EXHIBIT 10.3
EXECUTION COPY
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SALE AND SERVICING AGREEMENT
dated as of September 22, 2003
by and among
ABFS BALAPOINTE, INC.,
as Depositor,
HOMEAMERICAN CREDIT, INC., d/b/a UPLAND MORTGAGE, and
AMERICAN BUSINESS MORTGAGE SERVICES, INC.,
as Originators and Subservicers,
ABFS MORTGAGE LOAN WAREHOUSE TRUST 2003-1,
as Trust,
AMERICAN BUSINESS CREDIT, INC.,
as an Originator and Servicer,
AMERICAN BUSINESS FINANCIAL SERVICES, INC.,
as Sponsor,
JPMORGAN CHASE BANK,
as Indenture Trustee
and
JPMORGAN CHASE BANK,
as Collateral Agent
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
Section 1.01 Certain Defined Terms.........................................................................1
Section 1.02 Provisions of General Application.............................................................2
Section 1.03 Business Day Certificate......................................................................2
ARTICLE II
SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01 Conveyance of the Mortgage Loans..............................................................3
Section 2.02 Ownership and Possession of Custodial Loan Files..............................................4
Section 2.03 Books and Records; Intention of the Parties...................................................4
Section 2.04 Facility Fee..................................................................................5
Section 2.05 Possession of Custodial Loan Files; Access to Servicer's Loan Files...........................6
Section 2.06 Delivery of Mortgage Loan Documents...........................................................6
Section 2.07 Acceptance of the Trust Estate; Certification by the Collateral Agent; Certain
Substitutions and Repurchases...............................................................9
Section 2.08 Possession of Custodial Loan Files...........................................................11
Section 2.09 Future Defects...............................................................................13
Section 2.10 Release for Servicing........................................................................13
Section 2.11 Limitation on Release........................................................................13
Section 2.12 Release for Sale.............................................................................14
Section 2.13 Release for Payment..........................................................................14
Section 2.14 Examination of Custodial Loan Files..........................................................14
Section 2.15 Assignment of Agreement......................................................................15
Section 2.16 Termination of Transfer Period...............................................................15
Section 2.17 Correction of Errors.........................................................................15
Section 2.18 Copies of Mortgage Documents; Periodic Statements............................................15
Section 2.19 Cost of Delivery and Recordation of Documents................................................16
Section 2.20 Margin Option................................................................................16
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties as to the Originators and the Sponsor.........................17
Section 3.02 Representations and Warranties of the Servicer and the Subservicers..........................21
Section 3.03 Representations, Warranties and Covenants of the Depositor...................................22
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Section 3.04 Representations, Warranties and Covenants of the Indenture Trustee...........................24
Section 3.05 Representations, Warranties and Covenants of the Trust.......................................25
ARTICLE IV
THE MORTGAGE LOANS; REMEDIES; ADDITIONAL RECOURSE
Section 4.01 Representations and Warranties Relating to the Mortgage Loans................................28
Section 4.02 Purchase and Substitution....................................................................49
Section 4.03 Additional Recourse..........................................................................52
ARTICLE V
THE ORIGINATORS, THE DEPOSITOR AND THE SPONSOR
Section 5.01 Covenants of the Originators, the Depositor and the Sponsor..................................53
Section 5.02 Merger or Consolidation......................................................................53
Section 5.03 Costs........................................................................................54
Section 5.04 Indemnification..............................................................................54
Section 5.05 Financial Statements.........................................................................55
ARTICLE VI
CONDITIONS OF CLOSING
Section 6.01 Conditions Precedent to Transfer Dates.......................................................58
Section 6.02 Conditions Precedent to Initial Transfer Date................................................60
Section 6.03 Termination of Note Purchaser's Obligations..................................................62
ARTICLE VII
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 7.01 The Servicer; Term...........................................................................62
Section 7.02 Collection of Certain Mortgage Loan Payments; Collection Account.............................63
Section 7.03 Reserved.....................................................................................64
Section 7.04 Hazard Insurance Policies; Property Protection Expenses......................................64
Section 7.05 Assumption and Modification Agreements.......................................................65
Section 7.06 Realization Upon Defaulted Mortgage Loans....................................................66
Section 7.07 Indenture Trustee to Cooperate...............................................................67
Section 7.08 Servicing Compensation; Payment of Certain Expenses by Servicer..............................67
Section 7.09 Annual Statement as to Compliance............................................................68
Section 7.10 Annual Independent Public Accountants' Servicing Report......................................68
Section 7.11 Access to Certain Documentation..............................................................68
Section 7.12 Maintenance of Fidelity Bond.................................................................68
Section 7.13 Compensating Interest........................................................................69
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Section 7.14 Reports to the Indenture Trustee; Collection Account Statements..............................69
Section 7.15 Reserved.....................................................................................69
Section 7.16 Reports to Be Provided by the Servicer.......................................................69
Section 7.17 Adjustment of Servicing Compensation in Respect of Prepaid Mortgage Loans....................71
Section 7.18 Periodic Advances............................................................................71
Section 7.19 Indemnification; Third Party Claims..........................................................71
Section 7.20 Maintenance of Corporate Existence and Licenses; Merger or Consolidation of the
Servicer...................................................................................72
Section 7.21 Assignment of Agreement by Servicer; Servicer Not to Resign..................................72
Section 7.22 The Subservicers.............................................................................72
ARTICLE VIII
NOTE AND ACCOUNT ADMINISTRATION
Section 8.01 Calculation of Note Principal Balances.......................................................74
Section 8.02 Daily Report.................................................................................74
Section 8.03 Establishment of Accounts....................................................................75
Section 8.04 Deposits to Accounts.........................................................................76
Section 8.05 Investment of Accounts.......................................................................76
Section 8.06 Disbursements from Collection Account........................................................77
Section 8.07 Account Provisions...........................................................................78
Section 8.08 Reserved.....................................................................................80
Section 8.09 Modification of Underwriting Guidelines......................................................80
Section 8.10 Valuation of Mortgage Loans and Excess Interest Securities Value.............................80
Section 8.11 Collection of Money..........................................................................81
Section 8.12 Application of Principal and Interest........................................................81
ARTICLE IX
SERVICER DEFAULT
Section 9.01 Servicer Events of Default...................................................................81
Section 9.02 Successor Servicer to Act; Appointment of Successor..........................................83
Section 9.03 Waiver of Defaults...........................................................................85
Section 9.04 Reserved.....................................................................................85
Section 9.05 Indenture Trustee to Act Solely with Consent of the Note Purchaser...........................85
ARTICLE X
TERMINATION
Section 10.01 Termination..................................................................................86
Section 10.02 Additional Termination Requirements..........................................................87
Section 10.03 Accounting Upon Termination of Servicer......................................................87
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ARTICLE XI
THE COLLATERAL AGENT
Section 11.01 Duties of the Collateral Agent...............................................................87
Section 11.02 Certain Matters Affecting the Collateral Agent...............................................89
Section 11.03 Collateral Agent Not Liable for Secured Notes or Mortgage Loans..............................90
Section 11.04 Collateral Agent May Own Secured Notes.......................................................90
Section 11.05 Collateral Agent's Fees and Expenses; Indemnity..............................................90
Section 11.06 Eligibility Requirements for Collateral Agent................................................91
Section 11.07 Resignation and Removal of the Collateral Agent..............................................91
Section 11.08 Successor Collateral Agent...................................................................92
Section 11.09 Merger or Consolidation of Collateral Agent..................................................92
Section 11.10 Insurance of Collateral Agent; Custodial Delivery Failure; Indemnity by Collateral
Agent......................................................................................93
Section 11.11 Representations and Warranties of the Collateral Agent.......................................93
Section 11.12 Transmission of Custodial Loan Files.........................................................94
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Limitation on Liability......................................................................95
Section 12.02 Acts of Noteholders..........................................................................95
Section 12.03 Amendment....................................................................................95
Section 12.04 Recordation of Agreement.....................................................................96
Section 12.05 Duration of Agreement........................................................................96
Section 12.06 Notices......................................................................................96
Section 12.07 Severability of Provisions...................................................................97
Section 12.08 No Partnership...............................................................................97
Section 12.09 Counterparts.................................................................................97
Section 12.10 Successors and Assigns.......................................................................97
Section 12.11 Headings.....................................................................................97
Section 12.12 Reserved.....................................................................................97
Section 12.13 Third Party Beneficiary......................................................................97
Section 12.14 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.................................97
Section 12.15 Reserved.....................................................................................98
Section 12.16 Power of Attorney............................................................................98
Section 12.17 Non-Petition Agreement.......................................................................98
Section 12.18 Due Diligence Fees, Due Diligence............................................................99
Section 12.19 No Recourse to Owner Trustee................................................................100
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ARTICLE XIII
PASS-THROUGH TRANSFER
Section 13.01 Dispositions..................................................................................101
EXHIBITS AND APPENDICES
EXHIBIT A Format of Mortgage Loan Schedule
EXHIBIT B Form of Trust Receipt
EXHIBIT C Certificate of Lost or Destroyed Trust Receipt
EXHIBIT D Request for Release of Documents
EXHIBIT E Mortgage File
EXHIBIT F Form of Master Bailee Letter
EXHIBIT G Form of Originator Certification
EXHIBIT H Reserved
EXHIBIT I Form of Disbursement Order
EXHIBIT J Form of Assignment
EXHIBIT K Review Procedures
EXHIBIT L Notice of Issue
EXHIBIT M Form of Lost Note Affidavit
EXHIBIT N Form of Disposition Direction
EXHIBIT O Form of Officer's Certificate as to compliance or noncompliance with certain Amortization Events
APPENDIX I Definitions
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SALE AND SERVICING AGREEMENT, dated as of September 22, 2003 (this
"Agreement"), by and among ABFS BALAPOINTE, INC., a Delaware corporation, as
depositor (the "Depositor"), AMERICAN BUSINESS CREDIT, INC., a Pennsylvania
corporation ("ABC"), as an originator and as servicer (in its capacity as
servicer hereunder, the "Servicer"), HOMEAMERICAN CREDIT, INC. d/b/a UPLAND
MORTGAGE, a Pennsylvania corporation ("Upland"), as an originator and a
subservicer, and AMERICAN BUSINESS MORTGAGE SERVICES, INC., a New Jersey
corporation ("ABMS"), as an originator and a subservicer (ABMS, together with
ABC and Upland in their capacities as originators hereunder, the "Originators"
and, together with Upland in their capacities as subservicers hereunder, the
"Subservicers"), ABFS MORTGAGE LOAN WAREHOUSE TRUST 2003-1, a Delaware statutory
trust (the "Trust"), AMERICAN BUSINESS FINANCIAL SERVICES, INC., a Pennsylvania
corporation ("ABFS"), as sponsor (the "Sponsor"), JPMORGAN CHASE BANK, a New
York banking corporation, as indenture trustee (the "Indenture Trustee") and
JPMORGAN CHASE BANK, a New York banking corporation, as collateral agent (the
"Collateral Agent").
W I T N E S S E T H:
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WHEREAS, the Originators desire to sell to the Depositor and the
Depositor desires to sell to the Trust, and the Trust desires to purchase from
the Depositor, on a servicing released basis, certain Mortgage Loans;
WHEREAS, immediately after such purchase, the Trust will pledge such
Mortgage Loans to the Indenture Trustee pursuant to the terms of an Indenture,
dated as of September 22, 2003, between the Trust and the Indenture Trustee, and
issue the ABFS Mortgage Loan Warehouse Trust 2003-1, Secured Notes (the "Secured
Notes");
WHEREAS, the Servicer has agreed to service, and the Subservicers have
agreed to sub-service, the Mortgage Loans, which constitute the principal assets
of the Trust; and
WHEREAS, the Collateral Agent will hold, on behalf of the Indenture
Trustee, the Mortgage Loans and certain other assets pledged to the Indenture
Trustee pursuant to the Indenture;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Trust, the Depositor, the Originators, the
Subservicers, the Servicer, the Collateral Agent and the Indenture Trustee
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. Capitalized terms used herein but
not defined herein shall have the meanings ascribed to such terms in Appendix I
attached hereto.
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 herein and in Appendix I hereto 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 with respect to the Secured Notes
provided for herein shall be made on the basis of a 360-day year and the actual
number of days elapsed in the related Accrual Period. All calculations of
interest with respect to any Mortgage Loan provided for herein shall be made in
accordance with the terms of the related Mortgage Note and Mortgage or, if such
documents do not specify the basis upon which interest accrues thereon, on the
basis of a 360-day year consisting of twelve 30-day months, to the extent
permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the date such
payment is actually received by the Servicer; provided, however, that, for
purposes of calculating payments on the Secured Notes, 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 date hereof and
thereafter, within fifteen (15) days prior to the end of each calendar year
while this Agreement remains in effect (with respect to the succeeding calendar
years), (i) the Servicer shall provide to the Indenture Trustee, the Collateral
Agent and the Note Purchaser a certificate of a Responsible Officer specifying
the days on which banking institutions in the Commonwealth of Pennsylvania are
authorized or obligated by law, executive order or governmental decree to be
closed, (ii) the Indenture Trustee shall provide to the Servicer, the Collateral
Agent and the Note Purchaser a certificate of a Responsible Officer specifying
the days on which banking institutions in the State of New York are authorized
or obligated by law, executive order or governmental decree to be closed and
(iii) the Servicer shall cause the Owner Trustee to provide to the Indenture
Trustee, the Collateral Agent and the Note Purchaser a certificate of a
Responsible Officer specifying the days on which banking institutions in the
State of Delaware are authorized or obligated by law, executive order or
governmental decree to be closed.
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ARTICLE II
SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. Conveyance of the Mortgage Loans. (a) On the terms and
conditions of this Agreement, on each Transfer Date, (i) each Originator agrees
to offer for sale and to sell Mortgage Loans to the Depositor and deliver the
related Mortgage Loan Documents to or at the direction of the Depositor and (ii)
the Depositor agrees to offer for sale and to sell the Mortgage Loans to the
Trust and deliver the related Mortgage Loan Documents to or at the direction of
the Trust. To the extent the Trust has or is able to obtain sufficient funds
under the Indenture and the Secured Notes for the purchase thereof, the Trust
agrees to purchase such Mortgage Loans offered for sale by the Depositor.
(b) During the Transfer Period, on each Transfer Date, subject to the
conditions precedent set forth in Section 6.01 (and Section 6.02 with respect to
the initial Transfer Date) and in accordance with the procedures set forth in
this Agreement, (i) the related Originator will sell and assign to the Depositor
and (ii) the Depositor will sell and assign to the Trust without recourse all of
its respective right, title and interest in and to the Mortgage Loans listed on
the Mortgage Loan Schedule attached to the related Assignment, including all
interest, principal, prepayment fees and other amounts received by the related
Originator, the Depositor or the Servicer on or with respect to such Mortgage
Loans on or after the related Cut-off Date, together with servicing rights and
all right, title and interest in and to the proceeds of any related Mortgage
Insurance Policies and all proceeds of the foregoing, upon payment by the Trust
and the Depositor, as applicable, of the Sales Price of such Mortgage Loans. In
the event that the Sales Price of any Mortgage Loans is deemed to be less than
the fair market value of such Mortgage Loans, the difference shall be deemed to
be a capital contribution made by the applicable Originator to the Depositor and
by the Depositor to the Trust. The consideration received by the Originators
hereunder will be allocated among them in proportion to the outstanding
principal balance of the Mortgage Loans sold by each. During the term of this
Agreement each of the Originators covenants and agrees to maintain an ownership
interest in the Depositor proportionate to the principal amount of Mortgage
Loans contributed to the Depositor by such Originator.
(c) The foregoing sales, transfers, assignments, set overs and
conveyances do not, and are not intended to, result in a creation or an
assumption by the Trust of any of the obligations of the Depositor, any
Originator or any other Person in connection with the Mortgage Loans or under
any agreement or instrument relating thereto except as specifically set forth
herein.
(d) As of each Transfer Date, the Trust acknowledges the conveyance to
it of the Mortgage Loans and other property comprising the Trust Estate,
including all rights, title and interest of the Depositor in and to the Mortgage
Loans, receipt of which is hereby acknowledged by the Trust. Concurrently with
such delivery, as of each Transfer Date, pursuant to the Indenture the Trust
pledges the Mortgage Loans and all the other property comprising the Trust
Estate to the Indenture Trustee, as collateral agent and secured party on behalf
and for the benefit of the Noteholders.
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Section 2.02. Ownership and Possession of Custodial Loan Files. With
respect to each Mortgage Loan, as of the related Transfer Date, the ownership of
the related Mortgage Note, the related Mortgage and the contents of the related
Mortgage Loan Documents shall be vested in the Trust for the benefit of the
Noteholders, although possession of the Servicer's Loan File on behalf of and
for the benefit of the Noteholders shall remain with the Servicer, and the
Collateral Agent shall take possession of the Custodial Loan Files as
contemplated in Section 2.05.
Section 2.03. Books and Records; Intention of the Parties. (a) Each of
the Servicer and the Collateral Agent shall be responsible for maintaining, and
shall maintain, a complete set of books and records for each Mortgage Loan which
shall be clearly marked to reflect the ownership of each Mortgage Loan, as of
the related Transfer Date, by the Trust and for the benefit of the Noteholders.
The Originators, the Depositor and the Servicer shall take no action
inconsistent with the Trust's ownership of the Trust Estate 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 other assets in the Trust
Estate are held by the Collateral Agent, on behalf of the Indenture Trustee, for
the benefit of the Noteholders. In addition, the Originators, 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 Estate by stating
that it is not the owner of such asset and that the Trust is the owner of such
Mortgage Loan or other asset in the Trust Estate, which is held by the
Collateral Agent, on behalf of the Indenture Trustee, for the benefit of the
Noteholders.
(b) It is the intention of the parties hereto that, other than for
federal, state and local income or franchise tax purposes and accounting
purposes, the transfers and assignments of the Mortgage Loans and other property
comprising the Trust Estate on each Transfer Date shall constitute a sale of the
Mortgage Loans from (i) the Originators to the Depositor and (ii) the Depositor
to the Trust; and such Mortgage Loans shall not thereafter be property of the
Originators or the Depositor. It is, further, not intended that such conveyances
be deemed a pledge of the Mortgage Loans or such other property to secure a debt
or other obligation by (i) the Originators to the Depositor or (ii) the
Depositor to the Trust. The parties hereto shall treat the Secured Notes as
indebtedness for federal, state and local income and franchise tax purposes.
(c) In the event that the Mortgage Loans or any of such other property
are held to be property of the Originators or 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 Article II
shall be deemed to be a grant (x) by the Originators to the Depositor and (y) by
the Depositor to the Trust of a fully perfected first priority security interest
in all of the related Originator's, or the Depositor's, right, title and
interest in and to the Mortgage Loans, all Mortgage Insurance Policies and
Insurance Proceeds, all related servicing rights, general intangibles, accounts
(including any interest of the Depositor or the Originators in escrow accounts)
and such other property related to the Mortgage Loans, any interest of the
Depositor or the Originator in escrow accounts 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
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cash, instruments, securities or other property, including, without limitation,
all amounts from time to time held or invested in the Collection Account,
whether in the form of cash, instruments, securities or other property and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property; (iii) the possession by the
Collateral Agent, on behalf of the Indenture Trustee, 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
Indenture Trustee for the purpose of perfecting such security interest under
applicable law.
(d) On or before the initial Transfer Date, each Originator shall, at
its expense, cause to be filed UCC-1 Financing Statements naming such Originator
as "debtor" and the Depositor as "secured party" and describing the Mortgage
Loans and other property being sold by the Originator to the Depositor with the
office of the Secretary of the State in which the Originator is organized and
such other jurisdictions as shall be necessary to perfect a security interest in
the Trust Estate. On or before the initial Transfer Date, the Depositor shall,
at its sole expense, cause to be filed UCC-1 Financing Statements naming the
Depositor as "debtor" and the Trust as "secured party" and describing the
Mortgage Loans and other property being sold by the Depositor to the Trust with
the office of the Secretary of State of the state in which the Depositor is
organized and any other jurisdictions as shall be necessary to perfect a
security interest in the Mortgage Loans and other property.
(e) The Servicer agrees that, from time to time, at its expense, it
shall cause the Originators to (and the Depositor on behalf of itself also
agrees that it shall), promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate, or
that the Servicer, the Indenture Trustee or the Collateral Agent may reasonably
request, in order to perfect, protect or more fully evidence the transfer of
ownership of the Mortgage Loans and other assets in the Trust Estate or to
enable the Collateral Agent, on behalf of the Indenture Trustee, to exercise or
enforce any of its rights hereunder. Without limiting the generality of the
foregoing, the Servicer, the Originators and the Depositor will, upon the
request of the Servicer, the Indenture Trustee or the Collateral Agent 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.
(f) The Originators and the Depositor hereby grant to the Servicer, the
Indenture Trustee and the Collateral Agent powers of attorney to execute all
documents on its behalf under this Agreement as may be necessary or desirable to
effectuate the foregoing.
Section 2.04. Facility Fee. The Trust and, if not paid in full by the
Trust, then the Originators and the Sponsor, jointly and severally, agree to pay
to the Note Purchaser, in two equal installments, one installment being on the
Closing Date and the other installment being six (6) months after the Closing
Date, an amount equal to the Facility Fee. Such payment shall be made in
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Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Collection Account for distribution to the Note Purchaser
in accordance with Section 8.06 of this Agreement.
Section 2.05. Possession of Custodial Loan Files; Access to Servicer's
Loan Files. (a) Pursuant to Section 2.06 hereof, the related Originator will
deliver or cause to be delivered the Custodial Loan File related to each
Mortgage Loan to the Collateral Agent, on behalf of the Indenture Trustee.
(b) The Collateral Agent will be the custodian, on behalf of the
Indenture Trustee, to hold the Custodial Loan Files in trust for the benefit of
all present and future Noteholders. In the event the Collateral Agent resigns or
is removed, the Indenture Trustee shall either (x) hold the Custodial Loan
Files, or (y) appoint a successor Collateral Agent as set forth in Section 11.08
hereof to hold the Custodial Loan Files.
(c) The Collateral Agent shall afford the Depositor, the Originators,
the Trust, the Note Purchaser and the Servicer reasonable access to all records
and documentation regarding the Mortgage Loans relating to this Agreement, such
access being afforded at customary charges, upon reasonable prior written
request and during normal business hours at the offices of the Collateral Agent.
Section 2.06. Delivery of Mortgage Loan Documents. (a) In connection
with the transfer and assignment of the Mortgage Loans, the Originators shall,
no less than one (1) Business Day prior to the related Transfer Date, deliver to
the Collateral Agent, on behalf of the Indenture Trustee (as Collateral Agent
and secured party on behalf of and for the benefit of the Noteholders), a
Mortgage Loan Schedule and each of the following documents or instruments with
respect to each Mortgage Loan (other than any Wet-Ink Mortgage Loan covered by
Section 2.06(b) hereof) so transferred or assigned:
(i) the original Mortgage Note and related power of attorney,
if any, endorsed without recourse from the Originators in blank;
including all intervening endorsements showing a complete chain of
endorsement;
(ii) the related original Mortgage with evidence of recording
indicated thereon or a copy thereof certified by the applicable
recording office;
(iii) if the original Mortgage does not show the related
Originator as the mortgagor thereon, the recorded mortgage assignment,
or copy thereof certified by the applicable recording office, 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, in which case it must be in recordable form, but
need not have been previously recorded);
(iv) a mortgage assignment in recordable form of each Mortgage
endorsed from the related Originator to "JPMorgan Chase Bank, as
collateral agent for the holder of the related mortgage note from time
to time";
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(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 a completed
assignment thereof in recordable form cannot be delivered by the related
Originator to the Collateral Agent, on behalf of the Indenture Trustee on or
prior to such Business Day prior to the related Transfer Date (or, with respect
to Wet-Ink Mortgage Loans, within five (5) Business Days following such Transfer
Date), due to a delay in connection with recording, the related Originator may:
1) in lieu of delivering such original recorded Mortgage,
deliver to the Collateral Agent, on behalf of the Indenture 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
2) in lieu of delivering the completed assignment in
recordable form, deliver to the Collateral Agent, on behalf of the
Indenture Trustee, the assignment in recordable form, otherwise
complete except for recording information.
The Collateral Agent, on behalf of the Indenture Trustee, shall
promptly upon receipt thereof, with respect to each Mortgage Note described in
Section 2.06(a)(i) hereof and each assignment described in Section 2.06(a)(iv)
hereof, if requested by the Note Purchaser, fill in the name of the Collateral
Agent.
(b) With respect to each Wet-Ink Mortgage Loan, within five (5)
Business Days following the related Transfer Date, the related Originator shall
have delivered or caused to be delivered to the Collateral Agent, on behalf of
the Indenture Trustee, the Custodial Loan File documents.
(c) Notwithstanding anything contrary in Section 2.06(a), all documents
sent out for correction will be returned to the Collateral Agent within ten (10)
calendar days.
(d) As promptly as practicable, but in any event within thirty (30)
days from the request of the Note Purchaser, the related Originator shall
promptly submit for recording in the appropriate public office for real property
records, each assignment referred to in Section 2.06(a)(iv); provided, however,
that, for administrative convenience and facilitation of servicing and to reduce
costs, Assignments of Mortgage shall not be required to be submitted for
recording with respect to any Mortgage Loan if the Collateral Agent, the
Indenture Trustee and the Note Purchaser has received an Opinion of Counsel,
satisfactory in form and substance to each of them, to the effect that the
recordation of such Assignments of Mortgage in any specific jurisdiction is not
necessary to protect the Indenture Trustee's interest in the related Mortgage.
The Collateral Agent, while serving as such, on behalf of the Indenture Trustee,
shall retain a copy, after receipt thereof, of each assignment submitted for
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recording. In the event that any such assignment is lost or returned unrecorded
because of a defect therein, such Originator shall promptly prepare a substitute
assignment or cure such defect, as the case may be, and thereafter such
Originator shall submit each such assignment for recording. The costs relating
to the delivery and recordation of the documents in connection with the Mortgage
Loans as specified in this Article II shall be borne by the related Originator.
(e) The related Originator shall, within five (5) Business Days after
the receipt thereof, deliver, or cause to be delivered, to the Collateral Agent,
on behalf of the Indenture Trustee: (i) the original recorded Mortgage and
related power of attorney, if any, in those instances where a copy thereof
certified by the related Originator was delivered to the Collateral Agent, on
behalf of the Indenture Trustee; (ii) if applicable, the original recorded
assignment of Mortgage from the related Originator to the Collateral Agent,
which, together with any intervening assignments of Mortgage, evidences a
complete chain of assignment from the originator of the Mortgage Loan to the
Collateral Agent, in those instances where copies of such assignments certified
by the applicable recording office were delivered to the Collateral Agent, on
behalf of the Indenture Trustee; and (iii) the title insurance policy or title
opinion required in Section 2.06(a)(vi) in those instances where a copy thereof
certified by the related Originator was delivered to the Collateral Agent, on
behalf of the Indenture Trustee.
Notwithstanding anything to the contrary contained in this Section
2.06, in those instances where the public recording office retains the original
Mortgage, power of attorney, if any, assignment or Assignment of Mortgage after
it has been recorded or such original has been lost, the related Originator
shall be deemed to have satisfied its obligations hereunder upon delivery to the
Collateral Agent, on behalf of the Indenture Trustee, of a copy of such
Mortgage, power of attorney, if any, assignment or Assignment of Mortgage
certified by the public recording office to be a true copy of the recorded
original thereof.
From time to time the related Originator may forward, or cause to be
forwarded, to the Collateral Agent, on behalf of the Indenture Trustee,
additional original documents evidencing any assumption or modification of a
Mortgage Loan.
(f) All original documents relating to the Mortgage Loans that are not
delivered to the Collateral Agent, on behalf of the Indenture Trustee, as
permitted by Section 2.06(a) hereof are, and shall be, held by the Servicer or
the related Originator, as the case may be, in trust for the benefit of the
Indenture Trustee, on behalf of the Noteholders. In the event that any such
original document is required pursuant to the terms of this Section 2.06 to be a
part of a Custodial Loan File, such document shall be delivered promptly to the
Collateral Agent, on behalf of the Indenture Trustee. From and after the sale of
the Mortgage Loans to the Trust pursuant hereto, to the extent that the related
Originator retains legal title of record to any Mortgage Loans prior to the
vesting of legal title in the Trust, such title shall be retained in trust for
the Trust as the owner of the Mortgage Loans, and the Indenture Trustee, as the
pledgee of the Trust under the Indenture. In acting as custodian of any original
document which is part of the Custodial Loan Files, the Servicer agrees further
that it does not and will not have or assert any beneficial ownership interest
in the related Mortgage Loans or the Servicer's Loan Files. Promptly upon the
Servicer's receipt of any such original document, the Servicer, on behalf of the
Trust, shall ▇▇▇▇ conspicuously each such original document, and its master data
processing records with a legend evidencing that the Trust has purchased the
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related Mortgage Loan and all right and title thereto and interest therein, and
pledged such Mortgage Loan and all right and title thereto and interest therein
to the Indenture Trustee, on behalf of the Noteholders.
Section 2.07. Acceptance of the Trust Estate; Certification by the
Collateral Agent; Certain Substitutions and Repurchases. (a) With respect to
each Transfer Date, no later than 8:30 a.m., New York, New York time, one (1)
Business Day prior to such Transfer Date, the Servicer, on behalf of the
Originator, shall provide the Collateral Agent and the Note Purchaser with an
Assignment executed by the related Originator(s) and an Assignment executed by
the Depositor, and a related Mortgage Loan Schedule (such information contained
on the Mortgage Loan Schedule shall be delivered to the Collateral Agent and the
Note Purchaser in computer-readable form acceptable to the Collateral Agent and
the Note Purchaser, such format, in the case of the Collateral Agent, to be in
substantially the form of Exhibit A or in such other format as the Trust and the
Collateral Agent may from time to time mutually agree) with respect to the
Mortgage Loans to be delivered to the Collateral Agent on such Transfer Date.
If the Collateral Agent has received such Assignments and Mortgage Loan
Schedule by the time set forth above, the Collateral Agent will deliver, no
later than 2:00 p.m., New York, New York time, one (1) Business Day prior to
such Transfer Date via facsimile or by electronic transmission, to the Indenture
Trustee, with a copy to the Note Purchaser, the Servicer and the Trust, an
Exceptions Report with respect to the Mortgage Loans other than Wet-Ink Mortgage
Loans.
The Collateral Agent will accept such additional document deliveries as
may be made by the Depositor after its production of the Exceptions Report until
8:30 a.m., New York, New York time on such Transfer Date, and will deliver, no
later than 11:00 a.m., New York, New York time, on such Transfer Date, via
facsimile or by electronic transmission, to the Indenture Trustee, with a copy
to the Note Purchaser, the Servicer and the Trust, the final Exceptions Report,
which shall supercede the Exceptions Report referenced in the above paragraph.
With respect to Wet-Ink Mortgage Loans, no later than 5 p.m., New York,
New York time, on the sixth (6th) Business Day after the Transfer Date, the
Collateral Agent will deliver an Exceptions Report. The Collateral Agent will
accept additional documents until 11:00 a.m., New York, New York time, the
following day, and will deliver a revised Exceptions Report by 2:00 p.m., New
York, New York time. The Collateral Agent will deliver the final Exceptions
Report and Trust Receipt by 4:00 p.m., New York, New York time.
On such Transfer Date, the Collateral Agent will deliver, via facsimile
or by electronic transmission, no later than 4:00 p.m., New York, New York time,
to the Indenture Trustee, with a copy to the Note Purchaser, the Servicer and
the Trust, an Exceptions Report and a Trust Receipt with respect to such
Mortgage Loans (other than Wet-Ink Mortgage Loans). Any provision of this
Agreement to the contrary notwithstanding, however, a Trust Receipt will only be
delivered within one (1) Business Day if all related Custodial Loan Files have
been delivered to the Collateral Agent no later than 8:30 a.m. on the Business
Day prior to such date and no more than 100 Custodial Loan Files, with respect
to the Mortgage Loans other than Wet-Ink Mortgage Loans, have been delivered on
any single day in connection with such Transfer Date.
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(b) To the extent an Exceptions Report is not waived by the Note
Purchaser as provided for in Section 6.01 hereof, the purchase will not take
place on such Transfer Date. If the Note Purchaser elects in its sole discretion
to waive the Exceptions Report as a condition precedent to sale, with respect to
any Mortgage Loans which are set forth as exceptions in the Exceptions Report,
the related Originator shall cure such exceptions by delivering such missing
documents to the Collateral Agent or otherwise curing the defect no later than 5
Business Days following the receipt of the first Exceptions Report listing such
exception with respect to such Mortgage Loan. The related Originator may cure
the defect by repurchasing such Defective Mortgage Loan at the Repurchase Price
thereof with respect to such Mortgage Loan by depositing such Repurchase Price
in the Collection Account. In lieu of such a repurchase, the Depositor and
related Originator may comply with the substitution provisions of Section 4.02.
The related Originator shall provide the Servicer, the Indenture Trustee, the
Collateral Agent, the Trust and the Note Purchaser with a certification of a
Responsible Officer on or prior to such repurchase or substitution indicating
that the related Originator intends to repurchase or substitute such Mortgage
Loan.
(c) With respect to the substitution by the related Originator of a
Qualified Substitute Mortgage Loan pursuant to Section 4.02 hereof, the Servicer
shall provide the Collateral Agent with an updated Mortgage Loan Schedule (such
information contained on the Mortgage Loan Schedule shall be delivered to the
Collateral Agent in computer-readable form) with respect to such Qualified
Substitute Mortgage Loans to be pledged to the Indenture Trustee. The Collateral
Agent shall, no later than 2:00 p.m., New York, New York time, on the next
Business Day after the Collateral Agent's receipt of the Custodial Loan File
with respect thereto, deliver, via facsimile or by electronic transmission, to
the Indenture Trustee, with a copy to the Note Purchaser, the Servicer and the
Trust, an Exceptions Report with respect to each such Mortgage Loan.
(d) Each Exceptions Report shall list all Exceptions using such codes
as are customarily used by the Collateral Agent and in form and substance agreed
to by the Collateral Agent and the Note Purchaser. The delivery of each
Exceptions Report to the Indenture Trustee and the Note Purchaser shall be the
Collateral Agent's representation that, other than the Exceptions listed
therein: (A) all Mortgage Loan Documents have been reviewed by the Collateral
Agent in accordance with the review procedures set forth in Exhibit K (the
"Review Procedures") and appear on their face to be regular and to relate to
such Mortgage Loan, and (B) based upon a review of the Mortgage Note, items (i),
(ii) (as to the Borrower's name only), (iii) and (xxii) with respect to such
Mortgage Loan, as set forth in the Mortgage Loan Schedule delivered by the
related Originator to the Collateral Agent are the same as shown in the Mortgage
Note.
(e) In giving each of the Trust Receipts and Exceptions Reports,
neither the Indenture Trustee nor the Collateral Agent shall be under any duty
or obligation (i) to inspect, review or examine any such documents, instruments,
securities or other papers to determine that they or the signatures thereto are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face or (ii) to determine whether any Custodial Loan File should
include a flood insurance policy, any rider, addenda, surety or guaranty
agreement, power of attorney, buy down agreement, assumption agreement,
modification agreement, written assurance or substitution agreement. For the
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avoidance of doubt, the Collateral Agent's review shall not include whether
Assignments of Mortgage are in recordable form.
(f) A new Trust Receipt shall be issued in connection with each
delivery of Mortgage Loans to the Collateral Agent under this Agreement, and a
cumulative Exceptions Report and cumulative Mortgage Loan Schedule shall be
attached to such Trust Receipt. Upon the issuance of a new Trust Receipt, the
prior Trust Receipt shall be deemed canceled.
(g) In connection with each Trust Receipt delivered hereunder by the
Collateral Agent, the Collateral Agent shall make no representations as to, and
shall not be responsible to verify, (A) the validity, legality, enforceability,
due authorization, recordability, sufficiency, or genuineness of any of the
documents contained in each Custodial Loan File or (B) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan. Subject to
the preceding sentence, the Originator hereby gives the Collateral Agent notice
that from and after each Transfer Date, the Indenture Trustee shall have a
security interest in each Mortgage Loan identified on a Trust Receipt until such
time as the Collateral Agent receives written notice from the Indenture Trustee
that the Indenture Trustee no longer has a security interest in such Mortgage
Loan.
(h) Notwithstanding and in addition to the foregoing, in the event that
the Collateral Agent identifies a change to the Exceptions listed on the prior
Exceptions Report, the Collateral Agent shall perform any Review Procedures
required with respect thereto and deliver an updated Exceptions Report
reflecting such change to the Servicer, the Indenture Trustee and the Note
Purchaser, via facsimile or by electronic transmission, no later than 2:00 p.m.,
New York, New York time, on the next succeeding Business Day. Each Exceptions
Report so delivered by the Collateral Agent to the Note Purchaser shall
supersede and cancel the Exceptions Report previously delivered by the
Collateral Agent to the Note Purchaser hereunder.
(i) Each delivery of Custodial Loan Files to the Collateral Agent
pursuant to this Section 2.07 shall be deemed received by the Collateral Agent
on the Business Day immediately following such delivery.
(j) Under no circumstances shall the Collateral Agent be obligated to
verify the authenticity of any signature (whether original or facsimile) on any
of the documents received or examined by it in connection with this Agreement or
the authority or capacity of any Person to execute or issue any such document,
nor shall the Collateral Agent be responsible for the value, form, substance,
validity, recordability, perfection, priority, effectiveness or enforceability
of any of such documents.
(k) The Note Purchaser hereby notifies the Collateral Agent that the
Indenture Trustee shall be the Note Purchaser's designee for purposes of
accepting delivery of all Trust Receipts issued pursuant to Section 2.07(f). The
Collateral Agent acknowledges that the Note Purchaser shall be entitled to
change this designation at any time by notice to the Collateral Agent delivered
in accordance herewith.
Section 2.08. Possession of Custodial Loan Files. (a) With respect to
the Mortgage Note, the Mortgage and the Assignment of Mortgage and other
documents constituting each Custodial Loan File that is delivered to the
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Collateral Agent or that otherwise comes into the possession of the Collateral
Agent, the Collateral Agent is the custodian for and the bailee of the Indenture
Trustee, as collateral agent and secured party on behalf and for the benefit of
the Noteholders, exclusively; provided that the Note Purchaser may transfer its
interest in any Trust Receipt to one other party, as provided in the Trust
Receipt, by special endorsement, which other party may only transfer such Trust
Receipt by a second endorsement in favor of the Note Purchaser or an affiliate
of the Note Purchaser. Each Person so endorsing a Trust Receipt shall promptly
notify the Collateral Agent, in writing, of such endorsement and of the
substance thereof. The Collateral Agent shall hold all Mortgage Loan Documents
received by it constituting the Custodial Loan File for the exclusive use and
benefit of the Indenture Trustee, as collateral agent and secured party on
behalf and for the benefit of the Note Purchaser, and shall make disposition
thereof only in accordance with this Agreement and the instructions furnished by
the Note Purchaser or by the Indenture Trustee on behalf of the Note Purchaser.
The Collateral Agent shall electronically segregate and maintain continuous
custody of all Mortgage Loan Documents constituting the Custodial Loan File in
secure and fire resistant facilities in accordance with customary standards for
such custody. The Collateral Agent makes no representations as to, and shall not
be responsible to verify, the legality, enforceability, sufficiency, due
authorization or recordability of any document in any Custodial Loan File.
(b) Upon surrender of any Trust Receipt by or on behalf of the Note
Purchaser to the Collateral Agent and delivery of a Request for Release
substantially in the form of Exhibit D, the Note Purchaser shall issue
instructions regarding the Mortgage Loans designated in the applicable Trust
Receipt, including instructions to release the related Mortgage Loans as the
Trust may designate. In conjunction therewith, the Collateral Agent shall cancel
the related Trust Receipt.
(c) If a Trust Receipt is lost, destroyed or otherwise unavailable for
surrender to the Collateral Agent, the Note Purchaser shall present to the
Collateral Agent documentation in the form attached as Exhibit C. Upon receipt
by the Collateral Agent of such documentation, the Note Purchaser shall have the
right to issue, or cause to be issued by the Indenture Trustee, instructions
pursuant to Section 2.08(b) regarding the Mortgage Loans covered by a Trust
Receipt without surrender of the related document.
(d) The Collateral Agent shall cause to be kept at its corporate trust
office a register (the "Custodial Register") in which, subject to such
reasonable regulations as it may prescribe, the Collateral Agent shall reflect
the ongoing status of Mortgage Loans subject to Trust Receipts as herein
provided. The Collateral Agent shall amend the Custodial Register and each
related Mortgage Loan Schedule on a daily basis to reflect the Mortgage Loans
then subject to a Trust Receipt and provide such amended Mortgage Loan Schedules
to the Note Purchaser, the Trust, the Servicer and the Indenture Trustee in
accordance with Section 2.18(b). Absent manifest error, the Collateral Agent's
Custodial Register and the related Mortgage Loan Schedules, as amended, shall
control. The Custodial Register shall be deemed to contain proprietary
information, and only the Note Purchaser, the Trust, the Collateral Agent, the
Indenture Trustee and the Servicer or their respective designees shall have
access to such information. Each of the Note Purchaser, the Trust, the Indenture
Trustee and the Servicer shall give prompt written notice to Collateral Agent
identifying any such designee. In the event that (i) the Servicer, the
Collateral Agent, the Indenture Trustee or the Trust shall be served by a third
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party with any type of levy, attachment, writ or court order with respect to any
Custodial Loan File, or any Mortgage Loan Document contained therein, or (ii) a
third party shall institute any court proceeding by which any Custodial Loan
File or any Mortgage Loan Document included therein shall be required to be
delivered otherwise than in accordance with the provisions of this Agreement,
the party receiving such service shall promptly deliver or cause to be delivered
to the other parties to this Agreement copies of all court papers, orders,
documents and other materials concerning such proceedings. The Collateral Agent
shall, to the extent permitted by law, continue to hold and maintain all of the
Mortgage Loan Documents that are the subject of such proceedings pending a
final, non-appealable order of a court of competent jurisdiction permitting or
directing such disposition thereof. Upon final determination of such court, the
Collateral Agent shall dispose of such Custodial Loan File or any Mortgage Loan
Document included therein as directed by such court, and the Collateral Agent's
expenses in so doing shall constitute expenses it is entitled to be reimbursed
by the Servicer in accordance with its separate agreement with the Servicer as
contemplated by Section 11.05(a).
Section 2.09. Future Defects. During the term of this Agreement, if the
Collateral Agent discovers any defect set forth in Section 2.07(a) or 2.07(c)
with respect to the items certified pursuant to Section 2.06 with respect to any
Custodial Loan File, the Collateral Agent shall give written specification of
such defect to the Trust, the Servicer, the Note Purchaser and the Indenture
Trustee.
Section 2.10. Release for Servicing. From time to time and as
appropriate for the foreclosure or servicing of any of the Mortgage Loans, but
so long as a Servicer Event of Default shall not have occurred, the Collateral
Agent is hereby authorized, upon written receipt from the Servicer of a Request
for Release in the form annexed hereto as Exhibit D, in duplicate, to release to
the Servicer the related Custodial Loan File to the Servicer. All Custodial Loan
Files so released to the Servicer shall be held by the Servicer in trust for the
benefit of the Note Purchaser and the Indenture Trustee, as collateral agent and
secured party on behalf and for the benefit of the Note Purchaser, in accordance
with this Agreement. The Servicer shall return to the Collateral Agent the
Custodial Loan File upon the earliest of (x) when the Servicer's need therefor
in connection with such foreclosure or servicing no longer exists, (y) the
occurrence of a Servicer Event of Default, together with endorsements in blank
duly executed by the Trust, and (z) within ten (10) days following the date of
release, unless the Mortgage Loan shall have been liquidated or released to an
attorney in connection with a foreclosure proceeding, in which case, upon
receipt of an additional Request for Release, in duplicate, certifying such
liquidation from the Servicer to the Collateral Agent in the form annexed hereto
as Exhibit D, and the Collateral Agent shall countersign and release one copy to
the Servicer as acknowledgment.
Section 2.11. Limitation on Release. Notwithstanding the provisions of
Section 2.10, the Collateral Agent shall at no time release to the Servicer, and
the Servicer shall not be entitled under Section 2.10 to the release of, active
Custodial Loan Files (including those requested) representing Mortgage Loans
with an aggregate Principal Balance of more than $10,000,000 (excluding those
Mortgage Loans that have been paid in full, liquidated, in foreclosure or in
bankruptcy). Any additional Custodial Loan Files requested to be released by the
Servicer may be released for the reasons provided in Section 2.10 only upon
written authorization of the Note Purchaser, which authorization shall not be
unreasonably withheld or delayed. The limitations of this Section 2.11 shall not
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apply to the release of Custodial Loan Files to the Servicer under Section 2.12.
Prior to releasing any Custodial Loan File to the Servicer pursuant to
this Section, the Collateral Agent shall complete the endorsement in blank of
the related Mortgage Note, as follows: "JPMorgan Chase Bank, as custodian or
trustee under the applicable custody or trust agreement, without recourse."
Section 2.12. Release for Sale. From time to time and as appropriate
for the Disposition of any of the Mortgage Loans, but only so long as no Event
of Default or Amortization Event shall have occurred, the Collateral Agent is
hereby authorized, upon written receipt from the related Originator of a Request
for Release, in duplicate, to release to the applicable Disposition Participant
the related Custodial Loan File. The related Originator shall provide to the
Collateral Agent a completed Request for Release with respect to the related
Mortgage Loans. The Custodial Loan Files relating to the Mortgage Loans included
in a Request for Release shall be sent for delivery by the Collateral Agent to
the applicable Disposition Participant specified by the related Originator to
the Collateral Agent in writing. Such Custodial Loan Files shall be sent in the
original form and specific order received from the related Originator, via
overnight courier at such Originator's expense in accordance with the Delivery
Instructions and under cover of a fully completed Bailee Letter. The Collateral
Agent shall not deliver any Custodial Loan File to any potential Disposition
Participant unless such Disposition Participant was identified by the related
Note Purchaser. The Collateral Agent shall deliver such documents accompanied by
a Bailee Letter to the Disposition Participant and follow up to ensure that such
Disposition Participant has executed the Bailee Letter and returned the same to
the Collateral Agent. Any Payoff Amount sent by a Disposition Participant on
account of Mortgage Loans shall be sent to the Note Purchaser or its designee.
Section 2.13. Release for Payment.
(a) Upon the repurchase of any Mortgage Loan pursuant hereto or to the
Indenture, or upon the payment in full of any Mortgage Loan, and upon receipt by
the Collateral Agent of the Servicer's Request for Release, in duplicate (which
certification shall include a statement to the effect that all amounts received
in connection with such payment or repurchase have been credited to the
Collection Account as provided herein), the Collateral Agent shall promptly
release the related Custodial Loan File to the Servicer, and amend both the
Custodial Register and the related Mortgage Loan Schedule accordingly.
(b) Any request for release of any Custodial Loan Files to any third
party purchaser shall be sent in the form of a Request For Release which is
signed by the Note Purchaser. Promptly upon receipt by the Note Purchaser of the
full amount set forth in such transmittal letter as the "Payoff Amount," the
Note Purchaser shall notify the Collateral Agent thereof in writing. Any Payoff
Amount sent by a third-party purchaser of Mortgage Loans shall be sent to the
Note Purchaser or its designee.
Section 2.14. Examination of Custodial Loan Files. Upon reasonable
prior notice to the Collateral Agent of at least five (5) Business Days, the
Note Purchaser, the Trust, Indenture Trustee or the Servicer, and their
respective designated agents, accountants, attorneys and auditors, will be
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permitted during normal business hours to examine the Custodial Loan Files,
documents, records and other papers in the possession of or under the control of
the Collateral Agent relating to any or all of the Mortgage Loans, provided that
the Collateral Agent shall not be responsible for any expenses incurred by the
requesting party in conducting such examination.
Section 2.15. Assignment of Agreement. The Originators and the
Depositor hereby acknowledge and agree that the Trust may assign its interest
under this Agreement to the Indenture Trustee, for the benefit of the
Noteholders, as may be required to effect the purposes of the Indenture, without
further notice to, or consent of, the Originators or the Depositor, and the
Indenture Trustee shall succeed to such of the rights and obligations of the
Trust hereunder as shall be so assigned. The Trust shall, pursuant to the
Indenture, assign all of its right, title and interest in and to the Mortgage
Loans and its right to exercise the remedies created by Sections 2.07 and 4.02
for breaches of the representations, warranties, agreements and covenants of the
Originators contained in Sections 2.05, 2.06, 3.01 and 4.01, assign such right,
title and interest to the Indenture Trustee, for the benefit of the Noteholders.
The Originators and the Depositor agree that, upon such assignment to the
Indenture Trustee, such representations, warranties, agreements and covenants
will run to and be for the benefit of the Indenture Trustee and the Indenture
Trustee may enforce, without joinder of the Trust, the repurchase obligations of
the Originators set forth herein with respect to breaches of such
representations, warranties, agreements and covenants.
Section 2.16. Termination of Transfer Period. The Transfer Period will
end on the earlier of the last day of the Commitment Term or the occurrence of
an Amortization Event; provided, that, upon the occurrence of an Event of
Default or Default, the Note Purchaser may, in its sole discretion, terminate
the Transfer Period; and provided, further, that if the precipitating Default is
cured before it becomes an Event of Default and no other Default or Event of
Default then exists, the Transfer Period shall be reinstated.
Section 2.17. Correction of Errors. The Trust, the Depositor, the
Originators and the Servicer shall cooperate to reconcile any errors in
calculating the Sales Price from and after each Transfer Date. In the event that
an error in the Sales Price is discovered by any such party, including, without
limitation, any error due to miscalculations of Market Value where insufficient
information has been provided with respect to a Mortgage Loan to make an
accurate determination of Market Value as of any applicable Transfer Date, any
miscalculations of Principal Balance, accrued interest or aggregate unreimbursed
Servicing Advances attributable to the applicable Mortgage Loan, or any
prepayments not properly credited, such party shall give prompt notice to the
other parties hereto, and the party that shall have benefited from such error
shall promptly remit to the other, by wire transfer of immediately available
funds, the amount of such error with no interest thereon.
Section 2.18. Copies of Mortgage Documents; Periodic Statements. (a)
Upon the reasonable request of the Note Purchaser, the Trust, the Indenture
Trustee or the Servicer and at the cost and expense of the requesting party, the
Collateral Agent shall provide the requesting party with copies of the Mortgage
Notes, Mortgages, Assignment of Mortgages and other documents relating to one or
more of the Mortgage Loans.
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(b) Upon the request of the Note Purchaser, the Trust, the Indenture
Trustee or the Servicer at any time, the Collateral Agent shall provide to the
requesting party a list of all the Mortgage Loans for which the Collateral Agent
holds a Custodial Loan File pursuant to this Agreement. Such list shall be
provided to the requesting party electronically in such format as the requesting
party and the Collateral Agent may mutually agree upon (consent to such format
not to be unreasonably withheld by either the Collateral Agent or the requesting
party) and, if the requesting party so specifies, in hard copy format as well.
In the latter case, such list may be in the form of a copy of the Mortgage Loan
Schedule (as amended and revised from time to time) with manual deletions to
specifically denote any Mortgage Loans paid off or repurchased since the date of
this Agreement.
Section 2.19. Cost of Delivery and Recordation of Documents. The costs
relating to the delivery and recordation of the documents in connection with the
Mortgage Loans as specified in this Article II shall be borne by the
Originators.
Section 2.20. Margin Option. (a) At any time and from time to time, the
Note Purchaser shall have the right to determine whether the Mortgage Loan Base
supports the aggregate Note Principal Balance of the Secured Notes. If at any
time the Note Purchaser determines that the aggregate Note Principal Balance of
the Secured Notes exceeds the Mortgage Loan Base, then, in each such case, a
"Shortfall" shall exist.
(b) The Note Purchaser shall give written notice to the Trust,
Indenture Trustee and the Depositor of such determination and of the amount of
such Shortfall (each such notice, a "Margin Option") and, if notice is provided
by 5:00 p.m. (New York, New York time) the next succeeding Business Day (and
otherwise, the second succeeding Business Day) after receipt of such Margin
Option, (a) the Depositor has contributed to the Trust (i) to the extent held by
or reasonably available to the Depositor, Qualified Substitute Mortgage Loans
having an aggregate Market Value equal to at least the amount of such Shortfall,
and (ii) to the extent that sufficient Qualified Substitute Mortgage Loans are
not so held by, or reasonably available to, the Depositor, cash in an amount
equal to at least the difference between the amount of such Shortfall and the
aggregate Market Value of such Qualified Substitute Mortgage Loans as are
contributed by the Depositor to the Trust (the "Minimum Margin Contribution");
and (b) the Trust has pledged such Qualified Substitute Mortgage Loans, together
with all other assets related thereto, to the Indenture Trustee and has remitted
such cash to the Note Purchaser, for immediate application to the repayment of
the principal of the Secured Notes, then the Shortfall shall be deemed to have
been cured. If, within such period, the Shortfall has not been so cured, or if,
prior to expiration of such period, the Depositor has notified the Note
Purchaser that the Depositor does not intend to effect the Minimum Margin
Contribution, such occurrence shall constitute an Event of Default under the
Indenture; provided, however, that nothing contained herein shall either
obligate the Depositor to effect any Minimum Margin Contribution or impose any
liability to the Note Purchaser on the Depositor for any election by the
Depositor not to effect a Minimum Margin Contribution.
(c) Notwithstanding any other provision of this Agreement or any other
Basic Document to the contrary, if the Depositor effects all or any portion of a
Minimum Margin Contribution, the Trust shall immediately (x) pledge to the
Indenture Trustee on behalf of the Noteholders all Qualified Substitute Mortgage
Loans, together with all other assets related thereto, and (y) direct the
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Indenture Trustee to remit to the Note Purchaser, all cash contributed to the
Trust by the Depositor in response to the precipitating Margin Option. All such
cash shall be immediately applied to repayment of the principal of the Secured
Notes pro rata in accordance with the Shortfall with respect to each Secured
Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the Originators and
the Sponsor. Each of the Originators and the Sponsor hereby represents and
warrants to the Depositor, the Indenture Trustee, the Trust, the Collateral
Agent and the Noteholders, as of the date hereof and each Transfer Date, that:
(a) The Originators and the Sponsor are corporations duly organized,
validly existing and in good standing under the laws of its respective state of
incorporation, and have all licenses necessary to carry on its business as now
being conducted and is licensed, qualified and in good standing in each state
where a Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type conducted by
the Originators and the Sponsor and to perform their obligations as the
Originators and the Sponsor hereunder, and in any event the Originators and the
Sponsor are in compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the related Mortgage Loan; the
Originators and the Sponsor have the full power and authority, corporate and
otherwise, to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Originators and the Sponsor and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement
evidences the valid, binding and enforceable obligation of the Originators and
the Sponsor; and all requisite corporate action has been taken by the
Originators and the Sponsor to make this Agreement valid and binding upon the
Originators and the Sponsor in accordance with its terms;
(b) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Originators or the Sponsor of, or compliance by the
Originators or the Sponsor with, this Agreement or the sale of the Mortgage
Loans pursuant to the terms of this Agreement or the consummation of the
transactions contemplated by this Agreement, or if required, such approval has
been obtained prior to the date hereof;
(c) The Sponsor and the Originators are operated, in each case, in a
manner intended to reduce the risk that the Depositor or the Trust would be
substantively consolidated in the bankruptcy estate of the Sponsor or the
Originators, such that the separate existence of the Depositor or the Trust, on
the one hand, and the Sponsor and the Originators, on the other hand, would be
disregarded in the event of a bankruptcy or insolvency of the Sponsor or the
Originators;
(d) The financial statements and books and records of the Sponsor and
the Originators reflect the separate existence of the Depositor or the Trust;
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(e) Neither the Sponsor nor any of the Originators acts as an agent of
the Depositor or the Trust in any capacity except to the limited extent provided
in the Basic Documents, but instead presents itself to the public as a
corporation separate from the Depositor and the Trust;
(f) Neither the Sponsor nor the Originators are involved in the
day-to-day management of the Depositor or the Trust, except to the extent
provided in the Basic Documents;
(g) Neither the execution and delivery of this Agreement, nor the
acquisition or origination of the Mortgage Loans by the Originators or the
Sponsor or the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement, has or will conflict
with or result in a breach of any of the terms, conditions or provisions of the
Originators' or the Sponsor's charter or by-laws or any legal restriction or any
agreement or instrument to which the Originators or the Sponsor is now a party
or by which it is bound or to which its property is subject, or constitute a
default or result in an acceleration under any of the foregoing, or result in
the violation of any law, rule, regulation, order, judgment or decree to which
the Originators or the Sponsor or its property is subject, or impair the ability
of the Indenture Trustee (or the Servicer as the agent of the Indenture Trustee)
to realize on the Mortgage Loans, or impair the value of the Mortgage Loans;
(h) Neither this Agreement nor any statement, report or other document
prepared by the Originators or the Sponsor and furnished or to be furnished
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement or alleged untrue statement of any material
fact or omits to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading;
(i) Except for the civil subpoena, dated May 14, 2003, received by the
Sponsor from the Civil Division of the United States Attorney for the Eastern
District of Pennsylvania, there is no action, suit, proceeding or investigation
pending or, to the knowledge of the Originators or the Sponsor, threatened
before a court, administrative agency or government tribunal against the
Originators or the Sponsor which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Originators or the
Sponsor, or in any material impairment of the right or ability of the
Originators or the Sponsor to carry on its business substantially as now
conducted, or in any material liability on the part of the Originators or the
Sponsor, or which would draw into question the validity of this Agreement, the
Mortgage Loans, or of any action taken or to be taken in connection with the
obligations of the Originators or the Sponsor contemplated herein, or which
would impair materially the ability of the Originators or the Sponsor to perform
under the terms of this Agreement or that will prohibit its entering into this
Agreement or the consummation of any of the transactions contemplated hereby;
(j) None of the Originators or the Sponsor are in violation of or in
default with respect to, and the execution and delivery of this Agreement by the
Originators or the Sponsor and its performance of and compliance with the terms
hereof will not constitute a violation or 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, which violation or default might have
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consequences that would materially and adversely affect the condition (financial
or other) or operations of the Originators or the Sponsor or its properties or
might have consequences that would materially and adversely affect its
performance hereunder or under any subservicing agreement;
(k) Upon the receipt of each Servicer's Loan File by the Depositor (or
its assignee) under this Agreement, the Depositor (or its assignee) will have
good title to each related Mortgage Loan and such other items comprising the
corpus of the Trust Estate free and clear of any lien created by the related
Originators (other than liens which will be simultaneously released);
(l) The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Originators, and the transfer,
assignment and conveyance of the Mortgage Notes and the Mortgages by the
Originators pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions in effect in any applicable jurisdiction;
(m) With respect to any Mortgage Loan purchased by an Originator, such
Originator acquired title to the Mortgage Loan in good faith, without notice of
any adverse claim;
(n) The Originators and the Sponsor do not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement. The Originators and the Sponsor are solvent and the
sale of the Mortgage Loans by the Originators pursuant to the terms of this
Agreement will not cause the Originators nor the Sponsor to become insolvent.
The sale of the Mortgage Loans by the Originators pursuant to the terms of this
Agreement was not undertaken with the intent to hinder, delay or defraud any of
the Originators' or the Sponsor's creditors;
(o) The Mortgage Loans were not intentionally selected in a manner so
as to affect adversely the interests of the Depositor or of any transferee of
the Depositor (including the Trust and the Indenture Trustee);
(p) Reserved.
(q) The Originators has not dealt with any broker or agent or anyone
else that may be entitled to any commission or compensation in connection with
the sale of the Mortgage Loans to the Depositor other than to the Depositor or
an affiliate thereof;
(r) The consideration received by the Originators upon the sale of the
Mortgage Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Mortgage Loans;
(s) The Originators and the Sponsor are not an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
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(t) Neither the Originators, the Sponsor, nor any of their respective
Subsidiaries is an "affiliate" or a "subsidiary company" of a "public-utility
company", or a "holding company", or an "affiliate" or a "subsidiary company" of
a "holding company", as such terms are defined in the PUHC Act. Further, none of
the transactions contemplated under the Basic Documents shall cause or
constitute a violation of any of the provisions, rules, regulations or orders,
of or under the PUHC Act and the PUHC Act does not in any manner impair the
legality, validity or enforceability of the Mortgage Loans or Mortgage Notes.
(u) With respect to each Plan, the Originators and the Sponsor and
their respective Subsidiaries have fulfilled their obligations in all material
respects, including obligations under the minimum funding standards of ERISA and
the Code and are in compliance in all material respects with the provisions of
ERISA and the Code. No event has occurred which could result in a liability of
the Originators, the Sponsor or their respective Subsidiaries to the PBGC or a
Plan (other than to make contributions in the ordinary course) would reasonably
be expected to have a Material Adverse Effect on the properties, liabilities,
condition (financial or otherwise), business or operations of the Originators,
the Sponsor or their respective Subsidiaries. There have not been any nor are
there now existing any events or conditions that would cause the Lien provided
under Section 4068 of ERISA to attach to any property of the Originators,
Sponsor or their respective Subsidiaries. Unfunded Liabilities as of the date
hereof do not exceed Twenty-five Thousand Dollars ($25,000). No "prohibited
transaction" has occurred with respect to any Plan.
(v) The Originators and the Sponsor have filed (or caused to be filed)
all required federal, state and local income, excise, property and other tax
returns with respect to their and their respective Subsidiaries' operations, all
of such returns are true and correct and the Originators and the Sponsor have
paid or caused to be paid -- or is protesting by appropriate proceedings
diligently pursued and has established adequate reserves therefor -- all taxes
which are due and owing under applicable law or as shown on any assessment to
the extent such taxes have become due, including all applicable FICA payments
and withholding taxes. The amounts reserved as a liability for income taxes and
other taxes payable in the financial statements heretofore furnished to the
Indenture Trustee and Note Purchaser are sufficient for payment of all unpaid
federal, state and local income, excise, property and other taxes -- whether or
not disputed -- of the Originators, the Sponsor and their respective
Subsidiaries accrued for or applicable to the period and on the dates of such
financial statements and all prior years and periods, and for which the
Originators, the Sponsor and their respective Subsidiaries may be liable in
their own right or as transferee of the assets of other Person or as successor
to any other Person; and
(w) The balance sheet of the Originators and the Sponsor (and, to the
extent applicable, their Subsidiaries, on a consolidated basis) and the related
financial statements for the fiscal year ended on the Statement Date (the
"Statement Date Financial Statements") hereto furnished to the Collateral Agent,
fairly present the financial condition of the Originators and the Sponsor (and
their Subsidiaries) as at the Statement Date and the results of their operations
for the fiscal period ended on the Statement Date. The Statement Date Financial
Statements were prepared in accordance with GAAP. On the Statement Date, the
Originators and the Sponsor did not have known material liabilities - direct or
indirect, fixed or contingent, matured or unmatured - or liabilities for sales,
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long-term leases or unusual forward or long-term commitments not disclosed by
the Statement Date Financial Statements or reserved against them.
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 Custodial Loan Files to the Collateral Agent, on behalf of the
Indenture Trustee or to another custodian, as the case may be, and inure to the
benefit of the Indenture Trustee.
Section 3.02. Representations and Warranties of the Servicer and the
Subservicers. Each of the Servicer and the Subservicers hereby represents and
warrants to the Indenture Trustee, the Originators, the Depositor, the
Collateral Agent, the Trust and the Noteholders as of the date hereof and during
the term of this Agreement that:
(a) Each of the Servicer and the Subservicers is duly organized,
validly existing and in good standing under the laws of their respective states
of incorporation and has the power to own its assets and to transact the
business in which it is currently engaged. Each of 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 Servicer
or the Subservicers or the performance of their respective obligations
hereunder;
(b) Each of the Servicer and the Subservicers 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, and assuming the due authorization, execution and delivery hereof by
the other parties hereto constitutes, or will constitute, the legal, valid and
binding obligation of the Servicer and the Subservicers, enforceable in
accordance with its terms, except as enforcement of such terms 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);
(c) Neither the Servicer nor any Subservicer 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 date hereof;
(d) The execution, delivery and performance of this Agreement by each
of the Servicer and the Subservicers will not violate any provision of any
existing law or regulation or any order or decree of any court or their
respective charter or bylaws, or constitute a breach of any mortgage, indenture,
contract or other Agreement to which such party is a party or by which it may be
bound;
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(e) Except for the civil subpoena, dated May 14, 2003, received by the
Sponsor from the Civil Division of the United States Attorney for the Eastern
District of Pennsylvania, there is no action, suit, proceeding or investigation
pending or, to the knowledge of the Servicer or the Subservicer, threatened
against the Servicer or the Subservicers which, either in any one instance or in
the aggregate, is, in the Servicer's judgment, likely to result in any material
adverse change in the business, operations, financial condition, properties, or
assets of the Servicer or 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 Secured Notes, or
the Mortgage Loans or of any action taken or to be taken in connection with the
obligations of the Servicer or the Subservicers contemplated herein or therein,
or which would be likely to impair materially the ability of the Servicer or the
Subservicers to perform their respective obligations hereunder;
(f) Neither this Agreement nor any statement, report, or other document
furnished by the Servicer or the Subservicers pursuant to this Agreement or in
connection with the transactions contemplated hereby, including, without
limitation, the sale or placement of the Secured Notes, contains any untrue
statement of fact provided by or on behalf of the Servicer or the Subservicers
or omits to state a fact necessary to make the statements provided by or on
behalf of the Servicer or the Subservicers contained herein or therein not
misleading;
(g) Neither the Servicer nor any Subservicer believes, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement; and
(h) None of 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.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02 shall survive the delivery of the
respective Custodial Loan Files to the Collateral Agent, on behalf of the
Indenture Trustee or to another custodian, as the case may be, and inure to the
benefit of the Indenture Trustee.
Section 3.03. Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Indenture Trustee, the Originators, the Trust, the Collateral Agent, the
Noteholders and the Servicer that as of the date of this Agreement or as of such
date specifically provided herein:
(a) The Depositor is a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation;
(b) The Depositor is duly organized, validly existing and in good
standing under the laws of the State of Delaware;
(c) 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 transactions contemplated by this Agreement;
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(d) The Depositor is not involved in the day-to-day management of the
Sponsor and/or any of the Originators, maintains separate corporate records and
books of account from the Sponsor and the Originators, has a separate business
office from the Sponsor and the Originators and otherwise observes corporate
formalities;
(e) The Depositor maintains its assets separately from the assets of
the Sponsor and the Originators (including through the maintenance of a separate
bank account), the Depositor's funds and assets, and records relating thereto,
have not been and are not commingled with those of the Sponsor and the
Originators and the separate creditors of the Depositor will be entitled to be
satisfied out of the Depositor's assets prior to any value in the Depositor
becoming available to the holders of the Depositor's common stock or the
Sponsor's and/or any of the Originators' creditors;
(f) All business correspondence of the Depositor and other
communications are conducted in the Depositor's own name and on its own
stationery;
(g) The Depositor is operated in such a manner that it would not be
substantively consolidated in the bankruptcy estate of the Sponsor and/or any
Originator, such that the separate existence of the Depositor would be
disregarded in the event of a bankruptcy or insolvency of the Sponsor and/or any
Originator;
(h) The Depositor is operated in a manner intended to reduce the risk
that the Trust would be substantively consolidated in the bankruptcy estate of
the Depositor, such that the separate existence of the Trust, on the one hand,
and the Depositor, on the other hand, would be disregarded in the event of a
bankruptcy or insolvency of the Depositor;
(i) The financial statements and books and records of the Depositor
reflect the separate existence of the Trust;
(j) The Depositor does not act as an agent of the Trust in any
capacity, except to the extent provided in the Basic Documents, but instead
presents itself to the public as a corporation separate from the Trust;
(k) The Depositor is not involved in the day-to-day management of the
Trust, except to the extent provided in the Basic Documents;
(l) 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 other
parties hereto, 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);
(m) No consent, approval, license, permit, 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
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transactions contemplated hereby, except as have been made on or prior to the
date hereof;
(n) 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 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;
(o) 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 would materially and adversely affect the
performance by the Depositor of its obligations under this Agreement, or the
validity or enforceability of this Agreement; and
(p) 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.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.03 shall survive delivery of the
respective Custodial Loan Files to the Collateral Agent, on behalf of the
Indenture Trustee or to another custodian, as the case may be, and shall inure
to the benefit of the Indenture Trustee.
Section 3.04. Representations, Warranties and Covenants of the
Indenture Trustee. The Indenture Trustee hereby represent, warrant and covenant
to the Trust, the Servicer, the Originators, the Sponsor and the Depositor that
as of the date of this Agreement or as of such date specifically provided
herein:
(a) The Indenture Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York;
(b) The Indenture Trustee has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement; and
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Indenture Trustee, all requisite corporate action having been
taken, and, assuming the due authorization, execution and delivery hereof by the
other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Indenture Trustee, enforceable against such party in
accordance with its terms, except as such enforcement may be limited by
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bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.04 shall survive delivery of the
respective Custodial Loan Files to the Collateral Agent, on behalf of the
Indenture Trustee or to another custodian, as the case may be.
Section 3.05. Representations, Warranties and Covenants of the Trust.
The Trust hereby represents, warrants and covenants to the Indenture Trustee
that as of the date of this Agreement or as of such date specifically provided
herein:
(a) The Trust is a statutory trust duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all power and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business in each jurisdiction in which its business is
now conducted. The Trust is duly qualified to do business in, and is in good
standing in, every other jurisdiction in which the nature of its business
requires it to be so qualified.
(b) The Trust has full power and authority to execute and deliver this
Agreement and to perform its obligations under the Basic Documents to which it
is a party. The Basic Documents to which the Trust is a party have been duly
authorized by all necessary action and do not require any additional approval by
anyone that has not already been obtained. The Basic Documents to which the
Trust is a party have been duly executed and delivered by the Trust and
constitute its valid and legally binding obligations, enforceable against it in
accordance with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, and similar laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity and equitable remedies, regardless of whether enforcement
is considered in a proceeding in equity or at law.
(c) The Secured Notes have been duly authorized, and when the Secured
Notes are issued and delivered pursuant to the indenture, the Secured Notes will
have been duly executed, issued and delivered and will be entitled to the
benefits provided by the Indenture, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting the rights of creditors generally, and to general principles of equity
(regardless of whether the entitlement to such benefits is considered in a
proceeding in equity or at law), and will in all material respects be in the
form contemplated by the Indenture.
(d) Neither the execution and delivery nor the performance by the Trust
of the Basic Documents to which it is a party will conflict with the governing
instruments of the Trust or conflict with, result in a breach, violation or
acceleration of, or constitute a default or require any consent under any
instrument or agreement to which the Trust is a party or by which the Trust or
its properties may be bound, or any law, order, or regulation applicable to the
Trust of any governmental authority having jurisdiction over the Trust or its
properties, and do not and will not result in or require the creation of any
lien (other than pursuant to the Indenture) with respect to any of the Trust's
properties.
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(e) Neither the execution and delivery nor the performance by the Trust
of the Basic Documents to which it is a party requires any authorization,
approval, consent, license, exemption (other than any self-executing exemption),
filing, registration, or any other action except those which have been obtained
and are in full force and effect or where the failure to comply with the
requirement would not adversely affect the delivery, execution or performance by
the Trust of the Basic Documents.
(f) Neither the Trust nor any of its Affiliates is in default under any
mortgage, borrowing agreement or other instrument or agreement pertaining to
indebtedness for borrowed money to which it is a party or by which its
properties are bound, which default is likely to result in a Material Adverse
Effect. No Event of Default has occurred and is continuing under any of the
Basic Documents.
(g) The Trust holds good and indefeasible title to, and is the sole
owner of, all right, title and interest in and to the Trust Estate (including
any and all Mortgage Loans and the related other assets given as security for
any of the Trust's obligations hereunder), free and clear of all liens,
participations and rights of others (except for the lien created by the
Indenture), and on each date this representation is made, the Indenture Trustee
has a first priority lien with respect to the Trust Estate and no further action
in the nature of delivery of possession or filing, including any filing of any
document is required to establish and perfect the lien with respect to the Trust
Estate in favor of the Indenture Trustee against all third parties in any
jurisdiction.
(h) The Trust office is located at c/o Wilmington Trust Company, ▇▇▇▇▇▇
Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The
Custodial Loan Files concerning the Mortgage Loans are held in the offices of
the Collateral Agent in the State of Texas.
(i) The Trust's federal taxpayer identification number is ▇▇-▇▇▇▇▇▇▇.
(j) There are no delinquent federal, state, city, county, or other
taxes relating to the Trust.
(k) There are no actions, suits, investigations or other proceedings
pending or, to the best knowledge of the Trust after due inquiry, threatened
against or affecting the Trust by or before any court, arbitrator, or
governmental authority (i) asserting the invalidity of or any of the Basic
Documents, (ii) seeking to prevent the consummation of any of the transactions
contemplated by or any of the Basic Documents, or (iii) which is reasonably
likely to materially and adversely affect the validity, enforceability,
collectability or value of the Secured Notes. There are no preliminary or
permanent injunctions or orders by any court or other governmental authority
pending adversely affecting any of the Basic Documents or any of the
transactions contemplated thereby.
(l) The Trust is not, nor is it controlled by, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(m) The Trust does not have any outstanding debt obligation for money
borrowed, any other (i.e., debt arising for reasons other than money borrowed)
material debt obligations other than the Secured Notes.
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(n) The transactions contemplated by the Basic Documents are in the
ordinary course of business of the Trust. The Trust will engage in each
acquisition of Mortgage Loans under this Agreement as a principal and not as an
agent.
(o) The Trust is solvent, is able to pay its debts as they become due
and has capital sufficient to carry on its business and its obligations
hereunder. The Trust will not be rendered insolvent by the execution and
delivery of any of the Basic Documents or the performance of its obligations
hereunder. No petition of bankruptcy (or similar insolvency proceeding) has been
filed by or against the Trust.
(p) In incurring any obligation or making any "transfer" (as defined in
Section 101 of the Bankruptcy Code) of property or any interest therein pursuant
to the Basic Documents (whether in connection with the issue of a Secured Note
or otherwise), the Trust does not intend to hinder, delay or defraud any Person
to which the Trust is or will become, on or after the date on which such
obligation is incurred or such transfer is made, indebted.
(q) With respect to any obligation incurred by the Trust or any
"transfer" (as defined in Section 101 of the Bankruptcy Code) of property or any
interest therein made by the Trust pursuant to the Basic Documents, (i) the
Trust has received "reasonably equivalent value" within the meaning of Section
548(a)(1)(B)(i) of the Bankruptcy Code for such obligation or transfer, (ii) the
Trust is not and will not become "insolvent" within the meaning of Section
101(32) of the Bankruptcy Code at the time of or as a result of incurring such
obligation or making such transfer, (iii) the Trust is not engaged in, and is
not about to engage in, any business or transaction for which the any property
remaining with the Trust constitutes "unreasonably small capital" within the
meaning of Section 548(a)(1)(B)(ii)(II) of the Bankruptcy Code, and (iv) the
Trust does not intend to incur, and does not believe that it will incur, "debts"
within the meaning of Section 101(12) of the Bankruptcy Code that would be
beyond the Trust's ability to pay as such debts matured.
(r) With respect to any "transfer" (as defined in Section 101 of the
Bankruptcy Code) of property or any interest therein made by the Trust pursuant
to such transfer is intended as a "contemporaneous exchange for new value" given
to the Trust within the meaning of Section 547(c)(1) of the Bankruptcy Code.
(s) The Trust is a limited purpose entity whose primary activities are
restricted in the Trust Agreement and the Basic Documents.
(t) The Trust is not involved in the day-to-day management of the
Sponsor, any of the Originators and/or the Depositor, maintains separate
corporate records and books of account from the Sponsor, the Originators and the
Depositor, has a separate business office from the Sponsor, the Originators and
the Depositor and otherwise observes corporate formalities.
(u) The Trust maintains its assets separately from the assets of the
Sponsor, the Originators and the Depositor (including through the maintenance of
a separate bank account), the Trust's funds and assets, and records relating
thereto, have not been and are not commingled with those of the Sponsor, the
Originators or the Depositor and the separate creditors of the Trust will be
entitled to be satisfied out of the Trust's assets prior to any value in the
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Trust becoming available to the holders of the Trust Certificates or the
Sponsor's, any of the Originators' and/or the Trust's creditors.
(v) All business correspondence of the Trust and other communications
are conducted in the Trust's own name and on its own stationery.
(w) The Trust is operated in a manner intended to reduce the risk that
it would be substantively consolidated in the bankruptcy estate of the Sponsor,
any Originator and/or the Trust, such that the separate existence of the Trust
would be disregarded in the event of a bankruptcy or insolvency of the Sponsor,
any Originator and/or the Depositor.
ARTICLE IV
THE MORTGAGE LOANS; REMEDIES; ADDITIONAL RECOURSE
Section 4.01. Representations and Warranties Relating to the Mortgage
Loans. (a) Each Originator represents and warrants to the Indenture Trustee, the
Collateral Agent, the Trust and the Noteholders that, as of the related Transfer
Date, immediately prior to the sale and transfer of the related Mortgage Loan by
such Originator to the Depositor:
(i) Such Mortgage Loan contains no (i) provisions pursuant to
which any monthly payment due thereunder is (A) paid or partially paid
with funds deposited in any separate account established by the related
Originator, the related Mortgagor, or anyone on behalf of such
Mortgagor, or (B) paid by any source other than such Mortgagor, or (ii)
any other provision, of like effect, that may constitute a "buydown"
provision; such Mortgage Loan is not a graduated payment mortgage loan,
and does not have a shared appreciation or other contingent interest
feature;
(ii) The information set forth in each Mortgage Loan Schedule
is complete, true and correct;
(iii) The information to be provided by the Originators to the
Depositor in connection with a Mortgage Loan will be true and correct
in all material respects at the date or dates respecting which such
information is furnished;
(iv) The Mortgage securing such Mortgage Loan is a valid,
existing and enforceable first or second lien (as indicated on the
Mortgage Loan Schedule with respect thereto) on and in the Mortgaged
Property, including all improvements thereon, subject only to (i) the
lien of current real property taxes and assessments not yet due, (ii)
covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such
Mortgage, all such exceptions appearing of record being acceptable to
mortgage lending institutions generally and specifically referred to in
the lender's policy of title insurance delivered to the originator of
such Mortgage Loan, and specifically reflected in the appraisal made in
connection with the origination of such Mortgage Loan, (iii) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage, and (iv) if such Mortgage Loan is a
second-lien loan, the prior lien of another lender. Any other Mortgage
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Loan Document ("Other Mortgage Loan Document") establishes and creates
a valid, existing and enforceable first or second lien and first or
second priority security interest on the property described therein,
and the Originators have full right to ▇▇▇▇▇ ▇ ▇▇▇▇ on and in such
Other Mortgage Loan Document to the Note Purchaser. The lien of Other
Mortgage Loan Documents affects only property incidental to the related
Mortgaged Property, and there is no pledged account or other material
security securing the related Mortgagor's obligations other than the
Mortgaged Property. The related Mortgaged Property was not, as of the
date of origination of such Mortgage Loan, subject to a mortgage, deed
of trust, deed to secure debt or other security instrument creating a
lien subordinate to the lien of the related Mortgage;
(v) Immediately prior to the transfer and assignment by the
related Originator to the Depositor, the related Originator had good
title to, and was the sole owner of each Mortgage Loan, free of any
interest of any other Person, and the related Originator has
transferred all right, title and interest in each Mortgage Loan to the
Depositor;
(vi) Except as otherwise indicated on the Mortgage Loan
Schedule, all monthly payments due on such Mortgage Loan prior to the
applicable Cut-Off Date have been made. The related Originator has not
advanced funds, or induced, solicited or knowingly received any advance
of funds from a Person other than the Mortgagor thereunder, directly or
indirectly, for the payment of any amount required to be paid in
respect of such Mortgage Loan. As of the applicable Cut-Off Date, no
payment due under such Mortgage Loan is delinquent for 60 or more days.
No payment under such Mortgage Loan has been 30 days delinquent more
than once during the twelve months immediately preceding the applicable
Cut-Off Date, and no payment under such Mortgage Loan has ever been 60
or more days delinquent;
(vii) To the best knowledge of the related Originator, there
is no mechanics' lien or claim for work, labor or material (and no
rights are outstanding that under law could give rise to such lien)
affecting the premises subject to any Mortgage which is or may be a
lien prior to, or equal or coordinate with, the lien of such Mortgage,
except those which are insured against by the title insurance policy
referred to in (xxix) below;
(viii) At the origination of such Mortgage Loan, all
outstanding taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents
previously due and owing with respect to the related Mortgaged Property
had been paid, or an escrow of funds had been established in an amount
sufficient to pay for every such item that remained unpaid and that had
been assessed but was not yet due and payable. As of the applicable
Cut-Off Date, all taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents
that previously became due and owing with respect to such Mortgaged
Property have been paid, or an escrow of funds had been established in
an amount sufficient to pay for every such item that remained unpaid
and that had been assessed but was not yet due and payable;
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(ix) Such Mortgage Loan, the Mortgage, and the Mortgage Note,
including, without limitation, the obligation of the Mortgagor to pay
the unpaid principal of and interest on the Mortgage Note, are each not
subject to any right of rescission (or any such rescission right has
expired in accordance with applicable law), set-off, counterclaim, or
defense, including the defense of usury, nor will the operation of any
of the terms of the Mortgage Note or the Mortgage, or the exercise of
any right thereunder, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim, or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim, or
defense has been asserted with respect thereto; and the Mortgagor was
not a debtor in any state or federal bankruptcy or insolvency
proceeding at the time the Mortgage Loan was originated;
(x) The related Mortgage and Mortgage Note, and any Other
Mortgage Loan Document contain the entire agreement of the parties and
all obligations of the Originator or the Trust under the related
Mortgage Loan. No terms of the related Mortgage Note, Mortgage or Other
Mortgage Loan Document, if any, have been impaired, waived, altered or
modified in any respect, except by written instruments, recorded in the
applicable public recording office if necessary to maintain the lien
priority of the Mortgage, that have been delivered to the Collateral
Agent. The substance of any such waiver, alteration or modification has
been approved by the title insurer, to the extent required by the
related policy, and has been disclosed to the Note Purchaser in
writing. No Mortgagor has been released, in whole or in part, except in
connection with an assumption or partial release agreement approved by
the title insurer, to the extent required by the policy, and which
assumption agreement has been delivered to the Collateral Agent and the
terms of which have been disclosed to the Note Purchaser in writing;
(xi) To the best knowledge of the related Originator, the
Mortgaged Property is in good repair and is free of material damage and
there is no pending or threatened proceeding for the total or partial
condemnation of the Mortgaged Property;
(xii) The related Originator has not received a notice of
default of any first mortgage loan secured by the Mortgaged Property
which has not been cured by a party other than the related Originator;
(xiii) Each Mortgage Note and Mortgage are in substantially
the forms previously provided to the Depositor and the Indenture
Trustee by the related Originator;
(xiv) The Mortgage Loan was not originated in a program in
which the amount of documentation in the underwriting process was
limited in comparison to the related Originator's normal documentation
requirements, which, for the avoidance of doubt, means limited
documentation programs which may otherwise be permitted under the
Underwriting Guidelines;
(xv) The Mortgage Loans were not selected by the related
Originator for sale hereunder or inclusion in the Trust Estate on any
basis adverse to the Trust Estate relative to the portfolio of similar
mortgage loans of such Originator;
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(xvi) None of the Mortgage Loans constitutes a lien on
leasehold interests;
(xvii) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of
the benefits of the security including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. To the best of the related Originator's
knowledge, there is no homestead or other exemption available to the
related Mortgagor which would materially interfere with the right to
sell the related Mortgaged Property at a trustee's sale or the right to
foreclose the related Mortgage. The Mortgage contains customary and
enforceable provisions for the acceleration of the payment of the
Principal Balance of such Mortgage Loan in the event all or any part of
the related Mortgaged Property is sold or otherwise transferred without
the prior written consent of the holder thereof;
(xviii) The proceeds of such Mortgage Loan have been fully
disbursed, including reserves set aside by the related Originator,
there is no requirement for, and the related Originator shall not make
any future advances thereunder. Any future advances made prior to the
applicable Cut-Off Date have been consolidated with the principal
balance secured by the Mortgage, and such principal balance, as
consolidated, bears a single interest rate and single repayment term
reflected on the applicable Mortgage Loan Schedule. The Principal
Balance as of the applicable Cut-Off Date does not exceed the original
principal amount of such Mortgage Loan. Except with respect to no more
than $150,000 of escrow funds in the aggregate with respect to all
Mortgage Loans, any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees, and expenses
incurred in making, or recording such Mortgage Loan have been paid;
(xix) All Mortgage Loans were originated in compliance with
the related Originator's Underwriting Guidelines;
(xx) The terms of the Mortgage and the Mortgage Note have not
been impaired, waived, altered, or modified in any respect, except by a
written instrument which has been recorded, if necessary to protect the
interest of the Indenture Trustee, and which has been delivered to the
Collateral Agent, on behalf of the Indenture Trustee. The substance of
any such alteration or modification is or as to Mortgage Loans will be
reflected on the applicable Mortgage Loan Schedule and, to the extent
necessary, has been or will be approved by (i) the insurer under the
applicable mortgage title insurance policy, and (ii) the insurer under
any other insurance policy required hereunder for such Mortgage Loan
where such insurance policy requires approval and the failure to
procure approval would impair coverage under such policy;
(xxi) No instrument of release, waiver, alteration, or
modification has been executed in connection with such Mortgage Loan,
and no Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement which has been approved by the
insurer under any insurance policy required hereunder for such Mortgage
Loan where such policy requires approval and the failure to procure
approval would impair coverage under such policy, and which is part of
the Servicer's Loan File and has been delivered to the Collateral
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Agent, on behalf of the Indenture Trustee, and the terms of which are
reflected in the applicable Mortgage Loan Schedule;
(xxii) There is no default, breach, violation, or event of
acceleration existing under the Mortgage or the Mortgage Note and no
event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute such a default, breach,
violation or event of acceleration, and the related Originator has not
waived any such default, breach, violation or event of acceleration.
All taxes, governmental assessments (including assessments payable in
future installments), insurance premiums, water, sewer, and municipal
charges, leaseholder payments, or ground rents which previously became
due and owing in respect of or affecting the related Mortgaged Property
have been paid. The related Originator has not advanced funds, or
induced, solicited, or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the Mortgage or the Mortgage Note;
(xxiii) Principal payments on such Mortgage Loan commenced no
more than two (2) months after the proceeds of such Mortgage Loan were
disbursed. If such Mortgage Loan is an adjustable rate loan, on each
interest adjustment date under such Mortgage Loan, the mortgage
interest rate will be adjusted to equal the index plus the gross
margin, rounded to the nearest (or next highest, as applicable) 0.125%,
subject to the periodic rate cap, the maximum rate and the minimum rate
set forth in the Mortgage Loan Schedule. The related Mortgage Note is
payable on the day of each month indicated on the Mortgage Loan
Schedule with respect to such Mortgage Loan in self-amortizing monthly
installments of principal and interest, with interest payable in
arrears, and requires a monthly payment that is sufficient to fully
amortize the outstanding principal balance of such Mortgage Loan over
its remaining term and to pay interest at the applicable interest rate.
If such Mortgage Loan is an adjustable rate loan, the related Mortgage
Note provides that the monthly payments will be changed on each
adjustment date indicated on such Mortgage Loan Schedule to an amount
that will amortize the unpaid principal balance of such Mortgage Loan
over its remaining term at the mortgage interest rate established on
such adjustment date. If such Mortgage Loan is a fixed-rate loan and
provides for the payment of a balloon payment, such Mortgage Loan is
fully amortizing over a period of not more than 30 years and has a term
to maturity of not less than 10 years and not more than 30 years. The
related Mortgage Note does not permit negative amortization. If such
Mortgage Loan is an adjustable rate loan, the related Mortgage Note
does not permit the related Mortgagor to convert such Mortgage Loan to
a fixed-rate loan;
(xxiv) All of the improvements which were included for the
purposes of determining the Appraised Value of the Mortgaged Property
were completed at the time that such Mortgage Loan was originated and
lie wholly within the boundaries and building restriction lines of such
Mortgaged Property. Except for de minimis encroachments, no
improvements on adjoining properties encroach upon the Mortgaged
Property. To the best of the related Originator's knowledge, no
improvement located on or being part of the Mortgaged Property is in
violation of any applicable zoning law or regulation. All inspections,
licenses, and certificates required to be made or issued with respect
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to all occupied portions of the Mortgaged Property (including all such
improvements which were included for the purpose of determining such
Appraised Value) and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriters certificates, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied
under applicable law;
(xxv) To the best of the related Originator's knowledge, there
does not exist any circumstances or conditions with respect to the
Mortgage, the Mortgaged Property, the Mortgagor, or the Mortgagor's
credit standing that can be reasonably expected to cause such Mortgage
Loan to become delinquent or adversely affect the value or
marketability of such Mortgage Loan, other than any such circumstances
or conditions permitted under the related Originator's Underwriting
Guidelines;
(xxvi) All parties which have had any interest in the
Mortgage, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such
interest, were) (i) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is
located and (ii) (A) organized under the laws of such state, (B)
qualified to do business in such state, (C) federal savings and loan
associations or national banks having principal offices in such state,
(D) not doing business in such state, or (E) not required to qualify to
do business in such state;
(xxvii) The Mortgage Note and the Mortgage are genuine, and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium,
or other similar laws affecting the enforcement of creditors' rights
generally and except that the equitable remedy of specific performance
and other equitable remedies are subject to the discretion of the
courts. All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and convey the
estate therein purported to be conveyed, and the Mortgage Note and the
Mortgage have been duly and properly executed by such parties or
pursuant to a valid power-of-attorney that has been recorded with the
Mortgage;
(xxviii) 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 Depositor all right, title, and interest
of the related Originator thereto as note holder and mortgagee or (ii)
to grant to the Depositor the security interest referred to in Section
2.03(c) hereof and thereafter (x) to transfer the right, title and
interest of the Depositor to the Trust and (y) to pledge the interest
of the Trust to the Indenture Trustee for the benefit of the
Noteholders. The Mortgage has been duly assigned and the Mortgage Note
has been duly endorsed. The Assignment of Mortgage delivered to the
Collateral Agent, on behalf of the Indenture Trustee, pursuant to
Section 2.06(a)(iv) is in recordable form and is acceptable for
recording under the laws of the applicable jurisdiction. The
endorsement of the Mortgage Note, the delivery to the Collateral Agent,
on behalf of the Indenture 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
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Mortgage in, the appropriate public recording office in the
jurisdiction in which the Mortgaged Property is located are sufficient
to permit the Indenture Trustee to avail itself of all protection
available under applicable law against the claims of any present or
future creditors of the Depositor and the related Originator, and are
sufficient to prevent any other sale, transfer, assignment, pledge, or
hypothecation of the Mortgage Note and Mortgage by the Depositor or the
related Originator from being enforceable;
(xxix) Any and all requirements of any federal, state, or
local law including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, predatory and
abusive lending laws, equal credit opportunity, fair housing, or
disclosure laws applicable to such Mortgage Loan have been complied
with, and the Mortgage Loan is covered by an ALTA mortgage title
insurance policy or such other generally used and acceptable form of
policy, issued by and the valid and binding obligation of a title
insurer qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the related Originator, and its
successors and assigns, as to the first or second priority lien, as
applicable, of the Mortgage in the original principal amount of such
Mortgage Loan. The assignment to the Indenture Trustee of the related
Originator's interest in such mortgage title insurance policy does not
require the consent of or notification to the insurer. Such mortgage
title insurance policy is in full force and effect and will be in full
force and effect and inure to the benefit of the Indenture Trustee upon
the consummation of the transactions contemplated by this Agreement. No
claims have been made under such mortgage title insurance policy and
neither the related Originator nor any prior holder of the Mortgage has
done, by act or omission, anything which would impair the coverage of
such mortgage title insurance policy;
(xxx) All improvements upon the Mortgaged Property are insured
against loss by fire, hazards of extended coverage, and such other
hazards as are customary in the area where the Mortgaged Property is
located pursuant to insurance policies conforming to the requirements
of Section 7.04 hereof. If the Mortgaged Property at origination was
located in an area identified on a flood hazard boundary map or flood
insurance rate map issued by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made
available), such Mortgaged Property was covered by flood insurance at
origination. Each individual insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and will be in
full force and effect and inure to the benefit of the Indenture Trustee
upon the consummation of the transactions contemplated by this
Agreement, and contain a standard mortgage clause naming the originator
of such Mortgage Loan, and its successors and assigns, as mortgagee and
loss payee. All premiums thereon have been paid. The Mortgage obligates
the Mortgagor to maintain all such insurance at the Mortgagor's cost
and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from
the Mortgagor, and neither the related Originator or any prior holder
of the Mortgage has acted or failed to act so as to impair the coverage
of any such insurance policy or the validity, binding effect, and
enforceability thereof;
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(xxxi) If the Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the trustee or the
Noteholders to the Indenture Trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor;
(xxxii) The Mortgaged Property consists of one or more parcels
of real property separately assessed for tax purposes. To the extent
there is erected thereon a detached or an attached one-family residence
or a detached two-to four-family dwelling, or an individual condominium
unit in a low-rise condominium, or an individual unit in a planned unit
development, such residence, dwelling or unit is not (i) a unit in a
cooperative apartment, (ii) a property constituting part of a
syndication, (iii) a time share unit, (iv) a property held in trust,
(v) a mobile home, (vi) a log-constructed home, or (vii) a recreational
vehicle;
(xxxiii) There exist no material deficiencies with respect to
escrow deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made or which the
related Originator expects not to be cured, and no escrow deposits or
payments of other charges or payments due the related Originator have
been capitalized under the Mortgage or the Mortgage Note;
(xxxiv) Such Mortgage Loan was not originated at a below
market interest rate. Such Mortgage Loan does not have a shared
appreciation feature, or other contingent interest feature;
(xxxv) The origination and collection practices used by the
related Originator or the Servicer with respect to such Mortgage Loan
have been in all respects legal, proper, prudent, and customary in the
mortgage origination and servicing business;
(xxxvi) The Mortgagor has, to the extent required by
applicable law, executed a statement to the effect that the Mortgagor
has received all disclosure materials, if any, required by applicable
law with respect to the making of fixed-rate mortgage loans. The
Servicer shall maintain or cause to be maintained such statement in the
Servicer's Loan File. If such Mortgage Loan is an adjustable rate loan,
the related Mortgagor has executed a statement to the effect that such
Mortgagor has received all disclosure materials required by applicable
law with respect to the making of adjustable rate mortgage loans, and
the Servicer will ensure that such statement is and will remain in the
related Custodial Loan File;
(xxxvii) If such Mortgage Loan is a refinancing Mortgage Loan,
the related Mortgagor has received all disclosure and rescission
materials required by applicable law with respect to the making of a
refinancing Mortgage Loan, and evidence of such receipt is and will
remain in the related Custodial Loan File;
(xxxviii) All amounts received by the related Originator with
respect to such Mortgage Loan after the applicable Cut-Off Date and
required to be deposited in the Payment Account have been so deposited
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in the Collection Account and are, as of the related Transfer Date, in
the Collection Account;
(xxxix) The Servicer's Loan File with respect to such Mortgage
Loan contains an appraisal of the related Mortgaged Property made and
signed, prior to the approval of the application for such Mortgage
Loan, by a qualified appraiser (i) who, at the time of such appraisal,
met the minimum qualifications of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and the
requirements of the related Originator's appraisal policy and (ii) who
satisfied (and which appraisal was conducted in accordance with) all of
the applicable requirements of the Uniform Standards of Professional
Appraisal Practice in effect at the time of such appraisal and
procedures. Such appraiser had no interest, direct or indirect, in such
Mortgaged Property or in any loan made on the security thereof, and
such appraiser's compensation was not affected by the approval or
disapproval of such Mortgage Loan;
(xl) The related Originator has no knowledge with respect to
the Mortgaged Property of any no governmental or regulatory action or
third party claim made, instituted or threatened in writing relating to
a violation of any applicable federal, state or local environmental
law, statute, ordinance, regulation, order, decree or standard;
(xli) With respect to second lien Mortgage Loans:
1) the related Originator has no knowledge that the
Mortgagor has received notice from the holder of the prior
mortgage that such prior mortgage is in default,
2) no consent from the holder of the prior mortgage
is needed for the creation of the second lien Mortgage or, if
required, has been obtained and is in the related Servicer's
Loan File,
3) if the prior mortgage has a negative amortization
feature, the CLTV was determined using the maximum loan amount
of such prior mortgage, and
4) the related first mortgage loan encumbering the
related Mortgaged Property does not have a mandatory future
advance provision;
(xlii) Each of the Mortgage Loans is (A) subject to a Take-out
Commitment (which can be in the form of a forward sale) and saleable on
a whole loan basis pursuant to terms and conditions customary in the
secondary market for residential mortgage loans or (B) is securitizable
upon substantially the same terms and conditions as the mortgage loans
included in the ABFS Mortgage Loan Trust 2003-1;
(xliii) To the best of the related Originator's knowledge no
error, omission, misrepresentation, negligence, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part
of any person, including without limitation the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or in the application of any insurance
in relation to such Mortgage Loan;
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(xliv) Each Mortgaged Property is in compliance with all
environmental laws, ordinances, rules, regulations and orders of
federal, state or governmental authorities relating thereto. No
hazardous material has been or is incorporated in, stored on or under
(other than properly stored materials, used for reasonable residential
purposes), released from, treated on, transported to or from, or
disposed of on or from, any Mortgaged Property such that, under
applicable law (A) any such hazardous material would be required to be
eliminated before the Mortgaged Property could be altered, renovated,
demolished or transferred, or (B) the owner of the Mortgaged Property,
or the holder of a security interest therein, could be subjected to
liability for the removal of such hazardous material or the elimination
of the hazard created thereby. Neither the related Originator nor any
Mortgagor has received notification from any federal, state or other
governmental authority relating to any hazardous materials on or
affecting the Mortgaged Property or to any potential or known liability
under any environmental law arising from the ownership or operation of
the Mortgaged Property. For the purposes of this subsection, the term
"hazardous materials" shall include, without limitation, gasoline,
petroleum products, explosives, radioactive materials, polychlorinated
biphenyls or related or similar materials, asbestos or any material
containing asbestos, lead, lead-based paint and any other substance or
material as may be defined as a hazardous or toxic substance by any
federal, state or local environmental law, ordinance, rule, regulation
or order, including, without limitation, CERCLA, the Clean Air Act, the
Clean Water Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act and any regulations promulgated pursuant
thereto;
(xlv) Reserved;
(xlvi) The related Originator further represents and warrants
to the Indenture Trustee and the Noteholders that as of the Cut-Off
Date all representations and warranties set forth in clauses (i)
through (xlv) above will be correct in all material respects as to each
Mortgage Loan, and the following representation will be correct: as of
the applicable Cut-Off Date, no payment due under such Mortgage Loan is
delinquent for 60 or more days. No payment under such Mortgage Loan has
been 30 days delinquent more than once during the twelve months
immediately preceding the applicable Cut-Off Date, and no payment under
such Mortgage Loan has ever been 60 or more days delinquent;
(xlvii) No Mortgage Loan was made in connection with (i) the
construction or rehabilitation of a Mortgaged Property or (ii)
facilitating the trade-in or exchange of a Mortgaged Property;
(xlviii) The Mortgage Note is not and has not been secured by
any collateral except the lien or the corresponding Mortgage on the
Mortgaged Property and the security interest of any applicable security
agreements;
(xlix) The Mortgage Loan has a FICO Score of at least 525;
(l) No Mortgage Loan has a credit grade under the related
Originator's Underwriting Guidelines of less than C;
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(li) The CLTV for each C credit grade Mortgage Loan does not
exceed 80% and the CLTV for each B credit grade Mortgage Loan does not
exceed 85%;
(lii) No Mortgage Loan has a CLTV greater than 95%;
(liii) The Mortgage Loan is a "qualified mortgage loan" within
the meaning of Section 860G(a)(3) of the Code; (liv) No Mortgage Loan
(a) is subject to Section 226.32 of Regulation Z or any similar state
law (relating to high interest rate credit/lending transactions), or
(b) contains any term or condition, or involve any loan origination
practice, that has been defined as "predatory," "covered" or
"threshold" under applicable federal, state or local law, or which has
been expressly categorized as an "unfair" or "deceptive" term,
condition, or practice in any applicable federal, state or local law
(or the regulations promulgated thereunder) dealing with "predatory" or
"high cost" mortgage lending (or a similarly classified loan using
different terminology under a law, regulation or ordinance imposing
heightened regulatory scrutiny or additional legal liability for
residential mortgage loans having high interest rates, points and/or
fees);
(lv) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the Mortgagee
thereunder;
(lvi) With respect to each adjustable rate Mortgage Loans, all
Mortgage Interest Rate adjustments have been made in strict compliance
with state and federal law and the terms of the related Mortgage Note.
Any interest required to be paid pursuant to state and local law has
been properly paid and credited;
(lvii) The Mortgagor is one or more natural persons and/or
trustees for an Illinois land trust or a trustee under a "living trust"
and such "living trust" is in compliance with ▇▇▇▇▇▇ Mae guidelines for
such trusts. Either the Mortgagor is a natural person or the related
co-borrower or guarantor is a natural person. No Mortgagor is an
Affiliate of the Originators, the Sponsor, the Depositor or the
Servicer;
(lviii) The Mortgage Loans in the aggregate satisfy the
Portfolio Composition Criteria; and
(lix) Each and every Mortgage Loan is an Eligible Mortgage
Loan.
(b) The Depositor hereby represents and warrants to the Indenture
Trustee, the Collateral Agent, the Trust and the Noteholders that, as of the
related Transfer Date, immediately prior to the sale and transfer of such
Mortgage Loan by the Depositor to the Trust:
(i) Such Mortgage Loan contains no (i) provisions pursuant to
which any monthly payment due thereunder is (A) paid or partially paid
with funds deposited in any separate account established by the related
Originator, the related Mortgagor, or anyone on behalf of such
Mortgagor, or (B) paid by any source other than such Mortgagor, or (ii)
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any other provision, of like effect, that may constitute a "buydown"
provision. Such Mortgage Loan is not a graduated payment mortgage loan,
and does not have a shared appreciation or other contingent interest
feature;
(ii) The information set forth in each Mortgage Loan Schedule
is complete, true and correct;
(iii) The information to be provided by the Depositor to the
Trust in connection with a Mortgage Loan will be true and correct in
all material respects at the date or dates respecting which such
information is furnished;
(iv) The Mortgage securing such Mortgage Loan is a valid,
existing and enforceable first or second lien (as indicated on the
Mortgage Loan Schedule with respect thereto) on and in the Mortgaged
Property, including all improvements thereon, subject only to (i) the
lien of current real property taxes and assessments not yet due, (ii)
covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such
Mortgage, all such exceptions appearing of record being acceptable to
mortgage lending institutions generally and specifically referred to in
the lender's policy of title insurance delivered to the originator of
such Mortgage Loan, and specifically reflected in the appraisal made in
connection with the origination of such Mortgage Loan, (iii) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage, and (iv) if such Mortgage Loan is a
second-lien loan, the prior lien of another lender. Any Other Mortgage
Loan Document establishes and creates a valid, existing and enforceable
first or second lien and first or second priority security interest on
the property described therein, and the Originators have full right to
▇▇▇▇▇ ▇ ▇▇▇▇ on and in such Other Mortgage Loan Document to the Note
Purchaser. The lien of Other Mortgage Loan Documents affects only
property incidental to the related Mortgaged Property, and there is no
pledged account or other material security securing the related
Mortgagor's obligations other than the Mortgaged Property. The related
Mortgaged Property was not, as of the date of origination of such
Mortgage Loan, subject to a mortgage, deed of trust, deed to secure
debt or other security instrument creating a lien subordinate to the
lien of the related Mortgage;
(v) Immediately prior to the transfer and assignment by the
Depositor to the Trust, 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 Trust;
(vi) Except as otherwise indicated on the Mortgage Loan
Schedule, all monthly payments due on such Mortgage Loan prior to the
applicable Cut-Off Date have been made. The related Originator has not
advanced funds, or induced, solicited or knowingly received any advance
of funds from a Person other than the Mortgagor thereunder, directly or
indirectly, for the payment of any amount required to be paid in
respect of such Mortgage Loan. As of the applicable Cut-Off Date, no
payment due under such Mortgage Loan is delinquent for 60 or more days.
No payment under such Mortgage Loan has been 30 days delinquent more
than once during the twelve months immediately preceding the applicable
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Cut-Off Date, and no payment under such Mortgage Loan has ever been 60
or more days delinquent;
(vii) To the best of the Depositor's knowledge, there is no mechanics' lien
or claim for work, labor or material (and no rights are outstanding
that under law could give rise to such lien) affecting the premises
subject to any Mortgage which is or may be a lien prior to, or equal or
coordinate with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in (xxix)
below;
(viii) At the origination of such Mortgage Loan, all
outstanding taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents
previously due and owing with respect to the related Mortgaged Property
had been paid, or an escrow of funds had been established in an amount
sufficient to pay for every such item that remained unpaid and that had
been assessed but was not yet due and payable. As of the applicable
Cut-Off Date, all taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents
that previously became due and owing with respect to such Mortgaged
Property have been paid, or an escrow of funds had been established in
an amount sufficient to pay for every such item that remained unpaid
and that had been assessed but was not yet due and payable;
(ix) Such Mortgage Loan, the Mortgage, and the Mortgage Note,
including, without limitation, the obligation of the Mortgagor to pay
the unpaid principal of and interest on the Mortgage Note, are each not
subject to any right of rescission (or any such rescission right has
expired in accordance with applicable law), set-off, counterclaim, or
defense, including the defense of usury, nor will the operation of any
of the terms of the Mortgage Note or the Mortgage, or the exercise of
any right thereunder, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim, or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim, or
defense has been asserted with respect thereto; and the Mortgagor was
not a debtor in any state or federal bankruptcy insolvency proceeding
at the time the Mortgage Loan was originated;
(x) The related Mortgage and Mortgage Note, and any Other
Mortgage Loan Document contain the entire agreement of the parties and
all obligations of the Originator or the Trust under the related
Mortgage Loan. No terms of the related Mortgage Note, Mortgage or Other
Mortgage Loan Document, if any, have been impaired, waived, altered or
modified in any respect, except by written instruments, recorded in the
applicable public recording office if necessary to maintain the lien
priority of the Mortgage, that have been delivered to the Collateral
Agent. The substance of any such waiver, alteration or modification has
been approved by the title insurer, to the extent required by the
related policy, and has been disclosed to the Note Purchaser in
writing. No Mortgagor has been released, in whole or in part, except in
connection with an assumption or partial release agreement approved by
the title insurer, to the extent required by the policy, and which
assumption agreement has been delivered to the Collateral Agent and the
terms of which have been disclosed to the Note Purchaser in writing.
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(xi) To the best knowledge of the Depositor, the Mortgaged
Property is free of material damage and is in good repair, and there is
no pending or threatened proceeding for the total or partial
condemnation of the Mortgaged Property;
(xii) The Depositor has not received a notice of default of
any first mortgage loan secured by the Mortgaged Property which has not
been cured by a party other than the related Originator;
(xiii) Each Mortgage Note and Mortgage are in substantially
the forms previously provided to the Depositor and the Indenture
Trustee by the related Originator;
(xiv) The Mortgage Loan was not originated in a program in
which the amount of documentation in the underwriting process was
limited in comparison to the related Originator's normal documentation
requirements, which, for the avoidance of doubt, means limited
documentation programs which may otherwise be permitted under the
Underwriting Guidelines;
(xv) The Mortgage Loans were not selected by the Depositor for
sale hereunder or inclusion in the Trust Estate on any basis adverse to
the Trust Estate relative to the portfolio of similar mortgage loans of
the Depositor;
(xvi) None of the Mortgage Loans constitutes a lien on
leasehold interests;
(xvii) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of
the benefits of the security including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. To the best of the Depositor's knowledge, there
is no homestead or other exemption available to the related Mortgagor
which would materially interfere with the right to sell the related
Mortgaged Property at a trustee's sale or the right to foreclose the
related Mortgage. The Mortgage contains customary and enforceable
provisions for the acceleration of the payment of the Principal Balance
of such Mortgage Loan in the event all or any part of the related
Mortgaged Property is sold or otherwise transferred without the prior
written consent of the holder thereof;
(xviii) The proceeds of such Mortgage Loan have been fully
disbursed, including reserves set aside by the related Originator,
there is no requirement for, and the Depositor shall not make any
future advances thereunder. Any future advances made prior to the
applicable Cut-Off Date have been consolidated with the principal
balance secured by the Mortgage, and such principal balance, as
consolidated, bears a single interest rate and single repayment term
reflected on the applicable Mortgage Loan Schedule. The Principal
Balance as of the applicable Cut-Off Date does not exceed the original
principal amount of such Mortgage Loan. Except with respect to no more
than $150,000 of escrow funds in the aggregate with respect to all
Mortgage Loans, any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees, and expenses
incurred in making, or recording such Mortgage Loan have been paid;
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(xix) All Mortgage Loans were originated in compliance with
the related Originator's Underwriting Guidelines;
(xx) The terms of the Mortgage and the Mortgage Note have not
been impaired, waived, altered, or modified in any respect, except by a
written instrument which has been recorded, if necessary to protect the
interest of the Indenture Trustee, and which has been delivered to the
Collateral Agent, on behalf of the Indenture Trustee. The substance of
any such alteration or modification is or as to Mortgage Loans will be
reflected on the applicable Mortgage Loan Schedule and, to the extent
necessary, has been or will be approved by (i) the insurer under the
applicable mortgage title insurance policy, and (ii) the insurer under
any other insurance policy required hereunder for such Mortgage Loan
where such insurance policy requires approval and the failure to
procure approval would impair coverage under such policy;
(xxi) No instrument of release, waiver, alteration, or
modification has been executed in connection with such Mortgage Loan,
and no Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement which has been approved by the
insurer under any insurance policy required hereunder for such Mortgage
Loan where such policy requires approval and the failure to procure
approval would impair coverage under such policy, and which is part of
the Servicer's Loan File and has been delivered to the Collateral
Agent, on behalf of the Indenture Trustee, and the terms of which are
reflected in the applicable Mortgage Loan Schedule;
(xxii) There is no default, breach, violation, or event of
acceleration existing under the Mortgage or the Mortgage Note and no
event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute such a default, breach,
violation or event of acceleration, and neither the Depositor has not
waived any such default, breach, violation or event of acceleration.
All taxes, governmental assessments (including assessments payable in
future installments), insurance premiums, water, sewer, and municipal
charges, leaseholder payments, or ground rents which previously became
due and owing in respect of or affecting the related Mortgaged Property
have been paid. The Depositor has not advanced funds, or induced,
solicited, or knowingly received any advance of funds by a party other
than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage or the Mortgage Note;
(xxiii) Principal payments on such Mortgage Loan commenced no
more than two (2) months after the proceeds of such Mortgage Loan were
disbursed. If such Mortgage Loan is an adjustable rate loan, on each
interest adjustment date under such Mortgage Loan, the mortgage
interest rate will be adjusted to equal the index plus the gross
margin, rounded to the nearest (or next highest, as applicable) 0.125%,
subject to the periodic rate cap, the maximum rate and the minimum rate
set forth in the Mortgage Loan Schedule. The related Mortgage Note is
payable on the day of each month indicated on the Mortgage Loan
Schedule with respect to such Mortgage Loan in self-amortizing monthly
installments of principal and interest, with interest payable in
arrears, and requires a monthly payment that is sufficient to fully
amortize the outstanding principal balance of such Mortgage Loan over
its remaining term and to pay interest at the applicable interest rate.
-42-
If such Mortgage Loan is an adjustable rate loan, the related Mortgage
Note provides that the monthly payments will be changed on each
adjustment date indicated on such Mortgage Loan Schedule to an amount
that will amortize the unpaid principal balance of such Mortgage Loan
over its remaining term at the mortgage interest rate established on
such adjustment date. If such Mortgage Loan is a fixed-rate loan and
provides for the payment of a balloon payment, such Mortgage Loan is
fully amortizing over a period of not more than 30 years and has a term
to maturity of not less than 10 years and not more than 30 years. The
related Mortgage Note does not permit negative amortization. If such
Mortgage Loan is an adjustable rate loan, the related Mortgage Note
does not permit the related Mortgagor to convert such Mortgage Loan to
a fixed-rate loan;
(xxiv) All of the improvements which were included for the
purposes of determining the Appraised Value of the Mortgaged Property
were completed at the time that such Mortgage Loan was originated and
lie wholly within the boundaries and building restriction lines of such
Mortgaged Property. Except for de minimis encroachments, no
improvements on adjoining properties encroach upon the Mortgaged
Property. To the best of the Depositor's knowledge, no improvement
located on or being part of the Mortgaged Property is in violation of
any applicable zoning law or regulation. All inspections, licenses, and
certificates required to be made or issued with respect to all occupied
portions of the Mortgaged Property (including all such improvements
which were included for the purpose of determining such Appraised
Value) and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriters certificates, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied
under applicable law;
(xxv) To the best of the Depositor's knowledge, there does not
exist any circumstances or conditions with respect to the Mortgage, the
Mortgaged Property, the Mortgagor, or the Mortgagor's credit standing
that can be reasonably expected to cause such Mortgage Loan to become
delinquent or adversely affect the value or marketability of such
Mortgage Loan, other than any such circumstances or conditions
permitted under the related Originator's Underwriting Guidelines;
(xxvi) All parties which have had any interest in the
Mortgage, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such
interest, were) (i) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is
located and (ii) (A) organized under the laws of such state, (B)
qualified to do business in such state, (C) federal savings and loan
associations or national banks having principal offices in such state,
(D) not doing business in such state, or (E) not required to qualify to
do business in such state;
(xxvii) The Mortgage Note and the Mortgage are genuine, and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium,
or other similar laws affecting the enforcement of creditors' rights
generally and except that the equitable remedy of specific performance
and other equitable remedies are subject to the discretion of the
-43-
courts. All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and convey the
estate therein purported to be conveyed, and the Mortgage Note and the
Mortgage have been duly and properly executed by such parties or
pursuant to a valid power-of-attorney that has been recorded with the
Mortgage;
(xxviii) 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 Depositor all right, title, and interest
of the related Originator thereto as note holder and mortgagee or (ii)
to grant to the Depositor the security interest referred to in Section
2.03(c) hereof and thereafter (x) to transfer the right, title and
interest of the Depositor to the Trust and (y) to pledge the interest
of the Trust to the Indenture Trustee for the benefit of the
Noteholders. The Mortgage has been duly assigned and the Mortgage Note
has been duly endorsed. The Assignment of Mortgage delivered to the
Collateral Agent, on behalf of the Indenture Trustee, pursuant to
Section 2.06(a)(iv) is in recordable form and is acceptable for
recording under the laws of the applicable jurisdiction. The
endorsement of the Mortgage Note, the delivery to the Collateral Agent,
on behalf of the Indenture 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 Indenture 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;
(xxix) Any and all requirements of any federal, state, or
local law including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, predatory and
abusive lending laws, equal credit opportunity, fair housing or
disclosure laws applicable to such Mortgage Loan have been complied
with, and the Mortgage Loan is covered by an ALTA mortgage title
insurance policy or such other generally used and acceptable form of
policy, issued by and the valid and binding obligation of a title
insurer qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the related Originator, and its
successors and assigns, as to the first or second priority lien, as
applicable, of the Mortgage in the original principal amount of such
Mortgage Loan. The assignment to the Indenture Trustee of the related
Originator's interest in such mortgage title insurance policy does not
require the consent of or notification to the insurer. Such mortgage
title insurance policy is in full force and effect and will be in full
force and effect and inure to the benefit of the Indenture Trustee upon
the consummation of the transactions contemplated by this Agreement. No
claims have been made under such mortgage title insurance policy and
neither the Depositor nor any prior holder of the Mortgage has done, by
act or omission, anything which would impair the coverage of such
mortgage title insurance policy;
(xxx) All improvements upon the Mortgaged Property are insured
against loss by fire, hazards of extended coverage, and such other
hazards as are customary in the area where the Mortgaged Property is
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located pursuant to insurance policies conforming to the requirements
of Section 7.04 hereof. If the Mortgaged Property at origination was
located in an area identified on a flood hazard boundary map or flood
insurance rate map issued by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made
available), such Mortgaged Property was covered by flood insurance at
origination. Each individual insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and will be in
full force and effect and inure to the benefit of the Indenture Trustee
upon the consummation of the transactions contemplated by this
Agreement, and contain a standard mortgage clause naming the originator
of such Mortgage Loan, and its successors and assigns, as mortgagee and
loss payee. All premiums thereon have been paid. The Mortgage obligates
the Mortgagor to maintain all such insurance at the Mortgagor's cost
and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from
the Mortgagor, and neither the Depositor or any prior holder of the
Mortgage has acted or failed to act so as to impair the coverage of any
such insurance policy or the validity, binding effect, and
enforceability thereof;
(xxxi) If the Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the trustee or the
Noteholders to the Indenture Trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor;
(xxxii) The Mortgaged Property consists of one or more parcels
of real property separately assessed for tax purposes. To the extent
there is erected thereon a detached or an attached one-family residence
or a detached two- to four-family dwelling, or an individual
condominium unit in a low-rise condominium, or an individual unit in a
planned unit development, such residence, dwelling or unit is not (i) a
unit in a cooperative apartment, (ii) a property constituting part of a
syndication, (iii) a time share unit, (iv) a property held in trust,
(v) a mobile home, (vi) a log-constructed home, or (vii) a recreational
vehicle;
(xxxiii) There exist no material deficiencies with respect to
escrow deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made or which the
Depositor expects not to be cured, and no escrow deposits or payments
of other charges or payments due the Depositor have been capitalized
under the Mortgage or the Mortgage Note;
(xxxiv) Such Mortgage Loan was not originated at a below
market interest rate. Such Mortgage Loan does not have a shared
appreciation feature, or other contingent interest feature;
(xxxv) The origination and collection practices used by the
Depositor, the related Originator or the Servicer with respect to such
Mortgage Loan have been in all respects legal, proper, prudent, and
customary in the mortgage origination and servicing business;
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(xxxvi) The Mortgagor has, to the extent required by
applicable law, executed a statement to the effect that the Mortgagor
has received all disclosure materials, if any, required by applicable
law with respect to the making of fixed-rate mortgage loans. The
Servicer shall maintain or cause to be maintained such statement in the
Servicer's Loan File. If such Mortgage Loan is an adjustable rate loan,
the related Mortgagor has executed a statement to the effect that such
Mortgagor has received all disclosure materials required by applicable
law with respect to the making of adjustable rate mortgage loans, and
the Servicer will ensure that such statement is and will remain in the
related Custodial Loan File;
(xxxvii) If such Mortgage Loan is a refinancing Mortgage Loan,
the related Mortgagor has received all disclosure and rescission
materials required by applicable law with respect to the making of a
refinancing Mortgage Loan, and evidence of such receipt is and will
remain in the related Custodial Loan File;
(xxxviii) All amounts received by the Depositor with respect
to such Mortgage Loan after the applicable Cut-Off Date and required to
be deposited in the Payment Account have been so deposited in the
Collection Account and are, as of the related Transfer Date, in the
Collection Account;
(xxxix) The Servicer's Loan File with respect to such Mortgage
Loan contains an appraisal of the related Mortgaged Property made and
signed, prior to the approval of the application for such Mortgage
Loan, by a qualified appraiser (i) who, at the time of such appraisal,
met the minimum qualifications of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and the
requirements of the related Originator's appraisal policy and (ii) who
satisfied (and which appraisal was conducted in accordance with) all of
the applicable requirements of the Uniform Standards of Professional
Appraisal Practice in effect at the time of such appraisal and
procedures. Such appraiser had no interest, direct or indirect, in such
Mortgaged Property or in any loan made on the security thereof, and
such appraiser's compensation was not affected by the approval or
disapproval of such Mortgage Loan;
(xl) The Depositor has no knowledge with respect to the
Mortgaged Property of any governmental or regulatory action or third
party claim made, instituted or threatened in writing relating to a
violation of any applicable federal, state or local environmental law,
statute, ordinance, regulation, order, decree or standard;
(xli) With respect to second lien Mortgage Loans:
1) the Depositor has no knowledge that the Mortgagor
has received notice from the holder of the prior mortgage that
such prior mortgage is in default,
2) no consent from the holder of the prior mortgage
is needed for the creation of the second lien Mortgage or, if
required, has been obtained and is in the related Servicer's
Loan File,
3) if the prior mortgage has a negative amortization
feature, the CLTV was determined using the maximum loan amount
of such prior mortgage, and
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4) the related first mortgage loan encumbering the
related Mortgaged Property does not have a mandatory future
advance provision;
(xlii) Each of the Mortgage Loans is (A) subject to a Take-out
Commitment (which can be in the form of a forward sale) and saleable on
a whole loan basis pursuant to terms and conditions customary in the
secondary market for residential mortgage loans or (B) is securitizable
upon substantially the same terms and conditions as the mortgage loans
included in the ABFS Mortgage Loan Trust 2003-1;
(xliii) To the best of the Depositor's knowledge, no error,
omission, misrepresentation, negligence, fraud or similar occurrence
with respect to a Mortgage Loan has taken place on the part of any
person, including without limitation the Mortgagor, any appraiser, any
builder or developer, or any other party involved in the origination of
the Mortgage Loan or in the application of any insurance in relation to
such Mortgage Loan;
(xliv) Each Mortgaged Property is in compliance with all
environmental laws, ordinances, rules, regulations and orders of
federal, state or governmental authorities relating thereto. No
hazardous material has been or is incorporated in, stored on or under
(other than properly stored materials, used for reasonable residential
purposes), released from, treated on, transported to or from, or
disposed of on or from, any Mortgaged Property such that, under
applicable law (A) any such hazardous material would be required to be
eliminated before the Mortgaged Property could be altered, renovated,
demolished or transferred, or (B) the owner of the Mortgaged Property,
or the holder of a security interest therein, could be subjected to
liability for the removal of such hazardous material or the elimination
of the hazard created thereby. Neither the Depositor nor any Mortgagor
has received notification from any federal, state or other governmental
authority relating to any hazardous materials on or affecting the
Mortgaged Property or to any potential or known liability under any
environmental law arising from the ownership or operation of the
Mortgaged Property. For the purposes of this subsection, the term
"hazardous materials" shall include, without limitation, gasoline,
petroleum products, explosives, radioactive materials, polychlorinated
biphenyls or related or similar materials, asbestos or any material
containing asbestos, lead, lead-based paint and any other substance or
material as may be defined as a hazardous or toxic substance by any
federal, state or local environmental law, ordinance, rule, regulation
or order, including, without limitation, CERCLA, the Clean Air Act, the
Clean Water Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act and any regulations promulgated pursuant
thereto;
(xlv) Reserved;
(xlvi) The Depositor further represents and warrants to the
Indenture Trustee and the Noteholders that as of the Cut-Off Date all
representations and warranties set forth in clauses (i) through (xlv)
above will be correct in all material respects as to each Mortgage
Loan, and the following representation will be correct: as of the
applicable Cut-Off Date, no payment due under such Mortgage Loan is
delinquent for 60 or more days. No payment under such Mortgage Loan has
been 30 days delinquent more than once during the twelve months
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immediately preceding the applicable Cut-Off Date, and no payment under
such Mortgage Loan has ever been 60 or more days delinquent;
(xlvii) No Mortgage Loan was made in connection with (i) the
construction or rehabilitation of a Mortgaged Property or (ii)
facilitating the trade-in or exchange of a Mortgaged Property;
(xlviii) The Mortgage Note is not and has not been secured by
any collateral except the lien or the corresponding Mortgage on the
Mortgaged Property and the security interest of any applicable security
agreements;
(xlix) The Mortgage Loan has a FICO Score of at least 525;
(l) No Mortgage Loan has a credit grade under the related
Originator's Underwriting Guidelines of less than C;
(li) The CLTV for each C credit grade Mortgage Loan does not
exceed 80% and the CLTV for each B credit grade Mortgage Loan does not
exceed 85%;
(lii) No Mortgage Loan has a CLTV greater than 95%;
(liii) The Mortgage Loan is a "qualified mortgage loan" within
the meaning of Section 860G(a)(3) of the Code; (liv) No Mortgage Loan
(a) is subject to Section 226.32 of Regulation Z or any similar state
law (relating to high interest rate credit/lending transactions), or
(b) contains any term or condition, or involve any loan origination
practice, that has been defined as "predatory," "covered" or
"threshold" under applicable federal, state or local law, or which has
been expressly categorized as an "unfair" or "deceptive" term,
condition, or practice in any applicable federal, state or local law
(or the regulations promulgated thereunder) dealing with "predatory" or
"high cost" mortgage lending (or a similarly classified loan using
different terminology under a law, regulation or ordinance imposing
heightened regulatory scrutiny or additional legal liability for
residential mortgage loans having high interest rates, points and/or
fees);
(lv) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the Mortgagee
thereunder;
(lvi) With respect to each adjustable rate Mortgage Loans, all
Mortgage Interest Rate adjustments have been made in strict compliance
with state and federal law and the terms of the related Mortgage Note.
Any interest required to be paid pursuant to state and local law has
been properly paid and credited;
(lvii) The Mortgagor is one or more natural persons and/or
trustees for an Illinois land trust or a trustee under a "living trust"
and such "living trust" is in compliance with ▇▇▇▇▇▇ ▇▇▇ guidelines for
such trusts. Either the Mortgagor is a natural person or the related
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co-borrower or guarantor is a natural person. No Mortgagor is an
Affiliate of the Originators, the Sponsor, the Depositor or the
Servicer;
(lviii) The Mortgage Loans in the aggregate satisfy the
Portfolio Composition Criteria; and
(lix) Each and every Mortgage Loan is an Eligible Mortgage
Loan.
Section 4.02. Purchase and Substitution. (a) It is understood and
agreed that the representations and warranties set forth in Section 4.01 herein
shall survive the purchase by the Depositor of the Mortgage Loans, the transfer
thereof by the Depositor to the Trust, the pledge thereof by the Trust to the
Indenture Trustee, for the benefit of the Noteholders, and the delivery of the
Secured Notes to the Noteholders, and shall continue in full force and effect,
notwithstanding any restrictive or qualified endorsement on the Mortgage Notes
and notwithstanding subsequent termination of this Agreement.
(b) Upon discovery by the Originators, the Depositor, the Servicer, any
Subservicer, the Indenture Trustee, the Collateral Agent, or a Noteholder of a
breach of any of the representations and warranties in Section 3.01, 3.02 or
4.01 hereof which materially and adversely affects the value of the Mortgage
Loans or the interest of the Noteholders, or which materially and adversely
affects the interests of the Noteholders in the related Mortgage Loan in the
case of a representation and warranty relating to a particular Mortgage Loan
(with respect to those representations and warranties which are made to the best
of the Originators', the Depositor's or the Sponsor's knowledge, if it is
discovered by the Originator's, the Depositor, the Sponsor or the Note Purchaser
that the substance of such representation and warranty is inaccurate and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan or the interest of the Note Purchaser, notwithstanding the Originators',
the Depositor's or the Sponsor's lack of knowledge with respect to the substance
of such representation and warranty, such inaccuracy shall be deemed a breach of
the applicable representation and warranty), the party discovering such breach
or failure shall promptly (and in any event within five (5) days of the
discovery) give written notice thereof to the others. Within five (5) days of
the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty made in Section 4.01(a), the Originators shall be
jointly and severally obligated to (a) promptly cure such breach in all material
respects, (b) purchase such Mortgage Loan on the next succeeding Determination
Date, at the Repurchase Price in the manner specified in this Section 4.02, or
(c) remove such Mortgage Loan from the Trust Estate (in which case it shall
become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans in the manner specified in Section 2.07 and this Section 4.02.
Within five (5) days of the earlier of its discovery or its receipt of notice of
any breach of the Portfolio Composition Criteria, the Originators shall be
obligated to (a) purchase Mortgage Loans on the next succeeding Determination
Date, at the Repurchase Price in the manner specified in this Section 4.02, or
(b) remove Mortgage Loans from the Trust Estate (in which case they shall become
Deleted Mortgage Loans) and substitute one or more Qualified Substitute Mortgage
Loans in the manner specified in Section 2.07 and this Section 4.02, in each
case such that the Mortgage Loans in the aggregate satisfy the Portfolio
Composition Criteria; provided that to the extent that the breach arises solely
from a breach of the Portfolio Composition Criteria related to Delinquent
Mortgage Loans, the aggregate Repurchase Price paid on account of such breach
when added to the payments made by the Sponsor pursuant to Section 4.03 of the
Sale and Servicing Agreement, shall not exceed the Additional Recourse Cap.
Within five (5) days of the earlier of its discovery or its receipt of notice of
any breach of a representation or warranty made in Section 4.01(b), the
Depositor shall be obligated to (a) promptly cure such breach in all material
respects, (b) purchase such Mortgage Loan on the next succeeding Determination
Date, at the Repurchase Price in the manner specified in this Section 4.02, or
(c) remove such Mortgage Loan from the Trust Estate (in which case it shall
become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans in the manner specified in Section 2.07 and this Section 4.02.
Within five (5) days of the earlier of its discovery or its receipt of notice of
any breach of the Portfolio Composition Criteria, the Depositor shall be
obligated to (a) purchase Mortgage Loans on the next succeeding Determination
Date, at the Repurchase Price in the manner specified in this Section 4.02, or
(b) remove Mortgage Loans from the Trust Estate (in which case they shall become
Deleted Mortgage Loans) and substitute one or more Qualified Substitute Mortgage
Loans in the manner specified in Section 2.07 and this Section 4.02, in each
case such that the Mortgage Loans in the aggregate satisfy the Portfolio
Composition Criteria; provided that to the extent that the breach arises solely
from a breach of the Portfolio Composition Criteria related to Delinquent
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Mortgage Loans, the aggregate Repurchase Price paid on account of such breach
when added to the payments made by the Sponsor pursuant to Section 4.03 of the
Sale and Servicing Agreement, shall not exceed the Additional Recourse Cap. If
the Originator and the Depositor fails to purchase or substitute for any
Defective Mortgage Loans (whether pursuant to this Section 4.02 or under Section
2.07(b)), the Sponsor shall purchase such Mortgage Loans on the next Business
Day. The Collateral Agent shall give prompt written notice to the Indenture
Trustee, who shall deliver such notice to the Note Purchaser of any repurchase
or substitution made pursuant to this Section 4.02 or Section 2.07(b).
(c) In the event that the related Originator and the Depositor shall
fail to deliver, or cause to be delivered, to the Collateral Agent, on behalf of
the Indenture Trustee, the Custodial Loan File with respect to any Wet-Ink
Mortgage Loan, within five (5) Business Days following the related Transfer
Date, such Originator or the Depositor shall purchase such Wet-Ink Mortgage Loan
on the next succeeding Determination Date, at the Repurchase Price in the manner
specified in this Section 4.02. If the Originator and the Depositor fails to
purchase or substitute for any Wet-Ink Mortgage Loans (whether pursuant to this
Section 4.02 or under Section 2.07(b)), the Sponsor shall purchase such Wet-Ink
Mortgage Loans on the next Business Day. The Collateral Agent shall give prompt
written notice to the Indenture Trustee, who shall deliver such notice to the
Note Purchaser of any repurchase or substitution made pursuant to this Section
4.02 or Section 2.07(b).
(d) As to any Deleted Mortgage Loan for which an Originator (or the
Depositor, as the case may be) substitutes a Qualified Substitute Mortgage Loan
or Mortgage Loans, such Originator (or the Depositor, as the case may be) may,
by delivering to the Indenture Trustee a certification, in the form attached
hereto as Exhibit G, executed by a Responsible Officer, and delivering to the
Collateral Agent the related Custodial Loan File for such Qualified Substitute
Mortgage Loan or Mortgage Loans.
(e) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Mortgage
Loans after the date of such substitution. Such amounts will be applied to pay
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down the Secured Note which relates to such Deleted Mortgage Loans. Monthly
Payments received with respect to Qualified Substitute Mortgage Loan or Mortgage
Loans on or before the date of substitution will be retained by the related
Originator (or the Depositor, as the case may be). The Trust will own all
payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the related Originator (or the Depositor, as the case may be)
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 Indenture Trustee, the Collateral Agent and the Note Purchaser 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
Mortgage Loans. Upon such substitution, such Qualified Substitute Mortgage Loan
or Mortgage Loans shall be subject to the terms of this Agreement in all
respects.
(f) It is understood and agreed that the obligations of the
Originators, the Depositor and the Sponsor set forth herein to, cure, purchase
or substitute for a Defective Mortgage Loan, or to indemnify as described in
subsection (g) below, constitute the sole remedies of the Indenture Trustee, the
Collateral Agent and the Noteholders respecting a breach of the representations
and warranties of the Originators and the Depositor made in Section 4.01.
(g) The Originators hereby indemnify the Indenture Trustee, the
Depositor, the Trust, the Owner Trustee, the Collateral Agent and the
Noteholders and their successors, assigns, agents and servants (collectively,
the "Originator Indemnified Parties") from and against, any and all liabilities,
obligations, losses, damages, taxes, claims, actions and suits, and any and all
reasonable costs, expenses and disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever (collectively, "Expenses") which
may at any time be imposed on, incurred by, or asserted against any Originator
Indemnified Party in any way relating to or arising out of (i) any breach of any
representation, warranty or covenant of the Originator, the Servicer or their
Affiliates, in any Basic Document, including, without limitation, the
origination or prior servicing of the Mortgage Loans by reason of any acts,
omissions, or alleged acts or omissions arising out of activities of the
Originator, the Servicer or their Affiliates, and (ii) any untrue statement by
the Originator, the Servicer or its Affiliates of any material fact or any such
Person's failure to state a material fact necessary to make such statements not
misleading with respect to any such Person's statements contained in any Basic
Document, including, without limitation, any Officer's Certificate, statement,
report or other document or information prepared by any such Person and
furnished or to be furnished by it pursuant to or in connection with the
transactions contemplated thereby and not corrected prior to completion of the
relevant transaction, including, without limitation, such written information as
may have been and may be furnished in connection with any due diligence
investigation with respect to the Mortgage Loans or any such Person's business,
operations or financial condition, including reasonable attorneys' fees and
other costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim. The Depositor hereby indemnifies the
Indenture Trustee, the Trust, the Owner Trustee, the Collateral Agent and the
Noteholders and their successors, assigns, agents and servants (collectively,
the "Depositor Indemnified Parties") from and against, any and all liabilities,
obligations, losses, damages, taxes, claims, actions and suits, and any and all
reasonable costs, expenses and disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever (collectively, "Expenses") which
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may at any time be imposed on, incurred by, or asserted against any Depositor
Indemnified Party in any way relating to or arising out of a breach by the
Depositor of the representations or warranties herein. If the Originators or the
Depositor fail to perform in their obligations to indemnify the related
indemnified parties, then the Sponsor will do so. The indemnities contained
herein shall survive the resignation or termination of the Indenture Trustee,
Owner Trustee or the termination of this Agreement.
(h) Each of the Originators shall be jointly and severally responsible
for any repurchase, cure or substitution obligation of each Originator under
this Agreement and the Indenture.
Section 4.03. Additional Recourse.
(a) In addition to (and not by limitation) the obligations of the
Sponsor set forth in Section 4.01 and Section 4.02 hereof, the Sponsor agrees
that it will pay to the Indenture Trustee (for application in accordance with
the terms of this Agreement), any unpaid amounts which may become due and owing
under the Indenture, but remain unpaid on the 10th Business Day after the
relevant amount became due, (i) on the day on which the Sponsor is given notice
of the circumstances, if notice is given at or before 11:00 a.m. (New York Time)
on a Business Day, or (ii) on the Business Day following the day such notice is
given, if it is given after that time on a Business Day or on a day that is not
a Business Day; provided that the aggregate amount the Sponsor shall be
obligated to pay pursuant to this Section 4.06 shall not exceed 10% of the
aggregate Note Principal Balance (the "Additional Recourse Cap"). The Sponsor
further agrees to pay any and all reasonable expenses (including, without
limitation, all fees and disbursements of counsel) which may be paid or incurred
by the Indenture Trustee in enforcing, or obtaining advice of counsel in respect
to or collecting against, the Sponsor. The Sponsor agrees that whenever, at any
time, or from time to time, it shall make any payment to the Indenture Trustee
on account of its liability under this Section 4.06, it will notify the
Indenture Trustee in writing that such payment is made under this Agreement for
such purpose.
(b) The Sponsor waives any and all notice of the creation, renewal,
extension or accrual of the recourse and notice of or proof of reliance by the
Indenture Trustee upon this Sale and Servicing Agreement or acceptance of this
Agreement, the recourse, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Agreement; and all dealings between the Originators, the Depositor,
the Servicer and the Sponsor, on the one hand, and the Indenture Trustee, on the
other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Agreement. The Sponsor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Sponsor with respect to the recourse set forth in this section. The
Sponsor understands and agrees that this recourse shall be construed as a
continuing, absolute and unconditional payment obligation without regard to (a)
the validity, regularity or enforceability of this Agreement or any other Basic
Document, the recourse or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Indenture Trustee, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by the Originators, the Depositor, the Servicer or the Sponsor against
the Indenture Trustee, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Originators, the Depositor, the Servicer and the
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Sponsor) which constitutes, or might be construed to constitute, an equitable or
legal discharge of the Sponsor for the recourse contained in this Agreement, in
bankruptcy or in any other instance.
ARTICLE V
THE ORIGINATORS, THE DEPOSITOR AND THE SPONSOR
Section 5.01. Covenants of the Originators, the Depositor and the
Sponsor. (a) Each of the Originators, the Depositor and the Sponsor covenant to
the Indenture Trustee, the Trust, the Collateral Agent, the Servicer and the
Noteholders as follows:
(i) The Originators, the Depositor and the Sponsor shall
cooperate with such parties and the firm of independent certified
public accountants retained with respect to the issuance of the Secured
Notes in making available all information and taking all steps
reasonably necessary or reasonably required by the Note Purchaser to
permit the accountants' letters required hereunder to be delivered
within the times set for delivery herein;
(ii) The Originators, the Depositor and the Sponsor agree to
satisfy or cause to be satisfied on or prior to the related Transfer
Date, all of the conditions set forth in Section 6.01 hereof that are
within the Originators', the Depositor's, and the Sponsor's (or their
agents') control; and
(iii) The Originators, the Depositor and the Sponsor hereby
agree to do all acts, transactions, and things and to execute and
deliver all agreements, documents, instruments, and papers by and on
behalf of the Originators, the Depositor or the Sponsor as the Owner
Trustee or the Note Purchaser or their counsel may reasonably request
in order to (A) consummate the transfer of the Mortgage Loans to the
Depositor and from the Depositor to the Trust and the subsequent
transfer thereof to the Indenture Trustee, and the issuance and sale of
the Secured Notes and (B) consummate a Disposition of some or all of
the Mortgage Loans.
(b) The Depositor covenants to the Noteholders that it shall not, for
so long as an Event of Default or an Amortization Event exists or would result
under the Indenture, pay any dividend to the holders of its common stock.
(c) The Originators, the Depositor and the Sponsor shall not incur any
additional debt except as is permitted under the Credit Agreement.
Section 5.02. Merger or Consolidation. Each of the Originators, the
Depositor and the Sponsor will keep in full effect its existence, rights and
franchises as a corporation and 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. Any Person into which any of the
Originators' or the Depositor or the Sponsor may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Originators, the Depositor or the Sponsor shall be a party, or any Person
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succeeding to the business of the Originators, the Depositor or the Sponsor,
shall be approved by the Note Purchaser, which approval shall not be
unreasonably withheld. In all events such person shall be the successor of the
Originators, the Depositor or the Sponsor 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 Originators, the Depositor and the
Sponsor shall send notice of any such merger or consolidation to the Indenture
Trustee and the Note Purchaser.
Section 5.03. Costs. In connection with the transactions contemplated
under this Agreement, the Trust Agreement, the Indenture and all amendments
thereto, the Originators, Depositor and the Sponsor shall promptly pay: (a) the
fees and disbursements of the Depositor's and the Originators' counsel; (b) any
of the fees of the Indenture Trustee and the fees and disbursements of the
Indenture Trustee's counsel; (c) any of the fees of the Owner Trustee and the
fees and disbursements of the Owner Trustee's counsel; (d) the fees and
disbursements for accountants for the Originators; and (e) all of the reasonable
initial expenses of the Note Purchaser including, without limitation, legal fees
and expenses, accountant fees and expenses and expenses in connection with due
diligence conducted on the Servicer's Loan Files. For the avoidance of doubt,
the parties hereto acknowledge that it is the intention of the parties that the
Note Purchaser shall not pay any of the Indenture Trustee's or Owner Trustee's
fees and expenses in connection with the transactions contemplated by this
Agreement, the Trust Agreement, the Indenture and all amendments thereto. All
other costs and expenses in connection with the transactions contemplated
hereunder shall be borne by the party incurring such expenses.
Section 5.04. Indemnification. (a) The Originators, the Depositor and
the Sponsor, jointly and severally, agree to indemnify and to hold the Note
Purchaser 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 Note Purchaser may sustain in any way related to the
failure of any of the Originators, the Depositor or the Sponsor to perform any
of their duties in compliance with the terms of this Agreement. The Originators,
the Depositor or the Sponsor shall immediately notify the Note Purchaser if a
claim is made by a third party with respect to this Agreement, and the
Originators, the Depositor or the Sponsor 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 Note Purchaser in respect of such claim.
(b) Promptly after receipt by an indemnified party under this Section
5.04 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 Section 5.04, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent such indemnifying party
has been prejudiced thereby. 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 participate therein and, to
the extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel reasonably satisfactory to such
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indemnified party. After notice from the indemnifying party to such indemnified
party of its election to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 5.04 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, 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 that 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 assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party shall not be
liable for the expenses of more than one separate counsel.
Section 5.05. Financial Statements. The Originators, the Depositor and
the Sponsor will deliver to the Indenture Trustee and the Note Purchaser:
(a) As soon as available and in any event within forty-five (45) days
after the end of each month, statements of income of the Sponsor and its
Subsidiaries (including the Trust) on a consolidating basis for the month just
ended, and the related balance sheet as at the end of such month, all in
reasonable detail subject to year-end adjustments. Except for the month
immediately following the Sponsor's fiscal year end in which case the statements
of income and related balance sheet shall be delivered upon the completion of
the report and opinion required by Section 5.05(c)(1) below.
(b) As soon as available and in any event within sixty (60) days after
the close of each of the first three (3) fiscal quarters in each of its fiscal
years, statements of income and changes in its stockholders' equity and cash
flows of the Sponsor and its respective Subsidiaries on a consolidating and
consolidated basis for the period from the beginning of such fiscal year to the
end of such fiscal quarter, and the related balance sheet as at the end of such
fiscal quarter, all in reasonable detail, with all notes and certified by its
chief financial officer that, to the best of his or her knowledge, such
financial statements were prepared in accordance with GAAP and present fairly
the financial condition and the results of operations and cash flows for the
period covered, subject, however, to year-end audit adjustments and the omission
of footnotes.
(c) As soon as available and in any event within ninety (90) days after
the close of each of its fiscal years, statements of income, changes in its
stockholder's equity and cash flows of the Sponsor and its Subsidiaries on a
consolidating and consolidated basis as at the end of such year (setting forth
in comparative form the corresponding figures for the preceding fiscal year),
all in reasonable detail, prepared in accordance with GAAP and with all notes,
and accompanied by:
(i) a report and opinion of and independent certified public
accountants of recognized standing selected by the Sponsor and
acceptable to the Indenture Trustee, stating that such accountants have
conducted audits of such financial statements in accordance with
generally accepted auditing standards and that, in their opinion, such
financial statements present fairly, in all material respects, the
financial position of the Sponsor and its Subsidiaries as of the date
thereof and the results of its operations and cash flows for the
periods covered thereby in conformity with GAAP;
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(ii) copies of any management letter from such accounting firm
and the Sponsor's and its Subsidiaries' response(s) to it;
(iii) a report and opinion of an firm of independent public
accountants that is a member of the American Institute of Certified
Public Accountants, stating that such firm has examined selected
documents and records relating to the servicing of Mortgage Loans, in
accordance with the Mortgage Bankers Association of America's Uniform
Single Attestation Program for Mortgage Bankers, or any successor
uniform program, and that, on the basis of such examination, such
servicing has been conducted in compliance with the minimum servicing
standards identified therein, except for such significant exceptions or
errors in records that, in the opinion of such firm, generally accepted
auditing standards requires it to report-- the Servicer will use
commercially reasonable efforts to obtain such a report and opinion in
respect of each subservicer (if any) for the Servicer, and will furnish
those obtained to the Indenture Trustee; and
(iv) a certificate signed by the chief financial officer of
the Sponsor and its Subsidiaries stating that said financial statements
fairly present its financial condition and results of operations and
those of its Subsidiaries as at the end of, and for, such year.
(d) Together with each of the monthly, quarterly and annual financial
statements required by this Section 5.05, a certificate in the form of Exhibit O
of the Sponsor's chief financial officer (i) setting forth in reasonable detail
all calculations necessary to show that the Originators, the Depositor and the
Sponsor are in compliance with the applicable requirements of clauses (iii),
(iv), (v), and (ix) of the definition of Amortization Event or, if the
Originators, the Depositor or the Sponsor is not in compliance, showing the
extent of noncompliance and specifying the period of noncompliance and what
actions the Originators, the Depositor or the Sponsor proposes to take with
respect thereto and (ii) stating that the terms of this Agreement have been
reviewed by such officer or under his or her supervision, and that he or she has
made or caused to be made under his or her supervision, a review in reasonable
detail of the transactions and the condition of the Originators, the Depositor
or the Sponsor during the accounting period covered by such financial statements
and that such review does not disclose the existence during or at the end of
such accounting period -- and that such chief financial officer does not have
knowledge of the existence as of the date of the Officer's Certificate -- of any
Event of Default or Default or, if any Event of Default or Default existed or
exists, specifying the nature and period of its existence and what action the
Sponsor has taken, is taking and proposes to take with respect to it. Each such
Officer's Certificate shall show, in reasonable detail, the computations
supporting compliance (or showing noncompliance) with clauses (iii), (iv), (v),
and (ix) of the definition of Amortization Event.
The Trust, the Sponsor, the Originators, the Depositor and their
respective Subsidiaries also agree to provide to the Indenture Trustee such
other information related to such annual reports as the Agent may from time to
time reasonably request.
(e) The Trust, the Sponsor, the Originators, the Depositor and their
respective Subsidiaries will promptly furnish to the Indenture Trustee from time
to time information and certificates regarding the business and affairs of the
Originators, the Depositor, the Sponsor and the Trust, including the following
and such other information as the Indenture Trustee may from time to time
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reasonably request (each report or certificate required must be signed by an
Authorized Company Representative and the Indenture Trustee will have no
responsibility to verify or track any of the items referenced or conclusions
stated in such reports or to verify the authority of its signer):
(i) Monthly, a hedging coverage report showing, in reasonable
detail and in form and substance acceptable to and approved by the
Sponsor and the Indenture Trustee, the Sponsor's hedging coverage of
all Mortgage Loans.
(ii) Monthly, a report summarizing notices received by the
Originators, the Depositor or the Sponsor requesting or demanding that
the Originators repurchase (or pay indemnity or other compensation in
respect of) Mortgage Loans previously sold or otherwise disposed of by
the Originator to any investor or other Person pursuant to any express
or implied repurchase or indemnity obligation (whether absolute or
contingent and whether or not the Originator is contesting or intends
to contest the request or demand).
(iii) Quarterly, a report listing, and stating the current
values of, the Sponsor's residual interests in the Sponsor's Mortgage
Loan pools that have been securitized, with such values to be
determined by a method, and such report to be in form and content,
agreed to by the Sponsor's and the Indenture Trustee and Note
Purchaser.
(iv) Quarterly, a delinquent Mortgage Loan report categorized
by age of delinquency for 30, 60, 90 or more days.
(v) Quarterly, mortgage loan production reports reflecting the
Sponsor's quarterly mortgage loan production and acquisition volumes,
as well as its mortgage loan pipeline.
(vi) Such other reports by the Originators, the Depositor and
the Sponsor in respect of the Collateral, in such detail and at such
times as the Indenture Trustee in its reasonable discretion or at the
reasonable direction of the Note Purchaser may request at any time or
from time to time.
(vii) As soon as available and in any event within five (5)
Business Days of the date distributed, copies of all definitive
prospectuses relating to (i) any security offerings by the Originators,
the Depositor, the Sponsor or any of their respective Subsidiaries
(including single-purpose finance Subsidiaries) or (ii) any securities
to be based on, backed by or created from any Collateral and to be
offered by the Originators, the Depositor, the Sponsor or any of their
respective Subsidiaries.
(viii) As soon as available and in any event within five (5)
days after filing, copies of (i) all press releases issued by the
Originators, the Depositor, the Sponsor or any of their respective
Subsidiaries, (ii) all regular or periodic financial reports, and
copies of all extraordinary or non-routine filings, if any, that shall
be filed with the U.S. Securities and Exchange Commission or any
successor agency by or on behalf of the Originators, Depositor, Sponsor
or any of their respective Subsidiaries (including single-purpose
finance Subsidiaries) and (iii) all such filings relating to any
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securities that are or are to be based on, backed by or created from
any Collateral and which filings are made by or in respect of the
Originators, the Depositor, the Sponsor or any of their respective
Subsidiaries.
ARTICLE VI
CONDITIONS OF CLOSING
Section 6.01. Conditions Precedent to Transfer Dates. (a) Three (3)
Business Days prior to each Transfer Date, or in the case of Wet-Ink Mortgage
Loans one (1) Business Day prior to each Transfer Date, the Trust shall give a
Notice of Issue to the Note Purchaser, the Indenture Trustee and the Collateral
Agent of such upcoming Transfer Date and provide an estimate of the number of
Mortgage Loans and aggregate Principal Balance of such Mortgage Loans to be
transferred on such Transfer Date. One (1) Business Day prior to each Transfer
Date, the Trust shall provide the Note Purchaser, the Indenture Trustee and the
Collateral Agent a final Mortgage Loan Schedule with respect to the Mortgage
Loans to be transferred on such Transfer Date. On each Transfer Date, the
Depositor shall convey to the Trust the Mortgage Loans and the other property
and rights related thereto described in the related Assignment, and the Trust,
only upon the satisfaction of each of the conditions set forth below on or prior
to such Transfer Date, shall deposit or cause to be deposited cash in the amount
of the Sale Amount received from the Note Purchaser in the General Operating
Account in respect thereof, and the Servicer shall, promptly after such deposit,
direct the Indenture Trustee to withdraw the amount deposited in respect of
applicable Sale Amount from the General Operating Account, and distribute such
amount to or at the direction of the Depositor.
(b) The obligations of the Trust to purchase the Mortgage Loans and the
Note Purchaser to purchase the Secured Notes will be subject to the satisfaction
on each Transfer Date of the following conditions:
(i) the related Originator(s), the Depositor and the Servicer,
as applicable, shall have delivered to the Trust and the Note Purchaser
duly executed Assignments, which shall have attached thereto a Mortgage
Loan Schedule setting forth the appropriate information with respect to
all Mortgage Loans conveyed on such Transfer Date and the Depositor
shall have delivered to the Note Purchaser a computer readable
transmission of such Mortgage Loan Schedule;
(ii) the Depositor and the Servicer, as applicable, shall have
deposited in the Collection Account all collections received with
respect to each of the Mortgage Loans on and after the applicable
Cut-off Date;
(iii) as of such Transfer Date, none of any Originator, the
Sponsor nor the Depositor shall (A) be insolvent, (B) be made insolvent
by its respective sale of Mortgage Loans or (C) have reason to believe
that its insolvency is imminent;
(iv) the Transfer Period shall be in effect and shall not have
ended;
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(v) other than with respect to the Wet-Ink Mortgage Loans, the
Trust shall have delivered the Custodial Loan File to the Collateral
Agent in accordance herewith, the Note Purchaser shall have received a
Trust Receipt via facsimile, with the original to follow the next day
via federal express, along with the attached copy of the Exceptions
Report reflecting such delivery and no material exceptions (in the sole
judgment of the Note Purchaser) shall be listed on the Exceptions
Report;
(vi) each of the representations and warranties made by the
Originators and the Depositor contained in Sections 3.01 and 4.01 shall
be true and correct in all material respects as of the related Transfer
Date with the same effect as if then made, and the Originators and the
Depositor shall have performed all obligations to be performed by it
under the Basic Documents on or prior to such Transfer Date;
(vii) each related Originator and the Depositor shall, at its
own expense, within one Business Day following the Transfer Date,
indicate in its computer files that the Mortgage Loans identified in
the related Assignment have been sold to the Trust pursuant to this
Agreement and such Assignment;
(viii) the Depositor shall have taken any action requested by
the Indenture Trustee, the Trust or the Noteholders required to
maintain the ownership interest of the Trust in the Mortgage Loan and
the Trust Estate;
(ix) except for Wet-Ink Mortgage Loans for which the Trust
will deliver at least one (1) Business Day prior to such date, the
Trust shall have provided the Note Purchaser no later than three (3)
Business Days prior to such date a Notice of Issue pursuant to Section
6.01(a), with a copy to the Indenture Trustee;
(x) after giving effect to the Sale Amount associated
therewith, the Note Principal Balance will not exceed the Maximum Note
Balance;
(xi) all conditions precedent to the issuance of the Sale
Amount pursuant to the Indenture shall have been fulfilled as of such
Transfer Date;
(xii) the Mortgage Loans to be purchased with the proceeds of
the Sale Amount shall not, when aggregated with all other Sold Mortgage
Loans, cause any of the Portfolio Composition Criteria to be exceeded;
(xiii) the Servicer shall have delivered to the Note Purchaser
the report described in Section 7.16(b) hereof; (xiv) the Originators
shall have caused the Servicer to deposit in the Collection Account all
collections of (x) principal in respect of the related Mortgage Loans
received after the related Cut-Off Date and (y) interest due on the
Mortgage Loans after the related Cut-Off Date;
(xv) except for Wet-Ink Mortgage Loans, the Originators shall
have delivered the Mortgage File to the Collateral Agent, on behalf of
the Indenture Trustee;
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(xvi) no Event of Default or Amortization Event shall have
occurred and be continuing;
(xvii) the Originators shall have delivered to the Indenture
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and that each
complies with the terms hereof, including each of the representations
and warranties made with respect thereto in Sections 3.01 and 4.01;
(xviii) a Collateral Deficiency Event shall not have occurred
and be continuing on such Transfer Date, nor shall a Collateral
Deficiency Event occur as a result of such transfer; and
(xix) except for Wet-Ink Mortgage Loans, in connection with
the transfer, assignment and pledge of the Mortgage Loans, the
Originators and the Depositor shall satisfy the document delivery
requirements set forth in Section 2.06.
Section 6.02. Conditions Precedent to Initial Transfer Date. The
obligations of the Trust to purchase the initial Mortgage Loans and the Note
Purchaser to purchase the initial Secured Note will be subject to the
satisfaction on the initial Transfer Date of the following conditions:
(a) Each of the obligations of the Originators, the Sponsor and the
Depositor required to be performed by it on or prior to the date hereof and the
related Transfer Date pursuant to the terms of this Agreement shall have been
duly performed and complied with and all of the representations and warranties
of the Depositor, the Sponsor and the Originators under this Agreement shall be
true and correct as of the date hereof and the related Transfer Date and no
event shall have occurred which, with notice or the passage of time, would
constitute a default under this Agreement, and the Note Purchaser shall have
received a certificate to the effect of the foregoing signed by an authorized
officer of each of the Depositor, the Sponsor and the Originators.
(b) All fees and expenses set forth in Section 5.03 shall have been
paid by the Originators, the Sponsor and/or the Depositor.
(c) The Mortgage Loans will be acceptable to the Note Purchaser, in its
sole reasonable discretion.
(d) The Note Purchaser shall have received the following additional
closing documents, in form and substance reasonably satisfactory to the Note
Purchaser and its counsel:
(i) the Mortgage Loan Schedule;
(ii) this Agreement, the Indenture, the Trust Agreement, and
the Purchase Agreement and all documents required thereunder, duly
executed and delivered by each of the parties thereto;
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(iii) officer's certificates of an officer of each of the
Originators, the Depositor and the Sponsor, dated as of the date
hereof, and attached thereto resolutions of the board of directors and
a copy of the charter and by-laws;
(iv) an opinion of the counsel for the Originators, the
Depositor and the Sponsor as to various corporate matters in a form
acceptable to the Note Purchaser and its counsel (it being agreed that
the opinion shall expressly provide that the Indenture Trustee shall be
entitled to rely on the opinion);
(v) an opinion of the counsel for the Originators, the Sponsor
and the Depositor stating that the Secured Notes will be treated as
indebtedness and that the Trust will not be taxable as a corporation, a
publicly traded partnership or a taxable mortgage pool, in a form
acceptable to the Note Purchaser and its counsel (it being agreed that
the opinion shall expressly provide that the Indenture Trustee shall be
entitled to rely on the opinion);
(vi) opinions of counsel for the Originators, the Sponsor and
the Depositor relating to certain bankruptcy, true sale and
non-consolidation matters, in forms acceptable to the Note Purchaser
and its counsel (it being agreed that such opinions shall expressly
provide that the Indenture Trustee shall be entitled to rely on such
opinions);
(vii) an opinion of counsel for the Indenture Trustee in form
and substance acceptable to the Note Purchaser and its counsel (it
being agreed that the opinion shall expressly provide that the
Originators, the Sponsor and the Depositor shall be entitled to rely on
the opinion;
(viii) an opinion of counsel for the Owner Trustee in form and
substance acceptable to the Note Purchaser and its counsel (it being
agreed that the opinion shall expressly provide that the Originators,
the Depositor and the Indenture Trustee shall be entitled to rely on
the opinion);
(ix) an opinion or opinions of counsel for the Servicer, in
form and substance acceptable to the Note Purchaser and its counsel (it
being agreed that the opinion shall expressly provide that the
Originators, the Depositor and the Indenture Trustee shall be entitled
to rely on the opinion); and
(x) an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, counsel to the Servicer and
the Originator, in form and substance acceptable to the Note Purchaser
and its counsel.
(e) All proceedings in connection with the transactions contemplated by
this Agreement and all documents incident hereto shall be satisfactory in form
and substance to the Note Purchaser and its counsel.
(f) The Originators and the Depositor shall have furnished the Note
Purchaser with such other certificates of its officers or others and such other
documents or opinions as the Note Purchaser or its counsel may reasonably
request.
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(g) The Servicer shall have delivered to the Note Purchaser the report,
dated April 30, 2003, of independent accountants described in Section 7.10.
(h) The Sponsor shall have delivered evidence, in form and substance
satisfactory to Note Purchaser, that the Sponsor or an Affiliate of the Sponsor
has a commitment for warehouse financing of mortgage loans from a lender other
than the Note Purchaser in an amount of at least $200,000,000 for a term of not
less than 364 days.
Section 6.03. Termination of Note Purchaser's Obligations. The Note
Purchaser may terminate its obligations under the Basic Documents by notice to
the Originators, the Sponsor and the Depositor at any time before delivery of
and payment of the purchase price for the Secured Notes if: (a) any of the
conditions set forth in Section 6.01 are not satisfied when and as provided
therein; (b) there shall have been the entry of a decree or order by a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Depositor, the Sponsor or any Originator, or
for the winding up or liquidation of the affairs of the Depositor, the Sponsor
or any Originator; (c) there shall have been the consent by the Depositor, the
Sponsor or any Originator 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 Depositor, the Sponsor
or any Originator or of or relating to substantially all of the property of the
Depositor, the Sponsor or any Originator; (d) the Depositor, the Sponsor or any
Originator shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable insolvency,
bankruptcy or reorganization statute, make an assignment for the benefit of its
creditors, voluntarily suspend payment of its obligations or cease its normal
business operations; (e) the failure on the part of the Originator, the Sponsor
or Depositor to observe or perform in any material respect any material
covenants or agreements of the Originator, the Sponsor or Depositor under this
Agreement which failure continues a period of 10 days after written notice; (f)
any representation or warranty made by the Originator, the Sponsor or Depositor
pursuant hereto proves to have been incorrect in any material respect when made,
and, if such representation nor warranty is correctable, which continues to be
incorrect in any material respect for a period of 10 days after written notice;
(g) any purchase and assumption agreement with respect to the Depositor, the
Sponsor or any Originator or the assets and properties of the Depositor, the
Sponsor or any Originator shall have been entered into; or (h) an Amortization
Event or Event of Default shall have occurred. The termination of the Note
Purchaser's obligations hereunder shall not terminate the Note Purchaser's
rights hereunder or its right to exercise any remedy available to it at law or
in equity.
ARTICLE VII
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 7.01. The Servicer; Term. (a) 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 subject to the limitations set forth in
this Agreement. The Indenture Trustee shall furnish the Servicer with any powers
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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 Indenture Trustee, to execute and deliver, on
behalf of itself, the Noteholders and the Indenture 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. The Servicer
shall notify the Indenture Trustee of any such waiver, release, discharge,
modification, indulgence or other such matter by delivering to the Indenture
Trustee an Officer's Certificate certifying that such agreement is in compliance
with this Section 7.01 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 Custodial Loan 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 unless (i) the modifications do not decrease the
Mortgage Interest Rate, reduce or increase the principal balance, decrease the
lien priority, increase the current LTV above the lesser of the current LTV or
the original LTV, or change the final maturity date on or of such Mortgage Loan
and (ii) the Note Purchaser consents to such modifications in writing.
(b) The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Indenture 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.
(c) The Servicer's, and each Subservicer's, term hereunder shall be for
a period beginning on the Closing Date and ending 12 months thereafter; provided
that such term shall end on the date on which this Agreement is terminated; and
provided, further, that the Servicer, and each Subservicer, may be removed prior
to the expiration of such term as described in Article IX hereof. The Servicer,
each Subservicer and the other parties hereto acknowledge that the Mortgage
Loans have been sold to the Trust on a servicing-released basis, and that
neither the Servicer nor either Subservicer has any ownership interest in the
right to service the Mortgage Loans. Any renewal of the Servicer or the
Subservicers shall be at the sole discretion of the Note Purchaser.
Section 7.02. 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 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) Pursuant to Section 8.03, the Indenture Trustee shall establish and
maintain, in the name of the Indenture Trustee, the Collection Account, in trust
for the benefit of the Noteholders. The Collection Account shall be established
and maintained as an Eligible Account.
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(c) The Servicer shall deposit in the Collection Account, in
immediately available funds, any amounts representing Monthly Payments on the
Mortgage Loans due or to be applied as of a date after the related Cut-Off Date,
and thereafter, no later than the first Business Day following receipt thereof
(except as otherwise permitted herein), the following payments and collections
received or made by it (other than in respect of principal collected and
interest due on the Mortgage Loans on or before the related Cut-Off Date):
(i) payments of interest on the Mortgage Loans;
(ii) payments of principal of the Mortgage Loans, including
any prepayment penalties or premiums;
(iii) the Repurchase Price of Mortgage Loans repurchased
pursuant to Section 2.07 or 4.02;
(iv) the Substitution Adjustment received in connection with
Mortgage Loans for which Qualified Substitute Mortgage Loans are
received pursuant to Section 2.07 and 4.02;
(v) all Liquidation Proceeds; and
(vi) all Insurance Proceeds (including, for this purpose, any
amounts required to be deposited by the Servicer pursuant to Section
7.04 hereof).
It is understood that the Servicer need not deposit amounts
representing fees, 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) For any Mortgage Loan that has a first Due Date that occurs later
than the last day of the Due Period following the Due Period in which the
Mortgage Loan was sold to the Trust, on the first Business Day prior to the
related Payment Date, the Servicer will deposit into the Collection Account 30
days' interest at the related Mortgage Interest Rate, net of the Servicing Fee,
for each month after the month in which the transfer occurs until, but not
including, the month in which such first Due Date occurs.
Section 7.03. Reserved.
Section 7.04. 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 (x)
the maximum insurable value of the related Mortgaged Property or (y) 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
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property or (ii) the sum of the 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 related Originator, its successors and assigns, as
mortgagee.
(b) If the Servicer shall obtain and maintain a blanket policy issued
by an insurer acceptable to the Note Purchaser 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 7.04(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 7.04(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 sum of the Principal Balance of the related Mortgage Loan and the principal
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 7.05. 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
7.05, from enforcing any such clause, the Servicer is authorized, subject to the
consent of the Note Purchaser, 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 Indenture Trustee and the Collateral
Agent that any assumption and modification agreement has been completed by
delivering to the Indenture Trustee, the Collateral Agent and the Note Purchaser
an Officer's Certificate certifying that such agreement is in compliance with
this Section 7.05 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 Servicer's Loan 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
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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 any Mortgage Loan that has been assumed in
accordance with this Section 7.05 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 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 7.05 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 7.06. Realization Upon Defaulted Mortgage Loans. (a) The
Servicer shall, in a manner consistent with Accepted Servicing Practices,
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 7.02(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 Note Purchaser. 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.
Notwithstanding the foregoing, 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 Indenture Trustee, or to its nominee, on behalf of
Noteholders.
(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 Certificateholders of all the Mortgage Loans and REO
Properties in the Trust Estate pursuant to Section 10.01 of the Indenture) 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
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Subservicer from its own funds, in each case, with respect to the related
Mortgage Loan; third, to accrued and unpaid interest on the Mortgage Loan, at
the Mortgage Interest Rate (or at such lesser rate as may be in effect for such
Mortgage Loan pursuant to application of the Civil Relief Act) on the Principal
Balance of such Mortgage Loan, to the date such Mortgage Loan is determined to
be a Liquidated Mortgage Loan if it is a Liquidated Mortgage Loan, or to the Due
Date in the Due Period prior to the Payment Date on which such amounts are to be
paid 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 7.07. Indenture Trustee to Cooperate. Upon the payment in full
of the Principal Balance of any Mortgage Loan, the Servicer will notify the
Indenture Trustee and the Collateral Agent 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 7.02 have been so deposited) of a
Responsible Officer. Upon any such payment in full, the Servicer is authorized
to execute, pursuant to the authorization contained in Section 7.01, an
instrument of satisfaction regarding the related Mortgage, which instrument of
satisfaction shall be recorded by the Servicer if required by applicable law and
be delivered to the Person entitled thereto, it being understood and agreed that
no expenses incurred in connection with such instrument of satisfaction shall be
reimbursed from the Collection Account. From time to time and as appropriate for
the servicing or foreclosure of any Mortgage Loan, the Collateral Agent shall,
upon request of the Servicer and delivery to the Collateral Agent of a Request
for Release signed by a Responsible Officer, release the related Servicer's Loan
File to the Servicer and shall execute such documents as shall be necessary for
the prosecution of any such proceedings. Such Request for Release shall obligate
the Servicer to return the Custodial Loan File to the Collateral Agent 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 Responsible
Officer similar to that hereinabove specified, the Request for Release shall be
released by the Collateral Agent to the Servicer.
Section 7.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. On each Payment Date, the Servicer shall be entitled to receive, and
the Indenture Trustee shall distribute, out of collections on the Mortgage Loans
for the Due Period, as servicing compensation for such Due Period, the Servicing
Fee. Additional servicing compensation in the form of assumption fees, late
payment charges or extension and other administrative charges shall be retained
by the Servicer. The Servicer shall be required to pay all expenses incurred by
it in connection with its activities hereunder (including payment of all fees
and expenses of the Subservicers, payment of the Indenture Trustee Fee and any
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expenses or disbursements reasonably incurred or made by the Indenture Trustee
and payment of the Collateral Agent Fee and any expenses or disbursements
incurred or made by the Collateral Agent, as provided in Section 6.16 of the
Indenture and Section 11.05 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 7.09. Annual Statement as to Compliance. The Servicer will
deliver to the Indenture Trustee, the Collateral Agent, and each Noteholder, on
or before April 30 of each year, beginning April 30, 2004, an Officer's
Certificate of the Servicer stating that (a) a review of the activities of the
Servicer during the preceding calendar year and of its performance under this
Agreement has been made under such 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 7.10. Annual Independent Public Accountants' Servicing Report.
On or before April 30 of each year, beginning April 30, 2004, the Servicer at
its expense shall cause a firm of independent public accountants that is a
member of the American Institute of Certified Public Accountants (who may also
render other services to the Servicer) to furnish a report to the Indenture
Trustee, the Collateral Agent and each Noteholder to the effect that such firm
has examined certain documents and records relating to the servicing of mortgage
loans under 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 7.11. Access to Certain Documentation. The Servicer shall
permit the designated agents or representatives of each Noteholder, the Note
Purchaser, the Collateral Agent and the Indenture 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
relating to the Mortgage Loans and (ii) to visit the offices and properties of
the Servicer for the purpose of examining such materials and to discuss matters
relating to the Mortgage Loans and the Servicer's performance under this
Agreement with any of the officers or employees of the Servicer having knowledge
thereof and with the independent public accountants of the Servicer (and by this
provision the Servicer authorizes its 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 Noteholder, the Note Purchaser,
the Collateral Agent or the Indenture Trustee.
Section 7.12. 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 in an
amount at least equal to $1,000,000. 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 and shall name the Note
Purchaser as an additional loss payee.
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Section 7.13. Compensating Interest. Not later than the close of
business on the third Business Day prior to each Payment Date, the Servicer
shall remit to the Indenture Trustee (without right to reimbursement therefor)
for deposit into the Collection Account, an amount equal to, for each Mortgage
Loan, the lesser of (a) the Prepayment Interest Shortfall for such Mortgage Loan
for the related Payment Date resulting from Principal Prepayments during the
related Due Period and (b) its Servicing Fees with respect to such Mortgage Loan
received in the related Due Period (the "Compensating Interest").
Section 7.14. Reports to the Indenture Trustee; Collection Account
Statements. Not later than fifteen (15) days after each Payment Date, the
Servicer shall provide to the Indenture Trustee, the Collateral Agent and the
Note Purchaser a statement, certified by a Responsible Officer, setting forth
the status of the Collection Account as of the close of business on the related
Payment Date, stating that all payments required by this Agreement to be made by
the Servicer on behalf of the Indenture Trustee have been made (or if any
required payment 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 7.02 and each category of withdrawal
specified in Section 7.02 and the aggregate of deposits into the Collection
Account as specified in Section 8.01. 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 Payment
Date occurs. Copies of such statement shall be provided by the Indenture Trustee
to any Noteholder upon request.
Section 7.15. Reserved.
Section 7.16. Reports to Be Provided by the Servicer. (a) Four Business
Days prior to each Payment Date, the Servicer shall deliver to the Indenture
Trustee and the Note Purchaser a Monthly Report for such Payment Date, setting
forth the information required in the definition of "Monthly Report." (b) On the
date which is four Business Days prior to each Payment Date and each Transfer
Date, the Servicer shall deliver to the Indenture Trustee and the Note Purchaser
(as directed by the Note Purchaser) the following information with respect to
all Mortgage Loans as well as a break out as to consumer purpose and business
purpose Mortgage Loans, in each case, as of the close of business on the last
Business Day of the prior calendar month (except as otherwise provided in clause
(v) below):
(i) 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) 31-59 days Delinquent, (B)
60-89 days Delinquent and (C) 90 or more days Delinquent;
(ii) 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
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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) 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) 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) such loan level information as is generally included in
the offering documents for Securitizations entered into by the Servicer
and the Originators;
(vi) the book value of any REO Property;
(vii) the aggregate Principal Balance of all Mortgage Loans
that have ceased to be Eligible Mortgage Loans since the Initial
Cut-Off Date (such Principal Balance measured as of the day immediately
preceding the date on which each such Mortgage Loan ceased to be an
Eligible Mortgage Loan), provided that each such Mortgage Loan was
Delinquent more than 30 days at the time such Mortgage Loan ceased to
be an Eligible Mortgage Loan, but excluding any Mortgage Loans that
have been released from the lien of the Indenture due to the
Disposition of such Mortgage Loans aggregating $5,000,000 or more in
unpaid Principal Balance;
(viii) the total number of Mortgage Loans and the aggregate
Principal Balance; of all the Mortgage Loans; and
(ix) any other information reasonably requested by the Note
Purchaser.
(c) In connection with the transfer of the Secured Notes, the Indenture
Trustee on behalf of any Noteholder may request that the Servicer make available
to any prospective Noteholder annual audited financial statements of the
Servicer for one or more of the most recently completed five (5) fiscal years
for which such statements are publicly available together with the most recent
unaudited quarterly financial statements of the Servicer, which request shall
not be unreasonably denied or unreasonably delayed. Such annual audited
financial statements also shall be made available to the Note Purchaser upon
request.
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(d) Upon reasonable advance notice, the Servicer also agrees to make
available on a reasonable basis to the Note Purchaser and any prospective
Noteholder 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 Note
Purchaser and any prospective Noteholder to inspect the Servicer's servicing
facilities during normal business hours for the purpose of satisfying the Note
Purchaser and such prospective Noteholder that the Servicer has the ability to
service the Mortgage Loans in accordance with this Agreement.
Section 7.17. Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans. The Servicing Fee that the Servicer shall be entitled to
receive with respect to each Mortgage Loan and each Payment Date shall be offset
on such Payment Date by an amount equal to the Prepayment Interest Shortfall
with respect to such Mortgage Loan to the extent that it is the subject of
Principal Prepayments during the month preceding the month of such Payment Date.
The amount of any offset against the Servicing Fee with respect to any Payment
Date under this Section 7.17 shall be limited to the Servicing Fee otherwise
payable to the Servicer (without adjustment on account of Prepayment Interest
Shortfalls) with respect to such Mortgage Loan, and the rights of the
Noteholders to the offset of the aggregate Prepayment Interest Shortfalls
against the Servicing Fee shall not be cumulative.
Section 7.18. Periodic Advances. If, on any Determination Date, the
Servicer determines that any Monthly Payments due on the Due Date immediately
preceding such Determination Date have not been received as of the end of the
related Due Period, the Servicer shall determine the amount of any Periodic
Advance required to be made with respect to the related Payment Date. The
Servicer shall include in the amount to be deposited in the Collection Account
on such Determination 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 payment or withdrawal on or in connection with
Payment Dates in subsequent months. Any funds being held for future payment to
Noteholders 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 any
such future Determination Date to the extent that funds in the Collection
Account on such Determination Date shall be less than payments to Noteholders
required to be made on such date.
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 7.02
hereof.
Section 7.19. Indemnification; Third Party Claims. (a) The Servicer
shall indemnify the Originator, the Owner Trustee, the Trust, the Depositor, the
Indenture Trustee and the Noteholders, their respective officers, directors,
employees, agents and "control persons," as such term is used under the Act and
under the Securities Exchange Act of 1934 as amended (each a "Servicer
Indemnified Party") and hold harmless each of them against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
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breach of any of the Servicer's representations and warranties and covenants
contained in this Agreement or in any way relating to the failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance with
the terms of this Agreement except to the extent such loss arises out of such
Servicer Indemnified Party's gross negligence or willful misconduct; provided,
however, that if the Servicer is not liable pursuant to the provisions of
Section 7.19(b) for its failure to perform its duties and service the Mortgage
Loans in compliance with the terms of this Agreement, then the provisions of
this Section 7.19 shall have no force and effect with respect to such failure.
The obligations of the Servicer under this Section 7.19 arising prior to any
resignation or termination of the Servicer hereunder shall survive the
resignation or termination of the Servicer.
(b) Neither the Servicer or any of its Affiliates, directors, officers,
employees or agents shall be under any liability to the Owner Trustee, the
Trust, the Indenture Trustee or the Noteholders 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 Servicer or any of its Affiliates, directors, officers,
employees, agents against the remedies provided herein for the breach of any
warranties, representations or covenants made herein, or against any expense or
liability specifically required to be borne by such party without right of
reimbursement pursuant to the terms hereof, or against any expense or liability
which would otherwise be imposed by reason of misfeasance, bad faith or
negligence in the performance of the duties of the Servicer. The Servicer and
any of its Affiliates, directors, officers, employees, agents may rely in good
faith on any document of any kind which, prima facie, is properly executed and
submitted by any Person respecting any matters arising hereunder.
(c) With respect to a claim subject to indemnity hereunder made by any
Person against an Indemnified Party (a "Third Party Claim"), such Indemnified
Party shall notify the related indemnifying parties (each, an "Indemnifying
Party") in writing of the Third Party Claim within a reasonable time after
receipt by such Indemnified Party of written notice of the Third Party Claim
unless the Indemnifying Parties shall have previously obtained actual knowledge
thereof. Thereafter, the Indemnified Party shall deliver to the Indemnifying
Parties, within a reasonable time after the Indemnified Party's receipt thereof,
copies of all notices and documents (including court papers) received by the
Indemnified Party relating to the Third Party Claim. No failure to give such
notice or deliver such documents shall effect the rights to indemnity hereunder.
Each Indemnifying Party shall promptly notify the Indenture Trustee and the
Indemnified Party (if other than the Indenture Trustee) of any claim of which it
has been notified and shall promptly notify the Indenture Trustee and the
Indemnified Party (if applicable) of its intended course of action with respect
to any claim.
(d) If a Third Party Claim is made against an Indemnified Party, while
maintaining control over its own defense, the Indemnified Party shall cooperate
and consult fully with the Indemnifying Party in preparing such defense, and the
Indemnified Party may defend the same in such manner as it may deem appropriate,
including settling such claim or litigation after giving notice to the
Indemnifying Party of such terms; and the Indemnifying Party will promptly
reimburse the Indemnified Party upon written request.
Section 7.20. 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 3.02 to be true and correct at all times under this Agreement.
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(b) Any Person into which the Servicer may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Servicer shall be a party, or any Person succeeding to the business of
the Servicer, shall be an established mortgage loan servicing institution that
(i) is an approved servicer by at least two nationally recognized rating
agencies, (S&P, ▇▇▇▇▇'▇ and/or Fitch) and (ii) is acceptable to the Majority
Noteholders, 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 Owner
Trustee, the Indenture Trustee, the Collateral Agent and the Note Purchaser.
Section 7.21. 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 Note
Purchaser 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 Note
Purchaser, 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 counsel for the Servicer) to such effect delivered to the Trust, the
Indenture Trustee, the Depositor and the Note Purchaser. No such resignation
shall become effective until the Indenture 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 9.02. The
Servicer shall provide the Note Purchaser with at least 60 days' prior written
notice of its intention to resign pursuant to this Section 7.21.
Section 7.22. The Subservicers. (a) The Servicer hereby appoints the
Subservicers as the Servicer's agents for the purpose of servicing, on the
Servicer's behalf, the respective Mortgage Loans as were originated by such
Subservicers and transferred by them, in their capacity as Originators
hereunder, to the Depositor. The Subservicers hereby accept such appointment.
The Subservicers shall service such Mortgage Loans in a manner consistent with
the Accepted Servicing Practices set forth in this Agreement, and 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.
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(b) The Subservicers shall be compensated for their services hereunder
by the Servicer out of its Servicing Fee. No party other than the Servicer shall
be responsible for payment of the subservicing fees.
(c) The Subservicers are subject to Section 7.01(b) hereof regarding
the servicing term and Article IX hereof regarding events of default. The
Subservicers may be removed in the same circumstances as the Servicer
thereunder.
ARTICLE VIII
NOTE AND ACCOUNT ADMINISTRATION
Section 8.01. Calculation of Note Principal Balances. The Indenture
Trustee shall calculate the Note Principal Balance of each Secured Note for each
day. In the case of any Secured Note that is newly issued on such day pursuant
to an Issuance Order that states that such Issuance Order is "effective" on such
day, the Note Principal Balance for such Secured Note shall be the Sale Amount
set forth on the face of such Secured Note and such balance shall be reflected
on the Daily Report on the next Business Day. In the case of any Secured Note
that is not newly issued on such day, the Note Principal Balance for such
Secured Note on such day shall equal the Note Principal Balance of such Secured
Note at the close of business on the immediately preceding day.
Section 8.02. Daily Report. Not later than 5:00 p.m. New York, New York
time on each Business Day, the Indenture Trustee shall furnish to the Trust and
the Note Purchaser, by facsimile and e-mail, a report (the "Daily Report")
containing the following information:
1) the accrued and unpaid interest on such Secured Note at the close of
business on the day prior to such Business Day;
2) LIBOR for such day, and for each day since the day reflected
in the most recent prior Daily Report;
3) the Margin being used by the Indenture Trustee to calculate
accrued interest on such day;
4) the Note Principal Balance of each Secured Note as of the day
prior to such Business Day;
5) any principal reduction in the Note Principal Balance of each
Secured Note after the close of business on the date two
Business Days before such day and prior to the close of
business on the Business Day immediately preceding such day;
6) the amount of any payment of interest with respect to each
Secured Note on such day;
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7) the total amount on deposit in each Account as of the close of
business on the Business Day immediately preceding such day,
which amount, in the case of the Collection Account, shall be
stated separately, based solely on information supplied by the
Servicer to the Indenture Trustee, as (x) "general
collections" and "prepayments in full" or (y) on the Business
Day following any Determination Date, as "interest
collections," "general principal collections," "prepayments in
full" and "other collections" (and, if no such information is
supplied with respect to any Determination Date, such amounts
shall be deemed to be principal collections);
8) any deposits to, or withdrawals from, each Account prior to
the close of business on the Business Day immediately
preceding such day;
9) based on information supplied to the Indenture Trustee by the
Servicer (or, if such information is supplied by the Servicer
to the Collateral Agent, then by the Collateral Agent), with
respect to each Secured Note, the aggregate balance of all
Mortgage Loans, as of the relevant Transfer Date of each
Mortgage Loan, as reported on the Mortgage Loan Schedule
attached to the Trust Receipt and relating to such Secured
Note outstanding as the close of business on the Business Day
immediately preceding such day, together with the balance of
all Mortgage Loans, as of the relevant Transfer Date of each
Mortgage Loan, added to, or deleted from, such Mortgage Loan
Schedule and relating to such Secured Note as of the Transfer
Date.
Section 8.03. Establishment of Accounts. (a) Concurrently with the
execution and delivery hereof, the Indenture Trustee, in cooperation with the
Servicer, shall establish at the corporate trust offices of JPMorgan Chase Bank
the following segregated accounts:
"ABFS Mortgage Loan Warehouse Trust 2003-1 Collection Account, JPMorgan
Chase Bank, as Indenture Trustee in trust for the Noteholders" (the "Collection
Account"); and
"ABFS Mortgage Loan Warehouse Trust 2003-1 General Operating Account,
JPMorgan Chase Bank, as Indenture Trustee on behalf of ABFS Mortgage Loan
Warehouse Trust 2003-1" (the "General Operating Account").
The parties hereto may, from time to time, establish one or more other
Accounts, and amend this Agreement to provide for the administration thereof.
All Accounts shall be maintained in the State of New York as segregated trust
accounts established with the corporate trust department of the Indenture
Trustee. Subject to the provisions of this Agreement, the Indenture Trustee
shall have sole dominion and control over, and be the sole signatory on, each of
the Accounts (other than the General Operating Account).
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Section 8.04. Deposits to Accounts. (a) The Servicer shall deposit, or
cause to be deposited, to the Collection Account the amounts described in
Section 7.02.
(b) All Sale Amounts funded by the Noteholders shall be deposited to
the General Operating Account. The Trust may, from time to time, deposit, or
cause to be deposited, other moneys into the General Operating Account.
(c) The Servicer is hereby irrevocably authorized and empowered, as the
Trust's attorney-in-fact, to endorse any check or any other instrument or
security presented for deposit in any Account and requiring the endorsement of
the Trust.
(d) If at any time the Trust, or any Person on behalf of the Trust
(including the Servicer under the Agreement), receives any amounts required to
be deposited in any Account (other than the General Operating Account), all such
amounts shall be held by the Trust or such other Person as the agent of, and in
trust for, the Indenture Trustee and shall, forthwith upon receipt by the Trust
or such other Person, be turned over to the Indenture Trustee for deposit to the
applicable designated Account in the same form as received by the Trust or such
other Person (and, if received in the form of a check, instrument or security
requiring endorsement, duly endorsed on behalf of the Trust or such other Person
to the order of the Indenture Trustee).
Section 8.05. Investment of Accounts. (a) So long as the Note Purchaser
shall not have notified the Indenture Trustee of the occurrence of an Event of
Default under the Indenture, the Indenture Trustee shall cause all or any
portion of the Accounts to be invested and reinvested, in the name of the
Indenture Trustee or its nominee, as the Indenture Trustee may be directed in
writing by the Trust (or by the Servicer on behalf of the Trust) and at the
expense and risk of the Trust, in one or more Permitted Investments bearing
interest or sold at a discount; provided that, if the Trust causes to be
delivered to the Note Purchaser an opinion of counsel, in form and substance
reasonably satisfactory to the Note Purchaser to the effect that permitting the
Servicer directly to instruct the Indenture Trustee with respect to the
investment of funds in the Trust Estate Accounts will not adversely affect the
perfection of the Indenture Trustee's Lien thereon, the Servicer may so instruct
the Indenture Trustee regarding the investment and reinvestment of funds held in
the Accounts in Permitted Investments. If the Note Purchaser shall have notified
the Indenture Trustee of the occurrence of an Event of Default under the
Indenture, however, the Note Purchaser may direct such investments, neither the
Trust nor the Servicer shall have any further right or power to direct such
investments, and the Indenture Trustee shall follow such directions as it may
receive from the Note Purchaser notwithstanding any directions the Indenture
Trustee may have received from the Trust or the Servicer.
(b) No investments shall be liquidated prior to their stated maturity
by the Trust.
(c) The Indenture Trustee shall not in any way be held liable by reason
of any insufficiency in any Account resulting from any loss on any Permitted
Investment included therein.
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Section 8.06. Disbursements from Collection Account. On each Payment
Date, the Indenture Trustee shall make the following disbursements by wire
transfer from amounts then on deposit in the Collection Account:
(a) To the extent that such fees and expenses have not been paid by the
Servicer pursuant to Section 7.08 of this Agreement, to the Indenture Trustee,
the Indenture Trustee Fee or any portion thereof outstanding and any
reimbursable amounts owed the Indenture Trustee under Section 6.16 of the
Indenture if any such amounts remain unpaid for 60 or more days and to the
Collateral Agent, the Collateral Agent Fee and any reimbursable amounts owed the
Collateral Agent under Section 11.05 of this Agreement if any such amounts
remain unpaid for 60 or more days, and provided, that, if, after any remittance
of funds pursuant to this Section 8.06(a), all or any portion of the amount so
paid is subsequently recovered, the Indenture Trustee shall cause the amount so
recovered to be deposited into the Collection Account.
(b) Based solely on the information supplied by the Servicer, the
Indenture Trustee shall make the following withdrawals from available funds in
the Collection Account: (i) to withdraw any amount not required to be deposited
in the Collection Account or deposited therein in error; (ii) to distribute the
Servicer its Servicing Fee on an as-collected basis with respect to each
Mortgage Loan; and (iii) to clear and terminate the Collection Account in
connection with the termination of this Agreement.
(c) Interest. (i) (A) From the related Interest Amount Available with
respect to each Secured Note, to each Holder of such Secured Note, the related
Interest Payment Amount (plus any amounts equal to withheld amounts pursuant to
Section 3.03 of the Indenture), and (B) to the extent there are any interest
shortfalls on any Secured Notes, from the remaining Interest Amount Available
after making the distribution in clause (A), to the Holders of such Secured
Notes to distribute the Interest Payment Amounts for such Secured Notes
remaining unpaid, to be distributed pro rata based on the interest shortfall of
each such Secured Note;
(ii) from the remaining aggregate Interest Amount Available,
to the Note Purchaser such other amounts including without limitation,
the Facility Fee, then due and owing to the Note Purchaser under the
Basic Documents as the Note Purchaser may have given written notice of
to the Indenture Trustee and the Servicer not later than noon Eastern
time on the Business Day prior to such Payment Date; and
(iii) from the remaining Interest Amount Available, to the
Indenture Trustee and the Collateral Agent for the payment of any fees
and expenses then due and unpaid to them hereunder.
(d) Principal. (i) The related Principal Amount Available shall be
released from the Collection Account and distributed to the Holders of a Secured
Note as a payment of principal; and
(ii) on any Business Day, whether or not such payments are due
on a Payment Date, in connection with such payments of principal as the
Trust may be required to make pursuant to Article X of the Indenture or
as provided in Section 2.19 or 4.02 of this Agreement, upon the
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Indenture Trustee's receipt of a written order in substantially the
form of Exhibit I (a "Disbursement Order").
The Trust shall deliver, or cause to be delivered, such Disbursement
Orders as may be required to effect any payment of principal described in the
preceding clause (ii).
(e) From any remaining portion of the Interest Amount Available:
(i) first, to the Servicer, the amount of any Servicing
Advances, Periodic Advances or Compensating Interest not previously
reimbursed to the Servicer (as reported by the Servicer to the
Indenture Trustee); and
(ii) second, to the Certificateholders, any remainder.
(f) Amounts which are to be paid out of collections generally pursuant
to clauses (a), (c)(i)(B), (c)(ii) and (c)(iii) above shall be allocated from
the groups of Related Mortgage Loans pro rata in relation to the unpaid
principal balances of the related Secured Notes immediately prior to such
distribution.
(g) The Note Purchaser and the Trust may from time to time agree to
designate additional Payment Dates, as required, for example, in connection with
Dispositions. The Trust shall give the Indenture Trustee at least five Business
Days' notice of any such additional Payment Date, and shall deliver, or cause to
be delivered, a Disbursement Order relating thereto. Notwithstanding any other
provisions of this Section 8.06, proceeds of Dispositions shall be remitted in
accordance with the provisions of the relevant disposition agreement consented
to by the Note Purchaser.
(h) Notwithstanding the foregoing paragraphs of this Section 8.06,
should the Note Purchaser notify the Indenture Trustee that an Event of Default
under the Indenture has occurred and is continuing, then, from and after its
receipt of such notice (and without any right or obligation to investigate such
notice), the Indenture Trustee shall distribute, release and otherwise apply the
funds in the Collection Account pursuant to Section 5.07 of the Indenture.
(i) All distributions to be made by the Indenture Trustee hereunder
shall be made by wire transfer in immediately available funds with the transfer
initiated not later than noon New York, New York time, if the recipient has
provided wiring instructions to the Indenture Trustee, and otherwise shall be
paid by check addressed to the address of such recipient reflected in the
Indenture Trustee's records.
Section 8.07. Account Provisions. (a) Each of the Indenture Trustee and
the Servicer hereby confirms and agrees that each of the Accounts will be held
as a trust account as to which the Indenture Trustee shall be (i) the
"entitlement holder" (within the meaning of Section 8-102(a)(7) of the UCC to
the extent the Accounts are "securities-accounts" (within the meaning of Section
8-501(a) of the UCC or (ii) the "customer" (within the meaning of Section
4-104(1) of the UCC) to the extent the Accounts are "deposit accounts" (within
the meaning of Section 9-102(a)(8) of the UCC). Any investments held in any
Account will be registered in the name of "JPMorgan Chase Bank, as Indenture
Trustee in trust for the ABFS Mortgage Loan Warehouse Trust 2003-1 Noteholders."
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(b) The Trust, the Servicer and the Indenture Trustee represent and
warrant that they have not entered into, and covenant that they shall not enter
into, any agreement with respect to the Accounts or any item of property
credited to or carried in the Accounts other than this Agreement.
(c) The Trust represents and agrees that it has not suffered or
permitted, and covenants that it shall not suffer or permit, any of its
creditors (other than the Note Purchaser) to obtain control over any Account or
any property credited thereto or carried therein.
(d) Except for the claims and interests of the Note Purchaser and of
the Trust in the Accounts (and, to the extent permitted under Section 8.06(a) or
8.06(c), the claims of the Indenture Trustee and the Collateral Agent), each of
the Indenture Trustee and the Servicer represents and warrants that it does not
know of any claim to, or interest in, the Accounts credited thereto or required
to be credited thereto.
(e) The Trust, the Servicer and the Note Purchaser each intend and
agree that the Indenture Trustee, in its capacity as collateral agent and
secured party for the benefit and on behalf of the Note Purchaser, has obtained
"control" (within the meaning of Section 8-106(d) of the UCC) of all security
entitlements relating to the Accounts and to the financial assets credited
thereto or carried therein to the extent the Accounts are securities accounts.
(f) The Servicer shall cause (and, to the extent necessary, the
Indenture Trustee shall cooperate with the Servicer in causing) all items of
income, gain, expense and loss recognized in the Accounts to be reported by the
Indenture Trustee to the U.S. Internal Revenue Service, and to all state and
local taxing authorities, under the name and taxpayer identification number of
the Trust.
(g) The Parties agree as follows with respect to the Accounts and the
Permitted Investments, and the proceeds thereof, held from time to time in each
Account:
(i) any Account that is a "deposit account" (as defined in
Section 9-105 of the UCC) shall be subject to the exclusive custody and
"control" (within the meaning of Section 9-104 of the UCC) of the
Indenture Trustee, and the Indenture Trustee shall have sole signature
authority with respect thereto;
(ii) any Permitted Investment that constitutes Physical
Property (as defined in the definition of Delivery) shall be delivered
to the Indenture Trustee in accordance with paragraph (a) of the
definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a securities
intermediary (as such term is defined in Section 8-102(a)(14) of the
UCC) acting solely for the Indenture Trustee that has agreed to treat
such property as a financial asset;
(iii) any Permitted Investment that is a book-entry security
held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered to the Indenture Trustee in accordance
with paragraph (b) of the definition of "Delivery" and shall be
maintained by the Indenture Trustee, pending maturity or disposition,
through continued book-entry credit of such Permitted Investment as
described in such paragraph; and
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(iv) any Permitted Investment that is an "uncertificated
security" (within the meaning of Section 8-102(a)(18) of the UCC) and
that is not governed by clause (iii) above shall be delivered to the
Indenture Trustee in accordance with paragraph (c) of the definition of
"Delivery" and shall be maintained by the Indenture Trustee, pending
maturity or disposition, through continued registration of the
Indenture Trustee's (or its nominee's) ownership of such security
directly or through one or more securities intermediaries acting solely
for the Indenture Trustee as described in such paragraph.
(h) In the event of any change of law regarding matters relating to the
perfection of security interests in any Account or the amounts or any Permitted
Investments held therein, the Servicer shall cause to be furnished to the
Indenture Trustee and each Noteholder, an opinion of counsel addressing such
matters and if necessary, the Servicer shall cooperate with the Indenture
Trustee in taking all actions necessary to comply with the change in law.
Section 8.08. Reserved.
Section 8.09. Modification of Underwriting Guidelines. Each Originator
shall give the Note Purchaser prompt written notification of any modification or
change to its Underwriting Guidelines; provided that if, within 15 Business Days
after receipt of a copy thereof, the Note Purchaser informs such Originator that
it disapproves of one or more of such proposed modifications, "Underwriting
Guidelines" shall mean, for purposes of this Agreement and the other Basic
Documents, the Underwriting Guidelines previously in effect, modified only to
the extent of such modifications as (i) have not been disapproved by the Note
Purchaser pursuant to this Section 8.09, unless the Note Purchaser consents in
writing to any modification or change to such Underwriting Guidelines and (ii)
such other modifications which constitute non-substantive modifications and
corrections. Notwithstanding anything contained in this Agreement to the
contrary, any Mortgage Loan conveyed to the Trust pursuant to this Agreement
pursuant to underwriting guidelines that contain a modification or change to the
Underwriting Guidelines that has been disapproved by the Note Purchaser, or
which the Note Purchaser did not receive notice of (i.e., a Mortgage Loan that
could not have been originated in compliance with the "Underwriting Guidelines,"
as defined in this Section 8.09), shall be deemed a Defective Mortgage Loan and
be purchased or substituted for in accordance with Section 4.02(b) hereof.
Section 8.10. Valuation of Mortgage Loans and Excess Interest
Securities Value. (a) The "Market Value" of each Mortgage Loan will be
determined by the Note Purchaser or its designee in its sole judgment and its
sole good faith discretion. Such determination may be based in whole or in part
on agreed estimates of the projected proceeds from such Mortgage Loan's
Disposition in a whole loan sale or inclusion in a Securitization (inclusive of
the projected market value of any Excess Interest Securities to be issued in
connection with such Securitization).
(b) From time to time, the Note Purchaser may determine in its sole
good faith judgment the market value of the Excess Interest Securities, if any,
expected to be, or which could be, issued pursuant to a Securitization as of the
closing date of such Securitization. In making such determination the Note
Purchaser may rely exclusively on quotations provided by leading dealers in
instruments similar to such Excess Interest Securities or such other factors
deemed appropriate by the Note Purchaser.
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Section 8.11. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Indenture Trustee
pursuant to this Agreement, including 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 Indenture Trustee by the Servicer or by any
Subservicer. The Indenture Trustee, or the Collateral Agent on behalf of the
Indenture Trustee, shall hold all such money and property received by it, as
part of the Trust Estate and shall apply it as provided in the Indenture and in
this Agreement.
Section 8.12. 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 to
payment of the related Mortgage Note as provided therein, and if not so
provided, first to interest accrued at the Mortgage Interest Rate and then to
principal.
ARTICLE IX
SERVICER DEFAULT
Section 9.01. Servicer Events of Default. (a) The following events
shall each constitute a "Servicer Event of Default" hereunder:
(i) any failure by the Servicer to remit to the Indenture
Trustee any payment required to be made, including without limitation
any principal, interest or Servicing Advance, by the Servicer under the
terms of this Agreement or the Basic Documents;
(ii) 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
3.02 hereof to be true and correct which continues unremedied for a
period of fifteen (15) days after (x) actual knowledge thereof by the
Servicer or (y) the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the
Servicer by the Indenture Trustee or to the Servicer and the Indenture
Trustee by any Noteholder or the Note Purchaser;
(iii) any failure by the Servicer to maintain any required
licenses to do business in any jurisdiction where the property is
located, which failure has a material adverse effect on the ability of
the Servicer to perform its functions under this Agreement or
materially impairs the value of the Mortgage Loans, and which continues
to be unremedied for a period of fifteen (15) days after the date on
which the Servicer has actual knowledge or written notice of such
failure;
(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 liquidation in any
insolvency, readjustment of debt, marshalling of assets and liabilities
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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 thirty (30) 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
generally 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 or cease its normal business operations;
(vii) the Note Purchaser shall notify the Indenture Trustee of
any "event of default" under the Purchase Agreement;
(viii) the Servicer fails to be an Eligible Servicer;
(ix) the Sponsor shall fail to own, directly or indirectly
(through its subsidiaries) ownership of 100% of the outstanding common
stock of the Servicer;
(x) the Servicer fails to pay when due any principal or
interest on any other debt or in the payment when due of any contingent
obligation if such default continues beyond any period of grace
provided under the papers evidencing such obligation; or breach or
default with respect to any other material term of any other debt or of
any promissory note, bond, loan agreement, reimbursement agreement,
mortgage, indenture or other agreement relating thereto, if the effect
of any such failure, default or breach referred to in this Section
9.01(a)(x) is to cause, or to permit the holder or holders of such
obligation (or a trustee on behalf of such holder or holders) to cause,
debt of the Servicer or any of its Subsidiaries in the aggregate amount
of Ten Million Dollars ($10,000,000) or more to become or be declared
due before its stated maturity; and
(xi) any money judgment, writ or warrant of attachment, or
similar process involving in any case an amount in excess of Two
Hundred Fifty Thousand Dollars ($250,000) shall be entered or filed
against the Servicer, or any of its Subsidiaries or any of its assets
and shall remain undischarged, unvacated, unbonded or unstayed for a
period of thirty (30) days or in any event later than five (5) days
before the date of any proposed sale thereunder.
(b) So long as a Servicer Event of Default shall have occurred and not
have been remedied, the Indenture Trustee, upon receipt of written notice or
actual knowledge by a Responsible Officer of such failure, shall give immediate
telephonic and facsimile notice of such failure to a Responsible Officer of the
Servicer and to the Note Purchaser, and the Indenture Trustee shall, but only at
the direction of the Note Purchaser or the Majority Noteholders, terminate all
of the rights and obligations of the Servicer under this Agreement, except for
the Servicer's indemnification obligation under Section 7.19, the Successor
Servicer shall immediately make such Periodic Advance or payment of Compensating
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Interest and assume, pursuant to Section 9.02 hereof, the duties of a successor
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 9.02, pass to and be vested in the
Successor Servicer, and the Successor Servicer is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, at the expense of the Servicer, any and all documents and other
instruments and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including, but
not limited to, the transfer and endorsement or assignment of the Mortgage Loans
and related documents. The Servicer agrees to cooperate (and pay any related
costs and expenses) with the Successor Servicer in effecting the termination of
the Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Successor Servicer, or its designee, for
administration by it of all amounts which shall at the time be credited by the
Servicer to the Collection Account or thereafter received with respect to the
Mortgage Loans. To the extent the predecessor Servicer fails to pay such
amounts, the Indenture Trustee shall be entitled to withdraw such amounts from
the Collection Account. The Indenture Trustee shall promptly notify the Note
Purchaser of the occurrence of a Servicer Event of Default.
(c) Upon the occurrence of an (i) Event of Default under any of the
Basic Documents, (ii) a Servicer Event of Default under this Agreement, (iii) a
material adverse change in the business or financial conditions of the Servicer
(each, a "Term Event"), the Servicer's right to service the Mortgage Loans
pursuant to the terms of this Agreement shall remain in effect for an initial
period commencing on the date on which such Term Event occurred and shall
automatically terminate at 5:00 p.m., New York, New York time, on the last
Business Day of the calendar month in which such Term Event occurred (the
"Initial Term"). Thereafter, the Initial Term shall be extendible in the sole
discretion of the Note Purchaser by written notice (each, a "Servicer Extension
Notice") of the Noteholder for successive one-month terms (each such term ending
at 5:00 p.m., New York, New York time ("EST"), on the last business day of the
related month). Following a Term Event, the Servicer hereby agrees that the
Servicer shall be bound for the duration of the Initial Term and the term
covered by any such Servicer Extension Notice to act as the Servicer pursuant to
this Agreement and the Servicing Agreement. Following a Term Event, the Servicer
agrees that if, as of 3:00 p.m. (EST) on the last business day of any month, the
Servicer shall not have received a Servicer Extension Notice from the Note
Purchaser, the Servicer shall give written notice of such non-receipt to the
Note Purchaser by 4:00 p.m. (EST). Following a Term Event, the failure of the
Note Purchaser to deliver a Servicer Extension Notice by 5:00 p.m. (EST) shall
result in the automatic and immediate termination of the Servicer (the
"Termination Date"). Notwithstanding these time frames, the Servicer and the
Note Purchaser shall comply with all applicable laws in connection with such
transfer and the Servicer shall continue to service the Mortgage Loans until
completion of such transfer.
Section 9.02. Successor Servicer to Act; Appointment of Successor. (a)
On and after the time the Servicer receives a notice of termination pursuant to
Section 9.01, or the Indenture Trustee receives the resignation of the Servicer
evidenced by an Opinion of Counsel pursuant to Section 7.21, or the Servicer is
removed as Servicer pursuant to this Article IX, except as otherwise provided in
Section 9.01, the Successor Servicer 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
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by the terms and provisions hereof arising on or after the date of succession;
provided, however, that the Successor Servicer shall not be liable for any
actions or the representations and warranties of any Servicer prior to it and
including, without limitation, the obligations of the Servicer set forth in
Sections 2.07 and 4.02 hereof. The Successor Servicer shall be obligated to pay
Compensating Interest pursuant to Section 7.13 in any event and to make advances
pursuant to Section 7.18 unless, and only to the extent the Successor Servicer
determines reasonably and in good faith that such advances would not be
recoverable pursuant to Section 7.18, such determination to be evidenced by a
certification of a Responsible Officer of the Successor Servicer delivered to
the Note Purchaser.
(b) The Majority Noteholders with the written consent of the Note
Purchaser shall appoint a Successor Servicer or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
that qualifies as an Eligible Servicer 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. Notwithstanding anything in this
Agreement to the contrary, the original Servicer will continue to fulfill the
role of Servicer until such time as a Successor Servicer is appointed. The
Indenture Trustee shall not assume any servicing responsibilities at any time
whether or not the Servicer is able to continue in its role as Servicer until a
Successor Servicer is appointed.
(c) The Successor Servicer 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 7.08 hereof as the Servicer if the
Servicer had continued to act as servicer hereunder. In the event the Successor
Servicer is unable or unwilling to act as successor Servicer, the Successor
Servicer 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 (30) days after any such public
announcement, the Successor Servicer 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 Successor
Servicer shall deduct from any sum received by the Successor Servicer 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
Successor Servicer. After such deductions, the remainder of such sum shall be
paid by the Successor Servicer to the Servicer at the time of such sale,
transfer and assignment to the Servicer's successor.
(d) The Successor Servicer 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 Successor Servicer and any
successor Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Successor
Servicer or such successor Servicer, as applicable, at the Servicer's cost and
expense, (i) all documents and records reasonably requested by the Successor
Servicer and (ii) access to personnel knowledgeable in the servicing of the
Mortgage Loans to enable it to assume the Servicer's functions hereunder and
shall promptly also transfer to the Successor Servicer or such successor
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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
Indenture Trustee and remitted directly to the Indenture Trustee or, at the
direction of the Indenture Trustee, to the successor Servicer. Neither the
Indenture Trustee nor any Successor Servicer shall be held liable by reason of
any failure to make, or any delay in making, any payment 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; (ii) restrictions imposed
by any regulatory authority having jurisdiction over the Servicer hereunder; or
(iii) other circumstances beyond the control of the Successor Servicer.
(e) Pending appointment of a Successor Servicer hereunder, the Servicer
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Servicer may make such arrangements for the
compensation of such Successor Servicer out of payments on Mortgage Loans as it
and such Successor Servicer shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer pursuant to
Section 7.08, together with other Servicing Compensation. The Servicer, the and
such Successor Servicer shall take such action, consistent with this Agreement,
as shall be necessary to effectuate any such succession.
Section 9.03. Waiver of Defaults. The Majority Noteholders may, on
behalf of all Noteholders, and subject to the consent of the Note Purchaser,
waive any events permitting removal of the Servicer as servicer pursuant to this
Article IX; provided, however, that the Majority Noteholders may not waive a
default in making a required payment on a Secured Note without the consent of
the Holder of such Secured Note. Upon any waiver of a past default, such default
shall cease to exist, and any Servicer 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 Indenture Trustee to the Note Purchaser.
Section 9.04. Reserved.
Section 9.05. Indenture Trustee to Act Solely with Consent of the Note
Purchaser. The Indenture Trustee shall not, without the Note Purchaser's consent
or unless directed by the Note Purchaser:
(a) terminate the rights and obligations of the Servicer as servicer
pursuant to Section 9.01 hereof;
(b) agree to any amendment pursuant to Section 12.03 hereof; or
(c) undertake any litigation for the benefit of the Noteholders.
The Note Purchaser may, in writing and in its sole discretion renounce
all or any of its rights under this Section 9.05 or any requirement for the Note
Purchaser's consent for any period of time.
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ARTICLE X
TERMINATION
Section 10.01. Termination. (a) Subject to Section 10.02, this
Agreement shall terminate upon notice to the Indenture Trustee of either: (i) on
or after the expiration of the Commitment Term, upon the disposition of all
funds with respect to the last Mortgage Loan and the remittance of all funds due
hereunder, the payment of all amounts due and payable to the Indenture Trustee
and the Note Purchaser and the payment in full of all amounts due under the
Secured Notes or (ii) mutual consent of the Owner Trustee, on behalf of the
Trust, at the direction of the Indenture Trustee, the Collateral Agent, the
Servicer, the Note Purchaser and all Noteholders in writing.
(b) In addition, subject to Section 10.02, the Note Purchaser may, at
its sole option, put the Secured Notes to the Trust or terminate the Trust in
accordance with the terms of Section 10.01 of the Indenture.
(c) If on any Payment Date, the Servicer determines that there are no
outstanding Mortgage Loans and no other funds or assets in the Trust Estate
other than funds in the Collection Account, the Servicer shall send a final
payment notice promptly to each Noteholder in accordance with Section 10.01(d).
(d) Notice of any termination, specifying the Payment Date upon which
the Trust will terminate and the Noteholders shall surrender their Secured Notes
to the Indenture Trustee for final payment and cancellation, shall be given
promptly by the Servicer by letter to Noteholders mailed during the month of
such final payment before the Payment Date in such month, specifying (i) the
Payment Date upon which final payment of the Secured Notes will be made upon
presentation and surrender of Secured Notes at the office of the Indenture
Trustee therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Secured Notes at the office of the Indenture Trustee therein specified. The
Servicer shall give such notice to the Indenture Trustee therein specified at
the time such notice is given to Noteholders.
(e) In the event that all of the Noteholders do not surrender their
Secured Notes for cancellation within six (6) months after the time specified in
the above-mentioned written notice, the Servicer shall give a second written
notice to the remaining Noteholders to surrender their Secured Notes for
cancellation and receive the final payment with respect thereto. If within six
(6) months after the second notice, all of the Secured Notes shall not have been
surrendered for cancellation, the Indenture Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Noteholders concerning surrender of their Secured Notes and the cost thereof
shall be paid out of the funds and other assets which remain subject hereto. If
within nine (9) months after the second notice all the Secured Notes shall not
have been surrendered for cancellation, the related Certificateholders shall be
entitled to all unclaimed funds and other assets which remain subject hereto and
the Indenture Trustee upon transfer of such funds shall be discharged of any
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responsibility for such funds and the Noteholders shall look only to the related
Certificateholders for payment. Such funds shall remain uninvested.
Section 10.02. Additional Termination Requirements. By their acceptance
of the Secured Notes, 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 Noteholders hereby appoint the Indenture Trustee as their attorney in fact
to sign such plan) as appropriate or upon the written request of the Note
Purchaser 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 10.03. Accounting Upon Termination of Servicer. Upon
termination of the Servicer, the Servicer shall, at its expense:
(a) deliver to the Successor Servicer the funds in any Account;
(b) deliver to the Successor Servicer all Custodial Loan Files and
Servicer's Loan Files and related documents and statements held by it hereunder
and a Mortgage Loan portfolio computer tape;
(c) deliver to the Successor Servicer, upon request, to the Noteholders
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 the Successor Servicer and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer under this
Agreement including without limitation, "good-bye" letters, transfers of tax and
escrow and suspense accounts, and transfer of tax service contracts.
ARTICLE XI
THE COLLATERAL AGENT
Section 11.01. Duties of the Collateral Agent. (a) The Collateral Agent
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement.
(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.
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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 Exceptions
Report delivered pursuant to Section 2.07(a).
(c) No provision of this Agreement shall be construed to relieve the
Collateral Agent from liability for its own grossly negligent action, its own
grossly negligent failure to act or its own willful misconduct; provided,
however, that:
(i) 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 grossly 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 the direction of the Indenture Trustee or
with the consent of the Indenture 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 Indenture Trustee under
this Agreement;
(v) subject to the other provisions of this Agreement and
without limiting the generality of this Section 11.01, 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 re-recording, 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 Estate, the
Noteholders 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; and
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(vi) the Collateral Agent shall not be required to take notice
or be deemed to have notice or knowledge of any default or Event of
Default or Amortization Event unless a Responsible Officer of the
Collateral Agent shall have received written notice or obtained actual
knowledge thereof. In the absence of receipt of such notice or actual
knowledge, the Collateral Agent may conclusively assume that there is
no default or Event of Default or Amortization Event.
Section 11.02. Certain Matters Affecting the Collateral Agent. Except
as otherwise provided in Section 11.01 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 advice or
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 advice or Opinion of Counsel;
(c) the Collateral Agent 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 any of the Noteholders, pursuant to the provisions of this
Agreement, unless such Noteholders, as applicable, shall have offered to the
Collateral Agent 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 or an Amortization
Event (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 Note
Purchaser or Holders of Secured Notes evidencing Percentage Interests
aggregating not less than 25%; 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 against such expense or liability as a
condition to taking any such action. The reasonable expense of every such
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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 gross
negligence or willful misconduct in the performance of such act;
(g) the Collateral Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys;
(h) the Collateral Agent 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
(i) anything in this Agreement to the contrary notwithstanding, in no
event shall the Collateral Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Collateral Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
Section 11.03. Collateral Agent Not Liable for Secured Notes 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 Secured Notes issued or intended to be issued under the
Indenture.
Section 11.04. Collateral Agent May Own Secured Notes. The Collateral
Agent in its individual or any other capacity may become the owner or pledgor of
Secured Notes with the same rights it would have if it were not Collateral
Agent, and may otherwise deal with the parties hereto.
Section 11.05. Collateral Agent's Fees and Expenses; Indemnity.
(a) On each Payment Date, pursuant to Section 7.08 of this Agreement,
the Servicer shall pay to the Collateral Agent (i) the Collateral Agent Fee and
(ii) payment of its reimbursable expenses incurred by the Collateral Agent in
the preceding month in accordance with any of the provisions of this Agreement
(including, but not limited to the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ). In
the event that such fees and expenses remain unpaid for 60 or more days, such
fees and expenses shall be disbursed to the Collateral Agent from amounts on
deposit in the Collection Account, pursuant to Section 8.06 of this Agreement.
(b) The Collateral Agent acknowledges that in consideration of the
performance of its duties hereunder it is entitled to receive the Collateral
Agent Fee and expenses from the Servicer pursuant to Section 7.08 of this
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Agreement. The Depositor, the Indenture Trustee and the Note Purchaser 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 gross negligence or bad
faith, and the Collateral Agent shall have no lien on the Trust Estate for the
payment of its fees and expenses.
(c) The Collateral Agent and any director, officer, employee or agent
of the Collateral Agent shall be indemnified by the Servicer and held harmless
against any loss, liability, claim, damage or expense arising out of, or imposed
upon the Trust Estate or the Collateral Agent 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 gross 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 11.05 arising
prior to any resignation or termination of the Servicer hereunder shall survive
termination of the Servicer and payment of the Secured Notes.
Section 11.06. 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 Estate on behalf of the Indenture Trustee, for the benefit of
the Noteholders, (c) 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 Note Purchaser, and (e)
reasonably acceptable to the Note Purchaser 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 11.06, 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 11.06, the Collateral Agent shall
resign immediately in the manner and with the effect specified in Section 11.07.
Section 11.07. 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 Indenture
Trustee, the Servicer, and the Note Purchaser.
(b) If at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of Section 11.06 and shall fail to resign after
written request therefor by the Indenture Trustee, the Servicer or the Note
Purchaser, 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
Indenture Trustee or the Servicer, with the consent of the Note Purchaser, or
the Note Purchaser may remove the Collateral Agent.
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(c) If the Collateral Agent fails in any material respect to perform in
accordance with the terms of this Agreement, the Indenture Trustee, the Servicer
(with the consent of the Note Purchaser) or the Majority Noteholders or the Note
Purchaser may remove the Collateral Agent.
(d) Upon removal or receipt of notice of resignation of the Collateral
Agent, the Indenture Trustee shall either (i) take possession of the Custodial
Loan Files and assume the duties of the Collateral Agent hereunder or (ii)
appoint a successor Collateral Agent pursuant to Section 11.08. If the Indenture
Trustee shall assume the duties of the Collateral Agent hereunder, it shall
notify the Trust, the Depositor, the Servicer and Note Purchaser in writing.
Section 11.08. Successor Collateral Agent. Upon the resignation or
removal of the Collateral Agent, the Indenture Trustee may appoint a successor
Collateral Agent, with the written approval of the Note Purchaser; provided,
however, that the successor Collateral Agent so appointed shall in no event be
an Originator, the Depositor or the Servicer or any Person known to a
Responsible Officer of the Indenture Trustee to be an Affiliate of an
Originator, the Depositor or the Servicer and shall be approved by the Note
Purchaser. Such collateral agent, as the case may be, shall assume the duties of
the Collateral Agent hereunder. Any successor Collateral Agent appointed as
provided in this Section 11.08 shall execute, acknowledge and deliver to the
Trust, the Depositor, the Note Purchaser, the Servicer, the Indenture 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
Custodial Loan 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
11.08 unless at the time of such acceptance such successor Collateral Agent
shall be eligible under the provisions of Section 11.06. Upon acceptance of
appointment by a successor Collateral Agent as provided in this Section 11.08,
the Servicer shall mail notice of the succession of such Collateral Agent
hereunder to all Noteholders at their addresses as shown in the Note Register.
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 11.09. 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
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be eligible under the provisions of Section 11.06, 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 11.10. Insurance of Collateral Agent; Custodial Delivery
Failure; Indemnity by Collateral Agent. (a) At its own expense, the Collateral
Agent shall maintain at all times during the existence of this Agreement and
keep in full force and effect fidelity insurance, theft of documents insurance,
and errors and omissions insurance, which insurance shall cover forgery. All
such insurance shall be in amounts, with standard coverage and subject to
deductibles, all as is prudent and customary for insurance typically maintained
by banks that act as Collateral Agent. The minimum coverage under any such bond
and insurance policies shall be at least equal to the corresponding amounts
required by ▇▇▇▇▇▇ ▇▇▇ in its Selling and Servicing Guides. Evidence of such
insurance may be inspected by the Note Purchaser or the Trust at the offices of
the Collateral Agent during business hours upon reasonable notice.
(b) In the event that the Collateral Agent fails to produce a Mortgage
Note for which a Trust Receipt was issued, within five (5) Business Days after
required or requested by the Originator, the Servicer, the Trust or the
Indenture Trustee, and provided that (i) the Collateral Agent's most recent
Exceptions Report did not list such Mortgage Note as an Exception thereon; (ii)
such Mortgage Note was not previously released pursuant to a Request for Release
of Documents in the form Exhibit D and (iii) such Mortgage Note was held by the
Collateral Agent on behalf of the Indenture Trustee (a "Custodial Delivery
Failure"), then the Collateral Agent shall at its sole cost and expense, with
respect to any such missing Mortgage Note, promptly deliver to the Indenture
Trustee with a copy to the Note Purchaser, the Originator, the Servicer and the
Trust, a lost note affidavit.
Section 11.11. Representations and Warranties of the Collateral Agent.
The Collateral Agent represents and warrants to, and covenants with, the Trust,
the Servicer, the Indenture Trustee and the Note Purchaser that, on the date
hereof:
(a) The Collateral Agent is (i) a New York banking corporation duly
organized, validly existing and in good standing under the laws of New York and
(ii) duly qualified and in good standing and in possession of all requisite
authority, power, licenses, permits and franchises in order to execute, deliver
and comply with its obligations under the terms of this Agreement.
(b) The Collateral Agent has all requisite right, power and authority
to execute and deliver this Agreement and to perform all of its duties as the
Collateral Agent hereunder.
(c) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action on the part of the Collateral
Agent, and neither the execution and delivery of this Agreement by the
Collateral Agent in the manner contemplated herein nor the Collateral Agent's
performance of and compliance with the terms hereof will violate, contravene or
create a default under any charter document or bylaw of the Collateral Agent or
any material contract, agreement, or instrument to which the Collateral Agent or
by which any of its property may be bound.
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(d) Neither the execution and delivery of this Agreement by the
Collateral Agent, nor its performance of and compliance with its obligations and
covenants hereunder, require the consent or approval of any governmental
authority or, if such consent or approval is required, it has been obtained.
(e) This Agreement, and the original Trust Receipts issued hereunder,
when executed and delivered by the Collateral Agent, will constitute valid,
legal and binding obligations of the Collateral Agent, enforceable against the
Collateral Agent in accordance with their respective terms, except as the
enforcement thereof may be limited by applicable debtor relief laws and that
certain equitable remedies may not be available regardless of whether
enforcement is sought in equity or at law.
(f) The Collateral Agent does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
this Agreement.
(g) There is no litigation pending or, to the best of the Collateral
Agent's knowledge after due inquiry, threatened which, if determined adversely
to the Collateral Agent, would adversely affect the execution, delivery or
enforceability of this Agreement or any of the material duties or obligations of
the Collateral Agent hereunder.
(h) The Collateral Agent is not an Affiliate of the Trust or the
Servicer.
(i) At all times the Collateral Agent shall be a corporation or
association organized and doing business under the laws of the United States of
America or of any State, shall be authorized under such laws to exercise
corporate trust powers, subject to supervision or examination by the United
States of America or any such State, and shall have (A) a short-term, unsecured
debt rated at least P-1 by ▇▇▇▇▇'▇ (or such lower rating as may be acceptable to
the Trust and the Note Purchaser) and (y) a short-term deposit rating of at
least A-1 from S&P (or such lower rating as may be acceptable to the Trust and
the Note Purchaser).
(j) The Collateral Agent shall at all times have a combined capital and
surplus of at least $50,000,000 as set forth in its then most recent published
annual report of condition. The Collateral Agent shall provide copies of such
reports to the Trust and the Note Purchaser upon request.
Section 11.12. Transmission of Custodial Loan Files. Written
instructions as to the method of shipment and shipper(s) the Collateral Agent is
directed to use in connection with transmission of Custodial Loan Files in the
performance of the Collateral Agent's duties hereunder shall be delivered to the
Collateral Agent by the Person requesting shipment to the Collateral Agent prior
to any shipment of any Custodial Loan Files hereunder. The Servicer shall
arrange for the provision of such services at its sole cost and expense and
shall maintain such insurance against loss or damage to the Custodial Loan Files
as the Servicer deems appropriate. Any transmission of Custodial Loan Files by
the Collateral Agent under this Agreement shall be by personal delivery,
recognized courier delivery service, or registered or certified first class
mail, postage prepaid, return receipt requested, as designated by the Person
requesting shipment.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Liability. None of the Trust, the Owner
Trustee, the Depositor, the Servicer, the Collateral Agent, the Indenture
Trustee or any of the directors, officers, employees or agents of such Persons
shall be under any liability to the Trust or the Noteholders 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 Trust, the Owner Trustee, the Depositor, the
Servicer, the Collateral Agent, the Indenture Trustee or any such Person against
any breach of warranties or representations made herein by such party, or
against any specific liability imposed on each such party pursuant to this
Agreement or against any liability which would otherwise be imposed upon such
party by reason of willful misfeasance, bad faith or gross negligence (or in the
case of the Servicer or Depositor negligence) in the performance of duties or by
reason of reckless disregard of obligations or duties hereunder. The Trust, the
Owner Trustee, the Depositor, the Servicer, the Collateral Agent, the Indenture
Trustee and any director, officer, employee or agent of such Person 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 12.02. Acts of Noteholders. (a) Except as otherwise
specifically provided herein, whenever Noteholder 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
Noteholders if the Majority Noteholders agree to take such action or give such
consent or approval.
(b) The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Trust, nor entitle such Noteholder'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, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(c) No Noteholder 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, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Secured Notes, be
construed so as to constitute the Noteholders from time to time as partners or
members of an association; nor shall any Noteholder 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.
Section 12.03. Amendment. (a) This Agreement may be amended from time
to time at the expense of the Originators, the Sponsor or the Depositor by the
Owner Trustee, on behalf of the Trust, the Servicer, the Depositor, the
Collateral Agent and the Indenture Trustee by written agreement, upon the prior
written consent of the Note Purchaser, without notice to or consent of the
Noteholders 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
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expense of the Originators, the Sponsor or the Depositor, delivered to the
Indenture Trustee that such action will not adversely affect in any material
respect the interests of any Noteholder; 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 paid on any Secured
Note without the consent of such Noteholder, or change the rights or obligations
of any other party hereto without the consent of such party.
(b) This Agreement may be amended from time to time by the Owner
Trustee, on behalf of the Trust, the Servicer, the Depositor, the Collateral
Agent and the Indenture Trustee, with the consent of the Note Purchaser, the
Majority Noteholders and the Holder of the majority of the Percentage Interest
of the Trust 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 Noteholders; provided, however,
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 paid on
any Secured Notes without the consent of the Holders of such Secured Notes 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 Secured Notes
affected thereby.
(c) It shall not be necessary for the consent of Holders under this
Section 12.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
(d) Prior to the execution of any amendment to this Agreement, the
Indenture Trustee shall be entitled to receive and rely upon an opinion of
counsel stating that the execution of such amendment is authorized and permitted
by this Agreement. The Indenture Trustee and the Collateral Agent may, but shall
not be obligated to, enter into any such amendment which affects the Indenture
Trustee or Collateral Agent's own rights, duties or immunities under this
Agreement.
Section 12.04. 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 Noteholders' expense on direction and at
the expense of Majority Noteholders requesting such recordation, but only when
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Noteholders or is
necessary for the administration or servicing of the Mortgage Loans.
Section 12.05. Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 12.06. Notices. All demands, directions, instructions, 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, the
Subservicers or the Originators, addressed to such Person, c/o American
Business Financial Services, Inc., The ▇▇▇▇▇▇▇▇▇ Building, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
-▇▇-
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: General Counsel; (ii) in the case
of the Depositor, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Executive Vice President; (iii) in the case of
the Trust, ABFS Mortgage Loan Warehouse Trust 2003-1, c/o the Owner Trustee at
its Corporate Trust Office, Attention: Corporate Trust Administration; (iv) in
the case of the Indenture Trustee or the Collateral Agent, JPMorgan Chase Bank,
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Institutional
Trust Services - ABFS Mortgage Loan Warehouse Trust 2003-1, telephone (212)
▇▇▇-▇▇▇▇, telecopy (▇▇▇) ▇▇▇-▇▇▇▇; (v) in the case of the Note Purchaser,
JPMorgan Chase Bank, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopy (▇▇▇) ▇▇▇-▇▇▇▇;
and (vi) in the case of the Noteholders, as set forth in the Note Register. 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
Noteholders shall be effective upon mailing or personal delivery.
Section 12.07. 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 12.08. 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 Noteholders.
Section 12.09. 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 12.10. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Trust, the Servicer, the Depositor, the
Sponsor, the Indenture Trustee, the Collateral Agent and the Noteholders and
their respective successors and permitted assigns.
Section 12.11. 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 12.12. Reserved.
Section 12.13. Third Party Beneficiary. The parties agree that each of
the Owner Trustee and the Note Purchaser is intended and shall have all rights
of a third-party beneficiary of this Agreement.
Section 12.14. Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
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WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.
(b) THE TRUST, THE SERVICER, THE DEPOSITOR, THE SPONSOR, THE COLLATERAL
AGENT, EACH ORIGINATOR AND THE INDENTURE 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 12.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S.
MAILS, POSTAGE PREPAID. THE TRUST, THE DEPOSITOR, THE SERVICER, THE COLLATERAL
AGENT, EACH ORIGINATOR AND THE INDENTURE 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 12.14
SHALL AFFECT THE RIGHT OF THE TRUST, THE DEPOSITOR, THE SPONSOR, THE SERVICER,
THE COLLATERAL AGENT, ANY ORIGINATOR OR THE INDENTURE 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 TRUST, THE DEPOSITOR, THE SERVICER, THE SPONSOR, THE COLLATERAL
AGENT, EACH ORIGINATOR AND THE INDENTURE 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.
Section 12.15. Reserved.
Section 12.16. Power of Attorney. Each of the Originators, the
Depositor, the Sponsor and each Holder hereby appoints the Note Purchaser as its
attorney-in-fact with full power and authority acting in its stead for the
purpose of amending this Agreement, the Indenture or any document executed in
connection herewith or therewith to the extent necessary to protect the interest
of the Note Purchaser in the Trust Estate. The Note Purchaser shall not act
under such power of attorney unless and until an Event of Default or an
Amortization Event has occurred and is continuing.
Section 12.17. Non-Petition Agreement. Notwithstanding any prior
termination of any Basic Document, each Originator, the Servicer, each
Subservicer, the Depositor, the Collateral Agent, the Sponsor and the Indenture
Trustee each severally and not jointly covenants that it shall not, prior to the
date which is one year and one day after the payment in full of the all of the
Secured Notes, acquiesce, petition or otherwise, directly or indirectly, invoke
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or cause the Trust or the Depositor to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case against the Trust
or Depositor under any Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Trust or Depositor or any substantial part of
their respective property or ordering the winding up or liquidation of the
affairs of the Trust or the Depositor.
Section 12.18. Due Diligence Fees, Due Diligence. The Originators each
acknowledge that the Note Purchaser has the right to perform continuing due
diligence reviews with respect to the Mortgage Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and each Originator agrees that upon reasonable prior
notice (with no notice being required upon the occurrence of an Event of
Default) to such Originator, the Sponsor, the Note Purchaser, the Indenture
Trustee and Collateral Agent or its authorized representatives will be permitted
during normal business hours to examine, inspect, and make copies and extracts
of, the Loan Files and any and all documents, records, agreements, instruments
or information relating to such Mortgage Loans in the possession or under the
control of the Servicer and the Indenture Trustee. Each Originator also shall
make available to the Note Purchaser a knowledgeable financial or accounting
officer for the purpose of answering questions respecting the Loan Files and the
Mortgage Loans. Without limiting the generality of the foregoing, each
Originator acknowledges that the Note Purchaser may purchase Secured Notes based
solely upon the information provided by such Originator to the Note Purchaser in
the Mortgage Loan Schedule and the representations, warranties and covenants
contained herein, and that the Note Purchaser, at its option, has the right at
any time to conduct a partial or complete due diligence review on some or all of
the Mortgage Loans securing such purchase, including, without limitation,
ordering new credit reports and new appraisals on the related Mortgaged
Properties and otherwise re-generating the information used to originate such
Mortgage Loan. The Note Purchaser may underwrite such Mortgage Loans itself or
engage a mutually agreed upon third party underwriter to perform such
underwriting. Each Originator agrees to cooperate with the Note Purchaser and
any third party underwriter in connection with such underwriting, including, but
not limited to, providing the Note Purchaser and any third party underwriter
with access to any and all documents, records, agreements, instruments or
information relating to such Mortgage Loans in the possession, or under the
control, of the Servicer. Each Originator further agrees that it Originator
shall reimburse the Note Purchaser for any and all reasonable out-of-pocket
costs and expenses incurred by the Note Purchaser in connection with the Note
Purchaser's activities pursuant to this Section 12.18 (the "Due Diligence
Fees"). In addition to the obligations set forth in this Section 12.18, the Note
Purchaser agrees (on behalf of itself and its officers and employees) to use
reasonable precaution to keep confidential, in accordance with its customary
procedures for handling confidential information and in accordance with safe and
sound practices, and not to disclose to any third party, any non-public
information supplied to it or otherwise obtained by it hereunder with respect to
each Originator or any of its Affiliates (including, but not limited to, the
Loan File); except for, (i) disclosure to Note Purchaser's employees, direct or
indirect Affiliates, attorneys or accountants, but only to the extent such
disclosure is necessary and any such party agrees to hold such information in
strict confidence, (ii) disclosure required by law, rule, regulation or order of
a court or other similar authority or any regulatory authority, (iii) disclosure
in connection with the enforcement of any provision of this Agreement or any of
the Basic Documents, (iv) disclosure to any third party source of financing to
the Note Purchaser, including without limitation, to any lender or other
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counterparty of the Note Purchaser, or (v) the extent to which such information
is in the public domain other than due to a breach of this Section 12.18. Unless
specifically prohibited by applicable law or court order, the Note Purchaser
shall, prior to disclosure thereof, notify the related Originator of any request
for disclosure of any such non-public information. The Note Purchaser further
agrees not to use any such non-public information for any purpose unrelated to
this Agreement and that the Note Purchaser shall not disclose such non-public
information to any third party underwriter in connection with a potential
Disposition without obtaining a written agreement from such third party
underwriter to comply with the confidentiality provisions of this Section 12.18.
Notwithstanding the foregoing or anything to the contrary contained
herein or in any other Basic Document, the parties hereto may disclose to any
and all Persons, without limitation of any kind, the federal income tax
treatment of the conveyance of the Mortgage Loans, any fact relevant to
understanding the federal tax treatment of the conveyance of the Mortgage Loans,
and all materials of any kind (including opinions or other tax analyses)
relating to such federal income tax treatment; provided that the Originators,
the Depositor and the Sponsor may not disclose the name of or identifying
information with respect to Note Purchaser or Collateral Agent or any pricing
terms or other nonpublic business or financial information (including any
sublimits and financial covenants) that is unrelated to the purported or claimed
federal income tax treatment of the conveyance of the Mortgage Loans and is not
relevant to understanding the purported or claimed federal income tax treatment
of the conveyance of the Mortgage Loans, without the prior written consent of
the Note Purchaser.
Section 12.19. No Recourse to Owner Trustee. (a) It is expressly
understood and agreed by the parties hereto that (i) this Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally, but
solely as Owner Trustee of ABFS Mortgage Loan Warehouse Trust 2003-1, in the
exercise of the powers and authority conferred and vested in it, (ii) each of
the representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Trust, (iii) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (iv) under no
circumstances shall Wilmington Trust Company, be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or any other related documents.
(b) The recitals contained herein and in the Certificates (other than
the signature and countersignature of the Owner Trustee on the Certificates)
shall be taken as the statements of the Depositor, and the Owner Trustee assumes
no responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
other Basic Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates and as specified in
Section 7.03 of the Trust Agreement) or the Notes, or of any Mortgage Loans or
related documents. The Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
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any Mortgage Loan, or the perfection and priority of any security interest
created by any Mortgage Loan or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Owner Trust Estate or
its ability to generate the payments to be distributed to Certificateholders
under this Agreement or the Noteholders under the Indenture, including, without
limitation, the existence, condition and ownership of any Mortgaged Property,
the existence and enforceability of any insurance thereon, the existence and
contents of any Mortgage Loan on any computer or other record thereof, the
validity of the assignment of any Mortgage Loan to the Trust or of any
intervening assignment, the completeness of any Mortgage Loan, the performance
or enforcement of any Mortgage Loan, the compliance by the Depositor or the
Servicer with any warranty or representation made under any Basic Document or in
any related document or the accuracy of any such warranty or representation or
any action of the Indenture Trustee or the Servicer or any subservicer taken in
the name of the Owner Trustee.
ARTICLE XIII
PASS-THROUGH TRANSFER
Section 13.01. Dispositions. (a) The Trust shall effect Dispositions in
accordance with the terms of this Agreement and the Basic Documents at the
direction of the Originators, except that Dispositions shall be at the direction
of the Majority Noteholders (in the form of Exhibit N attached) should an Event
of Default or an Amortization Event have occurred and be continuing. The Trust,
the Servicer, each Originator and the Indenture Trustee agree to use
commercially reasonable efforts, in connection with a Disposition made in
connection with the occurrence of the Redemption Date, to permit the Depositor
to act as "depositor" in such Disposition; provided, nothing herein shall be
construed to permit the Depositor to repurchase any Mortgage Loans. In
connection therewith, the Trust shall:
(i) transfer, deliver and sell all or a portion of the
Mortgage Loans, as of the "cut-off dates" of the related Dispositions,
to such Disposition Participants as may be necessary to effect the
Dispositions; provided, that any such sale shall be for "fair market
value," as determined by the Note Purchaser in its good faith
discretion and provided, further, that none of the Originators, their
Affiliates or agents may purchase the Mortgage Loans;
(ii) deposit the cash Disposition Proceeds into the Collection
Account pursuant to Section 5.01; and
(iii) take such further actions as may be reasonably necessary
to effect such Dispositions.
(b) The Servicer hereby covenants that it will take such actions as may
be reasonably necessary to effect Dispositions as the Disposition Participants
may request and direct, including without limitation providing the Originator
such information as may be reasonably required to make representations and
warranties required hereunder.
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(c) The Majority Noteholders may effect Whole Loan Sales upon written
notice to the Servicer of its intent to cause the Trust to effect a Whole Loan
Sale at least 5 Business Days in advance thereof.
(d) (i) In consideration of the consideration received from the
Depositor hereunder, each related Originator hereby agrees and covenants that in
connection with each Disposition it shall effect the following:
(A) make such representations and warranties concerning the
related Mortgage Loans as of the "cut-off date" of the related
Disposition to the Disposition Participants as may be necessary in the
reasonable opinion of any of the Disposition Participants, to effect
such Disposition; provided, that such Originator shall not be required
to make any representation or warranty beyond the scope of the
representations and warranties delineated herein; and provided,
further, that, to the extent that the Originator has at the time of the
Disposition actual knowledge of any facts or circumstances that would
render any of such representations and warranties materially false, the
Originator may notify the Disposition Participants of such facts or
circumstances and, in such event, shall have no obligation to make such
materially false representation and warranty;
(B) supply such information, opinions of counsel, letters from
law and/or accounting firms and other documentation and certificates
regarding the origination of the Mortgage Loans as any Disposition
Participant shall reasonably request to effect a Disposition and enter
into such indemnification agreements customary for such transaction
relating to or in connection with the Disposition as the Disposition
Participants may reasonably require;
(C) make itself available for and engage in good faith
consultation with the Disposition Participants concerning information
to be contained in any document, agreement, private placement
memorandum, or filing with the Securities and Exchange Commission
relating to such Originator or the Mortgage Loans in connection with a
Disposition and shall use reasonable efforts to compile any information
and prepare any reports and certificates, into a form, whether written
or electronic, suitable for inclusion in such documentation;
(D) to implement the foregoing and to otherwise effect a
Disposition, enter into, or arrange for its Affiliates to enter into
insurance and indemnity agreements, underwriting or placement
agreements, servicing agreements, purchase agreements and any other
documentation which may reasonably be required of or reasonably deemed
appropriate by the Disposition Participants in order to effect a
Disposition; and
(E) take such further actions as may be reasonably necessary
to effect the foregoing;
provided, that, notwithstanding anything in the foregoing to the contrary, the
Originators shall only be required to enter into documentation in connection
with Dispositions that is consistent with the prior public securitizations of
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affiliates of the Originators, provided that, to the extent an Affiliate of the
Note Purchaser acts as "depositor" or performs a similar function in a
Securitization, additional indemnities and informational representations and
warranties are provided which are consistent with those in the Basic Documents
and may upon request of the Originators be set forth in a separate agreement
between an Affiliate of the Note Purchaser and the Originators.
(ii) As long as no Event of Default shall have occurred and be
continuing under this Agreement, the Purchase Agreement or the
Indenture, the Servicer may continue to service the Mortgage Loans
included in any Disposition subject to any applicable "term-to-term"
servicing provisions in Section 9.01 and subject to any required
amendments to the related servicing provisions as may be necessary to
effect the related Disposition including but not limited to the
obligation to make Servicing Advances, Periodic Advances and payments
of Compensating Interest on the Mortgage Loans.
(e) Except as otherwise expressly set forth under this Section 13.01,
the parties' rights and obligations under this Section 13.01 shall continue
notwithstanding the occurrence of an Event of Default.
(f) For the avoidance of doubt, the Majority Noteholders are not agents
of the Originators or any of their Affiliates and, when directing the Trust to
effect such Dispositions, are acting in their sole discretion and not for or on
behalf of the Originators or any of its Affiliates.
The Disposition Participants (and the Majority Noteholders to the
extent directing the Disposition Participants) shall be independent contractors
to the Trust and shall have no fiduciary obligations to the Trust or any of its
Affiliates. In that connection, the Disposition Participants shall not be liable
for any error of judgment made in good faith and shall not be liable with
respect to any action they take or omits to take in good faith in the
performance of their duties.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Servicer, the Trust, the Indenture Trustee, the
Collateral Agent, the Originators, the Subservicers 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.
ABFS BALAPOINTE, INC., as Depositor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
AMERICAN BUSINESS FINANCIAL
SERVICES, INC., as the Sponsor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
HOMEAMERICAN CREDIT, INC. D/B/A UPLAND
MORTGAGE, as an Originator
and a Subservicer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
ABFS MORTGAGE LOAN WAREHOUSE TRUST 2003-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President
[Signature Page to Sale and Servicing Agreement]
AMERICAN BUSINESS CREDIT, INC., as an
Originator and the Servicer
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
AMERICAN BUSINESS MORTGAGE SERVICES, INC.,
as an Originator and a Subservicer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
JPMORGAN CHASE BANK, not in its individual
capacity but solely as Indenture Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Trust Officer
JPMORGAN CHASE BANK, not in its individual
capacity but solely as Collateral Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
[Signature Page to Sale and Servicing Agreement]