1
Exhibit 10.15.3
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
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TABLE OF CONTENTS
Section Page
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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-1
2.05 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; II-Certification by Trustee.................. II-4
2.06 [Intentionally Omitted]........................................ II-5
2.07 Authentication of Certificates................................. II-5
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-3
3.03 Purchase and Substitution of Defective SBA Loans............... III-8
3.04 Representations of the Funding Trust........................... III-10
(i)
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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-6
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)
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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-12
6.12 Reports of Foreclosure and Abandonment of Mortgaged Property... VI-13
ARTICLE VII
GENERAL SERVICING PROCEDURE
7.01 [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-2
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-3
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)
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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-2
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-3
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-6
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)
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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)
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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)
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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:
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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
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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.
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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.
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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.
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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.
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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
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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.
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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.
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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.
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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.
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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.
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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
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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
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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
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(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
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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.
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RATING AGENCIES: Moody's 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
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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.
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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
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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
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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.
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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).
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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.
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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
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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
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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
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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.
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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
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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
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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.
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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
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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
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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 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.
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\ 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
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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,
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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
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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;
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(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
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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
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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
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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.
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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
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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
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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.
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(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).
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(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
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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
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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
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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 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.
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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.
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(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,
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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
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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
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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
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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:
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(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
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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
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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.
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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
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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.
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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;
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(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
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(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:
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(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;
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(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
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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.
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(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;
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(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.
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(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;
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(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
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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
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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
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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.
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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;
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(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
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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
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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;
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(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.
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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.
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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.
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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
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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;
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(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
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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.
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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 Moody's 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.
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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.
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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
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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.
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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.
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(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
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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.
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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.
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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
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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.
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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.
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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.
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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
-------------------------
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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 12/06/01
▇-▇
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ )
: 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
Senior 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
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