1
Exhibit 10.22
POOLING AND SERVICING AGREEMENT
Dated as of March 3, 2000
among
HSBC Bank USA
(Trustee),
FIRST INTERNATIONAL BANK
(Seller and Servicer)
and
FIB FUNDING TRUST
(Seller)
First International Bank
SBA Loan-Backed Adjustable Rate
Certificates, Series 2000-1, Class A, Class M and Class B
2
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
Definitions ............................................................I-1
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
2.01 Sale and Conveyance of Trust Fund.........................II-1
2.02 Possession of SBA Files...................................II-1
2.03 Books and Records.........................................II-1
2.04 Delivery of SBA Loan Documents............................II-2
2.05 Acceptance by Trustee of the Trust Fund;
Certain Substitutions; II-Certification by Trustee......II-4
2.06 [Intentionally Omitted]...................................II-6
2.07 Authentication of Certificates............................II-6
2.08 Fees and Expenses of the Trustee..........................II-6
2.09 Sale and Conveyance of the Subsequent SBA Loans...........II-6
2.10 Optional Purchase of Defaulted SBA Loans..................II-8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations of the Bank..............................III-1
3.02 Individual SBA Loans.....................................III-4
3.03 Purchase and Substitution of Defective SBA Loans.........III-9
3.04 Representations of the Funding Trust....................III-10
(i)
3
ARTICLE IV
THE CERTIFICATES
4.01 The Certificates..........................................IV-1
4.02 Registration of Transfer and Exchange of Certificates.....IV-1
4.03 Mutilated, Destroyed, Lost or Stolen Certificates.........IV-7
4.04 Persons Deemed Owners.....................................IV-8
ARTICLE V
ADMINISTRATION AND SERVICING OF SBA LOANS
5.01 Duties of the Servicer.........................................V-1
5.02 Liquidation of SBA Loans.......................................V-4
5.03 Establishment of Principal and Interest Accounts;
Deposits in Principal and Interest Accounts..................V-5
5.04 Permitted Withdrawals From the Principal and
Interest Account.............................................V-7
5.05 [Intentionally Omitted]........................................V-8
5.06 Transfer of Accounts...........................................V-8
5.07 Maintenance of Hazard Insurance................................V-8
5.08 [Intentionally Omitted]........................................V-9
5.09 Fidelity Bond..................................................V-9
5.10 Title, Management and Disposition of Foreclosed Property.......V-9
5.11 [Omitted.]....................................................V-10
5.12 Collection of Certain SBA Loan Payments.......................V-10
5.13 Access to Certain Documentation and Information
Regarding the SBA Loans.....................................V-11
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
6.01 Establishment of Certificate Account; Deposits in
Certificate Account; Permitted Withdrawals from
Certificate Account.........................................VI-1
6.02 Establishment of Spread Account; Deposits in Spread
Account; Permitted Withdrawals from Spread Account. ........VI-2
(ii)
4
6.03 Establishment of Expense Account; Deposits in Expense Account;
Permitted Withdrawals from Expense Account.................. VI-3
6.04 Pre-Funding Account and Capitalized Interest Account .......... VI-5
6.05 [Intentionally Omitted] ....................................... VI-6
6.06 Investment of Accounts ........................................ VI-6
6.07 Distributions ................................................. VI-7
6.08 [Omitted] ..................................................... VI-9
6.09 Statements .................................................... VI-9
6.10 Advances by the Servicer ...................................... VI-12
6.11 Compensating Interest ......................................... VI-13
6.12 Reports of Foreclosure and Abandonment of Mortgaged Property .. VI-13
ARTICLE VII
GENERAL SERVICING PROCEDURE
[Omitted]...................................................... VII-1
7.02 Satisfaction of Mortgages and Collateral and Release of
SBA Files......................... .......................... VII-1
7.03 Servicing Compensation......................................... VII-2
7.04 Annual Statement as to Compliance.............................. VII-3
7.05 Annual Independent Public Accountants' Servicing Report........ VII-3
7.06 SBA's and Trustee's Right to Examine Servicer Records
and Audit Operations......................................... VII-3
7.07 Reports to the Trustee; Principal and Interest Account
Statements................................................... VII-3
7.08 Premium Protection Fee and Servicing Fee....................... VII-4
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
8.01 Financial Statements........................................... VIII-1
ARTICLE IX
THE SERVICER
9.01 Indemnification; Third Party Claims............................ IX-1
(iii)
5
9.02 Merger or Consolidation of the Servicer; Assignment of the Servicer's Duties.....................IX-2
9.03 Limitation on Liability of the Servicer and Others...............................................IX-2
9.04 Servicer Not to Resign...........................................................................IX-3
ARTICLE X
DEFAULT
10.01 Events of Default.................................................................................X-1
10.02 Trustee to Act; Appointment of Successor..........................................................X-2
10.03 Waiver of Defaults................................................................................X-4
10.04 Control by Majority Certificateholders and Others.................................................X-4
ARTICLE XI
TERMINATION
11.01 Termination......................................................................................XI-1
11.02 Accounting Upon Termination of Servicer..........................................................XI-2
ARTICLE XII
THE TRUSTEE
12.01 Duties of Trustee...............................................................................XII-1
12.02 Certain Matters Affecting the Trustee...........................................................XII-2
12.03 Trustee Not Liable for Certificates or SBA Loans................................................XII-4
12.04 Trustee May Own Certificates....................................................................XII-4
12.05 Servicer To Pay Trustee's Fees and Expenses.....................................................XII-4
12.06 Eligibility Requirements for Trustee............................................................XII-5
12.07 Resignation and Removal of the Trustee..........................................................XII-5
12.08 Successor Trustee...............................................................................XII-6
12.09 Merger or Consolidation of Trustee..............................................................XII-7
12.10 Appointment of Co-Trustee or Separate Trustee...................................................XII-7
12.11 Authenticating Agent............................................................................XII-8
12.12 Tax Returns and Reports.........................................................................XII-9
12.13 Protection of Trust Fund........................................................................XII-9
(iv)
6
12.14 Representations, Warranties and Covenants of Trustee...........................................XII-10
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.01 Acts of Certificateholders.....................................................................XIII-1
13.02 Amendment......................................................................................XIII-1
13.03 Recordation of Agreement.......................................................................XIII-2
13.04 Duration of Agreement..........................................................................XIII-2
13.05 Governing Law..................................................................................XIII-2
13.06 Notices........................................................................................XIII-2
13.07 Severability of Provisions.....................................................................XIII-3
13.08 No Partnership.................................................................................XIII-3
13.09 Counterparts...................................................................................XIII-3
13.10 Successors and Assigns.........................................................................XIII-3
13.11 Headings.......................................................................................XIII-3
13.12 Paying Agent...................................................................................XIII-3
13.13 Notification to Rating Agencies................................................................XIII-4
13.14 Third Party Rights.............................................................................XIII-4
13.15 Inconsistencies................................................................................XIII-5
(v)
7
EXHIBIT INDEX
EXHIBIT A Contents of SBA File
EXHIBIT B-1 Form of Class A Certificate
EXHIBIT B-2 Form of Class M Certificate
EXHIBIT B-3 Form of Class B Certificate
EXHIBIT C Principal and Interest Account
Letter Agreement
EXHIBIT D [Omitted]
EXHIBIT E Wiring Instructions Form
EXHIBIT F-1 Initial Certification
EXHIBIT F-2 Final Certification
EXHIBIT G [Omitted]
EXHIBIT H-1 SBA Loan Schedule of the Bank
EXHIBIT H-2 SBA Loan Schedule of the Funding Trust
EXHIBIT I Request for Release of Documents
EXHIBIT J Form of Liquidation Report
EXHIBIT K Form of Delinquency Report
EXHIBIT L Servicer's Monthly Computer Diskette Format
EXHIBIT M Multi-Party Agreement
EXHIBIT N Spread Account Agreement
EXHIBIT O-1 Form of Transferee Letter
EXHIBIT O-2 Form of Rule 144A Certification
(vi)
8
Agreement dated as of March 3, 2000, among HSBC Bank USA, as trustee
(the "Trustee"), FIB Funding Trust, as Seller (the "Funding Trust"), and First
International Bank, as Seller (in such capacity, the "Bank" and together with
the Funding Trust, the "Sellers") and as Servicer (in such capacity, the
"Servicer"):
PRELIMINARY STATEMENT
The Bank, in the ordinary course of its business, originates and
acquires SBA Section 7(a) Loans (the "SBA Section 7(a) Loans") to small
businesses in compliance with the provisions of the Small Business Act and the
rules and regulations thereunder, which SBA Section 7(a) Loans are evidenced by
the SBA Notes in favor of the Bank.
The Funding Trust acquired the Unguaranteed Interests (as defined
herein) in certain of the SBA Section 7(a) Loans from the Bank pursuant to a
Sale and Servicing Agreement dated as of October 1, 1999 between the Funding
Trust and the Bank.
Pursuant to and in accordance with the provisions of the Small Business
Act and the Loan Guaranty Agreement, a portion of each SBA Section 7(a) Loan has
been guaranteed by the Small Business Administration (the "SBA").
The Bank has previously sold the Guaranteed Interest (as defined
herein) in the SBA Section 7(a) Loans to certain Registered Holders pursuant to
SBA Form 1086 Agreements between such Registered Holders, the SBA and the Bank.
In accordance with such SBA Form 1086 Agreements, the parties hereto acknowledge
that the SBA is the party in interest with respect to the Guaranteed Interest.
Pursuant to and in accordance with policies of the SBA, the Servicer is
required to retain the Premium Protection Fee and the Servicing Fee.
To facilitate the sale of the Unguaranteed Interest in the SBA Section
7(a) Loans, and the servicing of the SBA Loans by the Servicer, the Bank and the
Funding Trust are entering into this Agreement with the Trustee. The Sellers are
transferring the Unguaranteed Interest in the SBA Loans to the Trustee for the
benefit of the SBA and the Certificateholders under this Agreement, pursuant to
which Certificates are being issued, denominated on the face thereof as First
International Bank SBA Loan-Backed Adjustable Rate Certificates, Series 2000-1,
Class A, Class M and Class B, representing in the aggregate a 100% undivided
beneficial ownership interest in the right to receive the principal portion of
the Unguaranteed Interests of the SBA Loans together with interest thereon at
the then applicable Class A, Class M or Class B Interest Distribution Amount, as
the case may be. The Unguaranteed Interest of the Initial SBA Loans have an
aggregate outstanding principal balance of $25,846,858.63 as of March 3, 2000
(the "Cut-Off Date"), after application of payments received by the Sellers on
or before such date.
The parties hereto agree as follows:
9
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings. This Agreement
relates to a Trust Fund evidenced by First International Bank SBA Loan-Backed
Adjustable Rate Certificates, Series 2000-1, Class A, Class M and Class B.
Unless otherwise provided, all calculations of interest pursuant to this
Agreement including, but not limited to, the Class A, Class M and Class B
Interest Distribution Amounts, are based on a 360-day year and twelve 30-day
months.
ACCOUNT: The Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account established by the Trustee for the benefit of the
Certificateholders; the Expense Account established by the Trustee for the
benefit of the Trustee; and the Spread Account held by the Spread Account
Custodian pursuant to the Spread Account Agreement. The Trustee's obligation to
establish and maintain the Certificate Account is not delegable.
ACCOUNT NUMBER: The number assigned to each SBA Loan by the Sellers, as
set forth in Exhibit H-1 and Exhibit H-2 hereto.
ACCOUNT PROPERTY: Has the meaning set forth in Section 3 of the Spread
Account Agreement.
ADDITION NOTICE: With respect to the transfer of Subsequent SBA Loans
to the Trust Fund pursuant to Section 2.09 herein, notice, which shall be given
not later than three Business Days prior to the related Subsequent Transfer
Date, of the Bank's designation of Subsequent SBA Loans to be sold to the Trust
Fund and the aggregate Principal Balance of such Subsequent SBA Loans.
ADDITIONAL FEE: With respect to each Additional Fee SBA Loan, the fee
payable to the SBA by the Bank equal to 40 basis points or 50 basis points per
annum, as the case may be, on the outstanding balance of the Guaranteed Interest
of such Additional Fee SBA Loan.
ADDITIONAL FEE SBA LOAN: An SBA Section 7(a) Loan sold in the secondary
market on or after September 1, 1993 (unless the related SBA Section 7(a) Loan
was approved by the SBA on or after October 12, 1995), for which the related
Additional Fee is 40 basis points per annum, or an SBA Section 7(a) Loan
approved by the SBA on or after October 12, 1995 (regardless of whether it was
sold in the secondary market), for which the related Additional Fee is 50 basis
points per annum.
ADJUSTED CLASS A INTEREST DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the product of (A) the aggregate amount of interest payable
with
I-1
10
respect to each SBA Loan in accordance with its terms, net of the interest
payable to the Registered Holder, the Premium Protection Fee, the Excess Spread,
the Servicing Fee, the FTA's Fee, the Additional Fee, the Extra Interest and the
Annual Expense Escrow Amount allocable to such interest (plus, for the
Remittance Dates occurring in April, May and June 2000, any amounts transferred
from the Pre-Funding Account and the Capitalized Interest Account for such
Remittance Date to be applied as a payment of interest on the Certificates) and
(B) a fraction, the numerator of which is the amounts set forth in clauses (i)
and (ii) of the definition of Class A Interest Distribution Amount with respect
to such Remittance Date, and the denominator of which is the sum of the amounts
set forth in clauses (i) and (ii) of the definitions of Class A Interest
Distribution Amount, Class M Interest Distribution Amount and Class B Interest
Distribution Amount, each with respect to such Remittance Date.
ADJUSTED CLASS B INTEREST DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the product of (A) the aggregate amount of interest payable
with respect to each SBA Loan in accordance with its terms, net of the interest
payable to the Registered Holder, the Premium Protection Fee, the Excess Spread,
the Servicing Fee, the FTA's Fee, the Additional Fee, the Extra Interest and the
Annual Expense Escrow Amount allocable to such interest (plus, for the
Remittance Dates occurring in April, May and June 2000, any amounts transferred
from the Pre-Funding Account and the Capitalized Interest Account for such
Remittance Date to be applied as a payment of interest on the Certificates) and
(B) a fraction, the numerator of which is the amounts set forth in clauses (i)
and (ii) of the definition of Class B Interest Distribution Amount with respect
to such Remittance Date, and the denominator of which is the sum of the amounts
set forth in clauses (i) and (ii) of the definitions of Class A Interest
Distribution Amount, Class M Interest Distribution Amount and Class B Interest
Distribution Amount, each with respect to such Remittance Date.
ADJUSTED CLASS M INTEREST DISTRIBUTION AMOUNT: With respect to each
Remittance Date, the product of (A) the aggregate amount of interest payable
with respect to each SBA Loan in accordance with its terms, net of the interest
payable to the Registered Holder, the Premium Protection Fee, the Excess Spread,
the Servicing Fee, the FTA's Fee, the Additional Fee, the Extra Interest and the
Annual Expense Escrow Amount allocable to such interest (plus, for the
Remittance Dates occurring in April, May and June 2000 any amounts transferred
from the Pre-Funding Account and the Capitalized Interest Account for such
Remittance Date to be applied as a payment of interest on the Certificates) and
(B) a fraction, the numerator of which is the amounts set forth in clauses (i)
and (ii) of the definition of Class M Interest Distribution Amount with respect
to such Remittance Date, and the denominator of which is the sum of the amounts
set forth in clauses (i) and (ii) of the definitions of Class A Interest
Distribution Amount, Class M Interest Distribution Amount and Class B Interest
Distribution Amount, each with respect to such Remittance Date.
ADJUSTED SBA LOAN BENCHMARK RATE: With respect to any SBA Loan, a
percentage per annum equal to the sum of (i) the then applicable weighted
average Class A, Class M and Class B Benchmark Rates and (ii) .06% per annum,
relating to the Annual Expense Escrow Amount.
I-2
11
ADJUSTMENT DATE: For each Interest Accrual Period, the first Business
Day of such Interest Accrual Period, commencing April 17, 2000. The Prime Rate
in effect for each Adjustment Date shall be the Prime Rate published in The Wall
Street Journal on the first Business Day of the month preceding the start of
such Interest Accrual Period (i.e., the Prime Rate in effect for the April 17,
2000 Adjustment Date shall be the Prime Rate published on the first Business Day
in March 2000).
AGGREGATE CLASS A CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, the Original Class A Certificate Principal Balance less the sum
of all amounts previously distributed to the Class A Certificateholders in
respect of principal.
AGGREGATE CLASS B CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, the Original Class B Certificate Principal Balance less the sum
of all amounts previously distributed to the Class B Certificateholders in
respect of principal.
AGGREGATE CLASS M CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, the Original Class M Certificate Principal Balance less the sum
of all amounts previously distributed to the Class M Certificateholders in
respect of principal.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
ANNUAL EXPENSE ESCROW AMOUNT: The product of .06% per annum and the
Pool Principal Balance, which is computed and payable on a monthly basis and
represents the estimated annual Trustee's fees and Trust Fund expenses.
ASSIGNMENT OF MORTGAGE: With respect to those SBA Loans secured by a
Mortgaged Property, an assignment of the Mortgage, notice of transfer or
equivalent instrument sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the transfer of the
related SBA Loan to the Trustee subject to the Multi-Party Agreement.
AUTHENTICATING AGENT: Initially, HSBC Bank USA and thereafter, any
successor appointed pursuant to Section 12.11.
AVAILABLE FUNDS: With respect to each Remittance Date, the sum of (i)
all amounts received from any source by the Servicer or any Subservicer during
the preceding calendar month (including Excess Spread) with respect to principal
and interest on the SBA Loans (net of the amount payable to the Registered
Holders, the Premium Protection Fee, the FTA's Fee, the Additional Fee and the
Servicing Fee), (ii) advances by the Servicer, (iii) amounts to be transferred
from the Pre-Funding Account and the Capitalized Interest Account with respect
to the Remittance Dates in April, May and June 2000, and (iv) amounts in the
Spread Account.
I-3
12
BANK: First International Bank, in its individual capacity or in its
capacities as Seller and Servicer hereunder.
BIF: The Bank Insurance Fund, or any successor thereto.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in the States of New York or Connecticut are
authorized or obligated by law or executive order to be closed.
CAPITALIZED INTEREST ACCOUNT: As described in Section 6.04.
CAPITALIZED INTEREST REQUIREMENT: With respect to the Remittance Dates
in April, May and June 2000, the excess, if any, of (i) 30 days' interest
calculated at the weighted average Class A, Class M and Class B Benchmark Rates
on the excess of (a) the Aggregate Class A, Class M and Class B Certificate
Principal Balances for such Remittance Date over (b) the aggregate Principal
Balances of the SBA Loans for such Remittance Date over (ii) any Pre-Funding
Earnings to be transferred to the Certificate Account on such Remittance Date
pursuant to Section 6.04(d). With respect to the Special Remittance Date,
accrued interest calculated at the weighted average Class A, Class M and Class B
Benchmark Rates on the amount to be transferred on the Special Remittance Date
from the Pre-Funding Account to the Certificate Account pursuant to Section
6.04(c).
CERTIFICATE: Any Class A, Class M or Class B Certificate executed by
the Servicer and authenticated by the Trustee or the Authenticating Agent
substantially in the form annexed hereto as Exhibits ▇-▇, ▇-▇, and B-3.
CERTIFICATE ACCOUNT: As described in Section 6.01.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Class A, Class
M or Class B Certificate is registered in the Certificate Register, except that,
solely for the purposes of giving any consent, waiver, request or demand
pursuant to this Agreement, any Certificate registered in the name of any of the
Sellers, the Servicer, any Subservicer or any affiliate of any of them, shall be
deemed not to be outstanding and the undivided Percentage Interest evidenced
thereby shall not be taken into account in determining whether the requisite
percentage of Certificates necessary to effect any such consent, waiver, request
or demand has been obtained.
CERTIFICATE REGISTER: As described in Section 4.02.
CERTIFICATE REGISTRAR: Initially, HSBC Bank USA, and thereafter, any
successor appointed pursuant to Section 4.02.
I-4
13
CLASS A BENCHMARK RATE: During the initial Interest Accrual Period
6.80% per annum. During each subsequent Interest Accrual Period, the Prime Rate
in effect on the related Adjustment Date minus 1.95% per annum.
CLASS A CERTIFICATE: A Certificate denominated as a Class A
Certificate.
CLASS A CERTIFICATEHOLDER: A holder of a Class A Certificate.
CLASS A INTEREST DISTRIBUTION AMOUNT: With respect to each Remittance
Date, the sum of (i) the interest accrued for the related Interest Accrual
Period at the then applicable Class A Benchmark Rate on the Aggregate Class A
Certificate Principal Balance outstanding immediately prior to such Remittance
Date and (ii) the amount of the shortfall, if any, of the interest that the
Class A Certificates were entitled to receive on a preceding Remittance Date but
did not receive plus interest thereon at the then applicable Class A Benchmark
Rate compounded monthly; provided, however, that on each Remittance Date after
the first Remittance Date the amount set forth in Clause (i) of Class A Interest
Distribution Amount will be increased or decreased, as the case may be, to equal
the Adjusted Class A Interest Distribution Amount for such Remittance Date.
CLASS A PERCENTAGE: With respect to each Remittance Date, 90.00%,
representing the beneficial ownership interest of the Class A Certificates in
the Trust Fund.
CLASS B BENCHMARK RATE: During the initial Interest Accrual Period
12.75% per annum. During each subsequent Interest Accrual Period, the Prime Rate
in effect on the related Adjustment Date plus 4.00% per annum.
CLASS B CERTIFICATE: A Certificate denominated as a Class B
Certificate.
CLASS B CERTIFICATEHOLDER: A holder of a Class B Certificate.
CLASS B INTEREST DISTRIBUTION AMOUNT: With respect to each Remittance
Date, the sum of (i) the interest accrued for the related Interest Accrual
Period at the then applicable Class B Benchmark Rate on the Aggregate Class B
Certificate Principal Balance outstanding immediately prior to such Remittance
Date and (ii) the amount of the shortfall, if any, of the interest that the
Class B Certificates were entitled to receive on a preceding Remittance Date but
did not receive plus interest thereon at the then applicable Class B Benchmark
Rate compounded monthly; provided, however, that on each Remittance Date after
the first Remittance Date the amount set forth in Clause (i) of Class B Interest
Distribution Amount will be increased or decreased, as the case may be, to equal
the Adjusted Class B Interest Distribution Amount for such Remittance Date.
CLASS B INTEREST SHORTFALL AMOUNT: For any Remittance Date the amount,
if any, determined pursuant to Clause (ii) of the definition of Class B Interest
Distribution Amount.
I-5
14
CLASS B PERCENTAGE: With respect to each Remittance Date, 2.02%,
representing the beneficial ownership interest of the Class B Certificates in
the Trust Fund.
CLASS CARRY-FORWARD AMOUNT: The amount, if any, by which (i) the Class
Principal Distribution Amount for each Class of Certificates with respect to any
preceding Remittance Date exceeded (ii) the amount of the actual principal
distribution to the Class of Certificates on such Remittance Date.
CLASS M BENCHMARK RATE: During the initial Interest Accrual Period
7.55% per annum. During each subsequent Interest Accrual Period, the Prime Rate
in effect on the preceding Adjustment Date minus 1.20% per annum.
CLASS M CERTIFICATE: A certificate denominated as a Class M
Certificate.
CLASS M CERTIFICATEHOLDER: A holder of a Class M Certificate.
CLASS M INTEREST DISTRIBUTION AMOUNT: With respect to each Remittance
Date, the sum of (i) the interest accrued for the related Interest Accrual
Period at the then applicable Class M Benchmark Rate on the Aggregate Class M
Certificate Principal Balance outstanding immediately prior to such Remittance
Date and (ii) the amount of the shortfall, if any, of the interest that the
Class M Certificates were entitled to receive on a preceding Remittance Date but
did not receive plus interest thereon at the then applicable Class M Benchmark
Rate compounded monthly; provided, however, that on each Remittance Date after
the first Remittance Date the amount set forth in clause (i) of Class M Interest
Distribution Amount will be increased or decreased, as the case may be, to equal
the Adjusted Class M Interest Distribution Amount for such Remittance Date.
CLASS M INTEREST SHORTFALL AMOUNT: For any Remittance Date the amount,
if any, determined pursuant to Clause (ii) of the definition of Class M Interest
Distribution Amount.
CLASS M PERCENTAGE: With respect to each Remittance Date, approximately
7.98% representing the beneficial ownership interest of the Class M Certificates
in the Trust Fund.
CLASS PRINCIPAL DISTRIBUTION AMOUNT: With respect to each Remittance
Date, for each Class of Certificates, an amount equal to the Class A, Class M or
Class B Percentage, as the case may be, multiplied by the sum of, without
duplication, (i) the Unguaranteed Percentage of all payments and other
recoveries of principal of an SBA Loan (net of amounts reimbursable to the
Servicer pursuant to this Agreement) received by the Servicer or any Subservicer
in the related Due Period, excluding amounts received relating to SBA Loans
which have been delinquent 24 months or have been determined to be
uncollectible, in whole or in part, by the Servicer to the extent that the
applicable Class of Certificateholders has previously
I-6
15
received the Class A, Class M or Class B Percentage as the case may be, of the
Principal Balance of such SBA Loans; (ii) the principal portion of any
Unguaranteed Interest actually purchased by the Bank or the Servicer and
actually received by the Trustee as of the related Determination Date; (iii) any
Substitution Adjustments deposited in the Principal and Interest Account and
transferred to the Certificate Account as of the related Determination Date;
(iv) the Unguaranteed Percentage of all losses on SBA Loans which were finally
liquidated during the applicable Due Period; (v) the Unguaranteed Percentage of
the then outstanding principal balance of any SBA Loan which, as of the first
day of the related Due Period, has been delinquent 24 months or has been
determined to be uncollectible, in whole or in part, by the Servicer; and (vi)
the amount, if any, released from the Pre-Funding Account on the April, May and
June 2000 Remittance Dates.
CLOSING DATE: March 29, 2000.
CODE: The Internal Revenue Code of 1986, as amended, or any successor
legislation thereto.
COLLATERAL: All items of property (including a Mortgaged Property),
whether real or personal, tangible or intangible, or otherwise, pledged by an
Obligor or others (including guarantees on behalf of the Obligor) to secure
payment under an SBA Loan.
COMMERCIAL PROPERTY: Real property (other than agricultural property or
Residential Property) that generally is used by the Obligor in the conduct of
its business.
COMPENSATING INTEREST: As defined in Section 6.11.
CONFIDENTIAL PLACEMENT MEMORANDUM: The Confidential Private Placement
Memorandum dated March 22, 2000 prepared by the Bank in connection with the
offer and sale of the Class A and Class M Certificates.
CORPORATE TRUST OFFICE: The principal office of the Trustee at which at
any particular time its corporate trust business shall be administered which
office at the date of the execution of this Agreement is located at HSBC Bank
USA, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 12th Floor, Attention Corporate
Trust Department or at any other time at such other address as the Trustee may
designate from time to time by notice to the parties hereto.
CURTAILMENT: With respect to an SBA Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of five
times the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the SBA Loan in full, nor is intended to cure a delinquency.
CUT-OFF DATE: March 3, 2000.
DEFAULTED SBA LOAN: Any SBA Loan as to which the Obligor has failed to
make payment in full of three or more consecutive Monthly Payments.
I-7
16
DELETED SBA LOAN: An SBA Loan replaced by a Qualified Substitute SBA
Loan.
DEPOSITORY: The Depository Trust Company and any successor Depository
hereafter named.
DESIGNATED DEPOSITORY INSTITUTION: With respect to the Principal and
Interest Account or items of Account Property held in deposit accounts, an
entity which is an institution whose deposits are insured by either the BIF or
SAIF administered by the FDIC, the unsecured and uncollateralized long-term debt
obligations of which shall be rated A2 or better by Moody's and A or better by
Fitch, and which is either (i) a federal savings association duly organized,
validly existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
or (iv) a principal subsidiary of a bank holding company, in each case acting or
designated by the Servicer as the depository institution for the Principal and
Interest Account or the Spread Account Depositor with respect to items of
Account Property, as the case may be.
DETERMINATION DATE: That day of each month which is the third Business
Day prior to the Remittance Date.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial
institution for which the Depository holds Certificates from time to time as a
securities depository.
DUE DATE: The day of the month on which the Monthly Payment is due from
the Obligor on an SBA Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs.
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
or any successor legislation thereto.
EVENT OF DEFAULT: As described in Section 10.01.
EXCESS PAYMENTS: With respect to a Due Period, any amounts received on
an SBA Loan in excess of the Monthly Payment due on the Due Date relating to
such Due Period which does not constitute either a Curtailment or a Principal
Prepayment or payment with respect to an overdue amount. Excess Payments are
payments of principal for purposes of this Agreement.
I-8
17
EXCESS PROCEEDS: As of any Remittance Date, with respect to any
Liquidated SBA Loan, the excess, if any, of (a) the Unguaranteed Percentage of
the total Net Liquidation Proceeds, over (b) the Unguaranteed Percentage of the
Principal Balance of such SBA Loan as of the date such SBA Loan became a
Liquidated SBA Loan plus 30 days interest thereon at the then applicable
Adjusted SBA Loan Benchmark Rate; provided, however, that such excess shall be
reduced by the amount by which interest accrued on the advance, if any, made by
the Servicer at the related SBA Loan Interest Rate(s) exceeds interest accrued
on such advance at the then applicable weighted average Class A, Class M and
Class B Benchmark Rates.
EXCESS SPREAD: With respect to any Remittance Date, the amount, if any,
by which (i) the interest collected by the Servicer or any Subservicer on the
principal portion of the Guaranteed Interest of each SBA Section 7(a) Loan
exceeds (ii) the sum of (a) the interest payable to the Registered Holder, (b)
the FTA's Fee, (c) the Premium Protection Fee, (d) with respect to the
Additional Fee SBA Loans, the Additional Fee and (e) the Servicing Fee
attributable to the Guaranteed Interest.
EXPENSE ACCOUNT: The expense account established and maintained by the
Trustee in accordance with Section 6.03 hereof.
EXTRA INTEREST: With respect to each SBA Loan, for each Remittance Date
the product of (i) the principal portion of the Unguaranteed Interest of such
SBA Loan for such Remittance Date and (ii) one-twelfth of the Extra Interest
Percentage.
EXTRA INTEREST PERCENTAGE: With respect to each SBA Loan, the excess of
(i) the SBA Loan Interest Rate that would be in effect for such SBA Loan as of
the Cut-Off Date without giving effect to any applicable lifetime floors or caps
over (ii) the sum of the rates used in determining the Servicing Fee and the
Annual Expense Escrow Amount and 6.98% per annum (i.e., the initial weighted
average Class A, Class M and Class B Benchmark Rates without giving effect to
any applicable lifetime floors or caps on the SBA Loans).
FITCH: Fitch IBCA, Inc. or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FIDELITY BOND: As described in Section 5.09.
FNMA: The Federal National Mortgage Association and any successor
thereto.
FORECLOSED PROPERTY: As described in Section 5.10.
I-9
18
FORECLOSED PROPERTY DISPOSITION: The final sale of a Foreclosed
Property acquired in foreclosure or by deed in lieu of foreclosure or of
Repossessed Collateral acquired by legal process. The proceeds of any Foreclosed
Property Disposition constitute part of the definition of Liquidation Proceeds.
FTA: ▇▇▇▇▇▇ Services Corp., in its capacity as the Fiscal and Transfer
Agent of the SBA under the Multi-Party Agreement, or any successor thereto
appointed by the SBA.
FTA'S FEE: With respect to the Guaranteed Interest of each SBA Section
7(a) Loan sold into the secondary market, the monthly fee payable to the FTA in
accordance with Form 1086 and the SBA Rules and Regulations.
FUNDING PERIOD: The period commencing on the Closing Date and ending on
the earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account is less than $100,000, (ii) the date on which an Event of
Default occurs or (iii) at the close of business on June 14, 2000.
GLOBAL CERTIFICATE: Any Certificate registered in the name of the
Depository or its nominee, beneficial interests of which are reflected on the
books of the Depository or on the books of a Person maintaining any account with
such Depository (directly or as an indirect participant in accordance with the
rules of such Depository).
GUARANTEED INTEREST: As to any SBA Section 7(a) Loan, the right to
receive the guaranteed portion of the principal balance thereof together with
interest thereon at a per annum rate in effect from time to time in accordance
with the terms of the related SBA Form 1086. Certificateholders have no right or
interest in the Guaranteed Interest.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in any Certificate.
INDIVIDUAL CERTIFICATE: Any Certificate registered in the name of a
holder other than the Depository or its nominee.
INITIAL SBA LOANS: THE SBA Loans listed on Exhibit H-1 and Exhibit H-2
hereto and delivered to the Trustee on the Closing Date.
INSTITUTIONAL ACCREDITED INVESTOR: Any Person satisfying the definition
of "Accredited Investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
of Regulation D under the Securities Act.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any
insurance policy covering an SBA Loan, Collateral, Repossessed Collateral or
Foreclosed Property, including but not limited to title, hazard, life, health
and/or accident insurance policies.
I-10
19
INTEREST ACCRUAL PERIOD: With respect to each Remittance Date, the
period commencing on the 15th day of the month preceding such Remittance Date
and ending on the 14th day of the month of such Remittance Date. However, for
the Remittance Date occurring in April 2000, the period commencing on the
Closing Date and ending on April 14, 2000.
LIQUIDATED SBA LOAN: Any defaulted SBA Loan, Repossessed Collateral or
Foreclosed Property as to which the Servicer has determined that all amounts
which it reasonably and in good faith expects to recover have been recovered
from or on account of such SBA Loan.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds of
any Foreclosed Property Disposition, revenues received with respect to the
conservation and disposition of a Foreclosed Property or Repossessed Collateral,
and any other amounts received in connection with the liquidation of defaulted
SBA Loans, whether through trustee's sale, foreclosure sale or otherwise.
LOAN GUARANTY AGREEMENT: Collectively, one or more Loan Guaranty
Agreements (Deferred Participation) (SBA Form 750), between the SBA and the
Servicer, as such agreements may be amended, supplemented or replaced from time
to time, or such Loan Guaranty Agreement as applicable to a successor to the
Servicer, as the case may be.
LOAN-TO-VALUE RATIO OR LTV: With respect to any SBA Loan, (a) the sum
of (i) the original principal amount of such SBA Loan as of origination and (ii)
the principal balance of any Prior Lien as of the date of origination of the
related SBA Loan, divided by (b) the total discounted net collateral value (as
determined by the Bank in accordance with its underwriting criteria) of the
primary and secondary Collateral securing such SBA Loan at the time of
origination.
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A, Class M
and Class B Certificates evidencing an Aggregate Class A, Class M and Class B
Certificate Principal Balance in excess of 50% of the Aggregate Class A, Class M
and Class B Certificate Principal Balance.
MONTHLY ADVANCE: An advance made by the Servicer pursuant to Section
6.10 hereof.
MONTHLY PAYMENT: The monthly payment of principal and/or interest
required to be made by an Obligor on the related SBA Loan, as adjusted pursuant
to the terms of the related SBA Note.
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc. or any successor thereto.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
lien on a Mortgaged Property.
I-11
20
MORTGAGED PROPERTY: The underlying real property, if any, securing an
SBA Loan, consisting of a Commercial Property or Residential Property and any
improvements thereon.
MULTI-PARTY AGREEMENT: That certain Multi-Party Agreement dated as of
March 3, 2000 among the Bank, the Funding Trust, the Trustee, the SBA and the
FTA, substantially in the form of Exhibit M hereto, as amended from time to time
by the parties thereto.
NET LIQUIDATION PROCEEDS: Liquidation Proceeds net of (i) any
reimbursements to the Servicer made therefrom pursuant to Section 5.04(b) and
(ii) amounts required to be released to the related Obligor pursuant to
applicable law.
OBLIGOR: The obligor on an SBA Note.
OFFICER'S CERTIFICATE: A certificate delivered to the Trustee signed by
the Chairman of the Board, the President, an Executive Vice President, a Vice
President, an Assistant Vice President, the Treasurer, the Secretary, or one of
the Assistant Secretaries of the Bank as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Bank, reasonably acceptable to the Trustee and
experienced in matters relating thereto.
ORIGINAL CLASS A CERTIFICATE PRINCIPAL BALANCE: $32,261,000.
ORIGINAL CLASS B CERTIFICATE PRINCIPAL BALANCE: $725,000.
ORIGINAL CLASS M CERTIFICATE PRINCIPAL BALANCE: $2,860,000.
ORIGINAL POOL PRINCIPAL BALANCE: $25,846,858.63.
ORIGINAL PRE-FUNDED AMOUNT: $9,999,141.38, representing the amount
deposited in the Pre-Funding Account on the Closing Date.
OVERFUNDED INTEREST AMOUNT:
With respect to each Subsequent Transfer Date occurring in April 2000,
the difference between (i) three-months' interest on the aggregate Principal
Balances of the Subsequent SBA Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the weighted average Class A, Class M
and Class B Benchmark Rates, and (ii) three-months' interest on the aggregate
Principal Balances of the Subsequent SBA Loans
I-12
21
acquired by the Trust Fund on such Subsequent Transfer Date, calculated at the
rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date.
With respect to each Subsequent Transfer Date occurring in May 2000,
the difference between (i) two-month's interest on the aggregate Principal
Balances of the Subsequent SBA Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the weighted average Class A, Class M
and Class B Benchmark Rates, and (ii) two-month's interest on the aggregate
Principal Balances of the Subsequent SBA Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in June 2000,
the difference between (i) one-month's interest on the aggregate Principal
Balances of the Subsequent SBA Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the weighted average Class A, Class M
and Class B Benchmark Rates, and (ii) one-month's interest on the aggregate
Principal Balances of the Subsequent SBA Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date.
PAYING AGENT: Initially, HSBC Bank USA, and thereafter, any other
Person that meets the eligibility standards for the Paying Agent specified in
Section 13.12 hereof and is authorized by the Trustee to make payments on the
Certificates on behalf of the Trustee.
PERCENTAGE INTEREST: With respect to a Class A, Class M or Class B
Certificate, the portion of the Trust Fund evidenced by such Class A, Class M or
Class B Certificate, expressed as a percentage, the numerator of which is the
denomination represented by such Class A, Class M or Class B Certificate and the
denominator of which is the Original Class A Certificate Principal Balance,
Original Class M Certificate Principal Balance or Original Class B Certificate
Principal Balance, as the case may be. The Certificates are issuable only in the
minimum Percentage Interest corresponding to a minimum denomination of $100,000
and integral multiples of $1,000 in excess thereof, except for one Certificate
of each Class which may be issued in a different denomination to equal the
remainder of the Original Class A Certificate Principal Balance, Original Class
M Certificate Principal Balance or Original Class B Certificate Principal
Balance, as the case may be.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments shall
include the following:
(i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the
United States, FHA debentures, Federal Home Loan Bank consolidated senior
debt obligations, and FNMA senior debt obligations, but excluding any of
such
I-13
22
securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption;
(ii) federal funds, certificates of deposit, time deposits and
banker's acceptances (having original maturities of not more than 365
days) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisition
thereof have been rated Prime-1 or better by Moody's (and F1+ or better
by Fitch, if so rated);
(iii) deposits of any bank or savings and loan association
which has combined capital, surplus and undivided profits of at least
$3,000,000 which deposits are held only up to the limits insured by the
BIF or SAIF administered by the FDIC, provided that the unsecured
long-term debt obligations of such bank or savings and loan association
have been rated A3 or better by Moody's (and AA- or better by Fitch, if
so rated);
(iv) commercial paper (having original maturities of not more
than 365 days) rated Prime-1 or better by Moody's (and F1+ or better by
Fitch, if so rated);
(v) debt obligations rated Aaa by Moody's (and AAA by Fitch,
if so rated) (other than any such obligations that do not have a fixed
par value and/or whose terms do not promise a fixed dollar amount at
maturity or call date);
(vi) investments in money market funds rated Aaa or better by
Moody's (and F1+ by Fitch, if so rated), the assets of which are
invested solely in instruments described in clauses (i)-(v) above
(including, without limitation, any fund which the Trustee or an
affiliate of the Trustee serves as an investment advisor,
administrator, shareholder, servicing agent and/or custodian or
sub-custodian, notwithstanding that (a) the Trustee or an affiliate of
the Trustee charges and collects fees and expenses from such funds for
services rendered, (b) the Trustee charges and collects fees and
expenses for services rendered pursuant to this Agreement, and (c)
services performed for such funds and pursuant to this Agreement may
converge at any time (the parties hereto specifically authorizes the
Trustee or an affiliate of the Trustee to charge and collect all fees
and expenses from such funds for services rendered to such funds, in
addition to any fees and expenses the Trustee may charge and collect
for services rendered pursuant to this Agreement));
(vii) guaranteed investment contracts or surety bonds
providing for the investment of funds in an account or insuring a
minimum rate of return on investments of such funds, which contract or
surety bond shall:
(a) be an obligation of an insurance company or other
corporation whose debt obligations or insurance financial
strength or claims paying ability are rated Aaa by Moody's
(and AAA by Fitch, if so rated); and
I-14
23
(b) provide that the Trustee may exercise all of the
rights of the Sellers under such contract or surety bond
without the necessity of the taking of any action by the
Sellers;
(viii) A repurchase agreement that satisfies the following
criteria:
(a) Must be between the Trustee and a dealer bank or
securities firm described in 1. or 2. below:
1. Primary dealers on the Federal
Reserve reporting dealer list which
are rated Aa or better by Moody's
(and AA or better by Fitch, if so
rated), or
2. Banks rated Aa or better by Moody's
(and AA or better by Fitch, if so
rated).
(b) The written repurchase agreement must include the
following:
1. Securities which are acceptable for
the transfer are:
A. Direct U.S. government
securities, or
B. Securities of Federal
Agencies backed by the
full faith and credit of
the U.S. government (and
FNMA & FHLMC),
2. the term of the repurchase agreement
may be up to 60 days,
3. the collateral must be delivered to
the Trustee or third party custodian
acting as agent for the Trustee by
appropriate book entries and
confirmation statements must have
been delivered before or
simultaneous with payment
(perfection by possession of
certificated securities),
4. Valuation of collateral:
The securities must be valued
weekly, marked-to-market at current
market price plus accrued interest.
The value of the collateral must be
equal to at least 104% of the amount
of cash transferred by the Trustee
or custodian for the Trustee to the
dealer bank or security firm under
the repurchase agreement plus
accrued interest. If the value of
securities held as
I-15
24
collateral slips below 104% of the
value of the cash transferred by the
Trustee plus accrued interest, then
additional cash and/or acceptable
securities must be transferred. If,
however, the securities used as
collateral are FNMA or FHLMC, then
the value of collateral must equal
at least 105%; and
(ix) any other investment acceptable to the Rating Agencies,
written confirmation of which shall be furnished to the Trustee prior
to any such investment.
PERSON: Any individual, corporation, partnership, limited liability
company, limited liability partnership, joint venture, association, joint-stock
company, trust, national banking association, unincorporated organization or
government or any agency or political subdivision thereof.
POOL PRINCIPAL BALANCE: The aggregate Principal Balances as of any date
of determination.
PRE-FUNDED AMOUNT: With respect to any date of determination, the
amount on deposit in the Pre-Funding Account.
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in accordance
with Section 6.04 hereof and maintained by the Trustee.
PRE-FUNDING EARNINGS: With respect to the Remittance Date in April
2000, the actual investment earnings earned during the period from the Closing
Date through the Business Day immediately preceding the Determination Date in
April 2000 (inclusive) on the Pre-Funded Amount. With respect to the Remittance
Date in May 2000, the actual investment earnings earned during the period from
the Determination Date in April 2000 through the Business Day immediately
preceding the Determination Date in May 2000 (inclusive), on the Pre-Funded
Amount. With respect to the Remittance Date in June 2000, the actual investment
earnings earned during the period from the Closing Date through the Business Day
immediately preceding the Determination Date in June 2000 (inclusive) on the
Pre-Funded Amount.
PREMIUM PROTECTION FEE: As to any SBA Loan and any date of
determination, an amount equal to 0.60% per annum of the then outstanding
principal balance of the related Guaranteed Interest.
PRIME RATE: With respect to any date of determination, the lowest prime
lending rate published in the Money Rate Section of The Wall Street Journal.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
established by the Servicer pursuant to Section 5.03 hereof.
▇-▇▇
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇: With respect to any SBA Loan or related Foreclosed
Property or Repossessed Collateral, at any date of determination, (i) the
Unguaranteed Percentage of the principal balance of the SBA Loan outstanding as
of the Cut-Off Date (or applicable Subsequent Cut-Off Date with respect to
Subsequent SBA Loans), after application of principal payments received on or
before such date, minus (ii) the sum of (a) the Unguaranteed Percentage of the
principal portion of the Monthly Payments received during each Due Period ending
prior to the most recent Remittance Date, which were distributed pursuant to
Section 6.07 on any previous Remittance Date, and (b) the Unguaranteed
Percentage of all Principal Prepayments, Curtailments, Excess Payments,
Insurance Proceeds, Released Mortgaged Property Proceeds, Net Liquidation
Proceeds and net income from a Foreclosed Property or Repossessed Collateral to
the extent applied by the Servicer as recoveries of principal in accordance with
the provisions hereof, which were distributed pursuant to Section 6.07 on any
previous Remittance Date. The Principal Balance of any Liquidated SBA Loan or
any SBA Loan that has been paid off will equal $0.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on an
SBA Loan equal to the outstanding principal balance thereof, received in advance
of the final scheduled Due Date which is intended to satisfy an SBA Loan in
full.
PRIOR LIEN: With respect to any SBA Loan secured by a lien on a
Mortgaged Property or on other Collateral which is not a first priority lien,
each lien relating to the corresponding Mortgaged Property or other Collateral
having a prior priority lien.
QUALIFIED INSTITUTIONAL BUYER: As used herein, has the meaning ascribed
to such term in Rule 144A under the Securities Act.
QUALIFIED SUBSTITUTE SBA LOAN: An SBA loan or SBA loans substituted for
a Deleted SBA Loan pursuant to Section 2.05 or 3.03 hereof, which (i) has or
have an SBA Loan interest rate or rates of not less than (and not more than two
percentage points more than) the SBA Loan Interest Rate for the Deleted SBA
Loan, (ii) substantially relates or relate to the same type of Collateral as the
Deleted SBA Loan, (iii) matures or mature no later than (and not more than one
year earlier than) the Deleted SBA Loan, (iv) has or have a Loan-to-Value Ratio
or Loan-to-Value Ratios at the time of such substitution no higher than the
Loan-to Value Ratio of the Deleted SBA Loan at such time, (v) has or have a
principal balance or principal balances relating to an unguaranteed interest or
unguaranteed interests (after application of all payments received on or prior
to the date of substitution) equal to or less than the Principal Balance of the
Unguaranteed Interest or Unguaranteed Interests as of such date of the Deleted
SBA Loan, (vi) has or have the same Unguaranteed Percentage at the time of
substitution as the Deleted SBA Loan; (vii) was or were originated under the
same program type as the Deleted SBA Loan; and (viii) complies or comply as the
date of substitution with each representation and warranty set forth in Section
3.02.
I-17
26
RATING AGENCIES: ▇▇▇▇▇'▇ and ▇▇▇▇▇.
RATING AGENCY CONDITION: With respect to any specified action, that
each Rating Agency shall have notified the Servicer and the Trustee, orally or
in writing, that such action will not result in a reduction or withdrawal of the
rating assigned by the respective Rating Agency to either Class of Certificates.
RECORD DATE: With respect to any Remittance Date, the close of business
on the last day of the month immediately preceding the month of the related
Remittance Date. With respect to the Special Remittance Date, May 31, 2000.
REGISTERED HOLDER: With respect to any SBA Section 7(a) Loan, the
Person identified as such in the applicable SBA Form 1086, and any permitted
assignees thereof.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount
payable to the Servicer and/or the Bank, with respect to (i) the Monthly
Advances and Servicing Advances reimbursable pursuant to Section 5.04(b), (ii)
any advances reimbursable pursuant to Section 9.01 and not previously reimbursed
pursuant to Section 6.03(c)(i), and (iii) any other amounts paid by and
reimbursable to the Bank or the Servicer pursuant to this Agreement.
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any SBA Loan secured by a
Mortgaged Property, proceeds received by the Servicer in connection with (a) a
taking of an entire Mortgaged Property by exercise of the power of eminent
domain or condemnation or (b) any release of part of the Mortgaged Property from
the lien of the related Mortgage, whether by partial condemnation, sale or
otherwise, which are not released to the Obligor in accordance with applicable
law, the SBA or the Registered Holder in accordance with the SBA Rules and
Regulations, the Servicer's customary SBA loan servicing procedures and this
Agreement.
REMITTANCE DATE: The 15th day of any month or if such 15th day is not a
Business Day, the first Business Day immediately following, commencing in April
2000.
REO PROPERTY: Real estate property taken in the name of the Trustee on
behalf of the Trust Fund for the benefit of the Certificateholders and the SBA
as a result of foreclosure on an Obligor's SBA Loan.
REPOSSESSED COLLATERAL: Items of Collateral taken in the name of the
Trustee on behalf of the Trust Fund for the benefit of the Certificateholders
and the SBA as a result of legal action enforcing the lien on the Collateral
resulting from a default on the related Obligor's SBA Loan.
RESIDENTIAL PROPERTY: Any one or more of the following, (i) single
family dwelling unit not attached in any way to another unit, (ii) row house,
(iii) two-family house, (iv) low-rise condominium, (v) planned unit development,
(vi) three- or four-family
I-18
27
house, (vii) high-rise condominium, (viii) mixed use building or (ix)
manufactured home (as defined in the FNMA/FHLMC Seller-Servicers' Guide) to the
extent that it constitutes real property in the state in which it is located.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any officer
assigned to the Corporate Trust Office, including any Vice President, Assistant
Vice President, any Assistant Secretary, any trust officer or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject. When used
with respect to the Bank, the President, any Vice President, Assistant Vice
President, or any Secretary or Assistant Secretary. When used with respect to
the Funding Trust, any Responsible Officer of the Bank.
RULE 144A CERTIFICATION: A letter substantially in the form attached
hereto as Exhibit O-2.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
SBA: The United States Small Business Administration, an agency of the
United States Government.
SBA FILE: As described in Exhibit A.
SBA Form 1086: The Secondary Participation Guaranty and Certification
Agreement on SBA Form 1086, pursuant to which investors purchase the Guaranteed
Interest.
SBA LOAN: An individual loan, the Unguaranteed Interest of which is
transferred to the Trust Fund pursuant to this Agreement, together with the
rights and obligations of a holder thereof and payments thereon and proceeds
therefrom, the SBA Loans originally subject to this Agreement being identified
on the SBA Loan Schedule as set forth on Exhibit H-1 and Exhibit H-2. Any loan
which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust Fund by the Sellers (as
indicated by the appropriate SBA Loan Schedule), in fact was not transferred and
assigned to the Trust Fund for any reason whatsoever, including, without
limitation, the incorrectness of the statement set forth in Section 3.02(h)
hereof with respect to the loan, shall nevertheless be considered an "SBA Loan"
for all purposes of this Agreement. For the purposes of this Agreement,
references to SBA Loans are equivalent to references to SBA Section 7(a) Loans.
SBA LOAN INTEREST RATE: With respect to any date of determination, the
then applicable annual rate of interest borne by an SBA Loan, pursuant to its
terms, which, as of the Cut-Off Date, is shown on the SBA Loan Schedule.
I-19
28
SBA LOAN SCHEDULE: The schedules of SBA Loans listed on Exhibit H-1 and
Exhibit H-2 attached hereto and delivered to the Trustee on the Closing Date or
Subsequent Transfer Date, as the case may be, such schedule identifying each SBA
Loan by address of the related premises, and the name of the Obligor and setting
forth as to each SBA Loan the following information: (i) the Principal Balance
as of the close of business on the Cut-Off Date or Subsequent Cut-Off Date, as
the case may be, (ii) the Account Number, (iii) the original principal amount of
the SBA Loan, (iv) the SBA Loan date and original number of months to maturity,
in months, (v) the SBA Loan Interest Rate as of the Cut-Off Date or Subsequent
Cut-Off Date, as the case may be, and guaranteed rate payable to the Registered
Holder and the FTA, (vi) when the first Monthly Payment was due, (vii) the
Monthly Payment as of the Cut-Off Date or Subsequent Cut-Off Date, as the case
may be, (viii) the remaining number of months to maturity as of the Cut-Off Date
or Subsequent Cut-Off Date, as the case may be, (ix) the Unguaranteed
Percentage, (x) the SBA loan number, (xi) the margin which is added to the Prime
Rate to determine the SBA Loan Interest Rate or, in the case of fixed rate SBA
Loans, the rate of interest specified in the related SBA Note, and (xii) the
lifetime minimum and maximum SBA Loan Interest Rates, if applicable.
SBA NOTE: The note or other evidence of indebtedness evidencing the
indebtedness of an Obligor under an SBA Loan.
SBA RULES AND REGULATIONS: The Small Business Act, as amended, codified
at 15 U.S.C. 631 et. seq., the Loan Guaranty Agreement, all legislation binding
on the SBA regarding financial transactions, all rules and regulations
promulgated from time to time thereunder, the Loan Guaranty Agreement and SBA
Standard Operating Procedures and official notices as from time to time are in
effect.
SBA Section 7(a) LOAN: An SBA Loan originated pursuant to Section 7(a)
of the SBA Rules and Regulations. For purposes of this Agreement, references to
SBA Section 7(a) Loans are equivalent to references to SBA Loans.
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES LEGEND: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF,
BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY (1) (A) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN
I-20
29
RELIANCE ON RULE 144A, OR (B) IN CERTIFICATED FORM TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (WITHIN THE MEANING OF RULE 501(a)(1)-(3) OR (7) UNDER THE
SECURITIES ACT) PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, IN EACH CASE, SUBJECT TO (X) THE RECEIPT BY THE TRUSTEE
OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (Y) THE
RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT
SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE SKY LAWS OF ANY
STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, (2) PURSUANT
TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS, OR (3) PURSUANT TO A VALID REGISTRATION
STATEMENT."
SELLERS: First International Bank a Connecticut bank and trust company
and its successors and permitted assigns and FIB Funding Trust and its
successors and permitted assigns, as Sellers hereunder.
SERIES: 2000-1.
SERVICER: First International Bank, a Connecticut bank and trust
company and its successors and permitted assigns as Servicer hereunder.
SERVICER'S CERTIFICATE: The certificate as defined in Section 6.09.
SERVICING ADVANCES: All reasonable and customary "out-of-pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property or other Collateral, (ii)
any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Foreclosed Property or Repossessed Collateral,
(iv) compliance with the obligations under clause (iv) of Section 5.01(a) and
Sections 5.02 and 5.07, which Servicing Advances are reimbursable to the
Servicer to the extent provided in Section 5.04(b) and (v) in connection with
the liquidation of an SBA Loan, expenditures relating to the purchase or
maintenance of any Prior Lien for all of which costs and expenses the Servicer
is entitled to reimbursement thereon up to a maximum rate per annum equal to the
related SBA Loan Interest Rate, except that any amount of such interest accrued
at a rate in excess of the weighted average Class A, Class M and Class B
Benchmark Rates with respect to the Remittance Date on or prior to which the
Unguaranteed Percentage of the Net Liquidation Proceeds will be distributed
shall be reimbursable only from Excess Proceeds.
SERVICING FEE: As to each SBA Loan, the annual fee payable to the
Servicer. Such fee shall be calculated and payable monthly from the amounts
received in respect of interest
I-21
30
on the Guaranteed Interest and the Unguaranteed Interest of such SBA Loan, shall
accrue at the rate of 0.40% per annum on the entire principal balance of such
SBA Loan and shall be computed on the basis of the same principal amount and for
the period respecting which any related interest payment on an SBA Loan is
computed. The Servicing Fee is payable solely from the interest portion of
related (i) Monthly Payments, (ii) Liquidation Proceeds or (iii) Released
Mortgaged Property Proceeds collected by the Servicer, or as otherwise provided
in Section 5.04. The Servicing Fee includes any servicing fees owed or payable
to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the SBA Loans whose name
appears on a list of servicing officers furnished to the Trustee by the Servicer
on the Closing Date hereof and as such list may from time to time be amended.
SPECIAL REMITTANCE DATE: June 15, 2000.
SPECIFIED SPREAD ACCOUNT REQUIREMENT: The maximum amount of Spread
Account Balance required to be on deposit at any time in the Spread Account
which, with respect to any Remittance Date, shall be equal to the sum of (i) the
then outstanding Principal Balance with respect to all SBA Loans 180 days or
more delinquent and (ii) the greater of (a) 3.0% of the then outstanding Pool
Principal Balance or (b) 2.0% of the Original Pool Principal Balance; provided,
however, that for purposes of clauses (i) and (ii)(a), there shall be excluded
the Principal Balance of SBA Loans which have been delinquent 24 months or have
been determined to be uncollectible, in whole or in part, by the Servicer, to
the extent that the Certificateholders have previously received the Principal
Balance of such SBA Loans; provided, however, that in no event shall the Spread
Account Balance exceed the then outstanding Pool Principal Balance.
SPREAD ACCOUNT: The Spread Account established in accordance with the
terms of the Spread Account Agreement and maintained by the Spread Account
Custodian for distribution in accordance with the provisions of Section 6.02
hereof.
SPREAD ACCOUNT AGREEMENT: The agreement dated as of March 24, 2000 by
and among the Spread Account Depositor and the Spread Account Custodian,
substantially in the form attached hereto as Exhibit N, as amended from time to
time by the parties thereto.
SPREAD ACCOUNT BALANCE: As of any date of determination, the sum of the
aggregate amount then on deposit in the Spread Account.
SPREAD ACCOUNT CUSTODIAN: HSBC Bank USA, in its capacity as Spread
Account Custodian under the Spread Account Agreement, or any successor thereto.
SPREAD ACCOUNT DEPOSITOR: FIB Business Loans Holdings, Inc., a
wholly-owned subsidiary of the Bank.
I-22
31
SPREAD ACCOUNT EXCESS: As defined in Section 6.02(b)(iii).
SUBSEQUENT CUT-OFF DATE: The beginning of business on each date
specified in a Subsequent Transfer Agreement with respect to those Subsequent
SBA Loans which are transferred and assigned to the Trust Fund pursuant to the
related Subsequent Transfer Agreement.
SUBSEQUENT SBA LOANS: The SBA Loans sold to the Trust Fund pursuant to
Section 2.09, which shall be listed on the schedule of SBA Loans attached to the
related Subsequent Transfer Agreement.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement dated
as of a Subsequent Transfer Date executed by the Trustee and the Bank, by which
Subsequent SBA Loans are sold and assigned to the Trust Fund.
SUBSEQUENT TRANSFER DATE: The date specified as such in each Subsequent
Transfer Agreement.
SUBSERVICER: Any person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies any requirements set forth in Section
5.01(b) hereof in respect of the qualification of a Subservicer.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain SBA Loans
as provided in Section 5.01(b), a copy of which shall be delivered, along with
any modifications thereto, to the Trustee and the SBA.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.05 or 3.03, the amount (if any) by which the aggregate
unguaranteed portions of the principal balances (after application of principal
payments received on or before the date of substitution) of any Qualified
Substitute SBA Loans as of the date of substitution are less than the aggregate
of the Principal Balance of the related Deleted SBA Loans.
TAX RETURN: The federal income tax return to be filed on behalf of the
Trust Fund together with any and all other information reports or returns that
may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provision of federal, state or local tax laws.
TERMINATION PRICE: The price defined in Section 11.01 hereof.
TRANSFEREE LETTER: A letter substantially in the form attached hereto
as Exhibit O-1.
▇-▇▇
▇▇
▇▇▇▇▇ ▇▇▇▇: The segregated pool of assets subject hereto, constituting
the trust created hereby and to be administered hereunder, consisting of: (i)
the Unguaranteed Interest of such SBA Loans as from time to time are subject to
this Agreement, together with, subject to the Multi-Party Agreement, the SBA
Files relating thereto and all proceeds thereof, (ii) the Unguaranteed Interest
of such assets (including any Permitted Instruments) as from time to time are
identified as Foreclosed Property, Repossessed Collateral or are deposited in or
constitute the Certificate Account, (iii) the Unguaranteed Interests of any
Insurance Proceeds under all insurance policies with respect to the SBA Loans
required to be maintained pursuant to this Agreement, (iv) the Unguaranteed
Interest of any Liquidation Proceeds and (v) the Unguaranteed Interest of any
Released Mortgaged Property Proceeds, including all earnings thereon and
proceeds thereof. Amounts deposited in the Principal and Interest Account,
Spread Account, Pre-Funding Account and Capitalized Interest Account shall be
held by the Trustee or the Spread Account Custodian, as the case may be, but
shall not constitute part of the Trust Fund. Also, neither the Servicing Fee nor
the Premium Protection Fee shall constitute part of the Trust Fund.
TRUSTEE: HSBC Bank USA, or its successor in interest, or any successor
trustee appointed as herein provided.
TRUSTEE'S DOCUMENT FILE: The documents delivered pursuant to Section
2.04.
UNGUARANTEED INTEREST: The sum of (i) that portion of an SBA Loan not
guaranteed by the SBA pursuant to the SBA Rules and Regulations and not
constituting the Premium Protection Fee, the FTA's Fee, the Servicing Fee, and,
with respect to the Additional Fee SBA Loans, the Additional Fee, and (ii) the
Excess Spread.
UNGUARANTEED PERCENTAGE: With respect to any SBA Section 7(a) Loan, the
quotient, expressed as a percentage, the numerator of which shall be the
principal portion of the Unguaranteed Interest of such SBA Section 7(a) Loan as
of the Cut-Off Date (or, in the case of a Subsequent SBA Loan, as of the
Subsequent Cut-Off Date) and the denominator of which shall be the sum of the
principal portion of the Unguaranteed Interest and the principal portion of the
Guaranteed Interest of such SBA Section 7(a) Loan as of the Cut-Off Date (or, in
the case of a Subsequent SBA Loan, as of the Subsequent Cut-Off Date).
I-24
33
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 Sale and Conveyance of Trust Fund.
(a) The Sellers hereby sell, transfer, assign, set over and
convey to the Trustee without recourse and for the benefit of the SBA and the
Certificateholders, as their interests may appear, subject to the terms of this
Agreement and the Multi-Party Agreement, all of the right, title and interest of
the Sellers in and to the Unguaranteed Interests of the Initial SBA Loans and
the Subsequent SBA Loans and all other assets included or to be included in the
Trust Fund.
(b) The rights of the Certificateholders to receive payments
with respect to the SBA Loans in respect of the Certificates, and all ownership
interests of the Certificateholders in such payments, shall be as set forth in
this Agreement. The Servicing Fee and the Premium Protection Fee shall not
constitute part of the Trust Fund and the Certificateholders shall have no
interest in, and are not entitled to receive any portion of, the Servicing Fee
or the Premium Protection Fee.
Section 2.02 Possession of SBA Files.
(a) Upon the issuance of the Certificates, the ownership of
each SBA Note, the Mortgage and the contents of the related SBA File relating to
the Initial SBA Loans is, and upon each Subsequent Transfer Date the ownership
of each Mortgage Note, the Mortgage and the contents of the related Mortgage
File relating to the applicable Subsequent SBA Loans will be, vested in the
Trustee for the benefit of the SBA and the Certificateholders, as their
interests may appear.
(b) Pursuant to Section 2.04, with respect to the Initial SBA
Loans, the Sellers have delivered or caused to be delivered, and, on each
Subsequent Transfer Date, the Bank will deliver or cause to be delivered, each
SBA Note relating to an SBA Section 7(a) Loan to the FTA.
Section 2.03 Books and Records.
The sale of the Unguaranteed Interest of each SBA Loan shall
be reflected on the Sellers' balance sheets and other financial statements as a
sale of assets by the applicable Seller and each Seller shall respond to any
third-party inquiry that such transfer is so reflected as a sale. The Sellers
shall be responsible for maintaining, and shall maintain, a complete set of
books and records for each SBA Loan which shall be clearly marked to reflect the
ownership of the Unguaranteed Interest in each SBA Loan by the Trustee for the
benefit of the SBA and the Certificateholders, as their interests may appear.
Section 2.04 Delivery of SBA Loan Documents.
II-1
34
The Sellers, (i) contemporaneously with the delivery of this
Agreement, have delivered or caused to be delivered to the Trustee or, with
respect to the SBA Notes relating to the SBA Section 7(a) Loans being delivered
pursuant to (a) below, to the FTA, each of the following documents for each
Initial SBA Loan and (ii) on each Subsequent Transfer Date, will deliver or
cause to be delivered to the Trustee, or with respect to the SBA Notes relating
to the SBA Section 7(a) Loans being delivered pursuant to paragraph (a) below,
to the FTA, each of the following documents for each Subsequent SBA Loan:
(a) The original SBA Note, endorsed by means of an allonge as
follows: "Pay to the order of HSBC Bank USA, and its successors and assigns, as
Trustee under that certain Pooling and Servicing Agreement dated as of March 3,
2000, for the benefit of the United States Small Business Administration and
holders of First International Bank SBA Loan-Backed Certificates, Series 2000-1,
Class A, Class M and Class B, as their respective interests may appear, without
recourse" and signed, by facsimile or manual signature, in the name of the
applicable Seller by a Responsible Officer, with all prior and intervening
endorsements showing a complete chain of endorsement from the originator to the
applicable Seller, if the applicable Seller was not the originator.
(b) With respect to those SBA Loans secured by Mortgaged
Properties, either: (i) the original Mortgage, with evidence of recording
thereon, (ii) a copy of the Mortgage certified as a true copy by a Responsible
Officer of the Bank where the original has been transmitted for recording until
such time as the original is returned by the public recording office or duly
licensed title or escrow officer or (iii) a copy of the Mortgage certified by
the public recording office in those instances where the original recorded
Mortgage has been lost.
(c) With respect to those SBA Loans secured by Mortgaged
Properties, either: (i) the original Assignment of Mortgage from the applicable
Seller endorsed as follows: "HSBC Bank USA, ("Assignee") its successors and
assigns, as Trustee under the Pooling and Servicing Agreement dated as of March
3, 2000 subject to the Multi-Party Agreement dated as of March 3, 2000" with
evidence of recording thereon (provided, however, that where permitted under the
laws of the jurisdiction wherein the Mortgaged Property is located, the
Assignment of Mortgage may be effected by one or more blanket assignments for
SBA Loans secured by Mortgaged Properties located in the same county), or (ii) a
copy of such Assignment of Mortgage certified as a true copy by a Responsible
Officer of the Bank where the original has been transmitted for recording
(provided, however, that where the original Assignment of Mortgage is not being
delivered to the Trustee, such Responsible Officer may complete one or more
blanket certificates attaching copies of one or more Assignments of Mortgage
relating to the Mortgages originated by the Bank);
(d) With respect to those SBA Loans secured by Mortgaged
Properties, either: (i) originals of all intervening assignments, if any,
showing a complete chain of title from the originator to the applicable Seller,
including warehousing assignments, with evidence of recording thereon if such
assignments were recorded, (ii) copies of any assignments certified as true
copies by a Responsible Officer of the Bank where the originals have been
submitted for
II-2
35
recording until such time as the originals are returned by the public recording
officer, or (iii) copies of any assignments certified by the public recording
office in any instances where the original recorded assignments have been lost;
(e) With respect to those SBA Loans secured by Mortgaged
Properties, either: (i) originals of all title insurance policies relating to
the Mortgaged Properties to the extent the Bank obtained such policies or (ii)
copies of any title insurance policies or other evidence of lien position,
including but not limited to Policy Insurance Record of Title ("PIRT") policies,
limited liability reports and lot book reports, to the extent the Bank obtains
such policies or other evidence of lien position, certified as true by the Bank;
(f) With respect to those SBA Loans secured by other items of
Collateral, the original or a certified copy of all filed UCC financing
statements giving notice of the security interest in such Collateral naming the
applicable Seller as "Secured Party;"
(g) For all SBA Loans, blanket assignment of all Collateral
securing the SBA Loan, including without limitation, all rights under applicable
guarantees and insurance policies. Such assignment shall be in the name of HSBC
Bank USA, its successors and assigns as trustee under this Agreement, subject to
the Multi-Party Agreement;
(h) For all SBA Loans, irrevocable power of attorney of the
Sellers to the Trustee to execute, deliver, file or record and otherwise deal
with the Collateral for the SBA Loans in accordance with the Agreement. The
power of attorney will be delegable by the Trustee to the Servicer and any
successor servicer and will permit the Trustee or its delegate to prepare,
execute and file or record UCC financing statements and notices to insurers; and
(i) For all SBA Loans, blanket UCC-1 financing statements
identifying by type all Collateral for the SBA Loans in the SBA Loan Pool and
naming the Trustee as "Secured Party" and the applicable Seller as the "Debtor".
The UCC-1 financing statements will be filed promptly following the Closing Date
in Connecticut, New York and Delaware and will be in the nature of protective
notice filings rather than true financing statements.
The Sellers shall, within ten Business Days after the receipt
thereof, and in any event, within one year of the Closing Date (or with respect
to the Subsequent SBA Loans, within one year of the related Subsequent Transfer
Date), unless such documents have been lost, deliver or cause to be delivered to
the Trustee: (i) the original recorded Mortgage in those instances where a copy
thereof certified by the applicable Seller was delivered to the Trustee; (ii)
the original recorded Assignment of Mortgage from the applicable Seller to the
Trustee, which, together with any intervening assignments of Mortgage, evidences
a complete chain of title from the originator to the Trustee in those instances
where copies thereof certified by the applicable Seller were delivered to the
Trustee; and (iii) any intervening assignments of Mortgage in those instances
where copies thereof certified by the applicable Seller were delivered to the
Trustee. Notwithstanding anything to the contrary contained in this Section
2.04, in those instances where the public recording office retains the original
Mortgage, Assignment of Mortgage or the
II-3
36
intervening assignments of the Mortgage after it has been recorded, or if such
document has been lost, the applicable Seller shall be deemed to have satisfied
its obligations hereunder upon delivery to the Trustee of a copy of such
Mortgage, Assignment of Mortgage or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof. All
SBA Loan documents held by the Trustee or the FTA, as the case may be, as to
each SBA Loan are referred to herein as the "Trustee's Document File."
Although it is the intent of the parties to this Agreement
that the conveyance of the Sellers' right, title and interest in and to the
Unguaranteed Interests of the SBA Loans and other assets in the Trust Fund
pursuant to this Agreement shall constitute a purchase and sale and not a loan,
in the event that such conveyance is deemed to be a loan, it is the intent of
the parties to this Agreement that the Sellers shall be deemed to have granted,
and hereby do grant, to the Trustee for the benefit of the Certificateholders
and the SBA a first priority perfected security interest in all of the Sellers'
right, title and interest in, to and under the Unguaranteed Interests of the SBA
Loans and other assets in the Trust Fund, and that this Agreement shall
constitute a security agreement under applicable law.
All recording required pursuant to this Section 2.04 shall be
accomplished by and at the expense of the Servicer.
Section 2.05 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee.
(a) The Multi-Party Agreement provides for the FTA to deliver
an acknowledgment of receipt of each SBA Note in accordance with the terms and
conditions of the Multi-Party Agreement. The Trustee agrees, for the benefit of
the SBA and the Certificateholders, to review each Trustee's Document File (with
the exception of the SBA Notes held by the FTA) within 90 days after the Closing
Date or Subsequent Transfer Date, as the case may be (or, with respect to any
Qualified Substitute SBA Loan, within 45 days after the assignment thereof), and
to deliver to the Certificateholders, the Sellers, the Servicer and the SBA a
certification in the form attached hereto as Exhibit F-1. Within 360 days after
the Closing Date (or, with respect to any Qualified Substitute SBA Loan, within
360 days after the assignment thereof), the Trustee shall deliver to the
Sellers, the Servicer, the SBA, the Rating Agencies and any Certificateholder
who requests a copy from the Trustee a final certification in the form attached
hereto as Exhibit F-2 evidencing the completeness of the Trustee's Document
Files.
(b) If the Trustee during the process of reviewing the
Trustee's Document Files finds any document constituting a part of a Trustee's
Document File which is not properly executed, has not been received, is
unrelated to an SBA Loan identified in the SBA Loan Schedule, or does not
conform in a material respect to the requirements of Section 2.04 or the
description thereof as set forth in the SBA Loan Schedule, the Trustee shall
promptly so notify the Bank and the Servicer. In performing any such review, the
Trustee may conclusively rely on the Bank as to the purported genuineness of any
such document and any signature thereon. It is
II-4
37
understood that the scope of the Trustee's review of the SBA Files is limited
solely to confirming that the documents listed in Section 2.04 have been
executed and received and relate to the SBA Loans identified in the SBA Loan
Schedule. The Bank agrees to use reasonable efforts to remedy a material defect
in a document constituting part of an SBA File of which it is so notified by the
Trustee. If, however, within 60 days after the Trustee's notice to it respecting
such material defect the Bank has not remedied the defect and such defect
materially and adversely affects the value of the related SBA Loan, the Bank
will (i) substitute in lieu of such SBA Loan a Qualified Substitute SBA Loan in
the manner and subject to the conditions set forth in Section 3.03 or (ii)
purchase the Unguaranteed Interest of such SBA Loan at a purchase price equal to
the Principal Balance of such Unguaranteed Interest as of the date of purchase,
plus 30 days' interest on such Principal Balance, computed at the Adjusted SBA
Loan Benchmark Rate as of the next succeeding Determination Date, plus any
accrued unpaid Servicing Fees, Monthly Advances and Servicing Advances
reimbursable to the Servicer, which purchase price shall be deposited in the
Principal and Interest Account on the next succeeding Determination Date.
(c) Upon receipt by the Trustee of a certification of a
Servicing Officer of the Servicer of such purchase and the deposit of the
amounts described above in the Principal and Interest Account (which
certification shall be in the form of Exhibit I hereto), the Trustee shall
release to the Servicer for release to the Bank the related Trustee's Document
File and the Trustee shall execute, without recourse, and deliver such
instruments of transfer necessary to transfer such SBA Loan to the Bank. All
costs of any such transfer shall be borne by the Servicer.
(d) If in connection with taking any action the Servicer
requires any item constituting part of the Trustee's Document File, or the
release from the lien of the related SBA Loan of all or part of any Mortgaged
Property or other Collateral, the Servicer shall deliver to the Trustee a
certificate to such effect in the form attached as Exhibit I hereto. The
Servicer shall comply with the SBA Rules and Regulations in connection with such
action, including the giving of any necessary notice. Upon receipt of such
certification, the Trustee or the SBA, as the case may be, shall deliver to the
Servicer the requested documentation and the Trustee shall execute, without
recourse, and deliver such instruments of transfer necessary to release all or
the requested part of the Mortgaged Property or other Collateral from the lien
of the related SBA Loan.
On the Remittance Date in March of each year, the Trustee
shall deliver to the Sellers and the Servicer a certification detailing all
transactions with respect to the SBA Loans for which the Trustee holds a
Trustee's Document File pursuant to this Agreement during the prior calendar
year. Such certification shall list all Trustee's Document Files which were
released by or returned to the Trustee or the FTA during the prior calendar
year, the date of such release or return and the reason for such release or
return.
Section 2.06 [Intentionally Omitted]
Section 2.07 Authentication of Certificates.
II-5
38
The Trustee acknowledges the assignment to it on behalf of the
Trust Fund of the Unguaranteed Interests in the SBA Loans and the delivery to
the Trustee and the FTA of the Trustee's Document Files and, concurrently with
such delivery, has authenticated or caused to be authenticated and delivered to
or upon the order of the Bank on behalf of the Sellers, in exchange for the
Unguaranteed Interests in the SBA Loans, the Trustee's Document Files and the
other assets included in the definition of Trust Fund, Certificates duly
authenticated by the Trustee in authorized denominations.
Section 2.08 Fees and Expenses of the Trustee.
The fees and expenses of the Trustee including (i) the annual
fees of the Trustee, payable quarterly in advance, and subject to rebate to the
Servicer as additional servicing compensation hereunder for any fraction of a
calendar quarter in which this Agreement terminates, (ii) any other fees and
expenses to which the Trustee is entitled pursuant to this Agreement or its
written agreement with the Bank, and (iii) reimbursements to the Servicer for
any advances made by the Servicer to the Expense Account pursuant to Section
6.03 hereof, shall be paid from the Expense Account in the manner set forth in
Section 6.03 hereof; provided, however, that the Bank shall be liable for any
expenses of the Trust Fund incurred prior to the Closing Date. The Servicer and
the Trustee hereby covenant with the Certificateholders that every material
contract or other material agreement entered into by the Trustee, or the
Servicer, acting as attorney-in-fact for the Trustee, on behalf of the Trust
Fund shall expressly state therein that no Certificateholder shall be personally
liable in connection with such contract or agreement.
Section 2.09 Sale and Conveyance of the Subsequent SBA Loans.
(a) Subject to the conditions set forth in paragraph (b)
below, in consideration of the Trustee's delivery on the related Subsequent
Transfer Dates to or upon the order of the Bank of all or a portion of the
balance of funds in the Pre-Funding Account, the Bank shall on any Subsequent
Transfer Date sell, transfer, assign, set over and otherwise convey without
recourse, to the Trustee all right, title and interest of the Bank in and to the
Unguaranteed Interest of each Subsequent SBA Loan listed on the SBA Loan
Schedule delivered by the Bank on such Subsequent Transfer Date, all their
right, title and interest in and to principal collected and interest accruing on
the Unguaranteed Interest of each such Subsequent SBA Loan on and after the
related Subsequent Cut-Off Date and all their right, title and interest in the
Unguaranteed Interest in all insurance policies; provided, however, that the
Bank reserve and retain all their right, title and interest in and to principal
(including Principal Prepayments) collected and interest accruing on each such
Subsequent SBA Loan prior to the related Subsequent Cut-Off Date. The transfer
by the Bank of the Unguaranteed Interest of the Subsequent SBA Loans set forth
on the SBA Loan Schedule to the Trustee shall be absolute and shall be intended
by all parties hereto to be treated as a sale by the Bank.
Although it is the intent of the parties to this Agreement
that the conveyance of the Bank's right, title and interest in and to the
Unguaranteed Interests of the SBA Loans and other assets in the Trust Fund
pursuant to this Agreement shall constitute a purchase and sale and
II-6
39
not a loan, in the event that such conveyance is deemed to be a loan, it is the
intent of the parties to this Agreement that the Bank shall be deemed to have
granted, and hereby does grant, to the Trustee a first priority perfected
security interest in all of the Bank's right, title and interest in, to and
under the Unguaranteed Interests of the SBA Loans and other assets in the Trust
Fund, and that this Agreement shall constitute a security agreement under
applicable law.
The amount released from the Pre-Funding Account shall be
one-hundred percent (100%) of the aggregate Principal Balances as of the related
Subsequent Cut-Off Date of the Subsequent SBA Loans so transferred on the
related Subsequent Transfer Date.
(b) The Bank shall transfer to the Trustee the Unguaranteed
Interest of the Subsequent SBA Loans and the other property and rights related
thereto described in paragraph (a) above only upon the satisfaction of each of
the following conditions on or prior to the related Subsequent Transfer Date:
(i) the Bank shall have provided the Trustee with an
Addition Notice and shall have provided any information
reasonably requested by it with respect to the Subsequent SBA
Loans;
(ii) the Bank shall have delivered to the Trustee a
duly executed written assignment (including an acceptance by
the Trustee) that shall include SBA Loan Schedules, listing
the Subsequent SBA Loans and any other exhibits listed
thereon;
(iii) the Bank shall have deposited in the Principal
and Interest Account all collections in respect of the
Subsequent SBA Loans received on or after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, the Bank
was not insolvent nor will it have been made insolvent by such
transfer nor is it aware of any pending insolvency;
(v) such addition will not result in a material
adverse tax consequence to the Trust Fund or the Holders of
the Certificates;
(vi) the Funding Period shall not have terminated;
(vii) the Bank shall have delivered to the Trustee an
Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and in the
related Subsequent Transfer Agreement;
(viii) the Bank shall have delivered to the Rating
Agencies and the Trustee, Opinions of Counsel with respect to
the transfer of the Subsequent SBA
II-7
40
Loans substantially in the form of the Opinions of Counsel
delivered to the Trustee on the Closing Date (bankruptcy,
corporate and tax opinions); and
(ix) the FTA shall have delivered, pursuant to the
Multi-Party Agreement, an acknowledgment of receipt of the SBA
Note relating to such SBA Section 7(a) Loan in the form
attached as Exhibit 1 to the Multi-Party Agreement.
(c) The obligation of the Trust Fund to purchase the
Unguaranteed Interest of a Subsequent SBA Loan on any Subsequent Transfer Date
is subject to the requirement, as evidenced by a certificate from a Responsible
Officer of the Bank, that such Subsequent SBA Loan conforms in all material
respects to the representations and warranties concerning the individual Initial
SBA Loans set forth in Sections 3.01 and 3.02 (except that any reference therein
to the Cut-Off Date shall be deemed a reference to the applicable Subsequent
Cut-Off Date) and that the inclusion of all Subsequent SBA Loans being
transferred to the Trust Fund on such Subsequent Transfer Date will not change,
in any material respect, the characteristics of the Initial SBA Loans, in the
aggregate, set forth in Sections 3.01 and 3.02 or in the Confidential Placement
Memorandum under the headings "Summary of Terms -- The SBA Loan Pool" and "The
SBA Loan Pool." Further, each Subsequent SBA Loan must be an SBA Section 7(a)
Loan.
(d) In connection with the transfer and assignment of the
Subsequent SBA Loans, the Bank agrees to satisfy the conditions set forth in
Sections 2.01, 2.02, 2.03, 2.04 and 2.05.
(e) In connection with each Subsequent Transfer Date, on the
Remittance Dates in April, May and June 2000 and the Special Remittance Date,
the Bank shall determine, and the Trustee shall cooperate with the Bank in
determining (i) the amount and correct dispositions of the Capitalized Interest
Requirements, Overfunded Interest Amounts, and Pre-Funding Earnings and (ii) any
other necessary matters in connection with the administration of the Pre-Funding
Account and of the Capitalized Interest Account. If any amounts are incorrectly
released to the Bank from the Capitalized Interest Account, the Bank shall
immediately repay such amounts to the Trustee.
Section 2.10 Optional Purchase of Defaulted SBA Loans.
The Servicer shall have the right, but not the obligation, to
purchase the Unguaranteed Interest of any Defaulted SBA Loan for a purchase
price equal to the Principal Balance of such Unguaranteed Interest as of the
date of repurchase, plus 30 days' interest on such Principal Balance, computed
at the Adjusted SBA Loan Benchmark Rate as of the next succeeding Determination
Date, plus any accrued unpaid Servicing Fees, Monthly Advances and Servicing
Advances reimbursable to the Servicer, which purchase price shall be deposited
in the Principal and Interest Account on the next succeeding Determination Date.
Any such repurchase shall be accomplished in the manner specified in Section
2.05(b). In no event shall the aggregate Principal Balance of the Unguaranteed
Interests of all Defaulted SBA Loans purchased pursuant to this Section 2.10
exceed 10.0% of the sum of (i) the Original Pool Principal Balance and (ii) the
Original Pre-Funded Amount.
II-8
41
II-9
42
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Bank.
The Bank hereby represents and warrants to the Trustee and the
Certificateholders as of the Closing Date:
(a) The Bank is a Connecticut chartered bank and trust company
duly organized and validly existing under the laws of the State of Connecticut
and has all licenses necessary to carry on its business as now being conducted
and is licensed and qualified in each state where the laws of such state require
licensing or qualification in order to conduct business of the type conducted by
the Bank and perform its obligations hereunder; the Bank has all requisite power
and authority to execute and deliver this Agreement and to perform in accordance
herewith and therewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant to
this Agreement) by the Bank and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action; this Agreement evidences the valid, binding and
enforceable obligation of the Bank; and all requisite corporate action has been
taken by the Bank to make this Agreement valid, binding and enforceable upon the
Bank in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally or the application of equitable principles
in any proceeding, whether at law or in equity, none of which will affect the
ownership of the SBA Loans by the Trustee, as trustee.
(b) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc., under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Bank makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution and delivery by the
Bank of the documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and the other
documents on the part of the Bank and the performance by the Bank of its
obligations under this Agreement and such of the other documents to which it is
a party;
(c) The consummation of the transactions contemplated by this
Agreement will not result in the breach of any terms or provisions of the
certificate of incorporation or by-laws of the Bank or result in the breach of
any term or provision of, or conflict with or constitute a
III-1
43
default under or result in the acceleration of any obligation under, any
material agreement, indenture or loan or credit agreement or other material
instrument to which the Bank or its property is subject, or result in the
violation of any law, rule, regulation, order, judgment or decree to which the
Bank or its property is subject;
(d) Neither this Agreement nor any statement, report or other
document furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby and thereby contains any
untrue statement of material fact or omits to state a material fact necessary to
make the statements contained herein or therein not misleading in light of the
circumstances under which they were made;
(e) The Bank 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;
(f) There is no action, order, suit, proceeding or
investigation pending or, to the best of the Bank's knowledge, threatened
against the Bank which, either in any one instance or in the aggregate, may (i)
result in any material adverse change in the business, operations, financial
condition, properties or assets of the Bank or in any material impairment of the
right or ability of the Bank to carry on its business substantially as now
conducted, or in any material liability on the part of the Bank or of any action
taken or to be taken in connection with the obligations of the Bank contemplated
herein, or which would be likely to impair materially the ability of the Bank to
perform under the terms of this Agreement or (ii) which would draw into question
the validity of this Agreement or the SBA Loans;
(g) The Trust Fund will not constitute an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(h) The Bank 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, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Bank or its properties or might have consequences that would
materially and adversely affect its performance hereunder;
(i) The statements contained in the Confidential Placement
Memorandum which describe the Bank or the SBA Loans or matters or activities for
which the Bank is responsible in accordance with the Confidential Placement
Memorandum, this Agreement and all documents referred to therein or herein or
delivered in connection therewith or herewith, or which are attributable to the
Bank therein or herein are true and correct in all material respects, and the
Confidential Placement Memorandum does not contain any untrue statement of a
material fact with respect to the Bank or the SBA Loans and does not omit to
state a material fact necessary to make the statements contained therein with
respect to the Bank or the SBA Loans not misleading in light of the
circumstances under which they were made. The Bank is not aware that the
Confidential Placement Memorandum contains any untrue statement of a material
fact or omits to state any material fact necessary to make the statements
contained therein not misleading in
III-2
44
light of the circumstances under which they were made. There is no fact peculiar
to the Bank or the SBA Loans and known to the Bank that materially adversely
affects or in the future may (so far as the Bank can now reasonably foresee)
materially adversely affect the Bank or the SBA Loans or the ownership interests
therein represented by the Certificates that has not been set forth in the
Confidential Placement Memorandum;
(j) No Certificateholder is subject to Connecticut state
licensing requirements solely by virtue of holding the Certificates;
(k) The transfer, assignment and conveyance of the SBA Notes
and the Mortgages by the Bank pursuant to this Agreement are not or, with
respect to the Subsequent SBA Loans, will not be, subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction and do not violate the SBA Rules and Regulations;
(l) The origination and collection practices used by the Bank
with respect to each SBA Note and Mortgage relating to the Initial SBA Loans
have been, and the origination and collection practices to be used by the Bank
with respect to each SBA Note and Mortgage relating to the Subsequent SBA Loans
will have been, in all material respects legal, proper, prudent and customary in
the SBA loan origination and servicing business;
(m) Each Initial SBA Loan listed on Exhibit H-1 was, and each
Subsequent SBA Loan will be, selected from among the existing SBA loans in the
Bank's portfolio at the date hereof or, in the case of the Subsequent SBA Loans,
at the related Subsequent Cut-Off Date, in a manner not designed to adversely
affect the Certificateholders;
(n) The Bank received fair consideration and reasonably
equivalent value or, in the case of the Subsequent SBA Loans, will have received
fair consideration and reasonably equivalent value, in exchange for the sale of
the Unguaranteed Interest of the SBA Loans listed on Exhibit H-1;
(o) Neither the Bank nor any of its affiliates sold or, in the
case of the Subsequent SBA Loans, will have sold any interest in any SBA Loan
evidenced by the Certificates with any intent to hinder, delay or defraud any of
their respective creditors;
(p) The Bank is solvent, and the Bank will not be rendered
insolvent as a result of the transfer of the SBA Loans to the Trust Fund or the
sale of the Certificates; and
(q) The chief executive office and legal name of the Bank is
as set forth on the respective UCC-1 financing statement filed on behalf of the
Bank pursuant to Section 2.04(i), such office is the place where the Bank is
"located" for the purposes of Section 9-103(3)(d) of the Uniform Commercial Code
as in effect in the State of New York, and neither the location of such office
nor the legal name of the Bank has changed in the past four months.
Section 3.02 Individual SBA Loans.
III-3
45
The Bank hereby represents and warrants to the Trustee, and
the Certificateholders, with respect to each Initial SBA Loan, as of the Closing
Date, and with respect to each Subsequent SBA Loan as of the related Subsequent
Transfer Date:
(a) The information with respect to each SBA Loan set forth in
the SBA Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth
in Section 2.04 (including all material documents related thereto) has been or
will be delivered to the Trustee or the FTA, on behalf of the Trustee, on the
Closing Date or as otherwise provided in Section 2.04;
(c) Each Mortgaged Property serving as the primary Collateral
for an SBA Loan is improved by a Commercial Property or a Residential Property
and does not constitute other than real property under state law;
(d) Except for Initial SBA Loans (and up to 10 Subsequent SBA
Loans) that were purchased and reunderwritten by the Bank, each SBA Loan has
been originated by the Bank and each SBA Loan is being serviced by the Bank, in
its capacity as Servicer;
(e) Each SBA Loan is an SBA Section 7(a) Loan;
(f) Except for 8 Initial SBA Loans that bear fixed rates of
interest and one Initial SBA Loan that adjusts every ten years to the 10 year
CMT plus the margin set forth in the related SBA Notes, the SBA Loan Interest
Rates adjust monthly to equal the then applicable Prime Rate plus the margin (if
applicable) set forth in the related SBA Note. Each adjustable rate SBA Note
will, with respect to principal payments, adjust monthly to provide for a
schedule of Monthly Payments which are, if timely paid, sufficient to fully
amortize the principal balance of such SBA Loan on its respective maturity date;
(g) With respect to those SBA Loans secured by a Mortgaged
Property, each Mortgage is a valid and subsisting lien of record on the
Mortgaged Property subject only to any applicable Prior Liens on such Mortgaged
Property and subject in all cases to such exceptions that are generally
acceptable to banking institutions in connection with their regular commercial
lending activities, and such other exceptions to which similar properties are
commonly subject and which do not individually, or in the aggregate, materially
and adversely affect the benefits of the security intended to be provided by
such Mortgage;
(h) Immediately prior to the transfer and assignment herein
contemplated, each Seller held good and indefeasible title to, and was the sole
owner of, the Unguaranteed Interest of each SBA Loan conveyed by such Seller
subject to no liens, charges, mortgages, encumbrances or rights of others except
as set forth in Sections 3.02(g) or 3.02(kk) or other liens which will be
released simultaneously with such transfer and assignment; and immediately upon
the transfer and assignment herein contemplated, the Trustee will hold good and
indefeasible title, to, and be
III-4
46
the sole owner of, each SBA Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except (i) as set forth in Sections 3.02(g) or
3.02(kk), (ii) the interests of the SBA or (iii) other liens which will be
released simultaneously with such transfer and assignment;
(i) As of the Cut-Off Date (or, with respect to any Subsequent
SBA Loan, as of the related Subsequent Cut-Off Date), no SBA Loan is more than
30 days delinquent in payment;
(j) To the best of the Bank's knowledge, there is no
delinquent tax or assessment lien on any Mortgaged Property, and each Mortgaged
Property is free of material damage and is in good repair;
(k) No SBA Loan is subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the SBA Note or any related Mortgage, or the
exercise of any right thereunder, render either the SBA Note or any related
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;
(l) Each SBA Loan at the time it was made complied and, as of
the Closing Date complies, in all material respects with applicable state and
federal laws and regulations, including, without limitation, usury, equal credit
opportunity, disclosure and recording laws and the SBA Rules and Regulations;
(m) Each Initial SBA Loan was (and each Subsequent SBA Loan
will be) originated and underwritten or purchased and reunderwritten by the Bank
in accordance with the underwriting criteria set forth in the Confidential
Placement Memorandum; provided, however, that without the prior written consent
of the SBA, no more than 5 Subsequent SBA Loans may have been purchased by the
Bank from a third party;
(n) Pursuant to the SBA Rules and Regulations, the Bank
requires that the improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage representing coverage described in
Section 5.07;
(o) Pursuant to the SBA Rules and Regulations, the Bank
requires that if a Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing coverage
described in Section 5.07;
(p) Each SBA Note, any related Mortgage and any other
agreement pursuant to which Collateral is pledged to the Bank or to the Funding
Trust or to a respective assignee is the legal, valid and binding obligation of
the maker thereof and is enforceable in accordance with its terms, except only
as such enforcement may be limited by bankruptcy, insolvency,
III-5
47
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), none of which will
prevent the ultimate realization of the security provided by the Collateral or
other agreement, and all parties to each SBA Loan had full legal capacity to
execute all SBA Loan documents and convey the estate therein purported to be
conveyed;
(q) The Bank has caused and will cause to be performed any and
all acts reasonably required to be performed to preserve the rights and remedies
of the Trustee in any insurance policies applicable to the SBA Loans including,
without limitation, in each case, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of co-insured,
joint loss payee and mortgagee rights in favor of the Trustee, the Funding Trust
or the Bank, respectively;
(r) Each original Mortgage was recorded, and all subsequent
assignments of the original Mortgage have been recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien thereof
as against creditors of the Bank or the Funding Trust (or, subject to Section
2.04 hereof, are in the process of being recorded);
(s) Each SBA Loan conforms, and all such SBA Loans in the
aggregate conform, to the description thereof set forth in the Confidential
Placement Memorandum;
(t) The terms of the SBA Note and the related Mortgage or
other security agreement pursuant to which Collateral was pledged have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the SBA and
the Certificateholders and which has been delivered to the Trustee;
(u) There are no material defaults in complying with the terms
of any applicable Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable;
(v) There is no proceeding pending or threatened for the total
or partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and such property is undamaged by waste, fire, earthquake
or earth movement, windstorm, flood, tornado or other casualty, so as to affect
adversely the value of the Mortgaged Property as security for the SBA Loan or
the use for which the premises were intended;
(w) At the time of origination of an SBA Loan, in all
instances where commercial real property serves as the primary collateral for
such SBA Loan, the related Mortgaged Property was free of contamination from
toxic substances or hazardous wastes requiring action under applicable laws or
is subject to ongoing environmental rehabilitation approved by the SBA, and as
of the Cut-Off Date, the Bank has no knowledge of any such contamination from
toxic
III-6
48
substances or hazardous waste material on any Mortgaged Property unless such
items are below action levels or such Mortgaged Property is subject to ongoing
environmental rehabilitation approved by the SBA;
(x) The proceeds of the SBA Loan have been fully disbursed,
and there is no obligation on the part of the Bank to make future advances
thereunder and the Guaranteed Portion of the SBA Loan has been sold in the
Secondary Market pursuant to SBA Form 1086. Any and all requirements as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing or recording the SBA Loans were
paid;
(y) There is no obligation on the part of the Bank, the
Funding Trust or any other party (except for any guarantor of an SBA Loan) to
make Monthly Payments (except for Monthly Advances) in addition to those made by
the Obligor;
(z) No statement, report or other document signed by the Bank
or the Funding Trust constituting a part of the SBA File contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained therein not misleading in light of the circumstances
under which they were made;
(aa) With respect to each Mortgage constituting 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 Certificateholders to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Obligor;
(bb) No SBA Loan has a shared appreciation feature, or other
contingent interest feature;
(cc) With respect to each SBA Loan secured by a Mortgaged
Property or other Collateral and that is not a first priority lien, either (i)
no consent for the SBA Loan is required by the holder of any related Prior Lien
or (ii) such consent has been obtained;
(dd) Each SBA Loan was originated to a business located in the
State identified in the SBA Loan Schedule;
(ee) All parties which have had any interest in the SBA Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
any Mortgaged Property is located, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state, or (C) federal savings and
loan associations or national banks having principal offices in such state, or
(D) not doing business in such state;
III-7
49
(ff) Any related Mortgage contains customary and enforceable
provisions in accordance with the SBA Rules and Regulations which render the
rights and remedies of the holder thereof adequate for the realization against
the Mortgaged Property of the benefits of the security, including, (i) in the
case of a Mortgage designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure. There is no homestead or other exemption
available to the Mortgagor which would materially interfere with the right to
sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;
(gg) There is no default, breach, violation or event of
acceleration existing under the SBA Note and no event which, with the passage of
time or with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration; and the Bank,
in its capacity as either Servicer or Seller, and the Funding Trust, in its
capacity as Seller, have not waived any default, breach, violation or event of
acceleration;
(hh) All parties to the SBA Note and any related Mortgage or
other document pursuant to which Collateral was pledged had legal capacity to
execute the SBA Note and any such Mortgage or other document and each SBA Note
and Mortgage or other document have been duly and properly executed by such
parties;
(ii) The SBA Loan was not selected for inclusion under this
Agreement from the Bank's and the Funding Trust's respective portfolios of
comparable SBA loans on any basis which would have a material adverse affect on
a Certificateholder;
(jj) All amounts received after the Cut-Off Date (or, with
respect to the Subsequent SBA Loans, after the related Subsequent Cut-Off Date)
with respect to the SBA Loans have been, to the extent required by this
Agreement, deposited into the Principal and Interest Account and are, as of the
Closing Date (or with respect to the Subsequent SBA Loans, as of the related
Subsequent Transfer Date), in the Principal and Interest Account; and
(kk) With respect to those SBA Loans secured by Collateral
other than a Mortgaged Property, the related SBA Note, security agreements, if
any, and UCC-1 filed with respect to such Collateral creates a valid and
subsisting lien of record on such Collateral subject only to any Prior Liens, if
any, on such Collateral and subject in all cases to such exceptions that are
generally acceptable to lending institutions in connection with their regular
commercial lending activities, and such other exceptions to which similar
Collateral is commonly subject and which do not individually, or in the
aggregate, materially and adversely affect the benefits of the security intended
to be provided by such SBA Note, security agreement and UCC-1.
Section 3.03 Purchase and Substitution of Defective SBA Loans.
It is understood and agreed that the representations and
warranties set forth in Sections 3.01, 3.02 and 3.04 shall survive delivery of
the Certificates to the Certificateholders. Upon discovery by the Servicer, any
Subservicer or the Trustee of a breach of any of such
III-8
50
representations and warranties which materially and adversely affects the value
of the SBA Loans or the interest of the Certificateholders or the SBA therein or
which materially and adversely affects the interests of the Certificateholders
and the SBA in the related SBA Loan in the case of a representation and warranty
relating to a particular SBA Loan (notwithstanding that such representation and
warranty was made to the Bank's best knowledge), the party discovering such
breach shall give prompt written notice to the others. Within 60 days of the
earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Bank, in its capacity as Seller shall (a)
promptly cure such breach in all material respects, (b) purchase the
Unguaranteed Interest of such SBA Loan by depositing in the Principal and
Interest Account, on the next succeeding Determination Date, an amount and in
the manner specified in Section 2.05(b), or (c) if within two years of the
Closing Date, remove such SBA Loan from the Trust Fund (in which case it shall
become a Deleted SBA Loan) and substitute one or more Qualified Substitute SBA
Loans. Any such substitution shall be accompanied by payment by the Bank of the
Substitution Adjustment, if any.
As to any Deleted SBA Loan for which the Bank substitutes a
Qualified Substitute SBA Loan or Loans, the Servicer shall effect such
substitution by delivering to the Trustee and the FTA a certification in the
form attached hereto as Exhibit I, executed by a Servicing Officer, and shall
also deliver to the Trustee and the FTA, as applicable, the documents
constituting the Trustee's Document File for such Qualified Substitute SBA Loan
or Loans.
The Servicer shall deposit in the Principal and Interest
Account the Unguaranteed Percentage of all payments of principal received in
connection with such Qualified Substitute SBA Loan or Loans after the date of
such substitution together with all interest (net of the portion thereof
required to be paid to the related Registered Holder, the FTA's Fee, the Premium
Protection Fee and the Servicing Fee with respect to each SBA Loan and the
Additional Fee with respect to each Additional Fee SBA Loan). Monthly Payments
received with respect to Qualified Substitute SBA Loans on or before the date of
substitution will be retained by the Bank. The Trust Fund will own all payments
received with respect to the Unguaranteed Interest on the Deleted SBA Loan on or
before the date of substitution, and the Bank shall thereafter be entitled to
retain all amounts subsequently received in respect of such Deleted SBA Loan.
The Servicer shall give written notice to the Trustee that such substitution has
taken place and shall amend the SBA Loan Schedule to reflect the removal of such
Deleted SBA Loan from the terms of this Agreement and the substitution of the
Qualified Substitute SBA Loan or Loans. Upon such substitution, such Qualified
Substitute SBA Loan or Loans shall be subject to the terms of this Agreement in
all respects, including Sections 2.04 and 2.05, and the Bank shall be deemed to
have made with respect to such Qualified Substitute SBA Loan or Loans, as of the
date of substitution, the covenants, representations and warranties set forth in
Sections 3.01 and 3.02. On the date of such substitution, the Bank will remit to
the Servicer, and the Servicer will deposit into the Principal and Interest
Account an amount equal to the Substitution Adjustment.
In addition to the cure, purchase and substitution obligation
in Sections 2.04, 2.05 and 3.03, the Bank shall indemnify and hold harmless the
Trust Fund, the Trustee and the Certificateholders against any loss, damages,
penalties, fines, forfeitures, reasonable legal fees
III-9
51
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 breach of the Bank's or the Funding Trust's representations and
warranties contained in this Agreement. It is understood and agreed that the
obligations of the Bank, in its capacity as Seller set forth in Sections 2.04,
2.05 and 3.03 to cure, purchase or substitute for a defective SBA Loan and to
indemnify the Certificateholders and the Trustee as provided in Sections 2.04,
2.05 and 3.03 constitute the sole remedies of the Trustee and the
Certificateholders respecting a breach of the foregoing representations and
warranties.
Any cause of action against the Bank, in its capacity as
either Servicer or the Seller, relating to or arising out of the breach of any
representations and warranties made in Sections 2.05, 3.01, 3.02 or 3.04 shall
accrue as to any SBA Loan upon (i) discovery of such breach by any party and
notice thereof to the Bank and or notice thereof by the Bank to the Trustee,
(ii) failure by the Bank to cure such breach or purchase or substitute such SBA
Loan as specified above, and (iii) demand upon the Bank by the Trustee for all
amounts payable hereunder in respect of such SBA Loan.
Section 3.04 Representations of the Funding Trust.
The Funding Trust hereby represents and warrants to the
Trustee and the Certificateholders as of the Closing Date:
(a) The Funding Trust is a business trust, and is duly
organized, validly existing and in good standing under the laws of the State of
Delaware;
(b) The Funding Trust has good and marketable title to the
Unguaranteed Interest in each SBA Section 7(a) Loan listed on Exhibit H-2 free
and clear of any lien (other than liens to be released upon consummation of the
transactions contemplated hereby) and the Funding Trust has the authority to
sell the Unguaranteed Interest in SBA Section 7(a) Loans listed on Exhibit H-2
to the Trust Fund as contemplated in this Agreement;
(c) The Funding Trust received fair consideration and
reasonably equivalent value in exchange for the sale of the Unguaranteed
Interest of the SBA Loans listed on Exhibit H-2.
(d) All requisite action has been taken by the Funding Trust
to make this Agreement valid, binding and enforceable upon the Funding Trust in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally or the application of equitable principles in any
proceeding, whether at law or in equity, none of which will affect the ownership
of the SBA Loans by the Trustee, as trustee.
(e) The consummation of the transactions contemplated by this
Agreement will not result in the breach of any terms or provisions of the
Certificate of Formation
III-10
52
of the Funding Trust or result in the breach of any term or provision of, or
conflict with or constitute a default under or result in the acceleration of any
obligation under, any material agreement, indenture or loan or credit agreement
or other material instrument to which the Funding Trust or its property is
subject, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Funding Trust or its property is subject;
(f) There is no action, order, suit, proceeding or
investigation pending or, to the best of the Funding Trust's knowledge,
threatened against the Funding Trust which, either in any one instance or in the
aggregate, may (i) result in any material adverse change in the business,
operations, financial condition, properties or assets of the Funding Trust or in
any material impairment of the right or ability of the Funding Trust to carry on
its business substantially as now conducted, or in any material liability on the
part of the Funding Trust or of any action taken or to be taken in connection
with the obligations of the Funding Trust contemplated herein, or which would be
likely to impair materially the ability of the Funding Trust to perform under
the terms of this Agreement or (ii) which would draw into question the validity
of this Agreement or the SBA Loans;
(g) The Funding Trust 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, which default might have consequences
that would materially and adversely affect the condition (financial or other) or
operations of the Funding Trust or its properties or might have consequences
that would materially and adversely affect its performance hereunder;
(h) The Funding Trust is solvent, and the Funding Trust will
not be rendered insolvent as a result of the transfer of the SBA Loans to the
Trust Fund or the sale of the Certificates; and
(i) The chief executive office and legal name of the Funding
Trust is as set forth on the respective UCC-1 financing statement filed on
behalf of the Funding Trust pursuant to Section 2.04(i), such office is the
place where the Funding Trust is "located" for the purposes of Section
9-103(3)(d) of the Uniform Commercial Code as in effect in the State of New
York, and neither the location of such office nor the legal name of the Funding
Trust has changed in the past four months.
III-11
53
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates.
The Class A, Class M and Class B Certificates shall be
substantially in the forms annexed hereto as Exhibits ▇-▇, ▇-▇ and B-3 and
shall, upon original issue, be executed and delivered by the Servicer to the
Trustee for authentication and redelivery to or upon the order of the Bank, upon
receipt by the Trustee and the FTA of the documents specified in Section 2.04.
All Certificates shall be executed on behalf of the Servicer by a Responsible
Officer, in the denominations specified in the definition of Percentage
Interest, and shall be authenticated on behalf of the Trustee by one of its
Responsible Officers. Certificates bearing the signatures of individuals who
were at the time of the execution or authentication of the Certificates
Responsible Officers of the Servicer or Responsible Officers of the Trustee, as
the case may be, shall bind the Servicer or the Trustee, as the case may be,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Certificates or did not hold such offices
at the date of such Certificates. All Certificates issued hereunder shall be
dated the date of their authentication.
Section 4.02 Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at the office of the
Certificate Registrar, in New York, New York, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, it shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. The Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificateholder, as well
as the Series and the number in the Series. HSBC Bank USA is initially appointed
Certificate Registrar for the purpose of registering Certificates and transfers
and exchanges of Certificates as herein provided.
(b) Each Class of Certificates shall be issued in minimum
denominations of $100,000 original principal amount and integral multiples of
$1,000 in excess thereof, except that one Certificate of each Class may be in a
different denomination so that the sum of the denominations of all outstanding
Class A, Class M and Class B Certificates shall equal the Original Class A,
Class M and Class B Certificate Principal Balance, respectively. On the Closing
Date, the Trustee will execute and authenticate (i) one or more Global
Certificates and/or (ii) Individual Certificates all in an aggregate principal
amount that shall equal the Original Class A, Original Class M and Original
Class B Certificate Principal Balances.
The Global Certificates (i) shall be delivered by the
Bank on behalf of the Sellers to the Depository or, pursuant to the Depository's
instructions, shall be delivered by the Bank on behalf of the Depository to and
deposited with the Depository's custodian, and in each
IV-1
54
case shall be registered in the name of Cede & Co. and (ii) shall bear a legend
substantially to the following effect:
"Unless this certificate is presented by an
authorized representative of The Depository Trust Company, a
New York corporation ("DTC"), to the Certificate Registrar or
its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede &
Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co.
or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an
interest herein."
The Global Certificates may be deposited with such
other Depository as the Bank may from time to time designate, and shall bear
such legend as may be appropriate; provided that such successor Depository
maintains a book-entry system that qualifies to be treated as "registered form"
under Section 163(f)(3) of the Code.
The Bank on behalf of the Sellers and the Trustee are
hereby authorized to and shall execute and deliver a Letter of Representations,
in the form provided by the Depository, with the Depository relating to the
Certificates.
(c) With respect to Certificates registered in the Certificate
Register in the name of Cede & Co., as nominee of the Depository, the Sellers,
the Servicer and the Trustee shall have no responsibility or obligation to
Direct or Indirect Participants or beneficial owners for which the Depository
holds Certificates from time to time as a Depository and the Trustee and its
agents, employees, officers and directors may treat the Depository as the
absolute owner of the Certificates for all purposes whatsoever. Without limiting
the immediately preceding sentence, the Sellers, the Servicer and the Trustee
shall have no responsibility or obligation with respect to (a) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Certificates, (b) the delivery to
any Direct or Indirect Participant or any other Person, other than a registered
Holder of a Certificate, (c) the payment to any Direct or Indirect Participant
or any other Person, other than a registered Holder of a Certificate as shown in
the Certificate Register, of any amount with respect to any distribution of
principal or interest on the Certificates or (d) the making of book-entry
transfers among Direct and Indirect Participants of the Depository with respect
to Certificates registered in the Certificate Register in the name of the
nominee of the Depository. No Person other than a registered Holder of a
Certificate as shown in the Certificate Register shall receive a certificate
evidencing such Certificate.
(d) Upon delivery by the Depository to the Trustee of written
notice to the effect that the Depository has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions hereof with
respect to the payment of distributions by the mailing of checks or drafts to
the registered Holders of Certificates appearing as registered Owners in the
IV-2
55
Certificate Register on a Record Date, the name "Cede & Co." in this Agreement
shall refer to such new nominee of the Depository.
(e) In the event that (i) the Depository or the Servicer
advises the Trustee in writing that the Depository is no longer willing or able
to discharge properly its responsibilities as nominee and depository with
respect to the Certificates and the Servicer is unable to locate a qualified
successor or (ii) the Servicer at its sole option elects to terminate the
book-entry system through the Depository, the Certificates shall no longer be
restricted to being registered in the Certificate Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Servicer may determine that the Certificates shall be registered in the name of
and deposited with a successor depository operating a global book-entry system,
as may be acceptable to the Servicer, or such depository's agent or designee
but, if the Servicer does not select such alternative global book-entry system,
then upon surrender to the Certificate Registrar of the Global Certificates by
the Depository, accompanied by the registration instructions from the Depository
for registration, the Trustee shall at the Servicer's expense authenticate
Individual Certificates. Neither the Servicer nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be fully protected in relying on, such instructions. Upon the issuance of
Individual Certificates, the Trustee, the Certificate Registrar, the Servicer,
any Paying Agent and the Sellers shall recognize the Holders of the Individual
Certificates as Certificateholders hereunder.
(f) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Certificates are registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal and interest
on such Certificates and all notices with respect to such Certificates shall be
made and given, respectively, in the manner provided in the Letter of
Representations.
(g) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate at the office of the Certificate
Registrar and, upon satisfaction of the conditions set forth below, the Servicer
shall execute in the name of the designated transferee or transferees, a new
Certificate of the same Percentage Interest and dated the date of authentication
by the Trustee. The Certificate Registrar shall notify the Servicer and the
Trustee of any such transfer. The Certificate Registrar shall not transfer any
Class B Certificate, until 6 years after the issue date of the Class B
Certificates without the prior written consent of the SBA.
At the option of the Certificateholders, Certificates
may be exchanged for other Certificates in authorized denominations of a like
Class and aggregate Percentage Interest, upon surrender of the Certificates to
be exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Servicer shall execute, and the Trustee shall authenticate, the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall be accompanied by wiring instructions, if applicable, in the form of
Exhibit E.
IV-3
56
(h) No service charge shall be made for any transfer or
exchange of Certificates, but prior to transfer the Certificate Registrar may
require payment by the transferor of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
All Certificates surrendered for transfer and exchange shall
be marked canceled by the Authenticating Agent and retained for one year and
destroyed thereafter.
(i) By acceptance of an Individual Certificate, whether upon
original issuance or subsequent transfer, each holder of such a Certificate
acknowledges the restrictions on the transfer of such Certificate set forth in
the Securities Legend and agrees that it will transfer such Certificate only as
provided herein. In addition to the provisions of Section 4.02(n), the following
restrictions shall apply with respect to the transfer and registration of
transfer of an Individual Certificate to a transferee that takes delivery in the
form of an Individual Certificate:
(i) The Certificate Registrar shall register the
transfer of an Individual Certificate if the requested
transfer is being made to a transferee who has provided the
Certificate Registrar with a Rule 144A Certification.
(ii) The Certificate Registrar shall register the
transfer of any Individual Certificate (other than the initial
delivery of the Class B Certificates to the Spread Account
Depositor) if (x) the transferor has advised the Certificate
Registrar in writing that the Certificate is being transferred
to an Institutional Accredited Investor; and (y) prior to the
transfer the transferee furnishes to the Certificate Registrar
a Transferee Letter, provided that, if based upon an Opinion
of Counsel to the effect that the delivery of (x) and (y)
above are not sufficient to confirm that the proposed transfer
is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of
the Securities Act and other applicable laws, the Certificate
Registrar may as a condition of the registration of any such
transfer require the transferor to furnish other
certifications, legal opinions or other information prior to
registering the transfer of an Individual Certificate.
(j) Subject to Section 4.02(n), so long as the Global
Certificate remains outstanding and is held by or on behalf of the Depository,
transfers of beneficial interests in the Global Certificate, or transfers by
holders of Individual Certificates to transferees that take delivery in the form
of beneficial interests in the Global Certificate, may be made only in
accordance with this Section 4.02(j) and in accordance with the rules of the
Depository.
(i) In the case of a beneficial interest in the
Global Certificate being transferred to an Institutional
Accredited Investor, such transferee shall be required to take
delivery in the form of an Individual Certificate or
Certificates and the Certificate Registrar shall register such
transfer only upon compliance with the provisions of Section
4.02(i)(ii).
IV-4
57
(ii) In the case of a beneficial interest in the
Global Certificate being transferred to a transferee that
takes delivery in the form of an Individual Certificate or
Certificates, except as set forth in clause (i) above, the
Certificate Registrar shall register such transfer only upon
compliance with the provisions of Section 4.02(i)(i).
(iii) In the case of an Individual Certificate being
transferred to a transferee that takes delivery in the form of
a beneficial interest in a Global Certificate, the Certificate
Registrar shall register such transfer if the transferee has
provided the Certificate Registrar with a Rule 144A
Certification.
(iv) No restrictions shall apply with respect to the
transfer or registration of transfer of a beneficial interest
in the Global Certificate to a transferee that takes delivery
in the form of a beneficial interest in the Global
Certificate.
(k) Subject to Section 4.02(n), an exchange of a beneficial
interest in the Global Certificate for an Individual Certificate or
Certificates, an exchange of an Individual Certificate or Certificates for a
beneficial interest in the Global Certificate and an exchange of an Individual
Certificate or Certificates for another Individual Certificate or Certificates
(in each case, whether or not such exchange is made in anticipation of
subsequent transfer, and, in the case of the Global Certificate, so long as such
Certificate remains outstanding and is held by or on behalf of the Depository)
may be made only in accordance with this Section 4.02(k) and in accordance with
the rules of the Depository.
(i) A holder of a beneficial interest in the Global
Certificate may at any time exchange such beneficial interest
for an Individual Certificate or Certificates.
(ii) A holder of an Individual Certificate may
exchange such Certificate for a beneficial interest in the
Global Certificate if such holder furnishes to the Certificate
Registrar a Rule 144A Certification.
(iii) A holder of an Individual Certificate may
exchange such Certificate for an equal aggregate principal
amount of Individual Certificates in different authorized
denominations without any certification.
(l) (i) Upon acceptance for exchange or transfer of an
Individual Certificate for a beneficial interest in the Global Certificate as
provided herein, the Certificate Registrar shall cancel such Individual
Certificate and shall (or shall request the Depository to) endorse on the
schedule affixed to the applicable Global Certificate (or on a continuation of
such schedule affixed to the Global Certificate and made a part thereof) an
appropriate notation evidencing the date of such exchange or transfer and an
increase in the certificate balance of the Global
IV-5
58
Certificate equal to the certificate balance of such Individual Certificate
exchanged or transferred therefor.
(ii) Upon acceptance for exchange or transfer of a
beneficial interest in the Global Certificate for an
Individual Certificate as provided herein, the Certificate
Registrar shall (or shall request the Depository to) endorse
on the schedule affixed to the Global Certificate (or on a
continuation of such schedule affixed to the Global
Certificate and made a part thereof) an appropriate notation
evidencing the date of such exchange or transfer and a
decrease in the certificate balance of the Global Certificate
equal to the certificate balance of such Individual
Certificate issued in exchange therefor or upon transfer
thereof.
(m) The Securities Legend shall be placed on any Individual
Certificate issued in exchange for or upon transfer of another Individual
Certificate or of a beneficial interest in the Global Certificate.
(n) Subject to the restrictions on transfer and exchange set
forth in this Section 4.02, the holder of any Individual Certificate may
transfer or exchange the same in whole or in part (in an initial certificate
balance equal to the minimum authorized denomination or any integral multiple of
$1,000 in excess thereof) by surrendering such Certificate at the Corporate
Trust Office, or at the office of any transfer agent, together with an executed
instrument of assignment and transfer satisfactory in form and substance to the
Certificate Registrar in the case of transfer and a written request for exchange
in the case of exchange. The holder of a beneficial interest in a Global
Certificate may, subject to the rules and procedures of the Depository, cause
the Depository (or its nominee) to notify the Certificate Registrar in writing
of a request for transfer or exchange of such beneficial interest for an
Individual Certificate or Certificates. Following a proper request for transfer
or exchange, the Certificate Registrar shall, within five Business Days of such
request made at such Corporate Trust Office, cause the Trustee to authenticate
and the Certificate Registrar to deliver at such Corporate Trust Office, to the
transferee (in the case of transfer) or holder (in the case of exchange) or send
by first class mail at the risk of the transferee (in the case of transfer) or
holder (in the case of exchange) to such address as the transferee or holder, as
applicable, may request, an Individual Certificate or Certificates, as the case
may require, for a like aggregate Percentage Interest and in such authorized
denomination or denominations as may be requested. The presentation for transfer
or exchange of any Individual Certificate shall not be valid unless made at the
Corporate Trust Office by the registered holder in person, or by a duly
authorized attorney-in-fact.
(o) No transfer of any Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act and
any applicable state securities laws or is made in accordance with said Act and
laws. In the event of any such transfer, unless such transfer is made in
reliance upon Rule 144A under the Securities Act and except for the initial
issuance of the Class B Certificates to the Spread Account Depositor, (i) the
Trustee may require a written Opinion of Counsel (which may be in-house counsel)
acceptable to and in form and substance reasonably satisfactory to the Trustee
that such transfer may be made pursuant to an
IV-6
59
exemption, describing the applicable exemption and the basis therefor, from
said Act and laws or is being made pursuant to said Act and laws, which Opinion
of Counsel shall not be an expense of the Trustee, the Sellers, the Servicer or
the Trust Fund and (ii) the Trustee shall require the transferee to execute a
Transferee Letter certifying to the Sellers and the Trustee the facts
surrounding such transfer, which Transferee Letter shall not be an expense of
the Trustee, the Sellers, the Servicer or the Trust Fund. The holder of a
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Sellers and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws. None of the Sellers, the Servicer, the Trustee or
the Trust Fund intends or is obligated to register or qualify any Certificate
under the Securities Act or any state securities laws.
(p) No Certificate may be acquired directly or indirectly, for
or on behalf of an employee benefit plan or other retirement arrangement subject
to ERISA, and/or Section 4975 of the Code, (collectively, a "Plan"). No transfer
of a Certificate representing an Individual Certificate shall be made unless the
Trustee shall have received a certification from the transferee of such
Individual Certificate, acceptable to and in form and substance satisfactory to
the Trustee and the Servicer, to the effect that such transferee is not
acquiring a Certificate, directly or indirectly, for or on behalf of a Plan.
Notwithstanding anything else to the contrary herein, in the event any purported
transfer of any certificate representing an Individual Certificate is made
without delivery of the certification referred to above, such certification
shall be deemed to have been made by the Transferee by its acceptance of such
Individual Certificate. In addition, any purported transfer of a Certificate
representing an Individual Certificate directly or indirectly to or on behalf of
a Plan shall be void and of no effect. The acquisition of a Certificate
representing an interest in a Global Certificate shall be deemed a
representation by the acquirer that it is not acquiring a Certificate, directly
or indirectly, for or on behalf of a Plan.
(q) Notwithstanding any other provision of this Agreement to
the contrary, on the Closing Date, the Trustee shall authenticate in the name
of, and deliver to, the Spread Account Depositor, the Class B Certificate in the
form of a single Individual Certificate in an aggregate principal amount equal
to the Original Class B Principal Balance. The Class B Certificate may not be
sold, pledged, transferred, assigned, have a participation interest sold in such
Class B Certificate or otherwise conveyed, in whole or in part, for a period of
six years from the issue date of the Class B Certificate, without the prior
written approval of the SBA and a copy of such approval shall be furnished to
the Trustee. A legend to such effect shall be placed on the Class B Certificate.
Section 4.03 Mutilated, Destroyed, Lost or Stolen
Certificates.
If (i) any mutilated Certificate is surrendered to the
Certificate Registrar, or the Trustee and the Certificate Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Servicer, the Trustee and the
Certificate Registrar such security or indemnity as may be required by each of
them to save each of them harmless, then, in the absence of notice to the
Servicer, the Trustee and the Certificate
IV-7
60
Registrar that such Certificate has been acquired by a bona fide purchaser, the
Servicer shall execute and deliver, and the Trustee shall authenticate, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and Percentage Interest, but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate under this Section 4.03, the Servicer and the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses connected
therewith. Any duplicate Certificate issued pursuant to this Section 4.03 shall
constitute complete and indefeasible evidence of ownership in the Trust Fund, as
if originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time.
Section 4.04 Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
transfer, the Servicer, the Sellers, the Trustee, the Paying Agent and the
Certificate Registrar may treat the Person in whose name, as of any Record Date,
any Certificate is registered as the owner of such Certificate for the purpose
of receiving remittances pursuant to Section 6.07 and for all other purposes
whatsoever, and the Sellers, the Servicer, the Trustee and the Certificate
Registrar shall not be affected by notice to the contrary.
IV-8
61
ARTICLE V
ADMINISTRATION AND SERVICING OF SBA LOANS
Section 5.01 Duties of the Servicer.
(a) The Servicer covenants and agrees that it shall act as
agent (and the Servicer is hereby appointed to act as agent) on behalf of the
Trust Fund and that, in such capacity, it shall: (i) prepare and file, or cause
to be prepared and filed, in a timely manner, any Tax Return required to be
filed by the Trust Fund; (ii) prepare and forward, or cause to be prepared and
forwarded, to the Trustee, the Certificateholders and to the Internal Revenue
Service and any other relevant governmental taxing authority all information
returns or reports as and when required to be provided to them in accordance
with any provision of federal, state or local income tax laws; (iii) to the
extent that the affairs of the Trust Fund are within its control, conduct such
affairs at all times that any Certificates are outstanding so as to maintain the
status of the Trust Fund as a grantor trust under any applicable federal, state
and local laws; (iv) pay the amount of any and all federal, state, and local
taxes, imposed on the Trust Fund when and as the same shall be due and payable
(but such obligation shall not prevent the Servicer or any other appropriate
Person from contesting any such tax in appropriate proceedings and shall not
prevent the Servicer from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings); (v) ensure that any such returns or
reports filed on behalf of the Trust Fund are properly executed by the
appropriate person; and (vi) represent the Trust Fund in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
the Trust Fund, enter into settlement agreements with any governmental taxing
agency, extend any statute of limitations relating to any item of the Trust Fund
and otherwise act on behalf of the Trust Fund in relation to any tax matter
involving the Trust Fund. The Servicer shall indemnify the Trustee and the Trust
Fund for any liability it may incur in connection with this Section 5.01(a),
which indemnification shall survive the termination of the Trust Fund; provided,
however, that the Servicer shall not indemnify the Trustee for the Trustee's
negligence, willful misconduct or bad faith.
(b) The Servicer, as independent contract servicer, shall
service and administer the SBA Loans and shall have full power and authority,
acting alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement and the Multi-Party Agreement and the SBA Rules
and Regulations. The Servicer may enter into Subservicing Agreements for any
servicing and administration of SBA Section 7(a) Loans with any entity approved
with prior written consent by the SBA. Any such Subservicing Agreement must be
approved by the SBA and shall be consistent with and not violate the provisions
of this Agreement and the Multi-Party Agreement. The Servicer shall be entitled
to terminate any Subservicing Agreement in accordance with the terms and
conditions of such Subservicing Agreement and to either itself directly service
the related SBA Section 7(a) Loans or enter into a Subservicing Agreement with a
successor Subservicer which qualifies hereunder.
V-1
62
(c) Notwithstanding any Subservicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a Subservicer or reference to actions taken through a Subservicer
or otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, for itself and on behalf of the Certificateholders, the SBA and the
Certificateholders for the servicing and administering of the SBA Loans in
accordance with the provisions of this Agreement and the Multi-Party Agreement
and the SBA Rules and Regulations, without diminution of such obligation or
liability by virtue of such Subservicing Agreements or arrangements or by virtue
of indemnification from the Subservicer and to the same extent and under the
same terms and conditions as if the Servicer alone were servicing and
administering the SBA Loans. For purposes of this Agreement, the Servicer shall
be deemed to have received payments on SBA Loans when any Subservicer has
received such payments. The Servicer shall be entitled to enter into any
agreement with a Subservicer for indemnification of the Servicer by such
Subservicer, and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
(d) Any Subservicing Agreement that may be entered into and
any transactions or services relating to the SBA Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Trustee, the SBA and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer
except as set forth in Section 5.01(e).
(e) In the event the Servicer shall for any reason no longer
be the Servicer (including by reason of an Event of Default), the Trustee or its
designee shall, subject to Section 10.02 hereof and the Multi-Party Agreement,
thereupon assume all of the rights and obligations of the Servicer under each
Subservicing Agreement that the Servicer may have entered into, unless the
Trustee is then permitted and elects to terminate any Subservicing Agreement in
accordance with its terms. The Trustee, its designee or the successor servicer
for the Trustee shall be deemed to have assumed all of the Servicer's interest
therein and to have replaced the Servicer as a party to each Subservicing
Agreement to the same extent as if the Subservicing Agreements had been assigned
to the assuming party, except that the Servicer shall not thereby be relieved of
any liability or obligations under the Subservicing Agreements. The Servicer at
its expense and without right of reimbursement therefor, shall, upon request of
the Trustee, deliver to the assuming party all documents and records relating to
each Subservicing Agreement and the SBA Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.
(f) So long as it is consistent with the terms of this
Agreement and the Multi-Party Agreement, the SBA Agreement (as defined in the
Multi-Party Agreement) and the SBA Rules and Regulations, the Servicer may
waive, modify or vary any term of any SBA Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Obligor if in the Servicer's determination such waiver, modification,
V-2
63
postponement or indulgence is not materially adverse to the interests of the SBA
and the Certificateholders, provided, however, that (unless (x) the Obligor is
in default with respect to the SBA Loan, or such default is, in the judgment of
the Servicer, imminent and (y) the Servicer determines that any modification
would not be considered a new loan for federal income tax purposes) the Servicer
may not permit any modification with respect to any SBA Loan that would change
the SBA Loan Interest Rate, defer (subject to Section 5.12), or forgive the
payment of any principal or interest (unless in connection with the liquidation
of the related SBA Loan), or extend the final maturity date on such SBA Loan
without the consent of the SBA, if such consent is then required by the SBA
Rules and Regulations. The Servicer may exercise all unilateral servicing
actions permitted by participating lenders in accordance with the SBA Rules and
Regulations. No costs incurred by the Servicer or any Subservicer in respect of
Servicing Advances shall for the purposes of distributions to Certificateholders
be added to the amount owing under the related SBA Loan. Without limiting the
generality of the foregoing, so long as it is consistent with the SBA Rules and
Regulations, the Servicer shall continue, and is hereby authorized and empowered
to execute and deliver on behalf of the Trustee, the SBA and each
Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the SBA Loans and with respect to any Mortgaged Properties or other
Collateral. If reasonably required by the Servicer, each Certificateholder
and/or the Trustee shall furnish the Servicer, within 5 Business Days of receipt
of the Servicer's request, with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement. Any such request to the Trustee
shall be accompanied by a certification in the form of Exhibit I attached hereto
signed by a Servicing Officer.
The Servicer, in servicing and administering the SBA Loans,
shall employ or cause to be employed procedures (including collection,
foreclosure and Foreclosed Property and Repossessed Collateral management
procedures) and exercise the same care that it customarily employs and exercises
in servicing and administering SBA Loans for its own account and prudent lending
standards, and in accordance with the SBA Rules and Regulations, giving due
consideration to the Certificateholders' and the SBA's reliance on the Servicer.
(g) On and after such time as the Trustee receives the
resignation of, or notice of the removal of, the Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 9.04, after receipt of the Opinion of Counsel required pursuant to
Section 9.04 addressed to the SBA and the Trustee, the Trustee or its designee
shall assume all of the rights and obligations of the Servicer, subject to
Section 10.02 hereof and the Multi-Party Agreement. The Servicer shall, upon
request of the Trustee but at the expense of the Servicer, deliver to the
Trustee all documents and records (including computer tapes and diskettes)
relating to the SBA Loans and an accounting of amounts collected and held by the
Servicer and otherwise use its best efforts to effect the orderly and efficient
transfer of servicing rights and obligations to the assuming party.
(h) For so long as any of the Certificates are outstanding and
are "restricted securities" within the meaning of Rule 144(a)(3) of the
Securities Act, (1) the Servicer will
V-3
64
provide or cause to be provided to any holder of such Certificates and any
prospective purchaser thereof designated by such a holder, upon the request of
such holder or prospective purchaser, the information required to be provided to
such holder or prospective purchaser by Rule 144A(d)(4) under the Securities
Act; and (2) the Servicer shall update such information from time to time in
order to prevent such information from becoming false and misleading and will
take such other actions as are necessary to ensure that the safe harbor
exemption from the registration requirements of the Securities Act under Rule
144A is and will be available for resales of such Certificates conducted in
accordance with Rule 144A.
Section 5.02 Liquidation of SBA Loans.
In the event that any payment due under any SBA Loan and not
postponed pursuant to Section 5.01 is not paid when the same becomes due and
payable, or in the event the Obligor fails to perform any other covenant or
obligation under the SBA Loan, the Servicer in accordance with the SBA Rules and
Regulations shall take such action as it shall deem to be in the best interests
of the Certificateholders and the SBA. With respect to any such SBA Section 7(a)
Loan for which the SBA has expressed to the Servicer the SBA's desire to assume
servicing of such SBA Loan consistent with the SBA Rules and Regulations, the
Trustee shall, upon written direction of the Servicer, deliver to the SBA or its
designee all or any portion of the Trustee's Document File relating to such SBA
Section 7(a) Loan and the Trustee shall execute such documents, including but
not limited to an endorsement of the related SBA Note and an assignment of the
related Mortgage, as the Servicer or the SBA shall request. Expenses incurred in
connection with any such action shall be the responsibility of the Servicer and
shall not be chargeable to the Principal and Interest Account or the Certificate
Account. Subject to the SBA Rules and Regulations and with the prior written
consent of the SBA (if required by the SBA Rules and Regulations), the Servicer
shall foreclose upon or otherwise comparably effect the ownership of Mortgaged
Properties or other Collateral relating to defaulted SBA Section 7(a) Loans for
which the related SBA Section 7(a) Loan is still outstanding, as to which no
satisfactory arrangements can be made for collection of delinquent payments in
accordance with the provisions of Section 5.10. In connection with such
foreclosure or other conversion and any other liquidation action, the Servicer
shall exercise collection and foreclosure procedures with the same degree of
care and skill in its exercise or use as it would exercise with respect to its
own affairs, in accordance with prudent servicing standards, and in accordance
with the applicable SBA Rules and Regulations. Prior to undertaking foreclosure
of any Mortgaged Property, the Servicer must investigate environmental
conditions, including the performance of a Phase I and/or Phase II environmental
site assessment, to ascertain the actual or potential presence of any hazardous
material on or under such property. For purposes of this Agreement, the term
hazardous material includes (1) any hazardous substance, as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
9601-9675, and (2) petroleum (as that term is defined at 42 U.S.C. Section 6991)
including any derivative, fraction, by-product, constituent or breakdown product
thereof, or additive thereto. In the event that the environmental investigation
determines the existence of any hazardous material on or under the Mortgaged
Property in excess of
V-4
65
minimum action levels established by relevant regulatory agencies, title to such
property shall not be taken without prior written approval from the SBA.
After an SBA Loan has become a Liquidated SBA Loan, the
Servicer shall promptly prepare and forward to the Trustee and the SBA and upon
request, any Certificateholder, a Liquidation Report, in the form attached
hereto as Exhibit J, detailing the Liquidation Proceeds received from the
Liquidated SBA Loan, expenses incurred with respect thereto, and any loss
incurred in connection therewith.
Section 5.03 Establishment of Principal and Interest Accounts;
Deposits in Principal and Interest Accounts.
(a) The Servicer shall cause to be established and maintained
one or more Principal and Interest Accounts, in one or more Designated
Depository Institutions, in the form of time deposit or demand accounts, which
may be interest-bearing or such accounts may be trust accounts wherein the
moneys therein are invested in Permitted Instruments, titled "First
International Bank, in trust for the registered holders of First International
Bank SBA Loan-Backed Adjustable Rate Certificates, Series 2000-1, Class A, Class
M and Class B." Such Principal and Interest Accounts shall be insured by the BIF
or SAIF administered by the FDIC to the maximum extent provided by law. The
creation of any Principal and Interest Account shall be evidenced by a letter
agreement in the form of Exhibit C hereto.
A copy of such letter agreement shall be furnished to the
Trustee, the SBA and, upon request, any Certificateholder.
(b) The Servicer and each Subservicer shall deposit without
duplication (within two Business Days of receipt thereof) in the Principal and
Interest Account and retain therein:
(i) the Unguaranteed Percentage of all payments
received after the Cut-Off Date on account of principal on the
SBA Loans, including the Unguaranteed Percentage of all Excess
Payments, Principal Prepayments and Curtailments collected
after the Cut-Off Date, the Unguaranteed Percentage of all
Insurance Proceeds (other than amounts to be applied to
restoration or repair of any related Mortgaged Property, or to
be released to the Obligor in accordance with customary
servicing procedures) and the Unguaranteed Percentage of all
Released Mortgaged Property Proceeds;
(ii) all payments received after the Cut-Off Date on
account of interest on the SBA Loans (net of the portion
thereof required to be paid to the related Registered Holders,
the Premium Protection Fee, the FTA's Fee and the Servicing
Fee with respect to each SBA Loan, the Additional Fee with
respect to
V-5
66
each Additional Fee SBA Loan, and other servicing compensation
payable to the Servicer as permitted herein);
(iii) the Unguaranteed Percentage of all Net
Liquidation Proceeds;
(iv) the Unguaranteed Percentage of all Insurance
Proceeds (other than amounts to be applied to restoration or
repair of any related Mortgaged Property, or to be released to
the Obligor in accordance with customary servicing
procedures);
(v) the Unguaranteed Percentage of all Released
Mortgaged Property Proceeds;
(vi) any amounts paid in connection with the
repurchase of the Unguaranteed Interest of any SBA Loan and
the amount of any Substitution Adjustment received pursuant to
Sections 2.05 and 3.03;
(vii) any amount required to be deposited in the
Principal and Interest Account pursuant to Section 5.04 or
5.10; and
(viii) the amount of any losses incurred in
connection with investments in Permitted Instruments.
(c) The foregoing requirements for deposit in the Principal
and Interest Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments with respect to the
Guaranteed Interest to be paid to the Registered Holders, the Premium Protection
Fee, the FTA's Fee and the Servicing Fee, with respect to each SBA Loan, and
additionally the Additional Fee with respect to each Additional Fee SBA Loan,
together with the difference between any Liquidation Proceeds and the related
Net Liquidation Proceeds, should not be deposited by the Servicer in the
Principal and Interest Account.
(d) Any interest earnings on funds held in the Principal and
Interest Account paid by a Designated Depository Institution shall be for the
account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following its monthly remittance to
the Trustee pursuant to Section 5.04(a). Any reference herein to amounts on
deposit in the Principal and Interest Account shall refer to amounts net of such
investment earnings.
Section 5.04 Permitted Withdrawals From the Principal and
Interest Account
The Servicer shall withdraw funds from the Principal and
Interest Account for the following purposes:
V-6
67
(a) to effect the remittance to the Trustee on each
Determination Date for deposit in the Certificate Account, the portion of the
Available Funds for the related Remittance Date that is separate from
Compensating Interest, Monthly Advances and amounts then on deposit in the
Spread Account;
(b) to reimburse itself for any accrued unpaid Servicing Fees
and Premium Protection Fees allocable to the SBA Loans, unreimbursed Monthly
Advances and for unreimbursed Servicing Advances to the extent deposited in the
Principal and Interest Account (and not netted from Monthly Payments received).
The Servicer's right to reimbursement for unpaid Servicing Fees and Premium
Protection Fees and, except as provided in the following sentence, Servicing
Advances and Monthly Advances shall be limited to Liquidation Proceeds, Released
Mortgaged Property Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Servicer from the Obligor or otherwise relating to the SBA Loan
in respect of which such unreimbursed amounts are owed. The Servicer's right to
reimbursement for Servicing Advances and Monthly Advances in excess of such
amounts shall be limited to any late collections of interest received on the SBA
Loans generally, including Liquidation Proceeds, Released Mortgaged Property
Proceeds, Insurance Proceeds and any other amounts, provided, however, that the
Servicer's right to such reimbursement pursuant to this sentence shall be
subordinate to the rights of the Certificateholders and the Registered Holders;
(c) to withdraw any amount received from an Obligor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction;
(d) (i) to make investments in Permitted Instruments and (ii)
to pay to itself, as permitted by Section 5.03(d), interest paid in respect of
Permitted Instruments or by a Designated Depository Institution on funds
deposited in the Principal and Interest Account;
(e) to withdraw any funds deposited in the Principal and
Interest Account that were not required to be deposited therein or were
deposited therein in error;
(f) to pay itself servicing compensation pursuant to Section
7.03 hereof or interest as permitted under the definition of Excess Proceeds;
and
(g) to clear and terminate the Principal and Interest Account
upon the termination of this Agreement.
So long as no default or Event of Default shall have occurred
and be continuing, and consistent with any requirements of the Code, the
Principal and Interest Account shall either be maintained with a Designated
Depository Institution as an interest-bearing account meeting the requirements
set forth in Section 5.03(a), or the funds held therein may be invested by the
Servicer (to the extent practicable) in Permitted Instruments, as directed in
writing by the Servicer. In either case, funds in the Principal and Interest
Account must be available for
V-7
68
withdrawal without penalty, and any Permitted Instruments must mature not later
than the Business Day immediately preceding the Determination Date next
following the date of such investment (except that if such Permitted Instrument
is an obligation of the institution that maintains such account, then such
Permitted Instrument shall mature not later than such Determination Date) and
shall not be sold or disposed of prior to its maturity. All Permitted
Instruments must be held by or registered in the name of "First International
Bank, in trust for the registered holders of First International Bank SBA
Loan-Backed Adjustable Rate Certificates, Series 2000-1." All interest or other
earnings from funds on deposit in the Principal and Interest Account (or any
Permitted Instruments thereof) shall be the exclusive property of the Servicer,
and may be withdrawn from the Principal and Interest Account pursuant to clause
(d) above. The amount of any losses incurred in connection with the investment
of funds in the Principal and Interest Account in Permitted Instruments shall be
deposited in the Principal and Interest Account by the Servicer from its own
funds immediately as realized without reimbursement therefor.
Section 5.05 [Intentionally Omitted]
Section 5.06 Transfer of Accounts.
The Servicer may, upon written notice to the Trustee and the
SBA, transfer any Principal and Interest Account to a different Designated
Depository Institution.
Section 5.07 Maintenance of Hazard Insurance.
The Servicer shall comply with the SBA Rules and Regulations
concerning the issuance and maintenance of fire and hazard insurance with
extended coverage customary in the area where the Mortgaged Property is located.
If at origination of an SBA Loan, to the best of the Servicer's knowledge after
reasonable investigation, the related Mortgaged Property is in an area
identified in the Federal Register by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
consistent with the SBA Rules and Regulations, the Servicer will require the
related Obligor to purchase a flood insurance policy with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the full insurable value of the Mortgaged Property, or (ii) the maximum
amount of insurance available under the National Flood Insurance Act of 1968, as
amended. The Servicer shall also maintain, to the extent such insurance is
available, and required by the SBA Rules and Regulations and the Servicer's
policies, on Foreclosed Property constituting real property, fire and hazard
insurance in the amounts described above and liability insurance. Any amounts
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the Mortgaged Property, or to be
released to the Obligor in accordance with the SBA Rules and Regulations) shall
be deposited in the Principal and Interest Account, subject to withdrawal
pursuant to Section 5.04. It is understood and agreed that no earthquake or
other additional insurance need be required by the Servicer of any Obligor or
maintained on Foreclosed Property, other than pursuant to such applicable laws
and regulations as shall at any time be in force and as shall require such
additional insurance. All policies
V-8
69
required hereunder shall be endorsed with standard mortgagee clauses with losses
payable to the Servicer or its affiliates.
Section 5.08 [Intentionally Omitted]
Section 5.09 Fidelity Bond.
The Servicer shall maintain with a responsible company, and at
its own expense, a blanket fidelity bond and an errors and omissions insurance
policy, in a minimum amount equal to $1,500,000, and a maximum deductible of
$100,000, if commercially available, with coverage on all employees acting in
any capacity requiring such persons to handle funds, money, documents or papers
relating to the SBA Loans ("Servicer Employees"). The fidelity bond shall insure
the Trustee, its officers and employees against losses resulting from forgery,
theft, embezzlement or fraud by such Servicer Employees. The errors and
omissions policy shall insure against losses resulting from the errors,
omissions and negligent acts of such Servicer employees. No provision of this
Section 5.09 requiring such fidelity bond and errors and omissions insurance
shall relieve the Servicer from its duties as set forth in this Agreement. Upon
the request of the Trustee, the SBA or any Certificateholder, the Servicer shall
cause to be delivered to the Trustee, the SBA or such Certificateholder a
certified true copy of such fidelity bond and insurance policy. The current
issuer of such fidelity bond and insurance policy is The Hartford Underwriters
Insurance Company, located in Hartford, Connecticut.
Section 5.10 Title, Management and Disposition of Foreclosed
Property
In the event that title to a Mortgaged Property or other
Collateral is acquired in foreclosure, by deed in lieu of foreclosure or by
other legal process(a "Foreclosed Property"), the deed or certificate of sale or
the Repossessed Collateral may be taken in the name of the Trustee on behalf of
the Trust for the benefit of the Certificateholders and the SBA, as their
interests may appear under the Multi-Party Agreement dated the date of this
Agreement.
Unless the servicing of a Foreclosed Property or item of
Repossessed Collateral relating to an SBA Section 7(a) Loan is assumed by the
SBA pursuant to the SBA Rules and Regulations, the Servicer, subject to Sections
5.01 and 5.02 hereof, shall manage, conserve, protect and operate each
Foreclosed Property or other Repossessed Collateral for the SBA and the
Certificateholders solely for the purpose of its prudent and prompt disposition
and sale. The Servicer shall, either itself or through an agent selected by the
Servicer, manage, conserve, protect and operate the Foreclosed Property or other
Repossessed Collateral in the same manner that it manages, conserves, protects
and operates other foreclosed or repossessed property for its own account, and
in the same manner that similar property in the same locality as the Foreclosed
Property or other Repossessed Collateral is managed. The Servicer shall attempt
to sell the same (and may temporarily rent the same) on such terms and
conditions as the Servicer deems to be in the best interest of the SBA and the
Certificateholders.
V-9
70
The Servicer shall cause to be deposited in the Principal and
Interest Account, no later than five Business Days after the receipt thereof,
the Unguaranteed Percentage of all revenues received with respect to the
conservation and disposition of the related Foreclosed Property or other
Repossessed Collateral net of Servicing Advances.
The disposition of Foreclosed Property or other Repossessed
Collateral shall be carried out by the Servicer at such price, and upon such
terms and conditions, as the Servicer, with SBA concurrence (if required by the
SBA Rules and Regulations), deems to be in the best interest of the SBA and the
Certificateholders. The Unguaranteed Percentage of the proceeds of sale of the
Foreclosed Property or other Repossessed Collateral shall promptly, but in no
event later than two Business Days after receipt, be deposited in the Principal
and Interest Account as received from time to time and, as soon as practicable
thereafter, the expenses of such sale shall be paid. The Servicer shall, subject
to Section 5.04, reimburse itself for any related unreimbursed Servicing
Advances, unpaid Servicing Fees and unreimbursed Monthly Advances, and the
Servicer shall deposit in the Principal and Interest Account the Unguaranteed
Percentage of the net cash proceeds of such sale to be distributed to the
Certificateholders in accordance with Section 6.07 hereof.
In the event any Mortgaged Property or other Repossessed
Collateral is acquired as aforesaid or otherwise in connection with a default or
imminent default on an SBA Loan, the Servicer shall dispose of such Mortgaged
Property or other Repossessed Collateral within two years after its acquisition
unless the Servicer and the Trustee shall have received an Opinion of Counsel
also addressed to the SBA to the effect that such longer retention will not
cause the Trust Fund to be subject to Federal income tax.
Section 5.11 [Intentionally Omitted.]
Section 5.12 Collection of Certain SBA Loan Payments.
The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the SBA Loans, and shall
cause the Obligor under the SBA Loan, to the extent such procedures shall be
consistent with this Agreement, to comply with the terms and provisions of any
applicable hazard insurance policy. Consistent with the foregoing and the SBA
Rules and Regulations, the Servicer may in its discretion waive or permit to be
waived any fee or charge (other than the Servicing Fee or the Premium Protection
Fee, without the written consent of the SBA) which the Servicer would be
entitled to retain hereunder as servicing compensation and extend the due date
for payments due on an SBA Note for a period (with respect to each payment as to
which the due date is extended) not greater than 180 days after the initially
scheduled due date for such payment provided that the Servicer determines such
extension would not be considered a new mortgage loan for federal income tax
purposes. In the event the Servicer shall consent to the deferment of the due
dates for payments due on an SBA Note, the Servicer shall nonetheless make
payment of any required Monthly Advance with respect to the payments so extended
to the same extent as if such installment were due, owing and delinquent
V-10
71
and had not been deferred, and shall be entitled to reimbursement therefor in
accordance with Section 5.04(b) hereof.
Section 5.13 Access to Certain Documentation and Information
Regarding the SBA Loans.
The Servicer shall provide to the Trustee, the SBA and the
FDIC, and the supervisory agents and examiners of each of the foregoing access
to the documentation regarding the SBA Loans required by applicable local, state
and federal regulations, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it.
V-11
72
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 Establishment of Certificate Account; Deposits in
Certificate Account; Permitted Withdrawals
from Certificate Account.
(a) No later than the Closing Date, the Trustee will establish
and maintain with itself in its trust department a trust account, which shall
not be interest-bearing, titled "Certificate Account, HSBC Bank USA, as Trustee
for the registered holders of First International Bank SBA Loan-Backed
Adjustable Rate Certificates, Series 2000-1, Class A, Class M and Class B" (the
"Certificate Account"). The Trustee shall, promptly upon receipt, deposit in the
Certificate Account and retain therein:
(i) the Available Funds (net of the amount of Monthly
Advances and Compensating Interest deposited pursuant to
subclause (ii) below and amounts then on deposit in the Spread
Account) remitted by the Servicer;
(ii) the Compensating Interest and the portion of the
Monthly Advance remitted to the Trustee by the Servicer;
(iii) amounts transferred from the Spread Account
pursuant to Section 6.02(b)(i);
(iv) amounts required to be paid by the Servicer
pursuant to Section 6.06(e) in connection with losses on
investments of amounts in the Certificate Account; and
(v) amounts transferred from the Pre-Funding Account
and the Capitalized Interest Account on the Special Remittance
Date pursuant to Sections 6.04(c) and (h), respectively.
(b) Amounts on deposit in the Certificate Account shall be
withdrawn on each Remittance Date by the Trustee, or the Paying Agent, on its
behalf, to effect the distribution described in Section 6.07(b) and thereafter
by the following parties in no particular order of priority:
(i) by the Trustee, to invest amounts on deposit in
the Certificate Account in Permitted Instruments pursuant to
Section 6.06;
(ii) by the Trustee, to pay on a monthly basis to the
Servicer as additional servicing compensation interest paid
and earnings realized on Permitted Instruments;
VI-1
73
(iii) by the Trustee, to withdraw any amount not
required to be deposited in the Certificate Account or
deposited therein in error; and
(iv) by the Trustee, to clear and terminate the
Certificate Account upon the termination of this Agreement in
accordance with the terms of Section 11.01 hereof.
Section 6.02 Establishment of Spread Account; Deposits in
Spread Account; Permitted Withdrawals from
Spread Account.
(a) No later than the Closing Date, the Trustee will establish
with the Spread Account Custodian an Account in accordance with the terms of the
Spread Account Agreement (the "Spread Account"). The Spread Account shall be the
property of the Spread Account Depositor, subject to the terms hereof and of the
Spread Account Agreement, and the funds held therein may be invested in
Permitted Instruments. The Spread Account shall not constitute part of the Trust
Fund. The Trustee or the Spread Account Custodian, as the case may be, shall,
promptly upon receipt, deposit into the Spread Account or, in the case of the
Trustee, transfer to the Spread Account Custodian for deposit in the Spread
Account:
(i) [Reserved];
(ii) on each Remittance Date, that portion of the
Available Funds, if any, required to be deposited into the
Spread Account pursuant to Section 6.07(b)(vii) until the
Spread Account Balance equals the then applicable Specified
Spread Account Requirement; and
(iii) amounts required to be paid by the Servicer
pursuant to Section 6.06(e) in connection with losses on
investments of amounts in the Spread Account.
(b) Amounts on deposit in the Spread Account shall be
withdrawn by the Spread Account Custodian and transferred to the Trustee for
distribution in the manner set forth in subclause (c) below on each Remittance
Date in the following order of priority:
(i) to deposit in the Certificate Account an amount
by which (a) the sum of the Class A and Class M Interest
Distribution Amounts, the Class A and Class M Principal
Distribution Amounts and the Class Carry Forward Amounts for
the Class A and Class M Certificates exceeds (b) the Available
Funds for such Remittance Date (but excluding from such
definition of Available Funds, amounts in the Spread Account);
(ii) to deposit in the Certificate Account the
amount, if any, required to make the full distribution to the
Expense Account pursuant to Section 6.07(b)(vi); and
VI-2
74
(iii) to the extent that the amount then on deposit
in the Spread Account after giving effect to all required
transfers from the Spread Account to the Certificate Account
on such Remittance Date then exceeds the Specified Spread
Account Requirement as of such Remittance Date (such excess, a
"Spread Account Excess"), an amount equal to such Spread
Account Excess shall be distributed by the Spread Account
Custodian first, to the Class B Certificateholders, the
amount, if any, by which the Class B Interest Distribution
Amount, the Class B Principal Distribution Amount and the
Class B Carry-Forward Amount for such Remittance Date exceeds
the portion of the Available Funds (but excluding from such
definition amounts in the Spread Account) being distributed to
the Class B Certificates on such Remittance Date, and second,
to the Spread Account Depositor;
and also, in no particular order of priority:
(iv) to invest amounts on deposit in the Spread
Account in Permitted Instruments pursuant to Section 6.06;
(v) to withdraw any amount not required to be
deposited in the Spread Account or deposited therein in error;
and
(vi) to clear and terminate the Spread Account upon
the termination of this Agreement in accordance with the terms
of Section 11.01.
(c) Any amounts which are required to be withdrawn from the
Spread Account pursuant to paragraph (b) above shall be withdrawn from the
Spread Account in the following order of priority: (i) first, from any
uninvested funds therein, and (ii) second, from the proceeds of the liquidation
of any investments therein pursuant to Section 6.06(b).
(d) Any amounts which are distributed by the Spread Account
Custodian to the Spread Account Depositor pursuant to paragraph (b) above will
not be required to be refunded, regardless of whether there are sufficient funds
on a subsequent Remittance Date to make a full distribution to holders of the
Certificates on such Remittance Date.
Section 6.03 Establishment of Expense Account; Deposits in
Expense Account; Permitted Withdrawals from
Expense Account
(a) No later than the Closing Date, the Trustee will establish
with itself an account for the benefit of the Trustee to pay its fees and
expenses related to the Trust Fund (the "Expense Account"). The Expense Account
shall not constitute part of the Trust Fund and is for the benefit of the
Trustee and, on a subordinate basis, for the benefit of the Servicer as
described in (b)(ii) and (c) below. The Trustee shall deposit into the Expense
Account:
VI-3
75
(i) on each Remittance Date from the amounts on
deposit in the Certificate Account an amount equal to
one-twelfth of the Annual Expense Escrow Amount; and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.06(e) in connection with losses
on investments of amounts in the Expense Account.
If, at any time the amount then on deposit in the Expense Account shall be
insufficient to pay in full the fees and expenses of the Trustee then due, the
Trustee shall make demand on the Servicer to advance the amount of such
insufficiency, and the Servicer shall promptly advance such amount to the
Trustee. Thereafter, the Servicer shall be entitled to reimbursement from the
Expense Account for the amount of any such advance from any excess funds
available pursuant to subclause (c)(ii) below. Without limiting the obligation
of the Servicer to advance such insufficiency, in the event the Servicer does
not advance the full amount of such insufficiency by the Business Day
immediately preceding the Determination Date, the amount of such insufficiency
shall be deposited into the Expense Account for payment to the Trustee pursuant
to Section 6.07(b)(viii), to the extent of available funds in the Certificate
Account.
(b) The Trustee, at the direction of the Servicer, may invest
amounts on deposit in the Expense Account in Permitted Instruments pursuant to
Section 6.06 hereof, and the Trustee shall withdraw amounts on deposit in the
Expense Account to:
(i) pay the Trustee's fees and expenses as described
in Section 2.08 hereof;
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) withdraw any amounts not required to be
deposited in the Expense Account or deposited therein in
error; and
(iv) clear and terminate the Expense Account upon the
termination of this Agreement in accordance with the terms of
Section 11.01.
(c) On the twelfth Remittance Date following the Closing Date,
and on each twelfth Remittance Date thereafter, the Trustee shall determine that
all payments required to be made during the prior twelve month period pursuant
to subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and, if all
such payments have been made, from the amounts remaining in the Expense Account,
the Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the Bank, for
reimbursable advances made pursuant to Section 9.01;
VI-4
76
(ii) reimburse the Servicer for advances made by it
pursuant to the last paragraph of subclause (a) above; and
(iii) remit to the Servicer as additional servicing
compensation any amounts remaining in the Expense Account
after payments made pursuant to subclauses (b)(i), (b)(ii),
(b)(iii), (c)(i) and (c)(ii), above.
Section 6.04 Pre-Funding Account and Capitalized Interest
Account.
(a) No later than the Closing Date, the Bank shall establish
and maintain with the Trustee in its trust department a trust account, which
shall not be interest-bearing, titled "First International Bank, SBA Pre-Funding
Account 2000-1" (the "Pre-Funding Account"). The Pre-Funding Account shall not
constitute part of the Trust Fund. The Bank shall be deemed the owner of the
Pre-Funding Account for Federal income tax purposes. The Trustee shall, promptly
upon receipt, deposit into the Pre-Funding Account and retain therein the
Original Pre-Funded Amount from the proceeds of the sale of the Certificates.
(b) On each Subsequent Transfer Date, the Bank shall instruct
the Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of
the aggregate Principal Balances of the Subsequent SBA Loans as of the related
Subsequent Cut-Off Date sold to the Trust Fund on such Subsequent Transfer Date
and pay such amount to or upon the order of the Bank with respect to such
transfer.
(c) If at the end of the Funding Period amounts still remain
in the Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw
from the Pre-Funding Account on the immediately following Remittance Date and
deposit such amounts in the Certificate Account. However, if at the close of
business on June 14, 2000 amounts still remain in the Pre-Funding Account, the
Servicer shall instruct the Trustee to withdraw from the Pre-Funding Account on
the Special Remittance Date and deposit in the Certificate Account any
Pre-Funded Amount then remaining in the Pre-Funding Account, and then the
Pre-Funding Account shall be closed.
(d) On the Remittance Dates occurring in April, May and June
2000, the Trustee shall transfer from the Pre-Funding Account to the Certificate
Account, the Pre-Funding Earnings, if any, applicable to each such Remittance
Date.
(e) No later than the Closing Date, the Bank shall establish
and maintain with the Trustee in its trust department a trust account, which
shall not be interest-bearing, titled "First International Bank, SBA Capitalized
Interest Account 2000-1" (the "Capitalized Interest Account"). The Capitalized
Interest Account shall not constitute part of the Trust Fund. The Bank shall be
deemed the owner of the Capitalized Interest Account for Federal income tax
purposes. The Trustee shall, promptly upon receipt, deposit into the Capitalized
Interest Account $293,717.81. If prior to the end of the Funding Period the
funds on deposit in the Pre-Funding Account are invested in a guaranteed
investment contract, repurchase agreement or other arrangement acceptable to the
Rating Agencies, that constitutes a Permitted Instrument, the
VI-5
77
Trustee shall, within one Business Day of its receipt of notification of
satisfaction of the Rating Agency Condition, withdraw from the Capitalized
Interest Account and pay to the Bank the amount set forth in such notification.
(f) On each Subsequent Transfer Date the Bank may instruct the
Trustee to withdraw from the Capitalized Interest Account and pay on such
Subsequent Transfer Date to the Bank the Overfunded Interest Amount for such
Subsequent Transfer Date, as calculated by the Bank pursuant to Section 2.09(e)
hereof.
(g) On the Remittance Dates occurring in April, May and June
2000, the Trustee shall transfer from the Capitalized Interest Account to the
Certificate Account, the Capitalized Interest Requirement, if any, for such
Remittance Dates.
(h) On the Special Remittance Date, the Trustee shall transfer
from the Capitalized Interest Account to the Certificate Account the Capitalized
Interest Requirement, if any, for such Special Remittance Date. Any amounts
remaining in the Capitalized Interest Account after taking into account such
transfer shall be paid on such Special Remittance Date to the Bank, and the
Capitalized Interest Account shall be closed.
Section 6.05 [Intentionally Omitted]
Section 6.06 Investment of Accounts.
(a) So long as no default or Event of Default shall have
occurred and be continuing, and consistent with any requirements of the Code,
all or a portion of any Account which is not by the terms of this Agreement to
be held uninvested by the Trustee or the Spread Account Custodian shall be
invested and reinvested by the Trustee or the Spread Account Custodian, as
directed in writing by the Servicer, in one or more Permitted Instruments in the
name of the Trustee or the Spread Account Custodian, as the case may be, bearing
interest or sold at a discount. No such investment in the Certificate Account,
the Pre-Funding Account, the Capitalized Interest Account and the Spread Account
shall mature later than the Business Day immediately preceding the next
Remittance Date and no such investment in the Expense Account shall mature later
than the Business Day immediately preceding the date such funds will be needed
to pay fees or premiums; provided, however, the Trustee or any affiliate
thereof, may be the obligor on any investment which otherwise qualifies as a
Permitted Instrument and any investment on which the Trustee is the obligor may
mature on such Remittance Date or date when needed, as the case may be.
(b) If any amounts are needed for disbursement from any
Account held by the Trustee or the Spread Account Custodian and sufficient
uninvested funds are not available to make such disbursement, the Trustee or the
Spread Account Custodian, as the case may be, shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in such
Account. Neither the Trustee nor the Spread Account Custodian shall be liable
for any investment loss or other charge resulting therefrom.
VI-6
78
(c) Subject to Section 12.01 hereof, neither the Trustee nor
the Spread Account Custodian shall in any way be held liable by reason of any
insufficiency in any Account held by the Trustee or the Spread Account Custodian
resulting from any investment loss on any Permitted Instrument included therein
(except to the extent that the Trustee is the obligor thereon).
(d) The Trustee and the Spread Account Custodian shall invest
and reinvest funds in the Accounts held by the Trustee or the Spread Account
Custodian, to the fullest extent practicable, in such manner as the Servicer
shall from time to time direct in writing, but only in one or more Permitted
Instruments.
(e) All income or other gain from investments in any Account
held by the Trustee or the Spread Account Custodian shall be deposited in such
Account, as the case may be, immediately on receipt, and the Trustee or the
Spread Account Custodian shall notify the Servicer of any loss resulting from
such investments. The Servicer shall remit the amount of any such loss, to the
extent that such investment was made at the direction of the Servicer, from its
own funds, without reimbursement therefor, to the Trustee or the Spread Account
Custodian, as the case may be, for deposit in the Account from which the related
funds were withdrawn for investment by the next Determination Date following
receipt by the Servicer of such notice.
Section 6.07 Distributions.
(a) The rights of the Certificateholders to receive
distributions from the proceeds of the Trust Fund, and all ownership interests
of the Certificateholders in such distributions, shall be as set forth in this
Agreement.
(b) On each Remittance Date the Trustee shall withdraw from
the Certificate Account the sum of (A) that portion of the Available Funds
received from the Servicer pursuant to Section 6.01(a)(i), (ii) and (iv),and (B)
the amounts deposited therein pursuant to Section 6.02(b)(i) and make
distributions thereof in the following order of priority:
(i) First, to the Class A Certificates in an amount
up to the Class A Interest Distribution Amount;
(ii) Second, to the Class M Certificates in an amount
up to the Class M Interest Distribution Amount (other than the
Class M Interest Shortfall Amount, if any);
(iii) Third, to the Class A Certificates in an amount
up to the sum of (a) the Class Principal Distribution Amount
for the Class A Certificates and (b) the Class Carry Forward
Amount for the Class A Certificates;
VI-7
79
(iv) Fourth, to the Class M Certificates, in an
amount up to the sum of (a) the Class Principal Distribution
Amount for the Class M Certificates and (b) the Class Carry
Forward Amount for the Class M Certificates;
(v) Fifth, to the Class M Certificates, the Class M
Interest Shortfall Amount.
(vi) Sixth, to the Expense Account in an amount up to
one-twelfth of the Annual Expense Escrow Amount plus any
amount required to be paid to the Trustee pursuant to Section
6.03(a) resulting from insufficiencies in the Expense Account;
(vii) Seventh, to the Spread Account, any remaining
Available Funds unless and until the amount therein equals the
Specified Spread Account Requirement;
(viii) Eighth, to the Class B Certificates in an
amount up to the Class B Interest Distribution Amount (other
than the Class B Interest Shortfall Amount, if any);
(ix) Ninth, to the Class B Certificates, the Class
Principal Distribution Amount for the Class B Certificates;
(x) Tenth, to the Class B Certificates, the Class B
Interest Shortfall Amount;
(xi) Eleventh, to the Class B Certificates, the Class
Carry-Forward Amount for the Class B Certificates;
(xii) Twelfth, to the Servicer in an amount up to the
Reimbursable Amounts; and
(xiii) Thirteenth, to the Spread Account Depositor,
any amounts in excess of the Specified Spread Account
Requirement.
Additionally, on the Special Remittance Date, the Trustee
shall withdraw from the Certificate Account the amount, if any, deposited
therein pursuant to Section 6.01(a)(v) and make distributions thereof as
follows: (i) from amounts transferred from the Pre-Funding Account,
distributions of principal to the Class A, Class M and Class B Certificates pro
rata based upon the Class A, Class M and Class B Percentages and (ii) from
amounts transferred from the Capitalized Interest Account, distributions of
interest to such Class A, Class M and Class B Certificates equal to the
applicable Capitalized Interest Requirement.
VI-8
80
(c) All distributions made to the Certificateholders of a
particular Class will be made on a pro rata basis among the Certificateholders
of record of the applicable Class on the next preceding Record Date based on the
Percentage Interest represented by their respective Certificates on such date,
and shall be made by check or, upon request by a Certificateholder, by wire
transfer of immediately available funds to the account of such Certificateholder
at a bank or other entity having appropriate facilities therefor, and, in the
case of wire transfers, at the expense of such Certificateholder unless such
Certificateholder shall own of record Certificates which have initial
Certificate Principal Balances aggregating at least $5,000,000.
Section 6.08 [Intentionally Omitted]
Section 6.09 Statements.
Each month, not later than 12:00 noon New York time on the
Determination Date, the Servicer shall deliver to the Trustee, by telecopy, for
distribution to the Certificateholders, the receipt and legibility of which
shall be confirmed telephonically, with hard copy thereof and the Servicer's
Monthly Computer Diskette in the form attached hereto as Exhibit L (both in hard
copy and in computer diskette form) to be delivered on the Business Day
following the Determination Date, a certificate signed by a Servicing Officer (a
"Servicer's Certificate") stating the date (day, month and year), the Series
number of the Certificates, the date of this Agreement, and, as of the close of
business on the Record Date for such month:
(i) Available Funds for the related Remittance Date;
(ii) The Aggregate Class A Certificate Principal
Balance, the Aggregate Class M Certificate Principal Balance,
the Aggregate Class B Certificate Principal Balance and the
Pool Principal Balance as reported in the prior Servicer's
Certificate pursuant to subclause (xii) below, or, in the case
of the first Determination Date, the Original Class A, Class M
and Class B Certificate Principal Balance and the Original
Pool Principal Balance;
(iii) The number and Principal Balances of all SBA
Loans which were the subject of Principal Prepayments during
the Due Period and the number and Principal Balances of all
Defaulted SBA Loans purchased by the Servicer during the Due
Period;
(iv) The product of the Unguaranteed Percentage
multiplied by all Curtailments which were received during the
Due Period;
(v) The product of the Unguaranteed Percentage
multiplied by all Excess Payments and the product of the
Unguaranteed Percentage multiplied by all Monthly Payments in
respect of principal received during the Due Period;
VI-9
81
(vi) The aggregate amount of interest received on the
Unguaranteed Interest of each SBA Loan net of the FTA's Fee,
the Additional Fee and the Servicing Fee attributable to the
Unguaranteed Interest;
(vii) The amount of the Monthly Advances to be made
on the Determination Date and the Compensating Interest
payment to be made on the Determination Date;
(viii) The delinquency and foreclosure information
set forth in the form attached hereto as Exhibit K;
(ix) The product of the Unguaranteed Percentage
multiplied by the amount of any losses realized on a
Liquidated SBA Loan;
(x) The Class A, Class M and Class B Interest
Distribution Amounts and Principal Distribution Amounts for
the Remittance Date with the components thereof stated
separately;
(xi) The amount stated in dollars and as a percentage
of the current aggregate Principal Balance of the Class A,
Class M and Class B Certificates of the funds available in the
Spread Account as of the related Record Date in cash and from
liquidation of Permitted Instruments and the amount, if any,
to be transferred from the Spread Account to the Certificate
Account pursuant to Section 6.02(b)(i);
(xii) The Aggregate Class A Certificate Principal
Balance, Aggregate Class M Certificate Principal Balance,
Aggregate Class B Certificate Principal Balance and the Pool
Principal Balance after giving effect to the distribution to
be made on the Remittance Date;
(xiii) The Spread Account Balance and the Specified
Spread Account Requirement with respect to such Remittance
Date;
(xiv) The weighted average maturity and weighted
average SBA Loan Interest Rate;
(xv) The Servicing Fees and the Annual Expense Escrow
Amount and other amounts to be deposited to the Expense
Account;
(xvi) The amount of all payments and reimbursements
to the Servicer pursuant to Section 5.04 (b), (c), (d)(ii),
(e) and (f);
(xvii) The Class A, Class M and Class B Benchmark
Rates with respect to such Remittance Date and the actual
interest rate for the Class A, Class
VI-10
82
M and Class B Certificates with respect to such Remittance
Date based upon the Class A, Class M and Class B Interest
Distribution Amounts;
(xviii) During the Funding Period, the aggregate
Principal Balance of the Subsequent SBA Loans purchased during
the prior Due Period and the amount on deposit in the
Pre-Funding Account and the Capitalized Interest Account as of
the end of such Due Period; and
(xix) Such other information as the Trustee, the
Certificateholders or the Rating Agencies may reasonably
require; provided, however, that the Servicer shall have no
obligation to distribute such information directly to any
Certificateholder.
The Trustee shall forward such report to the
Certificateholders and the Rating Agencies on the Remittance Date, together with
a separate report indicating the amount of funds deposited in the Certificate
Account pursuant to Section 6.01(a)(iv); and the amounts which are reimbursable
to the Servicer or the Bank pursuant to Sections 6.03(c)(i), 6.03(c)(ii) and
6.07(b)(xii) (all reports prepared by the Trustee of such withdrawals and
deposits will be based in whole or in part upon the information provided to the
Trustee by the Servicer).
To the extent that there are inconsistencies between the
telecopy of the Servicer's Certificate and the hard copy thereof, the Trustee
shall be entitled to rely upon the telecopy. In the case of information
furnished pursuant to subclauses (ii), (iii), (iv), (v), (x) and (xii), above,
the amounts shall be expressed in a separate section of the report as a dollar
amount for each Class per $1,000 original dollar amount as of the Cut-Off Date.
Additionally, on the Special Remittance Date the Trustee
shall, based upon information received from the Servicer, forward to the
Certificateholders and the Rating Agencies a report setting forth the amount of
principal and interest, if any, being paid to each Class of Certificates on the
Special Remittance Date.
(a) Within a reasonable period of time after the end of each
calendar year, the Servicer shall furnish to the Trustee for distribution to
each Person who at any time during the calendar year was a Certificateholder
such information as is reasonably necessary to provide to such Person a
statement containing the information set forth in subclauses (vi), (x), and
(xiv), above, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the
Servicer shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Servicer pursuant to any
requirements of the Code as from time to time are in force.
(b) Upon reasonable advance notice in writing, the Servicer
will provide to each Certificateholder which is a savings and loan association,
bank or insurance company certain reports and access to information and
documentation regarding the SBA Loans sufficient to
VI-11
83
permit such Certificateholder to comply with applicable regulations of its
regulatory authorities with respect to investment in the Certificates.
(c) The Servicer shall furnish to each Certificateholder,
during the term of this Agreement, such periodic, special, or other reports or
information, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the Certificateholder or otherwise
with respect to the purposes of this Agreement, all such reports or information
to be provided by and in accordance with such applicable instructions and
directions as the Certificateholder may reasonably require; provided, that the
Servicer shall be entitled to be reimbursed by such Certificateholder for the
Servicer's actual expenses incurred in providing such reports if such reports
are not producible in the ordinary course of the Servicer's business. The Rating
Agencies shall receive copies of any such reports or information furnished to
the Certificateholders.
Section 6.10 Advances by the Servicer.
Not later than the close of business on each Determination
Date, the Servicer, may in its sole discretion, if it determines such amount is
recoverable, remit to the Trustee for deposit in the Certificate Account an
amount (as indicated in the Servicer's Certificate prepared pursuant to Section
6.09), to be distributed on the related Remittance Date pursuant to Section
6.07, equal to the amount by which (i) 30 days' interest at a rate equal to the
then applicable Adjusted SBA Loan Benchmark Rate on the aggregate Class A, Class
M and Class B Principal Balances immediately prior to the related Remittance
Date (plus or minus the difference, if any, between (A) the sum of the Class A,
Class M and Class B Interest Distribution Amounts and (B) the sum of the
Adjusted Class A, Adjusted Class M and Adjusted Class B Interest Distribution
Amounts for the related Remittance Date) exceeds (ii) the amount received by the
Servicer as of the related Record Date in respect of interest on the SBA Loans
minus the interest payable to the Registered Holders, the Premium Protection
Fee, the Additional Fee, the Servicing Fee and the FTA's Fee (plus, for the
Remittance Dates in April, May and June 2000, the sum of (i) all funds to be
transferred to the Certificate Account from the Capitalized Interest Account for
such Remittance Date pursuant to Section 6.04(g) and (ii) the Pre-Funding
Earnings for the applicable Remittance Date), such excess being defined herein
as the "Monthly Advance." The Servicer may reimburse itself for Monthly Advances
made pursuant to Section 5.04. Notwithstanding the foregoing, the Servicer shall
not be required to make a Monthly Advance with respect to an SBA Loan if it
determines, in good faith, that such advance would be nonrecoverable from
amounts received in respect of the SBA Loans.
Section 6.11 Compensating Interest.
The Certificateholders shall be entitled to a full month's
interest on the principal portion of the Unguaranteed Interest of each SBA Loan
at the then applicable Class A, Class M or Class B Benchmark Rate, as the case
may be. Not later than the close of business on each Determination Date, with
respect to each SBA Loan for which a Principal Prepayment or Curtailment was
received during the related Due Period, the Servicer shall remit to the Trustee
VI-12
84
for deposit in the Certificate Account from amounts otherwise payable to it as
servicing compensation (other than the Premium Protection Fee and the Servicing
Fee with respect to the Guaranteed Interest), an amount (such amount required to
be delivered to the Trustee is referred to herein as "Compensating Interest")
(as indicated in the Servicer's Certificate prepared pursuant to Section 6.09)
equal to the difference between (a) 30 days' interest at the Adjusted SBA Loan
Benchmark Rate on the Principal Balance of each such SBA Loan as of the
beginning of the Due Period applicable to the Remittance Date on which such
amount will be distributed, and (b) the amount of interest actually received on
the Unguaranteed Interest of each such SBA Loan for such Due Period net of the
portion thereof payable to the Registered Holder, the Premium Protection Fee,
the FTA's Fee, the Servicing Fee, the Excess Spread and the fees and expenses of
the Trustee allocable to such interest and, with respect to each Additional Fee
SBA Loan, the Additional Fee.
Section 6.12 Reports of Foreclosure and Abandonment of
Mortgaged Property
Each year the Servicer shall make the reports of foreclosures
and abandonments of any Mortgaged Property required by Section 6050J of the
Code. Promptly after filing each such report with the Internal Revenue Service,
the Servicer shall provide the Trustee with an Officer's Certificate certifying
that such report has been filed.
VI-13
85
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 [Intentionally Omitted]
Section 7.02 Satisfaction of Mortgages and Collateral and
Release of SBA Files
The Servicer shall maintain the Fidelity Bond as provided for
in Section 5.09 insuring the Servicer against any loss it may sustain with
respect to any SBA Loan not satisfied in accordance with the procedures set
forth herein.
Upon the payment in full of any SBA Loan, or the receipt by
the Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the FTA and
the Trustee by a certification in the form of Exhibit I attached hereto (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Principal and Interest Account pursuant to Section 5.03 have
been or will be so deposited) of a Servicing Officer and shall request delivery
to it of the Trustee's Document File. The Multi-Party Agreement provides for
release by FTA of the related SBA Note in accordance with the terms of the
Multi-Party Agreement. Upon receipt of such certification and request, the
Trustee shall release, within 3 Business Days, the related Trustee's Document
File to the Servicer. Expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be payable only from and to the
extent of servicing compensation and shall not be chargeable to the Principal
and Interest Account or the Certificate Account.
Subject to the Multi-Party Agreement, from time to time and as
appropriate for the servicing or foreclosure of any SBA Loan, the Trustee shall,
upon request of the Servicer and delivery to the Trustee of a certification in
the form of Exhibit I attached hereto signed by a Servicing Officer, release the
related Trustee's Document File to the Servicer within 3 Business Days, and the
Trustee shall execute such documents as shall be necessary to the prosecution of
any such proceedings. The Multi-Party Agreement provides for release by FTA of
the related SBA Note in accordance with the terms of the Multi-Party Agreement.
The Servicer shall return the Trustee's Document File to the FTA and the Trustee
when the need therefor by the Servicer no longer exists, unless the SBA Loan has
been liquidated and the Unguaranteed Percentage of the Liquidation Proceeds
relating to the SBA Loan has been deposited in the Principal and Interest
Account and remitted to the Trustee for deposit in the Certificate Account or
the SBA File or such document has been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of initiating
or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property or repossession of other Collateral either judicially or
non-judicially, and the Servicer has delivered to the Trustee a certificate of a
Servicing Officer certifying as to the name and address of the Person to whom
such SBA File or
VII-1
86
such document was delivered and the purpose or purposes of such delivery. Upon
receipt of a certificate of a Servicing Officer stating that such SBA Loan was
liquidated, the servicing receipt relating to such SBA Loan shall be released by
the Trustee to the Servicer.
The Trustee shall execute and deliver to the Servicer any
court pleadings, requests for trustee's sale or other documents provided to it
necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property or other Collateral or to any legal action brought to obtain judgment
against any Obligor on the SBA Note or Mortgage or other agreement securing
Collateral or to obtain a deficiency judgment, or to enforce any other remedies
or rights provided by the SBA Note or Mortgage or other agreement securing
Collateral or otherwise available at law or in equity. Together with such
documents or pleadings, the Servicer shall deliver to the Trustee a certificate
of a Servicing Officer requesting that such pleadings or documents be executed
by the Trustee and certifying as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee will not
invalidate or otherwise affect the lien of the Mortgage or other agreement
securing Collateral, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale. The Trustee shall, upon receipt of a
written request from a Servicing Officer, execute any document provided to the
Trustee by the Servicer or take any other action requested in such request, that
is, in the opinion of the Servicer as evidenced by such request, required by any
state or other jurisdiction to discharge the lien of a Mortgage or other
agreement securing Collateral upon the satisfaction thereof and the Trustee will
sign and post, but will not guarantee receipt of, any such documents to the
Servicer, or such other party as the Servicer may direct, within five Business
Days of the Trustee's receipt of such certificate or documents. Such certificate
or documents shall establish to the Trustee's satisfaction that the related SBA
Loan has been paid in full by or on behalf of the Obligor and that such payment
has been deposited in the Principal and Interest Account.
Section 7.03 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall
be entitled to retain from interest payments on the SBA Loans or withdraw from
the Principal and Interest Account (to the extent deposited therein) the
Servicer's Servicing Fee and the Premium Protection Fee and, in accordance with
Section 5.04(b), any accrued but unreimbursed Premium Protection Fees and
Servicing Fees. Additional servicing compensation in the form of assumption and
other administrative fees, interest paid on funds on deposit in the Principal
and Interest Account, interest paid and earnings realized on Permitted
Instruments, amounts remitted pursuant to Section 6.03(c)(iii) and late payment
charges shall be retained by or remitted to the Servicer to the extent not
required to be remitted to the Trustee for deposit in the Certificate Account.
The Servicer shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein.
Section 7.04 Annual Statement as to Compliance.
VII-2
87
The Servicer will deliver to the Trustee, the SBA and the
Rating Agencies on or before March 31 of each year beginning March 31, 2001, an
Officer's Certificate stating that (i) the Servicer has fully complied with the
provisions of Articles V and VII, (ii) a review of the activities of the
Servicer during the preceding calendar year and of performance under this
Agreement has been made under such officer's supervision, and (iii) to the best
of such officer's knowledge, based on such review, the Servicer has fulfilled
all its 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 officers and the nature and status thereof and the action
being taken by the Servicer to cure such default.
Section 7.05 Annual Independent Public Accountants' Servicing
Report
On or before March 31 of each year beginning March 31, 2001,
the Servicer, at its expense, shall cause one of the "big five" accounting firms
to furnish a letter or letters to the Trustee and the Rating Agencies to the
effect that such firm has with respect to the Servicer's overall servicing
operations examined such operations in accordance with the requirements of the
Uniform Single Audit Program for Mortgage Bankers, and stating such firm's
conclusions relating thereto.
Section 7.06 SBA's and Trustee's Right to Examine Servicer
Records and Audit Operations
The SBA and the Trustee shall have the right upon reasonable
prior notice, during normal business hours and as often as reasonably required,
to examine and audit any and all of the books, records or other information of
the Servicer, whether held by the Servicer or by another on behalf of the
Servicer, which may be relevant to the performance or observance by the Servicer
of the terms, covenants or conditions of this Agreement. No amounts payable in
respect of the foregoing shall be paid from the Trust Fund.
Section 7.07 Reports to the Trustee; Principal and Interest
Account Statements.
Not later than 20 days after each Record Date, the Servicer
shall forward to the Trustee and the SBA a statement, certified by a Servicing
Officer, setting forth the status of the Principal and Interest Account as of
the close of business on the preceding Record Date and showing, for the period
covered by such statement, the aggregate of deposits into the Principal and
Interest Account for each category of deposit specified in Section 5.03, the
aggregate of withdrawals from the Principal and Interest Account for each
category of withdrawal specified in Section 5.04, the aggregate amount of
permitted withdrawals not made in the related Due Period, and the amount of any
Monthly Advances or payments of Compensating Interest, in each case, for the
related Due Period.
Section 7.08 Premium Protection Fee and Servicing Fee.
VII-3
88
Pursuant to and in accordance with the policies of the SBA and
SBA Form 1086, the Servicer shall retain the Premium Protection Fee and the
Servicing Fee for each SBA Section 7(a) Loan. Neither the Premium Protection Fee
nor the Servicing Fee shall constitute part of the Trust Fund and
Certificateholders shall have no interest in, and are not entitled to receive
any portion of, either the Premium Protection Fee or the Servicing Fee. If the
Servicer is replaced as servicer pursuant to any provision of this Agreement, it
shall no longer be entitled to the Premium Protection Fee and the Servicing Fee
but, instead, the successor servicer shall be entitled thereto.
VII-4
89
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements.
The Servicer understands that, in connection with a transfer
of the Certificates, Certificateholders may request that the Servicer make
available to prospective Certificateholders the annual audited financial
statements of the Servicer's parent (First International Bancorp, Inc., and any
successor thereto) for one or more of the most recently completed five fiscal
years for which such statements are publicly available, which request shall not
be unreasonably denied.
The Servicer also agrees to make available on a reasonable
basis to any prospective Certificateholder a knowledgeable financial or
accounting officer for the purpose of answering reasonable questions respecting
recent developments affecting the Servicer or the financial statements of the
Servicer and its parent (First International Bancorp, Inc. and any successor
thereto) and to permit any prospective Certificateholder to inspect the
Servicer's servicing facilities during normal business hours for the purpose of
satisfying such prospective Certificateholder that the Servicer has the ability
to service the SBA Loans in accordance with this Agreement.
VIII-1
90
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims.
(a) The Servicer agrees to indemnify and hold the Trustee, the
SBA, and each Certificateholder harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the SBA, and any
Certificateholder may sustain in any way related to the failure of the Servicer
to perform its duties and service the SBA Loans in compliance with the terms of
this Agreement. The Servicer shall immediately notify the Trustee, the SBA and
each Certificateholder if a claim is made by any party with respect to this
Agreement, and the Servicer shall assume (with the consent of the indemnified
party) 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 Servicer, the
Trustee, the SBA, and/or a Certificateholder in respect of such claim. The
Trustee may reimburse the Servicer from the Expense Account pursuant to Section
6.03(c)(i) for all amounts advanced by it pursuant to the preceding sentence
except when the claim relates directly to the failure of the Servicer to service
and administer the SBA Loans in compliance with the terms of this Agreement.
(b) The Bank agrees to indemnify and hold the Trustee, the SBA
and each Certificateholder harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the SBA, and any
Certificateholder may sustain in any way related to the failure of the Servicer,
if it is an affiliate thereof, or the failure of the Bank or the Funding Trust
to perform its respective duties in compliance with the terms of this Agreement
and in the best interests of the SBA and the Certificateholders. The Bank shall
immediately notify the Trustee, the SBA, and each Certificateholder if a claim
is made by a third party with respect to this Agreement, and the Bank shall
assume (with the consent of the indemnified party) 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 Servicer, the Bank, the Trustee, the SBA and/or a
Certificateholder in respect of such claim. The Trustee may reimburse the Bank
from the Expense Account pursuant to Section 6.03(c)(i) for all amounts advanced
by them pursuant to the preceding sentence except when the claim relates
directly to the Bank's indemnification pursuant to Section 2.05 and Section 3.03
or to the failure of the Servicer, if it is an affiliate of the Seller, to
perform its obligations to service and administer the Mortgages in compliance
with the terms of this Agreement, or the failure of the Seller to perform its
duties in compliance with the terms of this Agreement and in the best interests
of the SBA and the Certificateholders.
IX-1
91
Section 9.02 Merger or Consolidation of the Servicer;
Assignment of the Servicer's Duties.
The Servicer will keep in full effect its existence, rights
and franchises as a corporation, bank or association and will obtain and
preserve its qualification to do business as a foreign entity in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the SBA Loans and to perform its duties under this
Agreement.
Any Person into which the Servicer may be merged or
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to all or substantially all of the business of the Servicer, shall be an
established mortgage loan servicing institution that has a net worth of at least
$15,000,000 and shall be an approved SBA guaranteed lender in good standing,
operating pursuant to an effective Loan Guaranty Agreement, and shall be the
successor of the Servicer, hereunder, 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 except as may be otherwise required by
the SBA Rules and Regulations and the Multi-Party Agreement. The Servicer shall
send notice of any such merger or consolidation to the Trustee, the Rating
Agencies and the SBA.
Subject to the receipt of written approval from the SBA, the
Servicer is permitted to assign its rights and duties hereunder to, and such
rights and duties can be assumed by, an affiliate of the Servicer having a net
worth of at least $15,000,000 and which is an approved SBA guaranteed lender in
good standing, operating pursuant to an effective Loan Guaranty Agreement (the
"Assignee") (in which case all of the provisions of this Agreement and the
Multi-Party Agreement shall, to the same extent as they apply to the Servicer
hereunder, apply to the Assignee rather than 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 except as may be
otherwise required by the SBA Rules and Regulations and the Multi-Party
Agreement. The Servicer shall send notice of any such assignment to the Trustee,
the Rating Agencies and the SBA.
Section 9.03 Limitation on Liability of the Servicer and
Others.
The Servicer and any director, officer, employee or agent of
the Servicer may rely on any document of any kind which it in good faith
reasonably believes to be genuine and to have been adopted or signed by the
proper authorities or persons respecting any matters arising hereunder. Subject
to the terms of Section 9.01 herein, the Servicer shall have no obligation to
appear with respect to, prosecute or defend any legal action which is not
incidental to the Servicer's duty to service the SBA Loans in accordance with
this Agreement.
Section 9.04 Servicer Not to Resign.
IX-2
92
The Servicer shall not assign this Agreement nor resign from
the obligations and duties hereby imposed on it except (i) by mutual consent of
the Servicer, the SBA, the Trustee and the Majority Certificateholders, or (ii)
in connection with a merger, conversion or consolidation permitted pursuant to
Section 9.02 and with the prior written consent of the SBA and written notice to
the Rating Agencies (in which case the Person resulting from the merger,
conversion or consolidation shall be the successor of the Servicer), or (iii) in
connection with an assignment permitted pursuant to Section 9.02 and with the
consent of the SBA (in which case the Assignee shall be the successor of the
Servicer), or (iv) upon the determination that the Servicer's duties hereunder
are no longer permissible under applicable law or administrative determination
and such incapacity cannot be cured by the Servicer. Any such determination
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 Trustee, the SBA and to each Certificateholder, which Opinion
of Counsel shall be in form and substance acceptable to the Trustee and the SBA.
No such resignation shall become effective until a successor approved in writing
by the SBA has assumed the Servicer's responsibilities and obligations hereunder
in accordance with Section 10.02.
IX-3
93
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
(a) In case one or more of the following Events of Default by
the Servicer shall occur and be continuing, that is to say:
(i) (A) the failure by the Servicer to make any
required Servicing Advance, to the extent such failure
materially and adversely affects the interests of the
Certificateholders; (B) the failure by the Servicer to make
any required Monthly Advance; (C) the failure by the Servicer
to remit any Compensating Interest; or (D) any failure by the
Servicer to remit to Certificateholders, or to the Trustee for
the benefit of the Certificateholders, any payment required to
be made under the terms of this Agreement which continues
unremedied after the date upon which written notice of such
failure, requiring the same to be remedied, shall have been
given to the Servicer by the Trustee or to the Servicer and
the Trustee by any Certificateholder; or
(ii) failure by the Servicer or the Sellers duly to
observe or perform, in any material respect, any other
covenants, obligations or agreements of the Servicer or the
Sellers as set forth in this Agreement, which failure
continues unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer or the
Sellers, as the case may be, by the Trustee or to the
Servicer, or the Sellers, as the case may be, and the Trustee
by any Certificateholder; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction for the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force,
undischarged or unstayed for a period of 60 days; or
(iv) the Servicer shall consent to the appointment of
a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling 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; or
(v) the Servicer shall admit in writing its inability
to pay its debts as they become due, file a petition to take
advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors,
or voluntarily suspend payment of its obligations;
X-1
94
(b) then, and in each and every such case, so long as an Event
of Default shall not have been remedied, and in the case of clause (i) above
(except for clause (i)(B)), if such Event of Default shall not have been
remedied within 30 days after the Servicer has received notice of such Event of
Default, (x) with respect solely to clause (i)(B) above, if such Monthly Advance
is not made earlier than 4:00 p.m. New York time on the Determination Date, the
Trustee shall give immediate telephonic notice of such failure to a Servicing
Officer of the Servicer and, unless such failure is cured, either by receipt of
payment or receipt of evidence (e.g., a wire reference number communicated by
the sending bank) that such funds have been sent, by 12:00 Noon New York time on
the following Business Day, the Trustee shall immediately assume, pursuant and
subject to Section 10.02 and the Multi-Party Agreement, the duties of a
successor servicer; and (y) in the case of clauses (i)(A), (i)(C), (i)(D),
(iii), (iv) and (v), the Majority Certificateholders, by notice in writing to
the Servicer (except with respect to (iii), (iv) and (v) for which no notice is
required) may, in addition to whatever rights such Certificateholders may have
at law or equity including damages, injunctive relief and specific performance,
in each case, with the consent of the SBA (which consent may be withheld in its
sole discretion) immediately terminate all the rights and obligations of the
Servicer under this Agreement and in and to the SBA Loans and the proceeds
thereof, as Servicer. Upon such receipt by the Servicer of a second written
notice from the Majority Certificateholders (accompanied with the consent of the
SBA) stating that they or it intend to terminate the Servicer as a result of
such Event of Default, all authority and power of the Servicer under this
Agreement, whether with respect to the SBA Loans or otherwise, shall, subject to
Section 10.02 and the Multi-Party Agreement, pass to and be vested in the
Trustee and the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, 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 SBA Loans and related documents. The Servicer agrees to
cooperate with the Trustee in effecting the termination of the Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee for administration by it of all amounts which shall at
the time be credited by the Servicer to each Principal and Interest Account or
thereafter received with respect to the SBA Loans. The Trustee shall provide
notice to the SBA of any Event of Default and any actual termination hereunder.
Section 10.02 Trustee to Act; Appointment of Successor
On and after the time of the Servicer's immediate termination,
or the Servicer's receipt of notice if required by Section 10.01, or at any time
if the Trustee receives the resignation of the Servicer evidenced by an Opinion
of Counsel pursuant to Section 9.04 or the Servicer is removed as Servicer
pursuant to this Article X, the Trustee shall be the successor in all respects
to the Servicer in its capacity as Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof; provided, however, that the Trustee shall
not be liable for any actions of any Servicer prior to it, and that
X-2
95
the Trustee shall not be obligated to make advances or payments pursuant to
Sections 6.03, 6.10, 6.11 or 5.10 but only to the extent the Trustee determines
reasonably and in good faith that such advances would not be recoverable, such
determination to be evidenced with respect to each such advance by a
certification of a Responsible Officer of the Trustee. As compensation therefor,
the Trustee shall be entitled to all funds relating to the SBA Loans which the
Servicer would have been entitled to receive from the Principal and Interest
Account pursuant to Section 5.04 if the Servicer had continued to act as
Servicer hereunder, together with other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided in Sections 7.01
and 7.03 and shall be entitled to the Servicing Fee and the Premium Protection
Fee.
Notwithstanding the above, the Trustee shall, if it is unable
to so act or if the SBA so requests in writing to the Trustee, appoint, or
petition a court of competent jurisdiction to appoint, any established servicing
institution acceptable to the SBA including but not limited to the SBA and
satisfying the Rating Agency Condition that has a net worth of not less than
$15,000,000, and which is an approved SBA guaranteed lender in good standing,
operating pursuant to an effective Loan Guaranty Agreement, 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. Any
collections received by the Servicer after removal or resignation shall be
endorsed by it to the Trustee and remitted directly to the Trustee or, at the
direction of the Trustee, to the successor servicer. As compensation, any
successor servicer (including, without limitation, the Trustee) so appointed
shall be entitled to receive all funds relating to the SBA Loans which the
Servicer would have been entitled to receive from the Principal and Interest
Account pursuant to Section 5.04 if the Servicer had continued to act as
Servicer hereunder, together with any other servicing compensation in the form
of assumption fees, late payment charges or otherwise as provided in Section
7.03 and shall be entitled to the Servicing Fee and the Premium Protection Fee.
In the event the Trustee is required to solicit bids as provided herein, the
Trustee shall solicit, by public announcement, bids from 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 and Premium Protection Fees as
servicing compensation, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise. Within thirty days
after any such public announcement, the Trustee shall negotiate and effect the
sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest qualifying bid. The
Trustee shall deduct from any sum received by the Trustee from the successor to
the Servicer in respect of such sale, transfer and assignment all costs and
expenses of any public announcement and of any sale, transfer and assignment of
the servicing rights and responsibilities hereunder and the amount of any
unreimbursed Servicing Advances and Monthly Advances. After such deductions, the
remainder of such sum shall be paid by the Trustee as a servicing fee to the SBA
at the time of such sale, transfer and assignment to the Servicer's successor.
The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. The Servicer
agrees to cooperate with the Trustee and any successor servicer in effecting the
termination of the Servicer's servicing responsibilities and rights hereunder
and shall promptly provide the Trustee or such successor servicer, as
applicable, all documents and records reasonably requested by it to
X-3
96
enable it to assume the Servicer's functions hereunder and shall promptly also
transfer to the Trustee or such successor servicer, as applicable, all amounts
which then have been or should have been deposited in the Principal and Interest
Account or Spread Account by the Servicer or which are thereafter received with
respect to the SBA Loans. Neither the Trustee nor any other successor servicer
shall be held liable by reason of any failure to make, or any delay in making,
any distribution hereunder or any portion thereof caused by (i) the failure of
the Servicer to deliver, or any delay in delivering, cash, documents or records
to it, or (ii) restrictions imposed by any regulatory authority having
jurisdiction over the Servicer hereunder. No appointment of a successor to the
Servicer hereunder shall be effective until written notice of such proposed
appointment shall have been provided by the Trustee to each Certificateholder
and the SBA and the Trustee and the SBA shall have consented thereto. The
Trustee shall not resign as servicer until a successor servicer acceptable to
the SBA has been appointed.
Subject to the Multi-Party Agreement, pending appointment of a
successor to the Servicer hereunder, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on SBA Loans as it and such successor shall agree; provided, however,
that no such compensation shall be in excess of that permitted the Servicer
pursuant to Section 7.03 or otherwise as provided in this Agreement. The
Servicer, the Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
Section 10.03 Waiver of Defaults.
The SBA may, or the Majority Certificateholders may on behalf
of all Certificateholders and subject to the consent of the SBA, which consent
may not be unreasonably withheld, and satisfaction of the Rating Agency
Condition, waive any events permitting removal of the Servicer pursuant to this
Article X; provided, however, that the Majority Certificateholders or the SBA
may not waive a default in making a required distribution on a Certificate
without the consent of the holder of such Certificate. Upon any waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto except to the extent expressly so waived.
Section 10.04. Control by Majority Certificateholders and
Others.
The SBA may, or the Majority Certificateholders with the
consent of the SBA may, direct the time, method and place of conducting any
proceeding relating to the Trust Fund or the Certificates or for any remedy
available to the Trustee with respect to the Certificates or exercising any
trust or power conferred on the Trustee with respect to the Certificates or the
Trust Fund provided that:
(i) such direction shall not be in conflict with any
rule of law or with this Agreement;
X-4
97
(ii) the Trustee shall have been provided with
indemnity satisfactory to it; and
(iii) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction; provided, however, that the Trustee, as the case
may be, need not take any action which it determines might
involve it in liability or may be unjustly prejudicial to the
Certificateholders not so directing.
X-5
98
ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon notice to the Trustee of the
earlier of the following events: (a) the final payment or other liquidation of
the last SBA Loan or the disposition of all property acquired upon foreclosure
or deed in lieu of foreclosure or other legal process of any SBA Loan and the
remittance of all funds due thereunder, or (b) mutual consent of the Servicer
and all Certificateholders in writing; provided, however, that in no event shall
the Trust Fund established by this Agreement terminate later than twenty-one
years after the death of the last surviving lineal descendant of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, late Ambassador of the United States to the Court of St. ▇▇▇▇▇, alive
as of the date hereof.
The Servicer may, at its option, terminate this Agreement on any date
on which the Pool Principal Balance is less than 10% of the sum of (i) the
Original Pool Principal Balance and (ii) the Original Pre-Funded Amount by
purchasing, on the next succeeding Remittance Date, all of the Unguaranteed
Interests in the SBA Loans and Foreclosed Properties at a price equal to the sum
of (i) 100% of the then outstanding Aggregate Class A, Class M and Class B
Certificate Principal Balances, and (ii) 30 days' interest thereon at the then
applicable Class A, Class M and Class B Benchmark Rates, as the case may be (the
"Termination Price"). Notwithstanding the prior sentence, if at the time the
Servicer determines to exercise such option the unsecured long-term debt
obligations of the Servicer are not rated at least Baa3 by ▇▇▇▇▇'▇ and BBB- by
Fitch, if such Rating Agencies are still rating the Certificates, the Servicer
shall give such Rating Agencies prior written notice of the Servicer's
determination to exercise such option and shall not exercise such option,
without the consent of such Rating Agencies, prior to furnishing such Rating
Agencies with an Opinion of Counsel, in form and substance reasonably
satisfactory to such Rating Agencies, that the exercise of such option would not
be deemed a fraudulent conveyance by the Servicer.
Notice of any termination, specifying the Remittance Date upon which
the Trust Fund will terminate and that the Certificateholders shall surrender
their Certificates to the Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer by letter to
Certificateholders mailed during the month of such final distribution before the
Determination Date in such month, specifying (i) the Remittance Date upon which
final payment of the Certificates will be made upon presentation and surrender
of Certificates at the office of the Trustee therein designated, (ii) the amount
of any such final payment and (iii) that the Record Date otherwise applicable to
such Remittance Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Servicer shall give such notice to the Trustee therein
specified. The Servicer shall give such notice to the Trustee at the time such
notice is given to Certificateholders. Any obligation of the Servicer to pay
amounts due to the Trustee shall survive the termination of this Agreement.
XI-1
99
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned written notice, the Servicer shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto and shall
at the expense of the Trust Fund cause to be published once, in the national
edition of The Wall Street Journal notice that such money remains unclaimed. If
within six months after the second notice all of the Certificates shall not have
been surrendered for cancellation, the Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within the period then specified in the escheat laws of the State of
New York after the second notice all the Certificates shall not have been
surrendered for cancellation, the Bank shall be entitled to all unclaimed funds
and other assets which remain subject hereto and the Trustee upon transfer of
such funds shall be discharged of any responsibility for such funds and the
Certificateholders shall look to the Bank for payment.
Section 11.02 Accounting Upon Termination of Servicer
Upon termination of the Servicer under Article X hereof, the Servicer
shall:
(a) deliver to its successor or, if none shall yet have been appointed,
to the Trustee the funds in any Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been appointed,
to the Trustee all SBA Files and related documents and statements held by it
hereunder and a SBA Loan portfolio computer diskette;
(c) deliver to its successor or, if none shall yet have been appointed,
to the Trustee and, upon request, to the Certificateholders a full accounting of
all funds, including a statement showing the Monthly Payments collected by it
and a statement of moneys held in trust by it for the payments or charges with
respect to the SBA 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 SBA Loans to its successor and to more fully and definitively
vest in such successor all rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer under this Agreement.
XI-2
100
ARTICLE XII
THE TRUSTEE
Section 12.01 Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement, provided, however that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer or the Sellers hereunder. If any such instrument is
found not to conform to the requirements of this Agreement in a material manner,
the Trustee shall take action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders and the
Servicer.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct or bad faith; provided, however, that:
(a) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
(b) The Trustee shall not be personally liable for an error of judgment
made in good faith by officers of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the
XII-1
101
Majority Certificateholders, and upon receiving the consent of the SBA, where
the SBA's consent is required) relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Agreement;
(d) In the absence of actual knowledge of an officer of the Trustee in
its Corporate Trust Office of an Event of Default, the Trustee shall not be
required to take notice or be deemed to have notice or knowledge of any default
or Event of Default unless the Trustee shall be specifically notified in writing
by the Servicer or any of the Certificateholders. In the absence of actual
knowledge or receipt of such notice, the Trustee may conclusively assume that
there is no default or Event of Default; and
(e) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability for the performance of any of its duties
hereunder or the exercise of any of its rights or powers if there is reasonable
ground for believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
Section 12.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 12.01:
(i) The Trustee may request and rely and shall be
protected in acting or refraining from acting upon any
resolution, Officer's Certificate, certificate of auditors or
any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any
opinion of counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with
such opinion of counsel;
(iii) The Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Agreement or
to institute, conduct or defend by litigation hereunder or in
relation hereto at the request, order or direction of the
Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered
to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein
or thereby; nothing contained herein shall, however, relieve
the Trustee of the obligation, upon the occurrence of an Event
of Default (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;
XII-2
102
(iv) The Trustee shall not be personally liable for
any action taken, suffered or omitted by it in good faith and
reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this
Agreement;
(v) Prior to the occurrence of an Event of Default
hereunder and after the curing of all Events of Default which
may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so
by Holders of Certificates evidencing Percentage Interests
aggregating not less than 25% provided, however, that if the
payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may
require reasonable indemnity against such expense or liability
as a condition to taking any such action. The reasonable
expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be repaid by the
Servicer upon demand from the Servicer's own funds;
(vi) The right of the Trustee to perform any
discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Trustee shall not be answerable
for other than its negligence or willful misconduct or bad
faith in the performance of such act;
(vii) The Trustee shall not be required to give any
bond or surety in respect of the execution of the trust
created hereby or the powers granted hereunder;
(viii) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys; and
(ix) In the event that the Trustee is also acting as
Paying Agent, Certificate Registrar or Spread Account
Custodian, the rights and protections afforded to the Trustee
shall be afforded to the Trustee in such capacity as Paying
Agent, Certificate Registrar or Spread Account Custodian, as
the case may be.
Section 12.03 Trustee Not Liable for Certificates
or SBA Loans.
The recitals contained herein and in the Certificates (other
than the certificate of authentication on the Certificates) shall be taken as
the statements of the Servicer, and the
XII-3
103
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates or of any SBA Loan or related document. The Trustee shall not be
accountable for the use or application by the Servicer of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Servicer in respect of the SBA Loans or
deposited in or withdrawn from the Principal and Interest Account by the
Servicer. The Trustee shall not be responsible for the legality or validity of
the Agreement or the validity, priority, perfection or sufficiency of the
security for the Certificates issued or intended to be issued hereunder.
Section 12.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates with the same rights it would have if it
were not Trustee, and may otherwise deal with the parties hereto.
Section 12.05 Servicer To Pay Trustee's Fees
and Expenses.
The Servicer covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder of the Trustee, and the
Servicer will pay or reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith, provided that the
Trustee shall have no lien on the Trust Fund for the payment of its fees and
expenses. To the extent that actual fees and expenses of the Trustee exceed the
amount available for payment thereof on deposit in the Expense Account as of the
date such fees and expenses are due and payable, the Servicer shall reimburse
the Trustee for such shortfall out of its own funds without reimbursement
therefor, except as provided in Section 6.03. The Trustee and any director,
officer, employee or agent of the Trustee and the Spread Account Custodian and
any director, officer, employee or agent of the Spread Account Custodian shall
be indemnified by the Servicer and held harmless against any loss, liability or
expense (i) incurred in connection with any legal action relating to this
Agreement or the Certificates, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder, and (ii) resulting from any error in any tax
or information return prepared by the Servicer. The obligations of the Servicer
under this Section 12.05 shall survive payment of the Certificates, and shall
extend to any co-trustee appointed pursuant to this Article XII.
XII-4
104
Section 12.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be (i) a national
banking association or banking corporation or trust company organized and doing
business under the laws of any state or the United States of America, (ii)
authorized under such laws to exercise corporate trust powers, (iii) having a
combined capital and surplus of at least $30,000,000, (iv) having unsecured and
unguaranteed long-term debt obligations rated at least Baa3 by ▇▇▇▇▇'▇ and BBB-
by Fitch or such other rating as is acceptable to the SBA, (v) is subject to
supervision or examination by federal or state authority, (vi) is an approved
SBA guaranteed lender in good standing, operating pursuant to an effective Loan
Guaranty Agreement, and (vii) is reasonably acceptable to the SBA. If such
banking association 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 this Section its combined capital and
surplus shall be deemed to be as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
(a) give prompt notice to the SBA and each Certificateholder that it has so
ceased to be eligible to be the Trustee and (b) resign, upon the request of the
SBA or the Majority Certificateholders, in the manner and with the effect
specified in Section 12.07.
Section 12.07 Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Servicer, the SBA,
and to all Certificateholders. Upon receiving such notice of resignation, the
Servicer shall with the consent of the SBA promptly appoint a successor trustee
by written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such instrument shall
be delivered to the Certificateholders by the Servicer. Unless a successor
trustee shall have been so appointed and have accepted appointment within 60
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee. If the resigning Trustee fails to petition an appropriate court, the
SBA may, after such 60 day period, petition any court of competent jurisdiction
for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 12.06 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Servicer may remove the Trustee and appoint, subject to the approval of the SBA,
a successor trustee by written instrument, in duplicate, which instrument shall
be delivered to the Trustee so removed and to the successor trustee. A copy of
such instrument shall be delivered to the Certificateholders and the SBA by the
Servicer.
XII-5
105
The Majority Certificateholders with the consent of the SBA,
which consent will not be unreasonably withheld, and upon satisfaction of the
Rating Agency Condition, or the SBA may at any time remove the Trustee and
appoint a successor trustee by written instrument or instruments, in triplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Servicer, one complete set to
the Trustee so removed and one complete set to the successor trustee so
appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 12.08.
Section 12.08 Successor Trustee.
Any successor trustee appointed as provided in Section 12.07
shall execute, acknowledge and deliver to the Servicer and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all SBA
Files and related documents and statements held by it hereunder, and the
Servicer and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations.
No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 12.06.
Upon acceptance of appointment by a successor trustee as
provided in this Section, the Servicer shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Servicer fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Servicer.
Section 12.09 Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted
or with which it may be consolidated or any corporation or national banking
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or national banking association
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation or national banking association shall be
eligible under the provisions of Section 12.06, 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. The Trustee shall send notice
of any such merger or consolidation to the Rating Agencies.
XII-6
106
Section 12.10 Appointment of Co-Trustee or Separate
Trustee.
Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing the same may at the time be located,
the Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee and the SBA pursuant to the procedure set forth below, to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Fund, and to vest in such
Person or Persons, in such capacity, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 12.10, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in case an Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 12.06 hereunder. No notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 12.08 hereof. The Trustee shall notify the SBA prior to
the appointment of any co-trustee(s) or separate trustee(s) and the SBA shall
have ten Business Days from its receipt of such notice to notify the Trustee
whether it, in its reasonable judgment, disapproves of such co-trustee(s) or
separate trustee(s). If the SBA does not notify the Trustee within such time
frame, it will be deemed to have approved such co-trustee(s) or separate
trustee(s). If the SBA notifies the Trustee within such time frame that it, in
its reasonable judgment, disapproves of such co-trustee(s) or separate
trustee(s) (which notice shall be accompanied by the name(s) of the SBA's
alternative proposed co-trustee(s) or separate trustee(s)), such appointments
shall not be effective.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 12.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee at the direction of the
Trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XII. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided
XII-7
107
therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. The Trustee shall not
be responsible for any action or inaction of any such separate trustee or
co-trustee. If any separate trustee or co-trustee shall die, become incapable of
acting, resign or be removed, all of its estates, properties, rights, remedies
and trusts shall vest in and be exercised by the Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
Section 12.11 Authenticating Agent.
Upon the request of the Servicer, the Trustee shall appoint an
Authenticating Agent, initially, HSBC Bank USA, with power to act on the
Trustee's behalf and subject to its direction in the authentication and delivery
of the Certificates in connection with transfers and exchanges under Section
4.02, as fully to all intents and purposes as though the Authenticating Agent
had been expressly authorized by that Section to authenticate and deliver
Certificates. For all purposes of this Agreement, the authentication and
delivery of Certificates by the Authenticating Agent pursuant to this Section
shall be deemed to be the authentication and delivery of Certificates by the
Trustee. Such Authenticating Agent shall at all times be a Person meeting the
requirements for the Trustee set forth in Section 12.06.
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation or national
banking association is otherwise eligible under this Section, without the
execution or filing of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving
notice of resignation to the Trustee and the Servicer. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and the Servicer. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section, the
Trustee shall promptly appoint a successor Authenticating Agent and shall give
written notice of such appointment to all Certificateholders as their names and
addresses appear on the Certificate Register. The Servicer agrees to pay to the
Authenticating Agent from time to time reasonable compensation for its services.
The provisions of Sections 4.04 and 12.03 shall be applicable to any
Authenticating Agent.
XII-8
108
Section 12.12 Tax Returns and Reports.
The Trustee, upon request, will furnish the Servicer with all
such information as may be reasonably required in connection with the Servicer's
preparation of all Tax Returns of the Trust Fund and, upon request within five
(5) Business Days after its receipt thereof, shall (i) sign on behalf of the
Trust Fund any Tax Return that the Trustee is required to sign pursuant to
applicable federal, state or local tax laws, and (ii) cause such Tax Return to
have been returned to the Servicer for filing.
The Servicer shall prepare and file or cause to be filed with
the Internal Revenue Service Federal tax information returns with respect to the
Trust Fund and the Certificates containing such information and at the times and
in the manner as may be required by the Code or applicable Treasury regulations,
and shall furnish to each Holder of Certificates at any time during the calendar
year for which such returns or reports are made such statements or information
at the times and in the manner as may be required thereby. The Trustee shall
sign all tax information returns filed pursuant to this Section and any other
returns as may be required by the Code, and in doing so shall rely entirely
upon, and shall have no liability for information provided by, or calculations
provided by, the Servicer.
Section 12.13 Protection of Trust Fund.
(a) The Trustee will hold the Trust Fund and such other assets
as may from time to time be deposited with it hereunder in trust for the benefit
of the Holders and the SBA and at the request of the Sellers or the SBA will
from time to time execute and deliver all such supplements and amendments hereto
pursuant to Section 13.02 hereof and all instruments of further assurance and
other instruments, and will take such other action upon such request as it deems
reasonably necessary or advisable, to:
(i) more effectively hold in trust all or any portion
of the Trust Fund or such other assets;
(ii) perfect, publish notice of, or protect the
validity of any grant made or to be made by this Agreement;
(iii) with the consent of the SBA, enforce any of the
SBA Loans; or
(iv) preserve and defend title to the Trust Fund and
the rights of the Trustee for the benefit of the
Certificateholders and the SBA, in such Trust Fund against the
claims of any other Persons and parties.
The Trustee shall send copies of any request received from the Sellers
or the SBA to take any action pursuant to this Section 12.13 to the Holders.
XII-9
109
(b) Subject to Article X hereof, the Trustee shall have the
power to enforce, and shall enforce the obligations of the other parties to this
Agreement by action, suit or proceeding at law or equity, and shall also have
the power to enjoin, by action or suit in equity, any acts or occurrences which
may be unlawful or in violation of the rights of the Holders; provided, however,
that nothing in this Section 12.13 shall require any action by the Trustee
unless the Trustee shall first (i) have been furnished indemnity satisfactory to
it and (ii) when required by this Agreement, have been requested to take such
action by the Majority Certificateholders, the SBA or the Sellers in accordance
with the terms of this Agreement.
(c) The Trustee shall execute any instrument required pursuant
to this Section so long as such instrument does not conflict with this Agreement
or with the Trustee's fiduciary duties.
Section 12.14 Representations, Warranties and Covenants of
Trustee.
The Trustee hereby makes the following representations,
warranties and covenants on which the Sellers, the Servicer, the SBA and the
Certificateholders shall rely:
(a) The Trustee is a banking corporation and trust company
duly organized, validly existing and in good standing under the laws of the
State of New York.
(b) The Trustee has full power, authority and legal right to
execute, deliver and perform this Agreement, and shall have taken all necessary
action to authorize the execution, delivery and performance by it of this
Agreement.
(c) The execution, delivery and performance by the Trustee of
this Agreement shall not (i) violate any provision of any law or any order,
writ, judgment or decree of any court, arbitrator or governmental authority
applicable to the Trustee or any of its assets, (ii) violate any provision of
the corporate charter or By-laws of the Trustee or (iii) violate any provision
of, or constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of any lien on any properties included in
the Trust Fund pursuant to the provisions of, any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation, default
or lien could reasonably be expected to materially and adversely affect the
Trustee's performance or ability to perform its duties under this Agreement or
the transactions contemplated in this Agreement.
(d) The execution, delivery and performance by the Trustee of
this Agreement shall not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with or the taking of any other
action in respect of any governmental authority or agency regulating the banking
and corporate trust activities of the Trustee.
(e) This Agreement has been duly executed and delivered by the
Trustee and constitutes the legal, valid and binding agreement of the Trustee,
enforceable in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium and other
XII-10
110
similar laws relating to or affecting creditors' rights generally or the
application of equitable principles in any proceeding, whether at law or in
equity. The Trustee hereby agrees and covenants that it will not at any time in
the future, deny that this Agreement constitutes the legal, valid and binding
agreement of the Trustee.
(f) The Trustee shall not take any action, or fail to take any
action, if such action or failure to take action will materially interfere with
the enforcement of any rights of the SBA or the Certificateholders under this
Agreement or the Certificates.
(g) The Trustee will comply at all times with the provisions
of the SBA Rules and Regulations in respect of its activities concerning the SBA
Loans, and will at all times hold an effective Loan Guaranty Agreement.
XII-11
111
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Acts of Certificateholders
Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders if the Majority
Certificateholders agree to take such action or give such consent or approval.
Section 13.02 Amendment.
(a) This Agreement may be amended from time to time by the
Sellers, the Servicer and the Trustee by written agreement, upon the prior
written consent of the SBA, without the notice to or consent of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein, to comply with any changes in the Code, or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Trustee, adversely affect the interests of any
Certificateholder or any other party and further provided that no such amendment
shall reduce in any manner the amount of, or delay the timing of, any amounts
received on SBA Loans which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate, or change the rights or
obligations of any other party hereto without the consent of such party.
(b) This Agreement may be amended from time to time by the
Sellers, the Servicer, the Trustee and the Majority Certificateholders, upon the
prior written consent of the SBA, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders; provided, however, that no
such amendment shall reduce in any manner the amount of, or delay the timing of,
any amounts which are required to be distributed on any Certificate without the
consent of the Holders of such Certificate or reduce the percentage of Holders
which are required to consent to any such amendment without the consent of the
Holders of 100% of the Certificates affected thereby and, provided further, that
no amendment affecting only one class of Certificates shall require the approval
of Holders of Certificates of the other Classes.
(c) It shall not be necessary for the consent of Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
XIII-1
112
Section 13.03 Recordation of Agreement.
To the extent permitted by applicable law, this Agreement 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 Certificateholders' expense on direction of the
Majority Certificateholders, but only when accompanied by an Opinion of Counsel
to the effect that such recordation materially and beneficially affects the
interests of the Certificateholders or is necessary for the administration or
servicing of the SBA Loans.
Section 13.04 Duration of Agreement.
This Agreement shall continue in existence and effect until
terminated as herein provided.
SECTION 13.05 GOVERNING LAW.
EXCEPT TO THE EXTENT INCONSISTENT WITH FEDERAL LAW, IN WHICH
CASE FEDERAL LAW WILL GOVERN, THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 13.06 Notices.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by overnight mail, certified mail or registered mail, postage prepaid,
to (i) in the case of the Bank, First International Bank, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other addresses
as may hereafter be furnished to the Certificateholders in writing by the Bank,
(ii) in the case of the Funding Trust, FIB Funding Trust c/o First International
Bank, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇
▇▇▇▇▇ or at any other address previously furnished in writing by the Funding
Trust, (iii) in the case of the Trustee, HSBC Bank USA, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 12th Floor, Attention: Corporate Trust Department, (iv) in the
case of the Certificateholders, as set forth in the Certificate Register, (v) in
the case of Moody's, to ▇▇▇▇▇'▇ Investors Service, ABS Monitoring Department, ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (vi) in the case of Fitch,
to Fitch IBCA, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and (vii) in the
case of the SBA, the United States Small Business Administration, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: Associate Administrator for
Financial Assistance. Any such notices shall be deemed to be effective with
respect to any party hereto upon the receipt of such notice by such
XIII-2
113
party, except that notices to the Certificateholders shall be effective upon
mailing or personal delivery.
Section 13.07 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 13.08 No Partnership.
Nothing herein contained shall be deemed or construed to
create a co-partnership or joint venture between the parties hereto and the
services of the Servicer shall be rendered as an independent contractor and not
as agent for the Certificateholders.
Section 13.09 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 13.10 Permitted Successors and Assigns.
This Agreement shall inure to the benefit of and be binding
upon the Sellers and the Servicer, the Trustee and the Certificateholders and
their respective permitted successors and assigns.
Section 13.11 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 13.12 Paying Agent.
The Trustee hereby appoints HSBC Bank USA as Paying Agent. The
Trustee may appoint one or more other Paying Agents or successor Paying Agents
meeting the eligibility requirements of a Trustee set forth in Section 12.06
(i), (ii), (iii), (iv), (v) and (vii) hereof.
Each Paying Agent, immediately upon such appointment, shall
signify its acceptance of the duties and obligations imposed upon it by this
Agreement by written instrument of acceptance deposited with the Trustee.
XII-3
114
Each such Paying Agent other than the Trustee shall execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of Section 6.06, that such Paying
Agent will:
(a) allocate all sums received for distribution to the Holders
of Certificates for which it is acting as Paying Agent on each Remittance Date
among such Holders in the proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the Holders
entitled thereto until such sums shall be paid to such Holders or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided.
Any Paying Agent other than the Trustee may at any time resign
and be discharged of the duties and obligations created by this Agreement by
giving at least sixty (60) days written notice to the Trustee. Any such Paying
Agent may be removed at any time by an instrument filed with such Paying Agent
signed by the Trustee.
In the event of the resignation or removal of any Paying Agent
other than the Trustee such Paying Agent shall pay over, assign and deliver any
moneys held by it as Paying Agent to its successor, or if there be no successor,
to the Trustee.
Upon the appointment, removal or notice of resignation of any
Paying Agent, the Trustee shall notify the Certificateholders by mailing notice
thereof to their addresses appearing on the Certificate Register.
Section 13.13 Notification to Rating Agencies.
The Trustee shall give prompt notice to the Rating Agencies of
the occurrence of any of the following events of which it has received notice:
(1) any modification or amendment to this Agreement, (2) any change of the
Trustee, the Servicer or Paying Agent, (3) any Event of Default or waiver of an
Event of Default, (4) that any superior lienholder has accelerated or intends to
accelerate the obligations secured by a Prior Lien, and (5) the final payment of
all the Certificates. The Servicer shall promptly deliver to the Rating Agencies
a copy of each of the Servicer's Certificates. Further, the Servicer shall give
prompt notice to the Rating Agencies if the Servicer or any of its affiliates
acquire any Certificates.
Section 13.14 Third Party Rights
The Trustee, the Spread Account Custodian and the Servicer
agree that the SBA shall be deemed a third-party beneficiary of this Agreement
entitled to all the rights and benefits set forth herein as fully as if it were
a party hereto.
XIII-4
115
Section 13.15 Inconsistencies
If any provision of this Agreement is inconsistent with any
provision in the Multi-Party Agreement, the provision of the Multi-Party
Agreement shall control.
XIII-5
116
IN WITNESS WHEREOF, the Bank, the Funding Trust and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
FIRST INTERNATIONAL BANK,
as Seller and Servicer
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
FIB FUNDING TRUST,
as Seller
By: FIRST INTERNATIONAL BANK
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
HSBC BANK USA,
as Trustee
By: /s/ ▇▇▇▇▇ Barstock
----------------------------
Name: ▇▇▇▇▇ Barstock
Title: Assistant Vice President
XIII-6
117
Acceptance of HSBC Bank USA
HSBC Bank USA hereby accepts its appointment under the within
instrument to serve as initial Authenticating Agent, Certificate Registrar and
Paying Agent. In connection therewith, HSBC Bank USA agrees to be bound by all
applicable provisions of such instrument.
HSBC BANK USA, as initial Authenticating Agent,
Certificate Registrar and Paying Agent
By: /s/ ▇▇▇▇▇ Barstock
----------------------------
Name: ▇▇▇▇▇ Barstock
Title: Assistant Vice President
XIII-7
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇)
: ss.:
COUNTY OF NEW YORK)
On the 29th day of March, 2000 before me, a Notary Public in
and for said State, personally appeared ▇▇▇▇▇ Barstock known to me to be an
officer of the Trustee, the trust company that executed the within instrument,
and also known to me to be the person who executed it on behalf of said banking
corporation, and acknowledged to me that such banking corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Notary Public
My Commission expires 12/6/01
▇-▇
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇)
: ss.:
COUNTY OF Hartford)
On the 17th day of March, 2000 before me, a Notary Public in
and for said State, personally appeared ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ known to me to be the Sr.
Vice President of First International Bank, the corporation that executed the
within instrument as seller and servicer, and also known to me to be the person
who executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------
Notary Public
My Commission expires 10/31/04
P-2