such Servicer Distribution Date have
not been received as of the close of business on the Business Day preceding
such Servicer Distribution 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 Distribution 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
Distribution Date on which the funds in the Collection Account shall be less
than the amount necessary to pay in full the Insured Distribution Amount with
respect to such date be made on such date; provided, that if such funds are
not sufficient the Servicer will use its own funds to the extent necessary to
fulfill its replacement or advance obligation.
The Servicer shall designate on its records the specific Mortgage
Loans and related installments (or portions thereof) as to which such Periodic
Advance shall be deemed to have been made, such determination being conclusive
for purposes of withdrawals from the Collection Account pursuant to Section
5.03.
(b) In addition to the Periodic Advances the Servicer shall make a
special advance (the "Special Advance") on the Servicer Distribution Date
occurring in April 2001, with respect to interest on Mortgage Loans not having
their first payment due until after March 2001. The Special Advance will be
deposited into the Certificate Account and will be paid out of the Interest
Reserve Account, set up on the Closing Date and will be equal to the
difference of the (i) sum of (x) the Class A-I Interest Distribution Amount
and (y) the Class A-IO Interest Distribution Amount over (ii) the amount of
interest collected for the first Due Period. Any funds remaining in the
Interest Reserve Account after such distribution shall be remitted to the
Servicer on the Distribution Date. The Special Advance shall be made without
regard to recoverability, and shall not be reimbursable. 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
Collateral Agent, the Unaffiliated Seller, the Certificate Insurer and each
Certificateholder harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Depositor, the Trustee, the Collateral
Agent, the Unaffiliated Seller, the Certificate Insurer and any
Certificateholder may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance
with the terms of this Agreement. Each indemnified party and the Servicer
shall immediately notify the other indemnified parties if a claim is made by a
third party with respect to this Agreement, and the Servicer shall assume the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Depositor, the Servicer,
the Trustee, the Unaffiliated Seller, the Certificate Insurer and/or a
Certificateholder in respect of such claim. The obligations of the Servicer
under this Section 5.19 arising prior to any resignation or termination of the
Servicer hereunder shall survive the resignation or termination of the
Servicer.
(b) The Trustee may, if necessary, reimburse the Servicer from
amounts otherwise distributable on the Class X and R Certificates for all
amounts advanced by it pursuant to Section 4.04 of the Unaffiliated Seller's
Agreement, except when the claim relates directly to the failure of the
Servicer, if it is, or is an Affiliate of, the Unaffiliated Seller, to perform
its obligations to service and administer the Mortgages in compliance with the
terms of the Unaffiliated Seller's Agreement, or the failure of the
Unaffiliated Seller to perform its duties in compliance with the terms of this
Agreement.
(c) The Trustee shall reimburse the Unaffiliated Seller from amounts
otherwise distributable on the Class X and R Certificates for all amounts
advanced by the Unaffiliated Seller pursuant to the second sentence of Section
4.04(a)(ii) of the Unaffiliated Seller's Agreement except when the relevant
claim relates directly to the failure of the Unaffiliated Seller to perform
its duties in compliance with the terms of the Unaffiliated Seller's
Agreement.
Section 5.20 Maintenance of Corporate Existence and Licenses; Merger
or Consolidation of the Servicer. (a) The Servicer will keep in full effect
its existence, rights and franchises as a corporation, will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 3.01 to be true and correct at
all times under this Agreement.
(b) Any Person into which the Servicer may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Servicer shall be a party, or any Person succeeding to the business
of the Servicer, shall be an established mortgage loan servicing institution
that has a net worth of at least $15,000,000 and is a Permitted Transferee,
and in all events shall be the successor of the Servicer without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding. The Servicer shall
send notice of any such merger or consolidation to the Trustee and the
Certificate Insurer.
Section 5.21 Assignment of Agreement by Servicer; Servicer Not to
Resign. The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Unaffiliated Seller, the Certificate Insurer and the Trustee or
upon the determination that the Servicer's duties hereunder are no longer
permissible under applicable law and that such incapacity cannot be cured by
the Servicer without incurring, in the reasonable judgment of the Certificate
Insurer, unreasonable expense. Any such determination that the Servicer's
duties hereunder are no longer permissible under applicable law permitting the
resignation of the Servicer shall be evidenced by a written Opinion of Counsel
(who may be outside counsel for the Servicer) to such effect delivered to the
Trustee, the Unaffiliated Seller, the Depositor and the Certificate Insurer.
No such resignation shall become effective until the Trustee or a successor
appointed in accordance with the terms of this Agreement has assumed the
Servicer's responsibilities and obligations hereunder in accordance with
Section 7.02. The Servicer shall provide the Trustee, the Rating Agencies and
the Certificate Insurer with 30 days prior written notice of its intention to
resign pursuant to this Section 5.21.
Section 5.22 Periodic Filings with the Securities and Exchange
Commission; Additional Information. The Trustee shall prepare or cause to be
prepared for filing with the Commission (other than the initial Current Report
on Form 8-K to be filed by the Depositor in connection with the issuance of
the Certificates) any and all reports, statements and information respecting
the Trust and/or the Certificates required to be filed, and shall solicit any
and all proxies of the Certificateholders whenever such proxies are required
to be solicited, pursuant to the Securities Exchange Act of 1934, as amended.
The Depositor shall promptly file, and exercise its reasonable best efforts to
obtain a favorable response to, no-action requests with, or other appropriate
exemptive relief from, the Commission seeking the usual and customary
exemption from such reporting requirements granted to issuers of securities
similar to the Certificates if and to the extent the Depositor shall deem any
such relief to be necessary or appropriate. Fees and expenses incurred by the
Trustee in connection with the foregoing shall be reimbursed pursuant to
Section 9.05 and shall not be paid by the Trust.
The Servicer and the Depositor each agree to promptly furnish to the
Trustee, from time to time upon request, such further information, reports and
financial statements as the Trustee deems appropriate to prepare and file all
necessary reports with the Securities and Exchange Commission.
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01 Establishment of Accounts; Withdrawals from Accounts;
Deposits to the Certificate Account. (a) The Trustee shall establish and
maintain the Certificate Account which shall be titled "Certificate Account,
The Chase Manhattan Bank, as trustee for the registered holders of ABFS
Mortgage Loan Trust 2001-1, Mortgage Pass-Through Certificates, Series 2001-1"
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 in the Interest
Reserve Account, an amount equal to $800,000. Amounts on deposit in the
Interest Reserve Account shall be invested by the Trustee, at the direction of
the Servicer in Permitted Investments. Any such Permitted Investment shall
mature no later than the Servicer Distribution 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 Certificate Account only in Permitted Investments. Any such
Permitted Investment shall mature no later than one Business Day prior to the
Distribution Date. No Permitted Investment shall be sold or disposed of at a
gain prior to maturity unless the Servicer has delivered to the Trustee an
Opinion of Counsel (at the Servicer's expense) that such sale or disposition
will not cause the Trust Fund to be subject to the tax on income from
prohibited transactions imposed by Code Section 860F(a)(1), otherwise subject
the Trust Fund to tax or cause the Trust Fund to fail to qualify as a REMIC
and the Certificate Insurer consents to such disposition. All income (other
than any gain from a sale or disposition of the type referred to in the
preceding sentence) 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 Certificate Account by the Servicer out of its own funds immediately as
realized.
(c) On each Servicer Distribution Date, the Servicer shall cause to
be deposited in the Certificate 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 Distribution Date, the Servicer shall also deposit into
the Certificate Account any Periodic Advances with respect to the related
Distribution Date calculated in accordance with Section 5.18.
Section 6.02 Permitted Withdrawals From the Certificate Account. The
Trustee shall withdraw or cause to be withdrawn funds from the Certificate
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 Certificate Account;
(d) to return to the Collection Account any amount deposited in the
Certificate Account that was not required to be deposited therein; and
(e) to clear and terminate the Certificate Account upon termination
of the Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Certificate 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)
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 Distribution Date and based solely on the Servicer's
Remittance Report delivered to the Trustee, the Trustee shall determine with
respect to the immediately following Distribution Date, the amount to be on
deposit in the Certificate Account on such Distribution Date as a result of
the Servicer's remittance of the Servicer Remittance Amount on the related
Servicer Distribution Date, excluding the amount of any Insured Payment and
after giving effect to the application of the amounts described in clauses
(a)(i) and (a)(ii) of Section 6.05 for the related Distribution Date. The
amounts described above in the preceding sentence with respect to the
Distribution Date are the "Available Funds".
(b) If on any Distribution Date there is an Available Funds
Shortfall, the Trustee shall complete a Notice in the form of Exhibit A to the
Certificate Insurance Policy and submit such notice to the Certificate Insurer
no later than 12:00 noon New York City time on the third Business Day
preceding such Distribution Date as a claim for an Insured Payment in an
amount equal to such Available Funds Shortfall.
(c) The Trustee shall establish a separate Eligible Account for the
benefit of Holders of the Certificates and the Certificate Insurer referred to
herein as the "Certificate Insurance Payment Account" over which the Trustee
shall have exclusive control and sole right of withdrawal. The Trustee shall
deposit upon receipt any amount paid under the Certificate Insurance Policy in
the Certificate Insurance Payment Account and distribute such amount only for
purposes of payment to the Class A Certificateholders of the Insured
Distribution Amount 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 Insured Distribution Amount shall be
transferred to the Certificate Account on the related Distribution Date and
disbursed by the Trustee to the Class A Certificateholders in accordance with
Section 6.05. It shall not be necessary for such payments to be made by checks
or wire transfers separate from the checks or wire transfers used to pay the
Insured Distribution Amount with other funds available to make such payment.
However, the amount of any payment of principal or of interest on the
Certificates to be paid from funds transferred from the Certificate Insurance
Payment Account shall be noted as provided in paragraph (d) below in the
Certificate Register and in the statement to be furnished to Holders of the
Class A Certificates pursuant to Section 6.07. Funds held in the Certificate
Insurance Payment Account shall not be invested. Any funds remaining in the
Certificate Insurance Payment Account on the first Business Day following a
Distribution Date shall be returned to the Certificate Insurer pursuant to the
written instructions of the Certificate Insurer by the end of such Business
Day.
(d) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Certificate from
moneys received under the Certificate Insurance Policy. The Certificate
Insurer shall have the right to inspect such records at reasonable times
during normal business hours upon one Business Day's prior notice to the
Trustee.
(e) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Insured Distribution Amount 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 Insured Distribution Amount, and shall, at
the time it provides notice to the Certificate Insurer, notify, by mail to the
Certificateholders of the affected Certificates that, in the event any
Certificateholder's Insured Distribution Amount is so recovered, such
Certificateholder will be entitled to payment pursuant to the Certificate
Insurance Policy, a copy of which shall be made available through the Trustee,
the Certificate Insurer or the Certificate Insurer's fiscal agent, if any, and
the Trustee shall furnish to the Certificate Insurer or its fiscal agent, if
any, its records evidencing the payments which have been made by the Trustee
and subsequently recovered from the Certificateholders, and dates on which
such payments were made.
(f) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law
(a "Preference Claim") of any distribution made with respect to the
Certificates. Each Certificateholder, by its purchase of Certificates, the
Servicer and the Trustee agree that, the Certificate Insurer (so long as no
Certificate Insurer Default exists) may at any time during the continuation of
any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (i) the direction of any
appeal of any order relating to such Preference Claim and (ii) the posting of
any surety, supersedeas or performance bond pending any such appeal. In
addition and without limitation of the foregoing, the Certificate Insurer
shall be subrogated to, and each Certificateholder, the Servicer and the
Trustee hereby delegate and assign to the Certificate Insurer, to the fullest
extent permitted by law, the rights of the Servicer, the Trustee and each
Certificateholder in the conduct of any such Preference Claim, including,
without limitation, all rights of any party to any adversary proceeding or
action with respect to any court order issued in connection with any such
Preference Claim.
(g) The Trustee shall, upon retirement of the Certificates, furnish
to the Certificate Insurer a notice of such retirement, and, upon retirement
of the Certificates and the expiration of the term of the Certificate
Insurance Policy, surrender the Certificate Insurance Policy to the
Certificate Insurer for cancellation.
Section 6.05 Distributions. (a) No later than 12:00 noon, New York,
New York time on the Servicer Distribution Date, the Servicer shall deliver to
the Trustee a report in computer-readable form containing such information as
to enable the Trustee to make the distribution pursuant to clause (i) through
(x) below, and such other information as the Trustee shall reasonably require.
With respect to the Certificate 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:
(i) to the Trustee, an amount equal to the Trustee's Fees then due
to it;
(ii) from amounts then on deposit in the Certificate Account, to the
Certificate Insurer the Premium Amount for such Distribution Date;
(iii) from amounts then on deposit in the Certificate Account, the
Interest Distribution Amount for the Class A Certificates, which shall be
further distributed pari passu to the owners of the Class A-1
Certificates and to the owners of the Class A-IO Certificates based on
the ratio of the Class A-1 Interest Distribution Amount and the Class
A-IO Interest Distribution Amount, respectively, to such Interest
Distribution Amount;
(iv) from amounts then on deposit in the Certificate Account, the
Reimbursement Amount owing to the Certificate Insurer;
(v) from amounts then on deposit in the Certificate Account, the
Principal Distribution Amount for the Class A-1 Certificates, until the
principal balance of the Class A-1 Certificates is reduced to zero;
(vi) from amounts then on deposit in the Certificate Account, the
amount of any Mortgage Loan Interest Shortfalls for the Class A
Certificates which shall be further distributed pari passu to the owners
of the Class A-1 Certificates and to the owners of the Class A-IO
Certificates, in the same manner as the distribution described in (iii)
above;
(vii) from amounts then on deposit in the Certificate Account, to
the Trustee, an amount equal to the outstanding expenses due the Trustee
pursuant to this Agreement and not otherwise paid or reimbursed by the
Servicer;
(viii) from amounts then on deposit in the Certificate Account, to
the Servicer for reimbursement of any Nonrecoverable Advances and
nonrecoverable Servicing Advances;
(ix) from amounts then on deposit in the Certificate Account, to the
holders of the Class X Certificates the sum of all amounts to which such
Certificates are entitled pursuant to Section 2.07(a)(i), notes (3) and
(4) hereunder and, to the extent not duplicative, any
Overcollateralization Reduction Amounts; and
(x) to the holders of the Class R Certificates, any further
remaining balance.
Notwithstanding the foregoing, the aggregate amounts distributed on
all Distribution Dates to the Holders of the Class A-1 Certificates on account
of principal shall not exceed the Original Certificate Principal Balance for
the Class A-1 Certificates.
Section 6.06 Investment of Accounts. (a) So long as no Event of
Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account other than the
Certificate Insurance Payment Account held by the Trustee shall be invested
and reinvested by the Trustee, as directed in writing by the Servicer, in one
or more Permitted Investments bearing interest or sold at a discount. If an
Event of Default shall have occurred and be continuing or if the Servicer does
not provide investment directions, the Trustee shall invest all Accounts in
Permitted Investments described in paragraph (iv) of the definition of
Permitted Investments. No such investment in any Account shall mature later
than the Business Day immediately preceding the next Distribution Date (except
that if such Permitted Investment is an obligation of the Trustee, then such
Permitted Investment shall mature not later than such Distribution Date).
(b) Subject to Section 6.01(b), if any amounts are needed for
disbursement from any Account held by the Trustee and sufficient uninvested
funds are not available to make such disbursement, the Trustee shall cause to
be sold or otherwise converted to cash a sufficient amount of the investments
in such Account. The Trustee shall not be, and the Servicer shall be, liable
for any investment loss or other charge resulting therefrom unless the
Trustee's failure to perform in accordance with this Section 6.06 is the cause
of such loss or charge.
(c) Subject to Section 9.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any investment loss on any Permitted Investment
included therein (except to the extent that the Trustee is the obligor and has
defaulted thereon or as provided in subsection (b) of this Section 6.06).
(d) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in any Account (excluding the Certificate
Insurance Payment Account) shall be for the benefit of the Servicer as
servicing compensation (in addition to the Servicing Fee). The Servicer shall
deposit in the related Account the amount of any loss incurred in respect of
any Permitted Investment held therein which is in excess of the income and
gain thereon immediately upon realization of such loss, without any right to
reimbursement therefor from its own funds.
Section 6.07 Reports by the Trustee. (a) On each Distribution Date
the Trustee shall forward to each Holder, to the Certificate Insurer, to the
Underwriter, to the Depositor and to the Rating Agencies the report provided
by the Servicer pursuant to Section 6.05 (the "Servicer Remittance Report"),
setting forth information including, without limitation, the following
information:
(i) the amount of the distribution with respect to the Class A-1,
Class A-IO, Class R and Class X Certificates;
(ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Prepayments or other
unscheduled recoveries of principal included therein and separately
identifying any Overcollateralization Increase Amounts;
(iii) the amount of such distributions allocable to interest and the
calculation thereof;
(iv) the Certificate Principal Balance of the Class A-1 Certificates
as of such Distribution Date, together with the principal amount of the
Class A-1 Certificates (based on a Certificate in an original principal
amount of $1,000) then outstanding, in each case after giving effect to
any payment of principal on such Distribution Date;
(v) the Certificate Notional Balance of the Class A-IO Certificates
as of such Distribution Date, together with the Notional Amount of the
Class A-IO Certificates then outstanding, in each case after giving
effect to any payment of interest on such Distribution Date.
(vi) the amount of any Insured Payment included in the amounts
distributed to the Class A-1 and Class A-IO 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 Date for
consumer purpose loans and for business purpose loans.
Items (i), (ii) and (iii) above shall, with respect to the Class A-1
Certificates, be presented on the basis of a Certificate having a $1,000
denomination. In addition, by January 31 of each calendar year following any
year during which the Certificates are outstanding, the Trustee shall furnish
a report to each Holder of record if so requested in writing at any time
during each calendar year as to the aggregate of amounts reported pursuant to
(i), (ii) and (iii) with respect to the Certificates for such calendar year.
(b) All distributions made to the Class A-1 Certificateholders, the
Class A-IO Certificateholders and the Class X and R Certificateholders as a
Class on each Distribution Date will be made on a pro rata basis among the
Certificateholders of each Class on the next preceding Record Date based on
the Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account
of such Certificateholder at a bank or other entity having appropriate
facilities therefor, if, in the case of a Class A-1 Certificateholder, such
Certificateholder shall own of record Certificates of the same Class which
have denominations aggregating at least $5,000,000 appearing in the
Certificate Register and shall have provided complete wiring instructions at
least five Business Days prior to the Record Date, and otherwise by check
mailed to the address of such Certificateholder appearing in the Certificate
Register.
(c) In addition, the Servicer Remittance Report described in
subsection (a) above forwarded by the Trustee to each Holder, to the
Certificate Insurer, to the Underwriter, to the Servicer, to the Depositor and
to the Rating Agencies on each Distribution Date, shall include the following
information with respect to all Mortgage Loans as well as a break out as to
(x) consumer purpose and business purpose Mortgage Loans as of the close of
business on the last Business Day of the prior calendar month (except as
otherwise provided in clause (v) below), which is hereby required to be
prepared by the Servicer and furnished to the Trustee for such purpose and to
the Certificate Insurer on or prior to the related Servicer Distribution 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 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 Pool Cumulative Loan Losses for the related Due Period
and the aggregate Pool Cumulative Loan Losses since the Closing Date;
(ix) the Delinquency Ratio, the Rolling Three Month Delinquency Rate
and the Twelve Month Loss Amount; and
(x) the total number of Mortgage Loans and the Pool Principal
Balance.
Section 6.08 Additional Reports by Trustee. (a) The Trustee shall
report to the Depositor, the Servicer and the Certificate Insurer with respect
to the amount then held in each Account (including investment earnings accrued
or scheduled to accrue) held by the Trustee and the identity of the
investments included therein, as the Depositor, the Servicer or the
Certificate Insurer may from time to time request in writing.
(b) From time to time, at the request of the Certificate Insurer, the
Trustee shall report to the Certificate Insurer with respect to its actual
knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth
in any Unaffiliated Seller's Agreement or in Section 3.01 or 3.02 hereof. The
Trustee shall also provide the Certificate Insurer such other information as
may be reasonably requested by it.
Section 6.09 Compensating Interest. Not later than the Servicer
Distribution Date, the Servicer shall remit to the Trustee (without right or
reimbursement therefor) for deposit into the Certificate 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 Effect of Payments by the Certificate Insurer;
Subrogation. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Certificates which is made with
moneys received pursuant to the terms of the Certificate Insurance Policy
shall not be considered payment of the Certificates from the Trust Fund. The
Depositor, the Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Certificate agrees, that without the need for any further
action on the part of the Certificate Insurer, the Depositor, the Servicer,
the Trustee or the Certificate Registrar (a) to the extent the Certificate
Insurer makes payments, directly or indirectly, on account of principal of or
interest on the Certificates to the Holders of such Certificates, the
Certificate Insurer will be fully subrogated to, and each Certificateholder,
the Servicer and the Trustee hereby delegate and assign to the Certificate
Insurer, to the fullest extent permitted by law, the rights of such Holders to
receive such principal and interest from the Trust Fund, including, without
limitation, any amounts due to the Certificateholders in respect of securities
law violations arising from the offer and sale of the Certificates, and (b)
the Certificate Insurer shall be paid such amounts from the sources and in the
manner provided herein for the payment of such amounts and as provided in the
Insurance and Reimbursement Agreement. The Trustee and the Servicer shall
cooperate in all respects with any reasonable request by the Certificate
Insurer for action to preserve or enforce the Certificate Insurer's rights or
interests under this Agreement without limiting the rights or affecting the
interests of the Holders as otherwise set forth herein.
Section 6.11 Additional Rights of Certificate Insurer. (a) Unless a
Certificate Insurer Default exists and is continuing, the Trustee, the
Depositor and the Servicer shall cooperate in all respects with any reasonable
request by the Certificate Insurer for action to preserve or enforce the
Certificate Insurer's rights or interests hereunder without limiting the
rights or affecting the interests of the Certificateholders as otherwise set
forth herein.
(b) Unless a Certificate Insurer Default exists and is continuing,
the Certificate Insurer shall have the right to participate in, to direct the
enforcement or defense of, and, at the Certificate Insurer's sole option, to
institute or assume the defense of, any action, proceeding or investigation
for any remedy available to the Trustee with respect to any matter that could
adversely affect the Trust, the Trust Fund or the rights or obligations of the
Certificate Insurer hereunder, under the Unaffiliated Seller Agreement, under
the Insurance and Reimbursement Agreement or under the Certificate Insurance
Policy or any other instrument, document or agreement relating to the
foregoing (collectively, the "Transaction Documents"), including (without
limitation) any insolvency or bankruptcy proceeding in respect of any
Originator, the Unaffiliated Seller, the Servicer, the Depositor or any
Affiliate thereof provided, that such participation or direction shall not be
in conflict with any rule of law or with the terms of this Agreement.
Following written notice to the Trustee, the Certificate Insurer shall have
exclusive right to determine, in its sole discretion, the actions necessary to
preserve and protect the Trust and the Trust Fund. The Certificate Insurer
shall be entitled to reimbursement for all out-of-pocket costs and expenses of
the Certificate Insurer in connection with such action, proceeding or
investigation, including (without limitation) reasonable attorneys' fees and
any judgment or settlement entered into affecting the Certificate Insurer or
the Certificate Insurer's interests, all of which shall be included in the
Reimbursement Amount.
(c) In connection with any such action, proceeding or investigation
for any remedy available to the Trustee with respect to any matter that could
adversely affect the Trust, the Trust Fund or the rights or obligations of the
Certificate Insurer hereunder or under the Certificate Insurance Policy or the
Transaction Documents, including (without limitation) any insolvency or
bankruptcy proceeding in respect of any Originator, the Unaffiliated Seller,
the Servicer, the Depositor, the Trust or any Affiliate thereof, the Trustee
hereby agrees to cooperate with, and (unless a Certificate Insurer Default
exists and is continuing) to take such action as reasonably directed by, the
Certificate Insurer, including (without limitation) entering into such
agreements and settlements as the Certificate Insurer shall direct, in its
sole discretion, without the consent of any Certificateholder. Notwithstanding
any other provision herein or in any of the other Transaction Documents, the
Trustee shall not be liable to the Certificate Insurer or any
Certificateholder for any such action that conforms to the direction of the
Certificate Insurer.
(d) Any judgment or settlement entered against or affecting the Trust
or the Trust Fund in connection with any action, proceeding or investigation
shall be paid by the Trustee from the Trust Fund out of funds that would
otherwise be distributed to the Holders of the Class X or R Certificates.
(e) The Trustee hereby agrees to provide to the Certificate Insurer
prompt written notice of any action, proceeding or investigation that names
the Trust or the Trustee as a party or that could adversely affect the Trust,
the Trust Fund or the rights or obligations of the Certificate Insurer
hereunder or under the Certificate Insurance Policy or the Transaction
Documents, including (without limitation) any insolvency or bankruptcy
proceeding in respect of any Originator, the Unaffiliated Seller, the
Servicer, the Depositor, the Trust or any Affiliate thereof.
(f) Notwithstanding anything contained herein or in any of the other
Transaction Documents to the contrary (other than at any time during which a
Certificate Insurer Default exists or is continuing), the Trustee shall not,
without the Certificate Insurer's prior written consent or unless directed by
the Certificate Insurer, undertake or join any litigation or agree to any
settlement of any action, proceeding or investigation affecting the Trust, the
Trust Fund or the rights or obligations of the Certificate Insurer hereunder
or under the Certificate Insurance Policy or the Transaction Documents.
(g) Each Holder of a Certificate, by acceptance of its Certificate,
and the Trustee agree that Certificate Insurer shall have such rights as set
forth in this Section, which are in addition to any rights of the Certificate
Insurer pursuant to the other provisions of the Transaction Documents, that
the rights set forth in this Section may be exercised by the Certificate
Insurer, in its sole discretion, without the need for the consent or approval
of any Certificateholder or the Trustee, notwithstanding any other provision
contained herein or in any of the other Transaction Documents, and that
nothing contained in this Section shall be deemed to be an obligation of the
Certificate Insurer to exercise any of the rights provided for herein.
(h) The Trustee shall, upon reasonable prior written request, permit
any representative of the Certificate Insurer, during the Trustee's normal
business hours, to examine all books of accounts, records, reports and other
information of the Trustee relating to the Certificates and the Trust Fund
(including, without limitation, the Mortgage Files), to make copies and
extracts therefrom and to discuss the Trustee's performance of its duties with
respect to the Transaction Documents with the Responsible Officers of the
Trustee.
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
which continues unremedied for one (1) Business Day after the date upon
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer and the Certificate Insurer by the
Trustee or to the Servicer and the Trustee by the Certificate Insurer or
Certificateholders of Class A Certificates evidencing Percentage
Interests of at least 25%;
(ii) the failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of thirty (30)
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Servicer by the
Trustee or to the Servicer and the Trustee by any Certificateholder or
the Certificate Insurer;
(iii) any failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements
on the part of the Servicer contained in this Agreement, or the failure
of any representation and warranty made pursuant to Section 3.01 to be
true and correct which continues unremedied for a period of thirty (30)
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Servicer, as the
case may be, by the Depositor or the Trustee or to the Servicer and the
Trustee by any Certificateholder or the Certificate Insurer;
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall
have remained in force, undischarged or unstayed for a period of
forty-five (45) days;
(v) the Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all of
the Servicer's property;
(vi) the Servicer shall admit in writing its inability to pay its
debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations;
(vii) the Certificate Insurer shall notify the Trustee of any event
of default under the Insurance and Reimbursement Agreement;
(viii) if on any Distribution Date the Rolling Three Month
Delinquency Rate exceeds 12.50% of the aggregate outstanding Principal
Balance of the Mortgage Loans;
(ix) if on any Distribution Date, the Twelve Month Loss Amount
exceeds 2.50% of the sum of the aggregate outstanding Principal Balance
of the Mortgage Loans as of the close of business on the first day of the
twelfth preceding calendar month (or, if later, the Cut-off Date);
(x) ABFS or the Servicer shall fail to pay any principal or interest
when due on any outstanding indebtedness having an aggregate principal
amount in excess of $1,000,000 and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such outstanding indebtedness, or any such outstanding
indebtedness of ABFS or the Servicer having an aggregate principal amount
in excess of $1,000,000 shall be declared to be due and payable or
required to be prepaid (other than a regular scheduled payment) prior to
the date of maturity thereof;
(xi) Net Worth to be less than the sum of (i) $30,000,000 plus (ii)
50% of the cumulative Net Income for each fiscal quarter ending after the
Closing Date; (excluding any fiscal quarter for which Net Income was less
than zero); or
(xii) any Change of Control shall occur.
Then, and in each and every such case, so long as such Event of
Default shall not have been remedied: (x) with respect solely to clause (i)
above, if such payment is in respect of Periodic Advances or Compensating
Interest owing by the Servicer and such payment is not made by 12:00 Noon, New
York time on the fourth Business Day prior to the applicable Distribution
Date, the Trustee, upon receipt of written notice or discovery by a
Responsible Officer of such failure, shall give immediate telephonic notice of
such failure to a Servicing Officer of the Servicer and to the Certificate
Insurer and the Trustee may, and shall, at the direction of the Certificate
Insurer, terminate all of the rights and obligations of the Servicer under
this Agreement and the Trustee, or a successor servicer appointed in
accordance with Section 7.02, shall immediately make such Periodic Advance or
payment of Compensating Interest and assume, pursuant to Section 7.02 hereof,
the duties of a successor Servicer; (y) with respect to any other Event of
Default, the Trustee shall, at the direction of the Certificate Insurer, by
notice in writing to the Servicer and a Responsible Officer of the Trustee,
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof, as servicer. Upon
receipt by the Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall, subject to Section 7.02, pass to and be vested in the
Trustee or such other Person as may be specified by the Certificate Insurer
and the Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, at the expense of
the Servicer, any and all documents and other instruments and do or cause to
be done all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, including, but not limited to, the
transfer and endorsement or assignment of the Mortgage Loans and related
documents. The Servicer agrees to cooperate (and pay any related costs and
expenses) with the Trustee in effecting the termination of the Servicer's
responsibilities and rights hereunder and the transfer of such
responsibilities and rights to a successor Servicer, including, without
limitation, the transfer to the Trustee or its designee for administration by
it of all amounts which shall at the time be credited by the Servicer to the
Collection Account or thereafter received with respect to the Mortgage Loans.
The Trustee shall promptly notify the Certificate Insurer and the Rating
Agencies of the occurrence of an Event of Default.
Section 7.02 Trustee to Act; Appointment of Successor. (a) On and
after the time the Servicer receives a notice of termination pursuant to
Section 7.01, or the Trustee receives the resignation of the Servicer
evidenced by an Opinion of Counsel pursuant to Section 5.21, the Trustee shall
promptly notify the Rating Agencies, except as otherwise provided in Section
7.01, the Trustee or such other Person as may be specified by the Certificate
Insurer shall be the successor in all respects to the Servicer in its capacity
as servicer under this Agreement and the transactions set forth or provided
for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and
provisions hereof arising on or after the date of succession; provided,
however, that the Trustee shall not be liable for any actions or the
representations and warranties of any servicer prior to it and including,
without limitation, the obligations of the Servicer set forth in Sections 2.06
and 3.03. The Trustee, as successor servicer, shall be obligated to pay
Compensating Interest pursuant to Section 6.09 in any event and to make
advances pursuant to Section 5.18 unless, and only to the extent the Trustee
determines reasonably and in good faith that such advances would not be
recoverable pursuant to Section 5.04, such determination to be evidenced by a
certification of a Responsible Officer of the Trustee delivered to the
Certificate Insurer.
(b) Notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act or if the Certificate
Insurer so requests in writing to the Trustee, appoint, pursuant to such
direction of the Certificate Insurer, or if no such direction is provided to
the Trustee, pursuant to the provisions set forth in paragraph (c) below, or
petition a court of competent jurisdiction to appoint, any established
mortgage loan servicing institution acceptable to the Certificate Insurer that
has a net worth of not less than $15,000,000 as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder.
(c) In the event the Trustee is the successor servicer, it shall be
entitled to the same Servicing Compensation (including the Servicing Fee as
adjusted pursuant to the definition thereof) and other funds pursuant to
Section 5.08 hereof as the Servicer if the Servicer had continued to act as
servicer hereunder. In the event the Trustee is unable or unwilling to act as
successor servicer, the Trustee shall solicit, by public announcement, bids
from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor servicer shall be entitled to
the full amount of the aggregate Servicing Fees hereunder as servicing
compensation, together with the other Servicing Compensation. Within thirty
days after any such public announcement, the Trustee shall negotiate and
effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party submitting the highest
qualifying bid. The Trustee shall deduct from any sum received by the Trustee
from the successor to the Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder
and the amount of any unreimbursed Servicing Advances and Periodic Advances
owed to the Trustee. After such deductions, the remainder of such sum shall be
paid by the Trustee to the Servicer at the time of such sale, transfer and
assignment to the Servicer's successor.
(d) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
The Servicer agrees to cooperate with the Trustee and any successor servicer
in effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
servicer, as applicable, at the Servicer's cost and expense, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor servicer, as applicable, all amounts that then have been or should
have been deposited in the Collection Account by the Servicer or that are
thereafter received with respect to the Mortgage Loans. Any collections
received by the Servicer after such removal or resignation shall be endorsed
by it to the Trustee and remitted directly to the Trustee or, at the direction
of the Trustee, to the successor servicer. Neither the Trustee nor any other
successor servicer shall be held liable by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof caused
by (i) the failure of the Servicer to deliver, or any delay in delivering,
cash, documents or records to it, or (ii) restrictions imposed by any
regulatory authority having jurisdiction over the Servicer hereunder.
Notwithstanding anything to the contrary herein, no appointment of a successor
to the Servicer under this Agreement shall be effective until the Certificate
Insurer shall have consented thereto, and written notice of such proposed
appointment shall have been provided by the Trustee to the Certificate Insurer
and to each Certificateholder. The Trustee shall not resign as servicer until
a successor servicer reasonably acceptable to the Certificate Insurer has been
appointed or until a successor servicer has been appointed in accordance with
paragraph (c) above. The Certificate Insurer shall have the right to remove
the Trustee (or any Successor Servicer) as successor Servicer under this
Section 7.02 without cause, and the Trustee shall appoint such other successor
Servicer as directed by the Certificate Insurer.
(e) Pending appointment of a successor to the Servicer hereunder, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on Mortgage Loans as the
Certificate Insurer and such successor shall agree; provided, however, that
unless otherwise agreed by the Certificate Insurer, no such compensation shall
be in excess of that permitted the Servicer pursuant to Section 5.08, together
with other Servicing Compensation. The Servicer, the Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
Section 7.03 Waiver of Defaults. The Majority Certificateholders may,
on behalf of all Certificateholders, and subject to the consent of the
Certificate Insurer, waive any events permitting removal of the Servicer as
servicer pursuant to this Article VII; provided, however, that the Majority
Certificateholders may not waive a default in making a required distribution
on a Certificate without the consent of the holder of such Certificate. Upon
any waiver of a past default, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived. Notice of any such waiver shall be given by the Trustee
to the Rating Agencies and the Certificate Insurer.
Section 7.04 Rights of the Certificate Insurer to Exercise Rights of
Class A-1 and Class A-IO Certificateholders. By accepting its Certificate,
each Class A-1and Class A-IO Certificateholder agrees that unless a
Certificate Insurer Default exists, the Certificate Insurer shall be deemed to
be the Certificateholders for all purposes (other than with respect to the
receipt of payment on the Certificates) and shall have the right to exercise
all rights of the Class A-1 and Class A-IO Certificateholders under this
Agreement and under the Class A-1 and Class A-IO Certificates without any
further consent of the Class A-1 and Class A-IO Certificateholders, including,
without limitation:
(a) the right to require the Unaffiliated Seller to repurchase
Mortgage Loans pursuant to Section 2.06 or 3.03 hereof to the extent set forth
in such Sections;
(b) the right to give notices of breach or to terminate the rights
and obligations of the Servicer as servicer pursuant to Section 7.01 hereof
and to consent to or direct waivers of Servicer defaults pursuant to Section
7.03 hereof;
(c) the right to direct the actions of the Trustee during the
continuance of an Event of Default pursuant to Sections 7.01 and 7.02 hereof;
(d) the right to institute proceedings against the Servicer pursuant
to Section 7.01 hereof;
(e) the right to direct the Trustee to investigate certain matters
pursuant to Section 9.02(a)(v) hereof;
(f) the right to remove the Trustee pursuant to Section 9.07 hereof;
(g) the right to direct foreclosures upon the failure of the Servicer
to do so in accordance with the provisions of Section 5.06 of this Agreement;
and
(h) any rights or remedies expressly given the Majority
Certificateholders.
In addition, each Certificateholder agrees that, subject to Section
10.02, unless a Certificate Insurer Default exists, the rights specifically
enumerated above may only be exercised by the Certificateholders with the
prior written consent of the Certificate Insurer.
Section 7.05 Trustee To Act Solely with Consent of the Certificate
Insurer. Unless a Certificate Insurer Default exists, the Trustee shall not,
without the Certificate Insurer's consent or unless directed by the
Certificate Insurer:
(a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 7.01 hereof;
(b) agree to any amendment pursuant to Section 10.03 hereof; or
(c) undertake any litigation.
The Certificate Insurer may, in writing and in its sole discretion
renounce all or any of its rights under Sections 7.04, 7.05 or 7.06 or any
requirement for the Certificate Insurer's consent for any period of time.
Section 7.06 Mortgage Loans, Trust Fund and Accounts Held for Benefit
of the Certificate Insurer. (a) The Trustee shall hold the Trust Fund and the
Mortgage Files for the benefit of the Certificateholders and the Certificate
Insurer and all references in this Agreement and in the Certificates to the
benefit of Holders of the Certificates shall be deemed to include the
Certificate Insurer. The Trustee shall cooperate in all reasonable respects
with any reasonable request by the Certificate Insurer for action to preserve
or enforce the Certificate Insurer's rights or interests under this Agreement
and the Certificates unless, as stated in an Opinion of Counsel addressed to
the Trustee and the Certificate Insurer, such action is adverse to the
interests of the Certificateholders or diminishes the rights of the
Certificateholders or imposes additional burdens or restrictions on the
Certificateholders.
(b) The Servicer hereby acknowledges and agrees that it shall service
the Mortgage Loans for the benefit of the Certificateholders and for the
benefit of the Certificate Insurer, and all references in this Agreement to
the benefit of or actions on behalf of the Certificateholders shall be deemed
to include the Certificate Insurer.
Section 7.07 Certificate Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Certificates to the contrary, if a
Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of all of its rights under this
Agreement, the provisions of this Article VII and all other provisions of this
Agreement which (a) permit the Certificate Insurer to exercise rights of the
Certificateholders, (b) restrict the ability of the Certificateholders, the
Servicer or the Trustee to act without the consent or approval of the
Certificate Insurer, (c) provide that a particular act or thing must be
acceptable to the Certificate Insurer, (d) permit the Certificate Insurer to
direct (or otherwise to require) the actions of the Trustee, the Servicer or
the Certificateholders, (e) provide that any action or omission taken with the
consent, approval or authorization of the Certificate Insurer shall be
authorized hereunder or shall not subject the party taking or omitting to take
such action to any liability hereunder or (f) which have a similar effect,
shall be of no further force and effect and the Trustee shall administer the
Trust Fund and perform its obligations hereunder solely for the benefit of the
Holders of the Certificates. Nothing in the foregoing sentence, nor any action
taken pursuant thereto or in compliance therewith, shall be deemed to have
released the Certificate Insurer from any obligation or liability it may have
to any party or to the Certificateholders hereunder, under any other
agreement, instrument or document (including, without limitation, the
Certificate Insurance Policy) or under applicable law.
ARTICLE VIII
TERMINATION
Section 8.01 Termination. (a) Subject to Section 8.02, this Agreement
shall terminate upon notice to the Trustee of either: (i) the later of the
distribution to Certificateholders of the final payment or collection with
respect to the last Mortgage Loan (or Periodic Advances of same by the
Servicer), or the disposition of all funds with respect to the last Mortgage
Loan and the remittance of all funds due hereunder and the payment of all
Reimbursement Amounts, Premium Amounts, Trustee Fees and other amounts due and
payable to the Certificate Insurer and the Trustee or (ii) mutual consent of
the Servicer, the Trustee, the Certificate Insurer and all Certificateholders
in writing; 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 March, 2037.
(b) In addition, subject to Section 8.02, the Class X
Certificateholder may, at its option and at its sole cost and expense,
terminate this Agreement on the first Distribution Date after any Distribution
Date on which the Pool Principal Balance is less than 10% of the Original 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 and (ii) the greater of
(1) the aggregate amount of accrued and unpaid interest on the Mortgage Loans
through the related Due Period and (2) 30 days' accrued interest thereon
computed at a rate equal to the related Mortgage Interest Rate, in each case
net of the Servicing Fee, (iii) any Reimbursements, Amounts or Premium Amounts
due to the Certificate Insurer under this Agreement and any I&I Payments and
(iv) any Trustee Fees or other amounts due to the Trustee hereunder (the
"Termination Price"); provided that in no event will the Termination Price be
less than the sum of the Class A-1 Certificate Principal Balance plus all
accrued and unpaid interest on the Class A-1 and Class A-IO Certificates plus
all accrued and unpaid Premium Amounts, Reimbursement Amounts and all amounts
due the Trustee hereunder plus all unreimbursed Periodic Advances and
Servicing Advances. In the absence of the exercise of any such purchase option
by the Class X Certificateholder, the Servicer shall have the option to
exercise the same purchase rights. Any such purchase shall be accomplished by
deposit into the Certificate Account of the Termination Price. 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.
(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 Certificate Account, the Servicer shall send a
final distribution notice promptly to each such Certificateholder and any
Certificate Insurer in accordance with paragraph (d) below.
(d) Notice of any termination, specifying the Distribution Date upon
which the Trust Fund will terminate and the Certificateholders shall surrender
their Certificates to the Trustee for payment of the final distribution and
cancellation, shall be given promptly by the Servicer by letter to
Certificateholders and the Certificate Insurer mailed during the month of such
final distribution before the Servicer Distribution Date in such month,
specifying (i) the Distribution Date upon which final payment of the
Certificates will be made upon presentation and surrender of Certificates at
the office of the Trustee therein designated, (ii) the amount of any such
final payment and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Servicer shall give such notice to the Trustee therein
specified. The Servicer shall give such notice to the Trustee at the time such
notice is given to Certificateholders. The obligations of the Certificate
Insurer hereunder shall terminate upon the deposit by the Servicer with the
Trustee of a sum sufficient to purchase all of the Mortgage Loans and REO
Properties as set forth above or when the Class A-1 Certificate Principal
Balance has been reduced to zero.
(e) In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the time
specified in the above-mentioned written notice, the Servicer shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice, all of the Certificates
shall not have been surrendered for cancellation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates and the cost thereof shall be paid out of the funds and other
assets which remain subject hereto. If within nine months after the second
notice all the Certificates shall not have been surrendered for cancellation,
the Class R Certificateholders shall be entitled to all unclaimed funds and
other assets which remain subject hereto and the Trustee upon transfer of such
funds shall be discharged of any responsibility for such funds and the
Certificateholders shall look only to the Class R Certificateholders for
payment and not to the Certificate Insurer or the Trustee. Such funds shall
remain uninvested.
Section 8.02 Additional Termination Requirements. (a) In the
event that the Servicer exercises its purchase option as provided in Section
8.01, the Trust Fund shall be terminated in accordance with the following
additional requirements, unless the Trustee and the Certificate Insurer have
been furnished with an Opinion of Counsel to the effect that the failure of
the Trust Fund to comply with the requirements of this Section 8.02 will not
(i) result in the imposition of taxes on "prohibited transactions" of any
REMIC created hereunder as defined in Section 860F of the Code or (ii) cause
any REMIC created hereunder to fail to qualify as a REMIC at any time that any
Class A-1 Certificates or Class A-IO 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-1 Certificateholders the Class
A-1 Principal Balance, plus one month's interest thereon at the Class A-1
Pass-Through Rate, (B) to the Certificate Insurer any amounts due the
Certificate Insurer under this Agreement or the Insurance and
Reimbursement Agreement and unpaid, including all Reimbursement Amounts
and (C) to the Class R Certificateholders, all cash on hand after such
payment to the Class A-1 Certificateholders (other than cash retained to
meet claims) and the Trust Fund shall terminate at such time; provided,
however that any such payment will be made after all outstanding fees,
costs and expenses of the Trustee have been paid in full.
(b) By their acceptance of the Certificates, the Holders thereof
hereby agree to appoint the Servicer as their attorney in fact to: (i) adopt
such a plan of complete liquidation (and the Certificateholders hereby appoint
the Trustee as their attorney in fact to sign such plan) as appropriate or
upon the written request of the Certificate Insurer and (ii) to take such
other action in connection therewith as may be reasonably required to carry
out such plan of complete liquidation all in accordance with the terms hereof.
Section 8.03 Accounting Upon Termination of Servicer. Upon
termination of the Servicer, the Servicer shall, at its expense:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Trustee, the funds in any Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Trustee all Mortgage Files and related documents and
statements held by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to its successor and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the "Servicer" under this
Agreement.
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of Trustee. (a) The Trustee, prior to the
occurrence of an Event of Default of which a Responsible Officer of the
Trustee shall have actual knowledge and after the curing of all Events of
Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. If an Event of
Default of which a Responsible Officer of the Trustee shall have actual
knowledge has occurred and has not been cured or waived, the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform on their face to the requirements of this Agreement;
provided, however, that the Trustee shall not be responsible for the accuracy
or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Servicer or the
Unaffiliated Seller hereunder. If any such instrument is found not to conform
on its face to the requirements of this Agreement, the Trustee will, at the
expense of the Servicer notify the Certificate Insurer of such instrument in
the event the Trustee, after so requesting, does not receive a satisfactorily
corrected instrument.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge, and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or other officers of
the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with this Agreement or at the direction of the Certificate
Insurer or with the consent of the Certificate Insurer, the Majority
Certificateholders, relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement;
(iv) the Trustee shall not be required to take notice or be deemed
to have notice or knowledge of any default or Event of Default (except an
Event of Default with respect to the nonpayment of any amount described
in Section 7.01(a)), unless a Responsible Officer of the Trustee shall
have received written notice thereof. In the absence of receipt of such
notice, the Trustee may conclusively assume that there is no default or
Event of Default;
(v) the Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability for the performance of any
of its duties hereunder or the exercise of any of its rights or powers if
there is reasonable ground for believing that the repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it and none of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for
the manner of performance of, any of the obligations of the Servicer
under this Agreement except during such time, if any, as the Trustee
shall be the successor to, and be vested with the rights, duties, powers
and privileges of, the Servicer in accordance with the terms of this
Agreement; and
(vi) subject to the other provisions of this Agreement (and except
in its capacity as successor Servicer) and without limiting the
generality of this Section, the Trustee shall have no duty (A) to see to
any recording, filing, or depositing of this Agreement or any agreement
referred to herein or any financing statement or continuation statement
evidencing a security interest, or to see to the maintenance of any such
recording or filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance, (C) to see to
the payment or discharge of any tax, assessment, or other governmental
charge or any lien or encumbrance of any kind owing with respect to,
assessed or levied against, any part of the Trust, the Trust Fund, the
Certificateholders or the Mortgage Loans, (D) to confirm or verify the
contents of any reports or certificates of the Servicer delivered to the
Trustee pursuant to this Agreement believed by the Trustee to be genuine
and to have been signed or presented by the proper party or parties.
(d) It is intended that the Trust Fund formed hereunder shall
constitute, and that the affairs of the REMIC Trust shall be conducted so as
to qualify it as three separate REMICs as defined in and in accordance with
the REMIC Provisions. In furtherance of such intention, the Unaffiliated
Seller, as Class R Certificateholder, covenants and agrees that it shall act
as agent (and the Unaffiliated Seller, as Class R Certificateholder, is hereby
appointed to act as agent) and as Tax Matters Person on behalf of each REMIC
created hereunder, and that in such capacities it shall:
(i) prepare, sign and file, or cause to be prepared and filed, in a
timely manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax
Return (Form 1066) and any other Tax Return required to be filed by each
REMIC created hereunder, using a calendar year as the taxable year for
each REMIC created hereunder;
(ii) make, or cause to be made, an election, on behalf of each REMIC
created hereunder, to be treated as a REMIC on the federal tax return of
each REMIC created hereunder for its first taxable year;
(iii) prepare and forward, or cause to be prepared and forwarded, to
the Trustee, the Certificateholders and to the Internal Revenue Service
and any other relevant governmental taxing authority all information
returns or reports as and when required to be provided to them in
accordance with the REMIC Provisions;
(iv) to the extent that the affairs of the Trust Fund are within its
control, conduct such affairs of the Trust Fund at all times that any
Certificates are outstanding so as to maintain the status of each REMIC
created hereunder as a REMIC under the REMIC Provisions and any other
applicable federal, state and local laws, including, without limitation,
information reports relating to "original issue discount," as defined in
the Code, based upon the Prepayment Assumption and calculated by using
the issue price of the Certificates;
(v) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of any
REMIC created hereunder;
(vi) pay the amount of any and all federal, state, and local taxes,
including, without limitation, upon the Trustee or the Certificateholders
in connection with the Trust, the Trust Fund or the Mortgage Loans,
prohibited transaction taxes as defined in Section 860F of the Code,
other than any amount due as a result of a transfer or attempted or
purported transfer in violation of Section 4.02, imposed on any REMIC
created hereunder when and as the same shall be due and payable (but such
obligation shall not prevent the Unaffiliated Seller or any other
appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Unaffiliated Seller from
withholding payment of such tax, if permitted by law, pending the outcome
of such proceedings).
(vii) ensure that any such returns or reports filed on behalf of any
REMIC created hereunder by the Trustee are properly executed by the
appropriate person and submitted in a timely manner;
(viii) represent any REMIC created hereunder in any administrative
or judicial proceedings relating to an examination or audit by any
governmental taxing authority, request an administrative adjustment as to
any taxable year of any REMIC created hereunder, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any item of any REMIC created hereunder and
otherwise act on behalf of each REMIC created hereunder in relation to
any tax matter involving any REMIC created hereunder;
(ix) as provided in Section 5.11 hereof, make available information
necessary for the computation of any tax imposed (1) on transferors of
residual interests to transferees that are not Permitted Transferees or
(2) on pass-through entities, any interest in which is held by an entity
which is not a Permitted Transferee. The Trustee covenants and agrees
that it will cooperate with the Servicer in the foregoing matters and
that it will sign, as Trustee, any and all Tax Returns required to be
filed by each REMIC created hereunder . Notwithstanding the foregoing, at
such time as the Trustee becomes the successor Servicer, the holder of
the largest percentage of the Class R Certificates shall serve as Tax
Matters Person until such time as an entity is appointed to succeed the
Trustee as Servicer;
(x) make available to the Internal Revenue Service and those Persons
specified by the REMIC Provisions all information necessary to compute
any tax imposed (A) as a result of the Transfer of an Ownership Interest
in a Class R Certificate to any Person who is not a Permitted Transferee,
including the information described in Treasury regulations sections
1.860D-1(b)(5) and 1.860E-2(a)(5)with respect to the "excess inclusions"
of such Class R Certificate and (B) as a result of any regulated
investment company, real estate investment trust, common trust fund,
partnership, trust, estate or organization described in Section 1381 of
the Code that holds an Ownership Interest in a Class R Certificate having
as among its record holders at any time any Person that is not a
Permitted Transferee. Reasonable compensation for providing such
information may be accepted by the Trustee;
(xi) pay out of its own funds, without any right of reimbursement,
any and all tax related expenses of each REMIC created hereunder
(including, but not limited to, tax return preparation and filing
expenses and any professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to each REMIC created
hereunder that involve the Internal Revenue Service or state tax
authorities), other than the expense of obtaining any Opinion of Counsel
required pursuant to Sections 3.03, 5.10 and 8.02 and other than taxes
except as specified herein;
(xii) upon filing with the Internal Revenue Service, the Trustee
shall furnish to the Holders of the Class R Certificates the Form 1066
and each Form 1066Q and the Unaffiliated Seller shall respond promptly to
written requests made not more frequently than quarterly by any Holder of
Class R Certificates with respect to the following matters:
(A) the original projected principal and interest cash flows on
the Closing Date on the regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
(B) the projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to the regular
and residual interests created hereunder and the Mortgage Loans,
based on the Prepayment Assumption;
(C) the Prepayment Assumption and any interest rate assumptions
used in determining the projected principal and interest cash flows
described above;
(D) the original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to the regular
or residual interests created hereunder and with respect to the
Mortgage Loans, together with each constant yield to maturity used
in computing the same;
(E) the treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness income of
any REMIC created hereunder with respect to such regular interests
or bad debt deductions claimed with respect to the Mortgage Loans;
(F) the amount and timing of any non-interest expenses of any
REMIC created hereunder; and
(G) any taxes (including penalties and interest) imposed on any
REMIC created hereunder, including, without limitation, taxes on
"prohibited transactions," "contributions" or "net income from
foreclosure property" or state or local income or franchise taxes;
and
(xiii) make any other required reports in respect of interest
payments in respect of the Mortgage Loans and acquisitions and
abandonments of Mortgaged Property to the Internal Revenue Service and/or
the borrowers, as applicable.
(e) In the event that any tax is imposed on "prohibited transactions"
of any REMIC created hereunder as defined in Section 860F(a)(2) of the Code,
on the "net income from foreclosure property" of any REMIC created hereunder
as defined in Section 860G(c) of the Code, on any contribution to any REMIC
created hereunder after the Startup Day pursuant to Section 860G(d) of the
Code, or any other tax is imposed, such tax shall be paid by (i) the Trustee,
if such tax arises out of or results from a breach by the Trustee of any of
its obligations under this Agreement, (ii) the Servicer, if such tax arises
out of or results from a breach by the Servicer of any of its obligations
under this Agreement, or otherwise (iii) the holders of the Class R
Certificates in proportion to their Percentage Interests. To the extent such
tax is chargeable against the holders of the Class R Certificates,
notwithstanding anything to the contrary contained herein, the Trustee is
hereby authorized to retain from amounts otherwise distributable to the
Holders of the Class R Certificates on any Distribution Date sufficient funds
to for the payment of such tax.
Section 9.02 Certain Matters Affecting the Trustee. (a) 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, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such opinion of counsel;
(iii) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to institute,
conduct or defend by litigation hereunder or in relation hereto at the
request, order or direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this Agreement, unless
such Certificateholders or the Certificate Insurer, as applicable, shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein by the
Trustee or thereby; nothing contained herein shall, however, relieve the
Trustee of the obligation, upon the occurrence of an Event of Default of
which a Responsible Officer of the Trustee shall have actual knowledge
(which has not been cured), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
the Certificate Insurer or the Majority Certificateholders; provided,
however, that if the payment within a reasonable time to the Trustee of
the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require reasonable indemnity
satisfactory to the Trustee against such cost, expense or liability as a
condition to taking any such action. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Trustee,
shall be repaid by the Servicer upon demand from the Servicer's own
funds;
(vi) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;
(vii) the Trustee shall not be required to give any bond or surety
in respect of the execution of the Trust created hereby or the powers
granted hereunder; and
(viii) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
attorneys or custodians and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or
custodian appointed by the Trustee with due care.
(b) Following the Startup Day, the Trustee shall not knowingly accept
any contribution of assets to the Trust Fund, unless the Trustee and the
Certificate Insurer shall have received an Opinion of Counsel (at the expense
of the Servicer) to the effect that the inclusion of such assets in the Trust
Fund will not cause any REMIC created hereunder to fail to qualify as a REMIC
at any time that any Certificates are outstanding or subject any REMIC created
hereunder to any tax under the REMIC Provisions or other applicable provisions
of federal, state and local law or ordinances. The Trustee agrees to indemnify
the Trust Fund and the Servicer for any taxes and costs, including any
attorney's fees, imposed or incurred by the Trust Fund or the Servicer as a
result of the breach of the Trustee's covenants set forth within this
subsection (b).
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein or in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Unaffiliated Seller or the Servicer as the case may be, and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to the validity or sufficiency of this Agreement or of
any Mortgage Loan or related document. The Trustee shall not be accountable
for the use or application by the Depositor of any of the Certificates or the
proceeds of the Certificates, or for the use or application of any funds paid
to the Servicer in respect of the Mortgage Loans or deposited in or withdrawn
from the Collection Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates
issued or intended to be issued hereunder. The Trustee shall have no
responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the perfection
of any security interest or lien granted to it hereunder or to record this
Agreement.
Section 9.04 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgor of
Certificates with the same rights it would have if it were not Trustee, and
may otherwise deal with the parties hereto.
Section 9.05 Trustee's Fees and Expenses; Indemnity. (a) The Trustee
acknowledges that in consideration of the services rendered by the Trustee in
the execution of the trust hereby created and in the exercise and performance
of any of the powers and duties hereunder it is entitled to receive the
Trustee's Fee in accordance with the provision of Section 6.05(a) (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of any express trust). Additionally, the Trustee hereby covenants, for
the benefit of the Depositor and the Certificate Insurer, that the Trustee has
arranged separately with the Servicer for the payment or reimbursement to the
Trustee of all of the Trustee's expenses in connection with this Agreement,
including, without limitation, all reasonable out of pocket expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ). Notwithstanding any other provision of this
Agreement to the contrary, the Servicer covenants and agrees to indemnify the
Trustee and its officers, directors, employees and agents from, and hold it
harmless against, any and all losses, liabilities, damages, claims or expenses
incurred in connection with any legal action relating to this Agreement, the
Certificates or incurred in connection with the administration of the Trust,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence of the Trustee in the performance of its
duties hereunder or by reason of the Trustee's reckless disregard of
obligations and duties hereunder. For the avoidance of doubt, the parties
hereto acknowledge that it is the intent of the parties that the Depositor and
the Certificate Insurer shall not pay any of the Trustee's fees and expenses
in connection with this transaction.
(b) The Trust Fund, the Trustee and any director, officer, employee
or agent of the Trustee shall be indemnified by the Servicer and held harmless
against any loss, liability, claim, damage or expense arising out of, or
imposed upon the Trust or the Trustee through the Servicer's acts or omissions
in violation of this Agreement, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence of the
Trustee in the performance of its duties hereunder or by reason of the
Trustee's reckless disregard of obligations and duties hereunder. The Servicer
shall immediately notify the Trustee, the Servicer, the Depositor, the
Certificate Insurer and all Certificateholders if a claim is made by a third
party with respect to this Agreement, and the Servicer shall assume (with the
consent of the Certificate Insurer) the defense of any such claim and advance
all expenses in connection therewith, including reasonable counsel fees, and
promptly advance funds to pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Depositor, the Trustee, the
Certificate Insurer and/or any Certificateholder in respect of such claim. The
obligations of the Servicer under this Section 9.05 arising prior to any
resignation or termination of the Servicer hereunder shall survive the
resignation or removal of the Trustee, termination of the Servicer and payment
of the Certificates, and shall extend to any co-trustee or separate trustee
appointed pursuant to this Article IX. Anything in this Agreement to the
contrary notwithstanding, in no event shall the Trustee be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.
Section 9.06 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a banking entity (a) organized and doing
business under the laws of any state or the United States of America subject
to supervision or examination by federal or state authority, (b) authorized
under such laws to exercise corporate trust powers, including taking title to
the Trust Fund assets on behalf of the Certificateholders, (c) be a wholly
owned subsidiary of a bank holding company having a combined capital and
surplus of at least $50,000,000, (d) whose long-term deposits, if any, shall
be rated at least BBB- by S&P and Baa3 by ▇▇▇▇▇'▇ (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 Certificate Insurer and the
Depositor. Upon receiving such notice of resignation, the Certificate Insurer
may promptly appoint a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the resigning Trustee and to the
successor trustee. A copy of such instrument shall be delivered to the
Depositor, the Certificateholders, the Certificate Insurer and the
Unaffiliated Seller by the Servicer. Unless a successor trustee shall have
been so appointed and shall have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 and shall fail to resign after
written request therefor by the Servicer or the Certificate Insurer, or if at
any time the Trustee shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or of its property shall
be appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, or the Trustee shall breach any of its
obligations hereunder in any material respect then the Servicer (with the
consent of the Certificate Insurer) or the Certificate Insurer may remove the
Trustee and the Servicer shall, at the direction of the Certificate Insurer,
and the Certificate Insurer may, within thirty (30) days after such removal,
appoint, a successor trustee by written instrument, in duplicate, which
instrument shall be delivered to the Trustee so removed and to the successor
trustee. A copy of such instrument shall be delivered to the Depositor, the
Certificateholders, the Certificate Insurer and the Unaffiliated Seller by the
Servicer.
(c) If the Trustee fails to perform in accordance with the terms of
this Agreement, the Majority Certificateholders (with the consent of the
Certificate Insurer) or the Certificate Insurer may remove the Trustee and
appoint a successor trustee by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Servicer, one
complete set to the Trustee and the Certificate Insurer so removed and one
complete set to the successor Trustee so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 9.08.
Section 9.08 Successor Trustee. Any successor trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the
Depositor, the Certificate Insurer, the Unaffiliated Seller, the Servicer and
to its predecessor trustee an instrument accepting such appointment hereunder,
and thereupon the resignation or removal of the predecessor trustee shall
become effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if
originally named as trustee herein. The predecessor trustee shall deliver to
the successor trustee all Mortgage Files and related documents and statements
held by it hereunder, and the Servicer and the predecessor trustee shall
execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties and obligations. No
successor trustee shall accept appointment as provided in this Section unless
at the time of such acceptance such successor trustee shall be eligible under
the provisions of Section 9.06. Upon acceptance of appointment by a successor
trustee as provided in this Section, the Servicer shall mail notice of the
succession of such trustee hereunder to all Holders of Certificates at their
addresses as shown in the Certificate Register and to the Rating Agencies. If
the Servicer fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Servicer.
Section 9.09 Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated or any corporation or national banking association resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation or national banking association succeeding to the business
of the trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 9.06, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
Section 9.10 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund,
and to vest in such Person or Persons, in such capacity, such title to the
Trust Fund, or any part thereof, and, subject to the other provisions of this
Section 9.10 and the consent of the Certificate Insurer, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or
in case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 9.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall
be required under Section 9.08 hereof.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 9.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or
imposed upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed (whether
as Trustee hereunder or as successor to the Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the holding of
title to the Trust Fund or any portion thereof in any such jurisdiction) shall
be exercised and performed by such separate trustee or co-trustee at the
direction of the Trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article IX. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute
the Trustee, its agent or attorney-in-fact, with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. The Trustee shall not be
responsible for any action or inaction of any such separate trustee or
co-trustee, provided that the Trustee appointed such separate trustee or
co-trustee with due care. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 9.11 Tax Returns. The Servicer, upon request, will promptly
furnish the Trustee with all such information as may be reasonably required in
connection with the Trustee's preparation of all Tax Returns of the Trust Fund
or for the purpose of the Trustee responding to reasonable requests for
information made by Certificateholders in connection with tax matters and,
upon request within five (5) Business Days after its receipt thereof, the
Servicer shall (a) sign on behalf of the Trust Fund any Tax Return that the
Servicer is required to sign pursuant to applicable federal, state or local
tax laws, and (b) cause such Tax Return to be returned to the Trustee for
filing and for distribution to Certificateholders if required.
Section 9.12 Retirement of Certificates. The Trustee shall, upon the
retirement of the Certificates pursuant hereto or otherwise, furnish to the
Certificate Insurer a notice of such retirement, and, upon retirement of the
Certificates and the expiration of the term of the Certificate Insurance
Policy, shall surrender the Certificate Insurance Policy to the Certificate
Insurer for cancellation.
Section 9.13 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, any such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery
of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Certificateholders in respect
of which such judgment has been recovered.
Section 9.14 Suits for Enforcement. In case an Event of Default or
other default by the Servicer hereunder shall occur and be continuing, the
Trustee, in its discretion, but subject to Section 9.01 and Section 7.01, as
applicable, may proceed to protect and enforce its rights and the rights of
the Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution
of any power granted in this Agreement or for the enforcement of any other
legal, equitable or other remedy, as the Trustee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of the
Trustee or the Certificateholders.
ARTICLE X
THE COLLATERAL AGENT
Section 10.01 Duties of the Collateral Agent. (a) The Collateral
Agent, prior to the occurrence of an Event of Default of which a Responsible
Officer shall have actual knowledge and after the curing of all Events of
Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. If an Event of
Default of which a Responsible Officer shall have actual knowledge has
occurred and has not been cured or waived, the Collateral Agent shall exercise
such of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own affairs.
(b) The Collateral Agent, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Collateral Agent which are specifically required
to be furnished pursuant to any provision of this Agreement, shall examine
them to determine whether they conform on their face to the requirements of
this Agreement; provided, however, that the Collateral Agent shall not be
responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by
any Person hereunder. If any such instrument is found not to conform on its
face to the requirements of this Agreement, the Collateral Agent shall note it
as such on the Initial Certification or Final Certification delivered pursuant
to Section 2.06(b).
(c) No provision of this Agreement shall be construed to relieve the
Collateral Agent from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided, however,
that:
(i) prior to the occurrence of an Event of Default of which a
Responsible Officer shall have actual knowledge , and after the curing of
all such Events of Default which may have occurred, the duties and
obligations of the Collateral Agent shall be determined solely by the
express provisions of this Agreement, the Collateral Agent shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Collateral
Agent and, in the absence of bad faith on the part of the Collateral
Agent, the Collateral Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Collateral Agent and
conforming to the requirements of this Agreement;
(ii) the Collateral Agent shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or other
officers of the Collateral Agent, unless it shall be proved that the
Collateral Agent was negligent in ascertaining the pertinent facts;
(iii) the Collateral Agent shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with this Agreement or at the direction of the
Certificate Insurer or the Trustee or with the consent of the Certificate
Insurer or the Trustee;
(iv) the Collateral Agent shall not be required to expend or risk
its own funds or otherwise incur financial liability for the performance
of any of its duties hereunder or the exercise of any of its rights or
powers if there is reasonable ground for believing that the repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it and none of the provisions contained in this
Agreement shall in any event require the Collateral Agent to perform, or
be responsible for the manner of performance of, any of the obligations
of the Servicer or the Trustee under this Agreement; and
(v) subject to the other provisions of this Agreement and without
limiting the generality of this Section 10.01, the Collateral Agent shall
have no duty (A) to see to any recording, filing, or depositing of this
Agreement or any agreement referred to herein or any financing statement
or continuation statement evidencing a security interest, or to see to
the maintenance of any such recording or filing or depositing or to any
rerecording, refiling or redepositing of any thereof, (B) to see to any
insurance, (C) to see to the payment or discharge of any tax, assessment,
or other governmental charge or any lien or encumbrance of any kind owing
with respect to, assessed or levied against, any part of the Trust, the
Trust Fund, the Certificateholders or the Mortgage Loans, (D) to confirm
or verify the contents of any reports or certificates of any Person
delivered to the Collateral Agent pursuant to this Agreement believed by
the Collateral Agent to be genuine and to have been signed or presented
by the proper party or parties.
Section 10.02 Certain Matters Affecting the Collateral Agent. Except
as otherwise provided in Section 10.01 hereof:
(a) the Collateral Agent may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate, Opinion of
Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond
or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) the Collateral Agent may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(c) the Collateral Agent shall be under no obligation to exercise any
of the powers vested in it by this Agreement or to institute, conduct or
defend by litigation hereunder or in relation hereto at the request, order or
direction of the Certificate Insurer or any of the Certificateholders,
pursuant to the provisions of this Agreement, unless such Certificateholders
or the Certificate Insurer, as applicable, shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein by the Collateral Agent or thereby; nothing
contained herein shall, however, relieve the Collateral Agent of the
obligation, upon the occurrence of an Event of Default of which a Responsible
Officer shall have actual Knowledge (which has not been cured), to exercise
such of the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs;
(d) the Collateral Agent shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(e) the Collateral Agent shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond
or other paper or document, unless requested in writing to do so by the
Certificate Insurer or the majority of Certificate Holders; provided, however,
that if the payment within a reasonable time to the Collateral Agent of the
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Collateral Agent, not reasonably
assured to the Collateral Agent by the security afforded to it by the terms of
this Agreement, the Collateral Agent may require reasonable indemnity
satisfactory to the Collateral Agent against such cost, expense or liability
as a condition to taking any such action. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Collateral Agent,
shall be repaid by the Servicer upon demand from the Servicer's own funds;
(f) the right of the Collateral Agent to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty, and the
Collateral Agent shall not be answerable for anything other than its
negligence or willful misconduct in the performance of such act;
(g) the Collateral Agent may execute any of the powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys.
Section 10.03 Collateral Agent Not Liable for Certificates or
Mortgage Loans. The recitals contained herein shall be taken as the statements
of the Trust and the Servicer, as the case may be, and the Collateral Agent
assumes no responsibility for their correctness. The Collateral Agent makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document. The Collateral Agent shall not be
accountable for the use or application of any funds paid to the Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the Collection
Account by the Servicer. The Collateral Agent shall not be responsible for the
legality or validity of the Agreement or the validity, priority, perfection or
sufficiency of the security for the Certificates issued or intended to be
issued under this Agreement.
Section 10.04 Collateral Agent May Own Certificates. The Collateral
Agent in its individual or any other capacity may become the owner or pledgor
of Certificates with the same rights it would have if it were not Collateral
Agent, and may otherwise deal with the parties hereto.
Section 10.05 Collateral Agent's Fees and Expenses; Indemnity. (a)
The Collateral Agent acknowledges that in consideration of the performance of
its duties hereunder it is entitled to receive its fees and expenses from the
Servicer, as separately agreed between the Servicer and the Collateral Agent.
The Depositor, the Trustee and the Certificate Insurer shall not pay any of
the Collateral Agent fees and expenses in connection with this transaction.
The Collateral Agent shall not be entitled to compensation for any expense,
disbursement or advance as may arise from its negligence or bad faith.
(b) The Collateral Agent and any director, officer, employee or agent
of the Collateral Agent shall be indemnified by first, the Trust and, second,
the Servicer and held harmless against any loss, liability, claim, damage or
reasonable expense incurred in connection with this Agreement other than any
loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence of the Collateral Agent in the performance of its duties
hereunder or by reason of the Collateral Agent `s reckless disregard of
obligations and duties hereunder. The obligations of the Servicer under this
Section 10.05 arising prior to any resignation or termination of the Servicer
hereunder shall survive termination of the Servicer and payment of the
Certificates.
Section 10.06 Eligibility Requirements for Collateral Agent. The
Collateral Agent hereunder shall at all times be a banking entity (a)
organized and doing business under the laws of any state or the United States
of America subject to supervision or examination by federal or state
authority, (b) authorized under such laws to exercise corporate trust powers,
including taking title to the Trust Fund on behalf of the Trustee, for the
benefit of the Certificateholders and the Certificate Insurer, (c) be a wholly
owned subsidiary of a bank holding company having a combined capital and
surplus of at least $50,000,000, (d) whose long-term deposits, if any, shall
be rated at least BBB- by S&P and Baa3 by ▇▇▇▇▇'▇ (except as provided herein)
or such lower long-term deposit rating as may be approved in writing by the
Certificate Insurer, and (e) reasonably acceptable to the Certificate Insurer
as evidenced in writing. If such banking entity publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of determining an
entity's combined capital and surplus for clause (c) of this Section 10.06,
the amount set forth in its most recent report of condition so published shall
be deemed to be its combined capital and surplus. In case at any time the
Collateral Agent shall cease to be eligible in accordance with the provisions
of this Section 10.06, the Collateral Agent shall resign immediately in the
manner and with the effect specified in Section 10.07.
Section 10.07 Resignation and Removal of the Collateral Agent. (a)
The Collateral Agent may at any time resign and be discharged from the trusts
hereby created by giving thirty (30) days' written notice thereof to the
Trustee, the Servicer, and the Certificate Insurer.
(b) If at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of Section 10.06 and shall fail to resign after
written request therefor by the Trustee, the Servicer or the Certificate
Insurer, or if at any time the Collateral Agent shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Collateral Agent or of its property shall be appointed, or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Trustee or the Servicer, with the consent of the Certificate Insurer, or
the Certificate Insurer may remove the Collateral Agent.
(c) If the Collateral Agent fails to perform in accordance with the
terms of this Agreement, the Trustee, the Servicer or the Majority
Certificateholders, with the consent of the Certificate Insurer, or the
Certificate Insurer may remove the Collateral Agent.
(d) Upon removal or receipt of notice of resignation of the
Collateral Agent, the Trustee shall either (i) take possession of the
Trustee's Mortgage Files and assume the duties of the Collateral Agent
hereunder or (ii) appoint a successor Collateral Agent pursuant to Section
9.08. If the Trustee shall assume the duties of the Collateral Agent
hereunder, it shall notify the Trust, the Depositor, the Servicer and
Certificate Insurer in writing.
Section 10.08 Successor Collateral Agent. Upon the resignation or
removal of the Collateral Agent, the Trustee may appoint a successor
Collateral Agent, with the written approval of the Certificate Insurer;
provided, however, that the successor Collateral Agent so appointed shall in
no event be the Unaffiliated Seller, the Depositor or the Servicer or any
Person known to a Responsible Officer of the Trustee to be an Affiliate of the
Unaffiliated Seller, the Depositor or the Servicer and shall be approved by
the Certificate Insurer. The Trustee or such custodian, as the case may be,
shall assume the duties of the Collateral Agent hereunder. Any successor
Collateral Agent appointed as provided in this Section 10.08 shall execute,
acknowledge and deliver to the Trust, the Depositor, the Certificate Insurer,
the Servicer, the Trustee and to its predecessor Collateral Agent an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Collateral Agent shall become effective and such
successor Collateral Agent, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as
Collateral Agent herein. The predecessor Collateral Agent shall deliver to the
successor Collateral Agent all Trustee's Mortgage Files and related documents
and statements held by it hereunder, and the Servicer and the predecessor
Collateral Agent shall execute and deliver such instruments and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in the successor Collateral Agent all such rights, powers, duties
and obligations. The cost of any such transfer to the successor Collateral
Agent shall be for the account of the Collateral Agent in the event of the
resignation of the Collateral Agent, and shall be for the account of the
Servicer in the event of the removal of the Collateral Agent. No successor
Collateral Agent shall accept appointment as provided in this Section 10.08
unless at the time of such acceptance such successor Collateral Agent shall be
eligible under the provisions of Section 10.06. Upon acceptance of appointment
by a successor Collateral Agent as provided in this Section 10.08, the
Servicer shall mail notice of the succession of such Collateral Agent
hereunder to all Certificateholders at their addresses as shown in the
Certificate Register and to the Rating Agencies. If the Servicer fails to mail
such notice within ten (10) days after acceptance of appointment by the
successor Collateral Agent, the successor Collateral Agent shall cause such
notice to be mailed at the expense of the Servicer.
Section 10.09 Merger or Consolidation of Collateral Agent. Any Person
into which the Collateral Agent may be merged or converted or with which it
may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation or national banking association
succeeding to the business of the Collateral Agent, shall be the successor of
the Collateral Agent hereunder; provided, that such corporation or national
banking association shall be eligible under the provisions of Section 10.06,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Limitation on Liability of the Depositor and the
Servicer. None of the Depositor, the Servicer or any of the directors,
officers, employees or agents of the Depositor the Servicer shall be under any
liability to the Trust, the Certificateholders or the Certificate Insurer for
any action taken, or for refraining from the taking of any action, in good
faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Depositor or the Servicer
or any such Person against any breach of warranties, representations,
covenants or agreements made herein, or against any specific liability imposed
on each such party pursuant to this Agreement or against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless
disregard of obligations or duties hereunder. The Depositor or the Servicer
and any director, officer, employee or agent of the Depositor or the Servicer
may rely in good faith on any document of any kind which, prima facie, is
properly executed and submitted by any appropriate Person respecting any
matters arising hereunder.
Section 11.02 Acts of Certificateholders. (a) Except as otherwise
specifically provided herein, whenever Certificateholder action, consent or
approval is required under this Agreement, such action, consent or approval
shall be deemed to have been taken or given on behalf of, and shall be binding
upon, all Certificateholders if the Majority Certificateholders or the
Certificate Insurer agrees to take such action or give such consent or
approval.
(b) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
to take any action or proceeding in any court for a partition or winding up of
the Trust Fund, nor otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
(c) No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust Fund, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
(d) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel
(which shall be an expense of the Trust) stating that the execution of such
amendment is authorized and permitted by this Agreement. The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under this Agreement.
Section 11.03 Amendment. (a) This Agreement may be amended from time
to time by the Servicer, the Depositor and the Trustee by written agreement,
upon the prior written consent of the Certificate Insurer, without notice to
or consent of the Certificateholders to cure any ambiguity, to correct or
supplement any provisions herein, to comply with any changes in the Code, or
to make any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of
this Agreement; provided, however, that such action shall not, as evidenced by
an Opinion of Counsel, at the expense of the party requesting the change,
delivered to the Trustee, adversely affect in any material respect the
interests of any Certificateholder; and provided further, that no such
amendment shall reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans which are required to be distributed on
any Certificate without the consent of the Holder of such Certificate, or
change the rights or obligations of any other party hereto without the consent
of such party. The Trustee shall give prompt written notice to the Rating
Agencies of any amendment made pursuant to this Section 11.03 or pursuant to
Section 6.09 of the Unaffiliated Seller's Agreement.
(b) This Agreement may be amended from time to time by the Servicer,
the Depositor and the Trustee with the consent of the Certificate Insurer, the
Majority Certificateholders and the Holders of the majority of the Percentage
Interest in the Class R Certificates for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Holders; provided,
however, that no such amendment shall be made unless the Trustee receives an
Opinion of Counsel, at the expense of the party requesting the change, that
such change will not adversely affect the status of any REMIC created
hereunder as a REMIC or cause a tax to be imposed on any REMIC created
hereunder; and provided, further, that no such amendment shall reduce in any
manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Class of Certificates
without the consent of the Holders of such Class of Certificates or reduce the
percentage for the Holders of which are required to consent to any such
amendment without the consent of the Holders of 100% of such Class of
Certificates affected thereby.
(c) It shall not be necessary for the consent of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
Section 11.04 Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices
for real property records in all of the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at the direction of
the Majority Certificateholders or the Certificate Insurer.
Section 11.05 Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 11.06 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Servicer, American Business Credit, Inc.,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (ii) in the case of the
Unaffiliated Seller, ABFS 2001-1, Inc., Balapointe Office Centre, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (iii) in the case of the Trustee, The Chase Manhattan Bank,
Institutional Trust Services, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ Attention: Structured Finance Services, ABFS 2001-1, (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 the Certificate Insurer,
MBIA Insurance Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Insured Portfolio Management - Mortgage Backed Securities,
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ (in each case in which notice or other communication
to the Certificate Insurer refers to an Event of Default, a claim on the
Certificate Insurance Policy or with respect to which failure on the part of
the Certificate Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and shall be marked to indicate
"URGENT MATERIAL ENCLOSED") and (viii) in the case of the Depositor or the
Underwriter, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc. or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇, Esq. 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 Depositor, the Trustee
and the Certificateholders and their respective successors and permitted
assigns.
Section 11.11 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not
be deemed to be part of this Agreement.
Section 11.12 The Certificate Insurer Default. Any right conferred to
the Certificate Insurer shall be suspended during any period in which a
Certificate Insurer Default exists. At such time as the Certificates are no
longer outstanding hereunder, the Certificate Insurance Policy has terminated
in accordance with its terms and no amounts owed to the Certificate Insurer
hereunder and no Reimbursement Amounts remain unpaid, the Certificate
Insurer's rights hereunder shall terminate.
Section 11.13 Third Party Beneficiary. The parties agree that each of
the Unaffiliated Seller and the Certificate Insurer is intended and shall have
all rights of a third-party beneficiary of this Agreement.
Section 11.14 [RESERVED].
Section 11.15 Appointment of Tax Matters Person. The Holders of the
Class R Certificates hereby appoint the Unaffiliated Seller to act, as their
agent, as the Tax Matters Person for each REMIC created hereunder for all
purposes of the Code. The Tax Matters Person will perform, or cause to be
performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the code.
The Holders of the Class R Certificates may hereafter appoint a different
entity as their agent, or may appoint one of the Class R Certificateholders to
be the Tax Matters Person.
Section 11.16 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE
STATE OF NEW YORK.
(b) THE SERVICER AND THE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH IN SECTION 10.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S.
MAILS, POSTAGE PREPAID. THE DEPOSITOR, THE SERVICER AND THE TRUSTEE EACH
HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO
VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN
THIS SECTION SHALL AFFECT THE RIGHT OF THE DEPOSITOR, THE SERVICER OR THE
TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
ANY OF THEIR RIGHTS TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY
OTHER JURISDICTION.
(c) THE DEPOSITOR, THE SERVICER AND THE TRUSTEE EACH HEREBY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
IN WITNESS WHEREOF, the Servicer, the Trustee and the Depositor have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.,
as Depositor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice-President
AMERICAN BUSINESS CREDIT, INC., as Servicer
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
THE CHASE MANHATTAN BANK, as Trustee
By: /s/ ▇▇▇▇ ▇▇▇▇▇
_____________________________
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
[Signature Page to Pooling and
Servicing Agreement]
EXHIBIT A
[FORM OF CLASS A-1 CERTIFICATE]
Series: Pass-Through Rate:
No. A-1-__
Original Certificate Principal
Balance: $
CUSIP: Percentage Interest of this Certificate:
Cut-Off Date: Date of Pooling and Servicing Agreement:
Closing Date:
First Distribution Date:
Servicer:. American Business Credit, Inc. Trustee: The Chase Manhattan 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 a Class A-1
Certificate percentage interest (the "Percentage 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
_____________ among American Business Credit, Inc., as servicer, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ABS Capital I, Inc., as depositor (the "Depositor") and The Chase
Manhattan Bank, as trustee (the "Trustee"). The Mortgage Loans were originated
or acquired by American Business Credit, Inc. ("ABC"), HomeAmerican Credit,
Inc. d/b/a Upland Mortgage ("Upland") or American Business Mortgage Services,
Inc. ("ABMS", and together with ABC and Upland, the "Originators") and sold to
_____________ (the "Seller"), which in turn sold the Mortgage Loans to the
Depositor pursuant to that certain Unaffiliated Seller's Agreement, dated as
of ___________, 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 (the
"Record Date") or in the case of the _____________ distribution date, 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-1 Certificates on such Distribution Date pursuant to
Section 6.05 of the Agreement.
Insured Distributions due under the Policy, unless otherwise stated
therein, will be disbursed by the Certificate Insurer's fiscal agent to the
trustee, on behalf of the Certificateholders, by wire transfer of immediately
available funds in the amount of the Insured Distribution less, in respect of
Insured Distributions related to Preference Amounts, any amount held by the
trustee for the payment of the Insured Distribution and legally available
therefor.
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 2001-1, Mortgage Pass-Through
Certificates, Series _________, Class A-1, Class A-IO, Class X and Class R
(herein called the "Certificates") and collectively representing undivided
ownership in the trust fund created and held under the Pooling and Servicing
Agreement, subject to the limits and priority of distribution provided for in
that agreement. The trust fund consists of (i) such Mortgage Loans as from
time to time are subject to the Agreement, together with the Mortgage Files
relating thereto and all collections thereon and proceeds thereof (other than
payments of interest that accrued on each Mortgage Loan up to the Cut-Off
Date), (ii) such assets as from time to time are identified as REO Property
and collections thereon and proceeds thereof, assets that are deposited in the
Accounts, including amounts on deposit in such Accounts and invested in
Permitted Investments, (iii) 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, (iv) the Certificate Insurance Policy,
(v) Liquidation Proceeds and (vi) Released Mortgaged Property Proceeds.
The Certificates do not represent an obligation of, or an interest
in, the Depositor, the Seller, the Servicer, the Originators, the Certificate
Insurer 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 A Certificates, Insured Payments under the Certificate
Insurance Policy, 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.
MBIA Insurance Corporation (the "Certificate Insurer") has issued a
surety bond with respect to the Class A Certificates, which guarantees certain
payments on the Class A Certificates, as described in the Agreement.
Subject to certain restrictions, the Agreement permits the amendment
thereof by the Depositor, the Servicer and the Trustee. 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 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 Class X Certificateholder or 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 Class X Certificateholder or 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 Class X Certificateholder or the Servicer to purchase being subject to
the Pool Principal Balance of the Mortgage Loans and REO Properties at the
time of purchase being less than ten percent (10%) of the Original Pool
Principal Balance; 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed by its authorized officer.
THE CHASE MANHATTAN BANK, not in its
individual capacity, but solely as Trustee
By:
----------------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class A-1 Certificate referred to in the within-mentioned
Agreement, which Certificate is issued to Cede & Co. in the initial
denomination of $______________.
THE CHASE MANHATTAN BANK, not in its
individual capacity, but solely as Trustee
By:
----------------------------------------
Dated: _____________
EXHIBIT B
[FORM OF CLASS A-IO CERTIFICATE]
Series: Pass-Through Rate:
No. A-IO-__
Original Certificate Notional Amount:
$
CUSIP: Percentage Interest of this Certificate:
Cut-Off Date: Date of Pooling and Servicing Agreement:
Closing Date:
First Distribution Date:
Servicer: American Business Credit, Inc. Trustee: The Chase Manhattan 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 a Class
A-IO Certificate percentage interest (the "Percentage 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 ___________ among American Business Credit, Inc., as servicer, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ABS Capital I, Inc., as depositor (the "Depositor") and The Chase
Manhattan Bank, as trustee (the "Trustee"). The Mortgage Loans were originated
or acquired by American Business Credit, Inc. ("ABC"), HomeAmerican Credit,
Inc. d/b/a Upland Mortgage ("Upland") or American Business Mortgage Services,
Inc. ("ABMS", and together with ABC and Upland, the "Originators") and sold to
_____________ (the "Seller"), which in turn sold the Mortgage Loans to the
Depositor pursuant to that certain Unaffiliated Seller's Agreement, dated as
of ______________, 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 (the
"Record Date") or in the case of the ______________ distribution date, 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.
Insured Distributions due under the Policy, unless otherwise stated
therein, will be disbursed by the Certificate Insurer's fiscal agent to the
trustee, on behalf of the Certificateholders, by wire transfer of immediately
available funds in the amount of the Insured Distribution less, in respect of
Insured Distributions related to Preference Amounts, any amount held by the
trustee for the payment of the Insured Distribution and legally available
therefor.
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 2001-1, Mortgage Pass-Through
Certificates, Series _________, Class A-1, Class A-IO, Class X and Class R
(herein called the "Certificates") and collectively representing undivided
ownership in the trust fund created and held under the Pooling and Servicing
Agreement, subject to the limits and priority of distribution provided for in
that agreement. The trust fund consists of (i) such Mortgage Loans as from
time to time are subject to the Agreement, together with the Mortgage Files
relating thereto and all collections thereon and proceeds thereof (other than
payments of interest that accrued on each Mortgage Loan up to the Cut-Off
Date), (ii) such assets as from time to time are identified as REO Property
and collections thereon and proceeds thereof, assets that are deposited in the
Accounts, including amounts on deposit in such Accounts and invested in
Permitted Investments, (iii) 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, (iv) the Certificate Insurance Policy,
(v) Liquidation Proceeds and (vi) Released Mortgaged Property Proceeds.
The Certificates do not represent an obligation of, or an interest
in, the Depositor, the Seller, the Servicer, the Originators, the Certificate
Insurer 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 A Certificates, Insured Payments under the Certificate
Insurance Policy, 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.
MBIA Insurance Corporation (the "Certificate Insurer") has issued a
surety bond with respect to the Class A Certificates, which guarantees certain
payments on the Class A Certificates, as described in the Agreement.
Subject to certain restrictions, the Agreement permits the amendment
thereof by the Depositor, the Servicer and the Trustee. 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 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 Class X Certificateholder or 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 Class X Certificateholder or 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 Class X Certificateholder or the Servicer to purchase being subject to
the Pool Principal Balance of the Mortgage Loans and REO Properties at the
time of purchase being less than ten percent (10%) of the Original Pool
Principal Balance; 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed by its authorized officer.
THE CHASE MANHATTAN 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 initial
denomination of $_____________.
THE CHASE MANHATTAN BANK, not in its
individual capacity, but solely as Trustee
By:
----------------------------------------
Dated:__________________
EXHIBIT C
[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 IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," 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. ss. 2510.3-101
OR OTHERWISE.]
Series: Percentage Interest of this Certificate:
No. R-__
Cut-Off Date: Date of Pooling and Servicing Agreement:
Closing Date:
First Distribution Date:
Servicer: American Business Credit, Inc. Trustee: The Chase Manhattan Bank
--------------------------------------
This certifies that _______________ is the registered owner of a
Class R percentage interest (the "Percentage 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 ____________ among
American Business Credit, Inc., as servicer, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I,
Inc., as depositor (the "Depositor") and The Chase Manhattan Bank, as trustee
(the "Trustee"). The Mortgage Loans were originated or acquired by American
Business Credit, Inc. ("ABC"), HomeAmerican Credit, Inc. d/b/a Upland Mortgage
("Upland") or American Business Mortgage Services, Inc. ("ABMS", and together
with ABC and Upland, the "Originators") and sold to _____________ (the
"Seller"), which in turn sold the Mortgage Loans to the Depositor pursuant to
that certain Unaffiliated Seller's Agreement, dated as of _____________, 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 (the
"Record Date") or in the case of the _____________ distribution date, 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.
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 2001-1, Mortgage Pass-Through
Certificates, Series ________, Class A-1, Class A-IO, Class X and Class R
(herein called the "Certificates") and collectively representing undivided
ownership in the trust fund created and held under the Pooling and Servicing
Agreement, subject to the limits and priority of distribution provided for in
that agreement. The trust fund consists of (i) such Mortgage Loans as from
time to time are subject to the Agreement, together with the Mortgage Files
relating thereto and all collections thereon and proceeds thereof (other than
payments of interest that accrued on each Mortgage Loan up to the Cut-Off
Date), (ii) such assets as from time to time are identified as REO Property
and collections thereon and proceeds thereof, assets that are deposited in the
Accounts, including amounts on deposit in such Accounts and invested in
Permitted Investments, (iii) 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, (iv) the Certificate Insurance Policy,
(v) Liquidation Proceeds and (vi) Released Mortgaged Property Proceeds.
The Certificates do not represent an obligation of, or an interest
in, the Depositor, the Seller, the Servicer, the Originators, Financial
Security Assurance Inc. (the "Certificate Insurer") 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 A
Certificates, Insured Payments under the Certificate Insurance Policy, 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 and the Trustee. 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, 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(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 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. ss. 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 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 Class X Cerfiticateholder or 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 Class X Certificateholder or 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 Class X Certificateholder or the Servicer to purchase being subject to
the Pool Principal Balance of the Mortgage Loans and REO Properties at the
time of purchase being less than ten percent (10%) of the Original Pool
Principal Balance; 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(i) 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed by its authorized officer.
THE CHASE MANHATTAN 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.
THE CHASE MANHATTAN BANK, not in its
individual capacity, but solely as Trustee
By:
----------------------------------------
Dated: _________________
EXHIBIT D
[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.
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. ss. 2510.3-101
OR OTHERWISE.]
Series: Percentage Interest of this Certificate:
No. X-__
Cut-Off Date: Date of Pooling and Servicing Agreement:
Closing Date:
First Distribution Date:
Servicer: American Business Credit, Inc. Trustee: The Chase Manhattan Bank
This certifies that _______________ is the registered owner of a
Class R percentage interest (the "Percentage 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 ____________ among
American Business Credit, Inc., as servicer, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I,
Inc., as depositor (the "Depositor") and The Chase Manhattan Bank, as trustee
(the "Trustee"). The Mortgage Loans were originated or acquired by American
Business Credit, Inc. ("ABC"), HomeAmerican Credit, Inc. d/b/a Upland Mortgage
("Upland") or American Business Mortgage Services, Inc. ("ABMS", and together
with ABC and Upland, the "Originators") and sold to ______________(the
"Seller"), which in turn sold the Mortgage Loans to the Depositor pursuant to
that certain Unaffiliated Seller's Agreement, dated as of _____________, 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 (the
"Record Date") or in the case of the _____________ distribution date, 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.
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 2001-1, Mortgage Pass-Through
Certificates, Series _________, Class A-1, Class A-IO, Class X and Class R
(herein called the "Certificates") and collectively representing undivided
ownership in the trust fund created and held under the Pooling and Servicing
Agreement, subject to the limits and priority of distribution provided for in
that agreement. The trust fund consists of (i) such Mortgage Loans as from
time to time are subject to the Agreement, together with the Mortgage Files
relating thereto and all collections thereon and proceeds thereof (other than
payments of interest that accrued on each Mortgage Loan up to the Cut-Off
Date), (ii) such assets as from time to time are identified as REO Property
and collections thereon and proceeds thereof, assets that are deposited in the
Accounts, including amounts on deposit in such Accounts and invested in
Permitted Investments, (iii) 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, (iv) the Certificate Insurance Policy,
(v) Liquidation Proceeds and (vi) Released Mortgaged Property Proceeds.
The Certificates do not represent an obligation of, or an interest
in, the Depositor, the Seller, the Servicer, the Originators, Financial
Security Assurance Inc. (the "Certificate Insurer") 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 A
Certificates, Insured Payments under the Certificate Insurance Policy, 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 and the Trustee. 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, 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. ss. 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 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 Class X Certificateholder or 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 Class X Certificateholder or 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 Class X Certificateholder or the Servicer to purchase being subject to
the Pool Principal Balance of the Mortgage Loans and REO Properties at the
time of purchase being less than ten percent (10%) of the Original Pool
Principal Balance; 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 X Certificate in
accordance with Section 4.02(i) 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed by its authorized officer.
THE CHASE MANHATTAN 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.
THE CHASE MANHATTAN BANK, not in its
individual capacity, but solely as Trustee
By:
----------------------------------------
Dated: __________________
EXHIBIT E
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 2.05 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, endorsed without recourse in blank
by the related Originator, including all intervening
endorsements showing a complete chain of endorsement;
2. the related Mortgage with evidence of recording indicated
thereon or a copy thereof certified by the applicable recording
office;
3. the recorded mortgage assignment, or copy thereof certified by
the applicable recording office, if any, showing a complete
chain of assignment from the originator of the related Mortgage
Loan to the related Originator (which assignment may, at such
Originator's option, be combined with the assignment referred
to in subpart (iv) hereof);
4. a mortgage assignment 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;
5. 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
6. 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).
EXHIBIT G
TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
__________, 2001
[Depositor]
[Trustee]
[Servicer]
[Certificate Insurer]
Re: The Pooling and Servicing Agreement, dated as of March 1, 2001
among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I, Inc., as Depositor,
American Business Credit, Inc., as Servicer and The Chase
Manhattan 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.
THE CHASE MANHATTAN BANK
as Trustee
By:
-----------------------------------
Name:
Title:
EXHIBIT H
INITIAL CERTIFICATION OF COLLATERAL AGENT
____________, 2001
[Depositor]
[Servicer]
[Collateral Agent]
[Certificate Insurer]
Re: The Pooling and Servicing Agreement, dated as of March 1, 2001
among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I, Inc., as Depositor,
American Business Credit, Inc., as Servicer and The Chase
Manhattan Bank, as Trustee and as Collateral
---------------------------------------------------------------
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's, in trust for the exclusive use and benefit of all present and
future Certificateholders and the Insurer.
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.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
----------------------------------------
Name:
Title
Exception Report
EXHIBIT I
FINAL CERTIFICATION OF COLLATERAL AGENT
____________, 2001
[Depositor]
[Servicer]
[Collateral Agent]
[Certificate Insurer]
Re: The Pooling and Servicing Agreement, dated as of March 1, 2001
among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I, Inc., as Depositor,
American Business Credit, Inc., as Servicer and The Chase
Manhattan Bank, as Trustee and as Collateral
---------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, 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 2.03 of the Pooling and Servicing Agreement and has
determined that (i) all documents required to be delivered to it pursuant to
the above-referenced Pooling and Servicing Agreement 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 respecting such Mortgage Loan 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.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
-----------------------------------
Name:
Title:
EXHIBIT J
REQUEST FOR RELEASE OF DOCUMENTS
______________ 2001
To: [Trustee]
Re: The Pooling and Servicing Agreement, dated as of March 1, 2001
among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I, Inc., as Depositor,
American Business Credit, Inc., as Servicer and The Chase
Manhattan Bank, as Trustee and as Collateral
---------------------------------------------------------------
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 therewith 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 Certificate Account and that the
substituted mortgage loan is a Qualified Substitute Mortgage
Loan.)
____ 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:
THE CHASE MANHATTAN BANK, as
Trustee
By:
-----------------------------------------
Date:
---------------------------------------
EXHIBIT K
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 2001-1, Mortgage Pass-Through
Certificates, Series 2001-1, 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. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
possession of the United States. (For this purpose, a "disqualified
organization" means the United States, any state or political subdivision
thereof, any agency or instrumentality of any of the foregoing (other than an
instrumentality all of the activities of which are subject to tax and, except
for the Federal Home Loan Mortgage Corporation, a majority of whose board of
directors is not selected by any such governmental entity) or any foreign
government, international organization or any agency or instrumentality of
such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives)
that generally is exempt from federal income tax unless such organization is
subject to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be imposed on
transfers of Class R Certificates to disqualified organizations under the
Code, that applies to all transfers of Class R Certificates after
____________; (ii) that such tax would be on the transferor, or, if such
transfer is through an agent (which person includes a broker, nominee or
middleman) for a disqualified organization, on the agent; (iii) that the
person otherwise liable for the tax shall be relieved of liability for the tax
if the transferee furnishes to such person an affidavit that the transferee is
not a disqualified organization and, at the time of transfer, such person does
not have actual knowledge that the affidavit is false; and (iv) that the Class
R Certificates may be "noneconomic residual interests" within the meaning of
proposed Treasury regulations promulgated pursuant to the Code and that the
transferor of a noneconomic residual interest will remain liable for any taxes
due with respect to the income on such residual interest, unless no
significant purpose of the transfer was to impede the assessment or collection
of tax.
4. That the Owner is aware of the tax imposed on a "pass-through
entity" holding Class R Certificates if at any time during the taxable year of
the pass-through entity a disqualified organization is the record holder of an
interest in such entity. (For this purpose, a "pass through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)
5. That the Owner is aware that the Trustee will not register the
transfer of any Class R Certificates unless the transferee, or the
transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it
knows or believes that any of the representations contained in such affidavit
and agreement are false.
6. That the Owner has reviewed the restrictions set forth on the face
of the Class R Certificates and the provisions of Section 4.02(i) of the
Pooling and Servicing Agreement under which the Class R Certificates were
issued (in particular, clauses (g) and (h) of Section 4.02(i) 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(i)). The Owner expressly agrees to
be bound by and to comply with such restrictions and provisions.
7. 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.
8. That the Owner's Taxpayer Identification Number is ____________.
9. This affidavit and agreement relates only to the Class R
Certificates held by the Owner and not to any other holder of the Class R
Certificates. The Owner understands that the liabilities described herein
relate only to the Class R Certificates.
10. That no purpose of the Owner relating to the transfer of any of
the Class R Certificates by the Owner is or will be to impede the assessment
or collection of any tax.
11. That the Owner has no present knowledge or expectation that it
will be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.
12. That the Owner has no present knowledge or expectation that it
will become insolvent or subject to a bankruptcy proceeding for so long as any
of the Class R Certificates remain outstanding.
13. That the Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
or trust whose income from sources without the United States is includable 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.
14. That the Owner will, in connection with any transfer that it
makes of the Class R Certificates, deliver to the Trustee an affidavit in form
and substance satisfactory to the Trustee, representing and warranting that it
is not transferring the Class R Certificates to impede the assessment or
collection of any tax and that it has no actual knowledge that the proposed
transferee: (i) has insufficient assets to pay any taxes owned by such
transferee as holder of the Class R Certificates; (ii) may become insolvent or
subject to a bankruptcy proceeding, for so long as the Class R Certificates
remains outstanding and; (iii) is not a Permitted Transferee.
15. That the Owner agrees to require a Transfer Affidavit and
Agreement from any person to whom the Owner attempts to transfer a percentage
interest in the Class R Certificates, and in connection with any transfer by a
person for whom the Owner is acting as nominee, trustee or agent, and the
Owner will not transfer its percentage interest or cause any percentage
interest to be transferred to any person that the Owner knows is not a
Permitted Transferee. In connection with any such transfer by the Owner, the
Owner agrees to deliver to the Trustee a transfer certificate in the form
attached to the Pooling and Servicing Agreement as Exhibit J to the effect
that the Owner has no actual knowledge that the person to which the transfer
is to be made is not a Permitted Transferee.
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.
Subscribed and sworn before me this ____ day of ________________
____.
-------------------------------------------------------------------------------
NOTARY PUBLIC
COUNTY OF
------------------------------------------------
STATE OF
-------------------------------------------------
My Commission expires the ____
day of ____________, ____.
EXHIBIT L
TRANSFEROR'S CERTIFICATE
To: [Trustee]
Re: The Pooling and Servicing Agreement, dated as of March 1, 2001 among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I, Inc., as Depositor, American Business
Credit, Inc., as Servicer and The Chase Manhattan Bank, as Trustee and as
Collateral Agent
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_____________________ (the "Seller") to ______________________ (the
"Purchaser") of a ___% Percentage Interest of ABFS Mortgage Loan Trust 2001-1,
Mortgage Pass-Through Certificates, Series 2001-1, 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, 2001
among American Business Credit, Inc., as servicer (the "Servicer"), ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ABS Capital I Inc., as depositor, and The Chase Manhattan Bank, as
trustee (the "Trustee"). 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 understands that the Purchaser 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 K. The Seller does
not know or believe that any representation contained therein is false.
3. The Seller has no actual knowledge that the proposed Transferee is
not both a United States Person and a Permitted Transferee.
Very truly yours,
------------------------------------------
(Seller)
By:
----------------------------------------
Name:
Title:
EXHIBIT M
ERISA INVESTMENT REPRESENTATION LETTER
[Depositor]
[Servicer]
[Trustee]
Re: ABFS Mortgage Loan Trust 2001-1, Mortgage
Pass-Through Certificates, Series 2001-1, Class R Certificates
-------------------------------------------------------------
The undersigned (the "Purchaser") proposes to purchase certain Class
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, 2001 (the "Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ABS Capital I Inc., as Depositor (the "Depositor"), American Business Credit,
Inc., as Servicer (the "Servicer") and The Chase Manhattan Bank, as Trustee
(the "Trustee") 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. ss. 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:
EXHIBIT N
RESALE CERTIFICATION
___________, 200_
[Depositor]
[Servicer]
[Trustee]
[Certificate Insurer]
[Certificate Registrar]
Re: Class ___ Certificate, No. __ (the "Certificate"), issued pursuant to that
certain Pooling and Servicing Agreement, dated as of March 1, 2001 by and
among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., as depositor, American Business
Credit, Inc., as servicer and The Chase Manhattan Bank, as trustee
Dear Sirs:
____________________________________________________ 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;
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. Either: (1) 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"); or (2) the acquisition and holding of the Certificate will not give
rise to a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of 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.
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.
EXHIBIT O
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, 2001, by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS
Capital I Inc., as depositor, American Business Credit, Inc., as servicer and
The Chase Manhattan Bank, as trustee ("Trustee") 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 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 and the Servicer that:
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 only] Either: (1) 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"); or (2) the
acquisition and holding of the Certificate will not give rise to a nonexempt
prohibited transaction under Section 406 of ERISA or Section 4975 of 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.
State of ___________ )
) ss.:
County of __________ )
On the__ day of_________, 20__ before me, a Notary Public in and for the State
of __________, personally appeared ___________ known to me to be
________________________ of _________________________________, the
________________ that executed the within instrument and also known to me to
be the person who executed it on behalf of said corporation, and acknowledged
to me that such ________________ executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
the day and year in this certificate first above written.
Notary Public
My Commission expires ____________
State of ___________ )
) ss.:
County of __________ )
On the__ day of________, 20__ before me, a Notary Public in and for the State
of ____________, personally appeared ___________ known to me to be
________________________ of _________________________________, the
________________ that executed the within instrument and also known to me to
be the person who executed it on behalf of said corporation, and acknowledged
to me that such ________________ executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
the day and year in this certificate first above written.
Notary Public
My Commission expires ____________
EXHIBIT P
WIRING INSTRUCTIONS FORM
______________, 20__
[Trustee]
Re: Mortgage Pass-Through Certificates, Series 2001-1, Class ___, No. __, (the
Certificate") issued pursuant to that certain Pooling and Servicing Agreement,
dated as of March 1, 2001, among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., as
depositor, American Business Credit, Inc., as servicer and The Chase Manhattan
Bank, as trustee.
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 _________, 2001 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: