EXHIBIT 4.1
EXECUTION COPY
INDENTURE
dated as of September 1, 2001
by and between
ABFS MORTGAGE LOAN TRUST 2001-3,
as Issuer
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 2
Section 1.01. General Definitions.........................................................................2
ARTICLE II THE NOTES 2
Section 2.01. Forms Generally.............................................................................2
Section 2.02. Form of Certificate of Authentication.......................................................2
Section 2.03. General Provisions With Respect to Principal and Interest Payment...........................2
Section 2.04. Denominations...............................................................................3
Section 2.05. Execution, Authentication, Delivery and Dating..............................................3
Section 2.06. Registration, Registration of Transfer and Exchange.........................................4
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes..................................................5
Section 2.08. Payments of Principal and Interest..........................................................5
Section 2.09. Persons Deemed Owner........................................................................7
Section 2.10. Cancellation................................................................................8
Section 2.11. Authentication and Delivery of Notes........................................................8
Section 2.12. Book-Entry Note.............................................................................9
Section 2.13. Termination of Book Entry System...........................................................10
Section 2.14. Limitations on Transfer of the Notes.......................................................11
ARTICLE III COVENANTS 12
Section 3.01. Payment of Notes...........................................................................12
Section 3.02. Maintenance of Office or Agency............................................................12
Section 3.03. Money for Note Payments to Be Held In Trust................................................12
Section 3.04. Existence of Trust.........................................................................14
Section 3.05. Protection of Trust Estate.................................................................15
Section 3.06. Opinions as to the Trust Estate............................................................15
Section 3.07. Performance of Obligations.................................................................16
Section 3.08. Investment Company Act.....................................................................16
Section 3.09. Covenants of the Trust.....................................................................16
Section 3.10. Annual Statement as to Compliance..........................................................18
Section 3.11. Restricted Payments........................................................................18
Section 3.12. Treatment of Notes as Debt for Tax Purposes................................................19
Section 3.13. Notice of Events of Default................................................................19
Section 3.14. Further Instruments and Acts...............................................................19
Section 3.15. Security Interest Matters..................................................................19
ARTICLE IV SATISFACTION AND DISCHARGE............................................................................20
Section 4.01. Satisfaction and Discharge of Indenture....................................................20
Section 4.02. Application of Trust Money.................................................................21
i
ARTICLE V DEFAULTS AND REMEDIES..................................................................................21
Section 5.01. Event of Default...........................................................................21
Section 5.02. Acceleration of Maturity; Rescission and Annulment.........................................23
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee..................23
Section 5.04. Remedies...................................................................................24
Section 5.05. Indenture Trustee May File Proofs of Claim.................................................24
Section 5.06. Indenture Trustee May Enforce Claims Without Possession of Notes...........................25
Section 5.07. Application of Money Collected.............................................................25
Section 5.08. Limitation on Suits........................................................................26
Section 5.09. Unconditional Rights of Noteholders to Receive Principal and Interest......................27
Section 5.10. Restoration of Rights and Remedies.........................................................27
Section 5.11. Rights and Remedies Cumulative.............................................................27
Section 5.12. Delay or Omission Not Waiver...............................................................28
Section 5.13. Control by Noteholders.....................................................................28
Section 5.14. Waiver of Past Defaults....................................................................28
Section 5.15. Undertaking for Costs......................................................................29
Section 5.16. Waiver of Stay or Extension Laws...........................................................29
Section 5.17. Sale of Trust Estate.......................................................................29
Section 5.18. Action on Notes............................................................................31
Section 5.19. No Recourse to Other Trust Estates or Other Assets of the Trust............................31
Section 5.20. Application of the Trust Indenture Act.....................................................31
Section 5.21. Note Insurer Default.......................................................................31
ARTICLE VI THE INDENTURE TRUSTEE.................................................................................32
Section 6.01. Duties of Indenture Trustee................................................................32
Section 6.02. Notice of Default..........................................................................33
Section 6.03. Rights of Indenture Trustee................................................................34
Section 6.04. Not Responsible for Recitals or Issuance of Notes..........................................35
Section 6.05. May Hold Notes.............................................................................35
Section 6.06. Money Held in Trust........................................................................35
Section 6.07. Eligibility, Disqualification..............................................................35
Section 6.08. Indenture Trustee's Capital and Surplus....................................................35
Section 6.09. Resignation and Removal; Appointment of Successor..........................................35
Section 6.10. Acceptance of Appointment by Successor Indenture Trustee...................................37
Section 6.11. Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee...........37
Section 6.12. Preferential Collection of Claims Against Trust............................................38
Section 6.13. Co-Indenture Trustees and Separate Indenture Trustees......................................38
Section 6.14. Authenticating Agents......................................................................39
Section 6.15. Review of Mortgage Files...................................................................40
Section 6.16. Indenture Trustee Fees and Expenses........................................................41
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS.......................................................................42
Section 7.01. Note Registrar to Furnish Indenture Trustee Names and Addresses of Noteholders.............42
Section 7.02. Preservation of Information; Communications to Noteholders.................................42
Section 7.03. Reports by Indenture Trustee...............................................................43
Section 7.04. Reports by Trust...........................................................................44
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ARTICLE VIII ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES..........................................44
Section 8.01. Accounts; Investment; Collection of Moneys.................................................44
Section 8.02. Payments; Statements.......................................................................46
Section 8.03. Claims against the Policy..................................................................48
Section 8.04. General Provisions Regarding the Distribution Accounts and Mortgage Loans..................51
Section 8.05. Releases of Deleted Mortgage Loans.........................................................51
Section 8.06. Reports by Indenture Trustee to Noteholders; Access to Certain Information.................52
Section 8.07. Release of Trust Estate....................................................................52
Section 8.08. Amendment to Sale and Servicing Agreement..................................................52
Section 8.09. Delivery of the Mortgage Files Pursuant to Sale and Servicing Agreement....................52
Section 8.10. Servicer as Agent..........................................................................53
Section 8.11. Termination of Servicer....................................................................53
Section 8.12. Opinion of Counsel.........................................................................53
Section 8.13. Appointment of Collateral Agents...........................................................53
Section 8.14. Rights of the Note Insurer to Exercise Rights of Noteholders...............................53
Section 8.15. Trust Estate and Accounts Held for Benefit of the Note Insurer.............................54
ARTICLE IX SUPPLEMENTAL INDENTURES...............................................................................54
Section 9.01. Supplemental Indentures Without Consent of Noteholders.....................................54
Section 9.02. Supplemental Indentures With Consent of Noteholders........................................55
Section 9.03. Execution of Supplemental Indentures.......................................................57
Section 9.04. Effect of Supplemental Indentures..........................................................57
Section 9.05. Conformity With Trust Indenture Act........................................................57
Section 9.06. Reference in Notes to Supplemental Indentures..............................................57
Section 9.07. Amendments to Governing Documents..........................................................57
ARTICLE X REDEMPTION OF NOTES....................................................................................58
Section 10.01. Redemption.................................................................................58
Section 10.02. Form of Redemption Notice..................................................................59
Section 10.03. Notes Payable on Optional Redemption.......................................................59
ARTICLE XI MISCELLANEOUS.........................................................................................60
Section 11.01. Compliance Certificates and Opinions.......................................................60
Section 11.02. Form of Documents Delivered to Indenture Trustee...........................................60
Section 11.03. Acts of Noteholders........................................................................61
Section 11.04. Notices, etc...............................................................................62
Section 11.05. Notices and Reports to Noteholders; Waiver of Notices......................................63
Section 11.06. Rules by Indenture Trustee.................................................................63
Section 11.07. Conflict With Trust Indenture Act..........................................................63
iii
Section 11.08. Effect of Headings and Table of Contents...................................................64
Section 11.09. Successors and Assigns.....................................................................64
Section 11.10. Separability...............................................................................64
Section 11.11. Benefits of Indenture......................................................................64
Section 11.12. Legal Holidays.............................................................................64
Section 11.13. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial...............................64
Section 11.14. Counterparts...............................................................................65
Section 11.15. Recording of Indenture.....................................................................65
Section 11.16. Trust Obligation...........................................................................65
Section 11.17. No Petition................................................................................65
Section 11.18. Inspection.................................................................................66
Section 11.19. Usury......................................................................................66
Section 11.20. Note Insurer Default.......................................................................66
Section 11.21. Third-Party Beneficiary....................................................................66
Section 11.22. Additional Rights of Note Insurer..........................................................67
APPENDICES, SCHEDULES AND EXHIBITS
Appendix I Defined Terms
Schedule l Mortgage Loan Schedule
Exhibit A Form of Note
Exhibit B Form of Rule 144A Transfer Certificate
Exhibit C Form of Purchaser's Letter for Institutional Accredited Investor
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CROSS-REFERENCE TABLE
Cross-reference sheet showing the location in the Indenture of the provisions
inserted pursuant to Sections 310 through 318(a) inclusive of the Trust
Indenture Act of 1939.1
Trust Indenture Act of 1939 Indenture Section
--------------------------- -----------------
Section 310
(a) (1)................................................................ 6.07
(a) (2)................................................................ 6.07, 6.08
(a) (3)................................................................ 6.13
(a) (4)................................................................ Not Applicable
(a) (5)................................................................ 6.07
(b).................................................................... 6.07, 6.09
(c).................................................................... Not Applicable
Section 311
(a).................................................................... 6.12
(b).................................................................... 6.12
(c).................................................................... Not Applicable
Section 312
(a).................................................................... 7.01(a), 7.02(a)
(b).................................................................... 7.02(b)
(c).................................................................... 7.02(c)
(d).................................................................... 7.03(a)
Section 313
(a).................................................................... 7.03(a)
(b).................................................................... 7.03(a)
(c).................................................................... 11.05
(d).................................................................... 7.03(b)
Section 314
(a)(1)................................................................. 7.04
(a)(2)................................................................. 7.04
(a)(3)................................................................. 7.04
(a)(4)................................................................. 7.04
(b)(1)................................................................. 2.11(c), 11.01
(b)(2)................................................................. 3.06
(c)(1)................................................................. 2.11(d), 4.01,
8.02(d), 11.01
(c)(2)................................................................. 2.11(c), 4.01,
8.02(d), 11.01
(c)(3)................................................................. 8.02(d)
(d)(1)................................................................. 11.01(a)
(d)(2)................................................................. 11.01(a)
(d)(3)................................................................. 11.01(a)
-------------
1 This Cross-Reference Table is not part of the Indenture.
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Trust Indenture Act of 1939 Indenture Section
--------------------------- -----------------
(e).................................................................... 11.0 1(b)
Section 315
(a).................................................................... 6.01(b), 6.01(c)(1)
(b).................................................................... 6.02, 11.05
(c).................................................................... 6.01(a)
(d)(1)................................................................. 6.01(b), 6.01(c)
(d)(2)................................................................. 6.01(c)(2)
(d)(3)................................................................. 6.01(c)(3)
(e).................................................................... 5.15
Section 316
(a).................................................................... 5.20
(b).................................................................... 5.09
(c).................................................................... 5.20
Section 317
(a)(1)................................................................. 5.03
(a)(2)................................................................. 5.05
(b).................................................................... 3.01
Section 318
(a).................................................................... 11.07
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This INDENTURE, dated as of September 1, 2001 (as amended or
supplemented from time to time as permitted hereby, this "Indenture"), is
between ABFS MORTGAGE LOAN TRUST 2001-3, a Delaware statutory business trust
(together with its permitted successors and assigns, the "Trust"), and THE CHASE
MANHATTAN BANK, a New York banking corporation, as indenture trustee (together
with its permitted successors in the trusts hereunder, the "Indenture Trustee").
Preliminary Statement
The Trust has duly authorized the execution and delivery of
this Indenture to provide for its Mortgage Backed Notes, Series 2001-3 (the
"Notes"), issuable as provided in this Indenture. All covenants and agreements
made by the Trust herein are for the benefit and security of the Holders of the
Notes and the Note Insurer. The Trust is entering into this Indenture, and the
Indenture Trustee is accepting the trusts created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement
of the Trust in accordance with its terms have been done.
Granting Clause
The Trust hereby Grants to the Indenture Trustee, for the
exclusive benefit of the Holders of the Notes and the Note Insurer, all of the
Trust's right, title and interest in and to (a) the Mortgage Loans in Mortgage
Loan Group I and Mortgage Loan Group II listed in the Mortgage Loan Schedule
attached as Schedule I to this Indenture (including property that secures a
Mortgage Loan that becomes an REO Property), including the related Mortgage
Files delivered or to be delivered to the Collateral Agent, on behalf of the
Indenture Trustee, pursuant to the Sale and Servicing Agreement, including all
payments of principal received, collected or otherwise recovered after the
Cut-Off Date for each Mortgage Loan, all payments of interest due on each
Mortgage Loan after the Cut-Off Date therefor whenever received and all other
proceeds received in respect of such Mortgage Loans and any Qualified Substitute
Mortgage Loan, (b) the Unaffiliated Seller's Agreement and the Sale and
Servicing Agreement, (c) the Insurance Policies, (d) all cash, instruments or
other property held or required to be deposited in the Collection Account, the
Distribution Accounts, the Note Insurance Payment Account and the
Cross-collateralization Reserve Account, including all investments made with
funds in such Accounts (but so long as no Servicer Event of Default or Event of
Default shall have occurred, not including any income on funds deposited in, or
investments made with funds deposited in, such Accounts, which income shall
belong to and be for the account of the Servicer), and (e) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquid assets, including, without limitation, all insurance proceeds and
condemnation awards. Such Grants are made, however, in trust, to secure the
Notes equally and ratably without prejudice, priority or distinction between any
Note and any other Note by reason of difference in time of issuance or
otherwise, and for the benefit of the Note Insurer to secure (x) the payment of
all amounts due on the Notes in accordance with their terms, (y) the payment of
all other sums payable under this Indenture and the Insurance Agreement and (z)
compliance with the provisions of this Indenture, all as provided in this
Indenture and the Insurance Agreement. All terms used in the foregoing Granting
Clause that are defined in Appendix I are used with the meanings given in said
Appendix I.
The Indenture Trustee acknowledges such Grant, accepts the
trusts hereunder in accordance with the provisions of this Indenture and agrees
to perform the duties herein required to the end that the interests of the
Holders of the Notes may be adequately and effectively protected. The Indenture
Trustee agrees that it will hold the Policy in trust and that it will hold any
proceeds of any claim upon the Policy, solely for the use and benefit of the
Noteholders in accordance with the terms hereof and the Policy.
ARTICLE I
DEFINITIONS
Section 1.01 General Definitions. Except as otherwise
specified or as the context may otherwise require, the terms defined in Appendix
I have the respective meanings set forth in such Appendix I for all purposes of
this Indenture, and the definitions of such terms are applicable to the singular
as well as to the plural forms of such terms and to the masculine as well as to
the feminine genders of such terms. Whenever reference is made herein to an
Event of Default or a Default known to the Indenture Trustee or of which the
Indenture Trustee has notice or knowledge, such reference shall be construed to
refer only to an Event of Default or Default of which the Indenture Trustee is
deemed to have notice or knowledge pursuant to Section 6.01(d). All other terms
used herein that are defined in the Trust Indenture Act (as hereinafter
defined), either directly or by reference therein, have the meanings assigned to
them therein.
ARTICLE II
THE NOTES
Section 2.01 Forms Generally. The Notes shall be substantially
in the form set forth as Exhibit A attached hereto. Each Note may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange on which the Notes may be listed, or as may, consistently
herewith, be determined by the Trust, as evidenced by its execution thereof. Any
portion of the text of any Note may be set forth on the reverse thereof with an
appropriate reference on the face of the Note.
The Definitive Notes may be produced in any manner determined
by the Trust, as evidenced by its execution thereof.
Section 2.02 Form of Certificate of Authentication. The form
of the Authenticating Agent's certificate of authentication is as set forth on
the signature page of the form of the Note attached hereto as Exhibit A.
Section 2.03 General Provisions With Respect to Principal and
Interest Payment. The Notes shall be designated generally as the "ABFS Mortgage
Loan Trust 2001-3, Mortgage Backed Notes, Series 2001-3".
2
The Notes shall be issued in the form specified in Section
2.01 hereof. The Notes shall be issued in the following Classes: the Class A-1
Notes and the Class A-2 Notes. The Class A-1 Notes will have an Original Note
Principal Balance of $253,800,000 and the Class A-2 Notes will have an Original
Note Principal Balance of $52,200,000. The Original Note Principal Balance of
each such Class is limited to such amounts, except for the Notes authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Notes pursuant to Sections 2.06, 2.07, or 9.06 of this Indenture.
Subject to the provisions of Sections 3.01, 5.07, 5.09 and
8.02 of this Indenture, the principal of each Class of Notes shall be payable in
installments ending no later than the related Final Stated Maturity Date, unless
the unpaid principal of such Notes become due and payable at an earlier date by
declaration of acceleration or call for redemption or otherwise.
All payments made with respect to any Note shall be applied
first to the interest then due and payable on such Note and then to the
principal thereof. All computations of interest accrued on any Note shall be
made on the basis of a year of 360 days and twelve 30-day months.
Notwithstanding any of the foregoing provisions with respect
to payments of principal of and interest on the Notes, if the Notes have become
or been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on the Notes shall be made
in accordance with Section 5.07 hereof.
Section 2.04 Denominations. The Notes shall be issuable only
as registered Notes in the denominations equal to the Authorized Denominations.
Section 2.05 Execution, Authentication, Delivery and Dating.
The Notes shall be executed on behalf of the Trust by an Authorized Officer of
the Owner Trustee, acting at the direction of the Certificateholders. The
signature of such Authorized Officer of the Owner Trustee on the Notes may be
manual or by facsimile.
Notes bearing the manual or facsimile signature of an
individual who was at any time an Authorized Officer of the Owner Trustee shall
bind the Trust, notwithstanding that such individual has ceased to be an
Authorized Officer of the Owner Trustee prior to the authentication and delivery
of such Notes or was not an Authorized Officer of the Owner Trustee at the date
of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Trust may deliver Notes executed on behalf of
the Trust to the Authenticating Agent for authentication, and the Authenticating
Agent shall authenticate and deliver such Notes as provided in this Indenture
and not otherwise.
Each Note authenticated on the Closing Date shall be dated the
Closing Date. All other Notes that are authenticated after the Closing Date for
any other purpose hereunder shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for in Section
3
2.02 hereof, executed by the Authenticating Agent by the manual signature of one
of its Authorized Officers or employees, and such certificate of authentication
upon any Note shall be conclusive evidence, and the only evidence, that such
Note has been duly authenticated and delivered hereunder.
Section 2.06 Registration, Registration of Transfer and
Exchange. The Trust shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Trust
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee is hereby initially appointed "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein provided. The
Indenture Trustee shall remain the Note Registrar throughout the term hereof.
Upon any resignation of the Indenture Trustee, the Servicer, on behalf of the
Trust, shall promptly appoint a successor, with the approval of the Note
Insurer, or, in the absence of such appointment, the Servicer, on behalf of the
Trust, shall assume the duties of Note Registrar.
Upon surrender for registration of transfer of any Note at the
office or agency of the Trust to be maintained as provided in Section 3.02
hereof, the Owner Trustee on behalf of the Trust, acting at the direction of the
Certificateholders, shall execute, and the Authenticating Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any Authorized Denominations and of a like
aggregate initial Note Principal Balance.
At the option of the Holder, Notes may be exchanged for other
Notes of any Authorized Denominations, and of a like aggregate Note Principal
Balance upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Owner Trustee shall
execute, and the Authenticating Agent shall authenticate and deliver, the Notes
that the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Trust, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in the form included in Exhibit A attached hereto, duly
executed by the Holder thereof or its attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Notes, but the Note Registrar, on behalf of the Trust,
may require payment of a sum sufficient to cover any tax or other governmental
charge as may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.07 hereof not
involving any transfer or any exchange made by the Note Insurer.
No transfer of a Note shall be made to the Unaffiliated Seller
or, to the actual knowledge of a Responsible Officer of the Indenture Trustee,
to any of the Unaffiliated Seller's Affiliates, successors or assigns.
4
The Note Registrar shall not register the transfer of a Note
unless the Note Registrar has received a representation letter from the
transferee to the effect that either (i) the transferee is not, and is not
acquiring the Note on behalf of or with the assets of, an employee benefit plan
or other retirement plan or arrangement that is subject to Title I of the
Employee Retirement Income Security Act or 1974, as amended, or Section 4975 of
the Code or (ii) the acquisition and holding of the Note by the transferee
qualifies for exemptive relief under a Department of Labor Prohibited
Transaction Class Exemption. Each Beneficial Owner of a Note which is a
Book-Entry Note shall be deemed to make one of the foregoing representations.
Section 2.07 Mutilated, Destroyed, Lost or Stolen Notes. If
(1) any mutilated Note is surrendered to the Note Registrar or the Note
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (2) there is delivered to the Note Registrar such
security or indemnity as may be required by the Note Registrar to save each of
the Trust, the Owner Trustee, the Note Insurer and the Note Registrar harmless,
then, in the absence of notice to the Note Registrar that such Note has been
acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust,
acting at the direction of the Certificateholders, shall execute and upon its
delivery of a Trust Request the Authenticating Agent shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a new Note or Notes of the same tenor and aggregate initial
principal amount bearing a number not contemporaneously outstanding. If, after
the delivery of such new Note, a bona fide purchaser of the original Note in
lieu of which such new Note was issued presents for payment such original Note,
the Note Registrar, shall be entitled to recover such new Note from the person
to whom it was delivered or any person taking therefrom, except a bona fide
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expenses incurred
by the Trust, the Owner Trustee, the Note Insurer or the Note Registrar in
connection therewith. If any such mutilated, destroyed, lost or stolen Note
shall have become or shall be about to become due and payable, or shall have
become subject to redemption in full, instead of issuing a new Note, the Trust
may pay such Note without surrender thereof, except that any mutilated Note
shall be surrendered.
Upon the issuance of any new Note under this Section 2.07, the
Note Registrar, 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
reasonable expenses (including the fees and expenses of the Trust, the Indenture
Trustee or the Note Registrar) connected therewith.
Every new Note issued pursuant to this Section 2.07 in lieu of
any destroyed, lost or stolen Note shall constitute an original contractual
obligation of the Trust, whether or not the destroyed, lost or stolen Note shall
be at any time enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Section 2.07 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.08 Payments of Principal and Interest. (a) Payments
on Notes issued as Book-Entry Notes will be made by or on behalf of the
Indenture Trustee to the Clearing Agency or its nominee. Any installment of
5
interest or principal payable on any Definitive Notes that is punctually paid or
duly provided for by the Trust on the applicable Distribution Date shall be paid
to the Person in whose name such Note (or one or more Predecessor Notes) is
registered at the close of business on the Record Date for such Class of Notes
and such Distribution Date by either (i) check mailed to such Person's address
as it appears in the Note Register on such Record Date, or (ii) by wire transfer
of immediately available funds to the account of a Noteholder, if such
Noteholder (A) is the registered holder of Definitive Notes having an initial
principal amount of at least $1,000,000 and (B) has provided the Indenture
Trustee with wiring instructions in writing by five (5) Business Days prior to
the related Record Date or has provided the Indenture Trustee with such
instructions for any previous Distribution Date, except for the final
installment of principal payable with respect to such Note, which shall be
payable as provided in subsection (b) of this Section 2.08. A fee may be charged
by the Indenture Trustee to a Holder of Definitive Notes for any payment made by
wire transfer. Any installment of interest or principal not punctually paid or
duly provided for shall be payable as soon as funds are available to the
Indenture Trustee for payment thereof, or if Section 5.07 applies, pursuant to
Section 5.07.
(b) All reductions in the Note Principal Balance of a Note
(or one or more Predecessor Notes) effected by payments of installments of
principal made on any Distribution Date shall be binding upon all Holders of
such Note and of any Note issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, whether or not such payment is noted on
such Note. The final installment of principal of each Note shall be payable only
upon presentation and surrender thereof on or after the Distribution Date
therefor at the Corporate Trust Office of the Indenture Trustee located within
the United States of America pursuant to Section 3.02.
Whenever the Indenture Trustee expects that the entire unpaid
Note Principal Balance of any Note will become due and payable on the next
Distribution Date, other than pursuant to a redemption pursuant to Article X, it
shall, no later than two (2) Business Days prior to such Distribution Date,
telecopy or hand deliver to each Person in whose name a Note to be so retired is
registered at the close of business on such otherwise applicable Record Date a
notice to the effect that:
(i) the Indenture Trustee expects that funds sufficient to pay
such final installment will be available in the related Distribution
Account on such Distribution Date; and
(ii) if such funds are available, (A) such final installment
will be payable on such Distribution Date, but only upon presentation
and surrender of such Note at the office or agency of the Note
Registrar maintained for such purpose pursuant to Section 3.02 (the
address of which shall be set forth in such notice) and (B) no interest
shall accrue on such Note after such Distribution Date.
A copy of such form of notice shall be sent to the Note
Insurer by the Indenture Trustee.
6
Notices in connection with redemptions of Notes shall be
mailed to Noteholders in accordance with Section 10.02 hereof.
(c) Subject to the foregoing provisions of this Section 2.08,
each Note delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights to unpaid
principal and interest that were carried by such other Note. Any checks mailed
pursuant to subsection (a) of this Section 2.08 and returned undelivered shall
be held in accordance with Section 3.03 hereof.
(d) The Noteholder Statement, shall be prepared by the
Servicer based on the Servicer calculations of the loan level data provided in
the Servicer Remittance Report delivered to the Indenture Trustee pursuant to
the Sale and Servicing Agreement. Each of the Noteholder Statements and the
Servicer Remittance Report shall be delivered by the Indenture Trustee to the
Note Insurer, the Rating Agencies, the Owner Trustee, the Depositor and each
Noteholder as the statements required pursuant to Section 8.06 hereof. Neither
the Indenture Trustee nor the Collateral Agent shall have any responsibility to
recalculate, verify or recompute information contained in any such tape,
electronic data file or disk or any such Servicer Remittance Report except to
the extent necessary to satisfy all obligations under this Section 2.08(d).
Within ninety (90) days after the end of each calendar year,
the Indenture Trustee will be required to furnish to each Person who at any time
during the calendar year was a Noteholder, if requested in writing by such
person, a statement containing the information set forth in subclauses (a), (b)
and (c) in the definition of "Noteholder Statement," aggregated for such
calendar year or the applicable portion thereof during which such person was a
Noteholder. Such obligation will be deemed to have been satisfied to the extent
that substantially comparable information is provided pursuant to any
requirements of the Code as are from time to time in force.
From time to time (but no more than once per calendar month),
upon the written request of the Depositor, the Servicer or the Note Insurer, the
Indenture Trustee shall report to the Depositor, the Servicer and the Note
Insurer the amount then held in each Account (including investment earnings
accrued) held by the Indenture Trustee and the identity of the investments
included therein. From time to time, at the request of the Note Insurer, the
Indenture Trustee shall report to the Note Insurer with respect to the actual
knowledge of a Responsible Officer, without independent investigation, of any
breach of any of the representations or warranties relating to individual
Mortgage Loans set forth in Section 3.03 of the Unaffiliated Seller's Agreement.
The Indenture Trustee shall also provide the Note Insurer such other information
within its control as may be reasonably requested by it.
Section 2.09. Persons Deemed Owner. Prior to due presentment
for registration of transfer of any Note, any agent on behalf of the Trust
including but not limited to the Indenture Trustee, or the Note Insurer, may
treat the Person in whose name any Note is registered as the owner of such Note
(a) on the applicable Record Date for the purpose of receiving payments of the
principal of and interest on such Note and (b) on any other date for all other
purposes whatsoever, and none of the Trust, the Indenture Trustee or any other
agent of the Trust, or the Note Insurer shall be affected by notice to the
contrary.
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Section 2.10. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Note Registrar, be delivered to the Note Registrar and
shall be promptly canceled by it. The Owner Trustee, on behalf of the Trust,
shall deliver to the Note Registrar for cancellation any Note previously
authenticated and delivered hereunder which the Owner Trustee, on behalf of the
Trust may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly canceled by the Note Registrar. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section 2.10, except as expressly permitted by this Indenture. All
cancelled Notes held by the Note Registrar shall be held by the Note Registrar
in accordance with its standard retention policy, unless the Owner Trustee, on
behalf of the Trust shall direct by a Trust Order that they be destroyed or
returned to it.
Section 2.11. Authentication and Delivery of Notes. The Notes
shall be executed by an Authorized Officer of the Owner Trustee, on behalf of
the Trust, and delivered to the Authenticating Agent for authentication, and
thereupon the same shall be authenticated and delivered by the Authenticating
Agent, upon a Trust Request and upon receipt by the Authenticating Agent of all
of the following:
(a) A Trust Order authorizing the execution, authentication
and delivery of the Notes and specifying the Note Principal Balance and the
Percentage Interest of such Notes to be authenticated and delivered.
(b) A Trust Order authorizing the execution and delivery of
this Indenture and the Sale and Servicing Agreement, the Insurance Agreement and
any other documents contemplated thereby.
(c) One or more Opinions of Counsel (which opinion shall not
be at the expense of the Indenture Trustee or the Trust) addressed to the
Authenticating Agent and the Note Insurer or upon which the Authenticating Agent
and the Note Insurer are expressly permitted to rely, complying with the
requirements of Section 11.01, reasonably satisfactory in form and substance to
the Authenticating Agent and the Note Insurer.
In rendering the opinions set forth above, such counsel may
rely upon Officer's Certificates of the Trust, the Owner Trustee, the
Unaffiliated Seller, the Originators, the Depositor, the Servicer and the
Indenture Trustee, without independent confirmation or verification with respect
to factual matters relevant to such opinions. In rendering the opinions set
forth above, such counsel need express no opinion as to (A) the existence of, or
the priority of the security interest created by the Indenture against, any
liens or other interests that arise by operation of law and that do not require
any filing or similar action in order to take priority over a perfected security
interest or (B) the priority of the security interest created by this Indenture
with respect to any claim or lien in favor of the United States or any agency or
instrumentality thereof (including federal tax liens and liens arising under
Title IV of ERISA).
The acceptability to the Note Insurer of the Opinion of
Counsel delivered to the Authenticating Agent and the Note Insurer at the
Closing Date shall be conclusively evidenced by the delivery on the Closing Date
of the Policy.
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(d) An Officer's Certificate of the Trust complying with the
requirements of Section 11.01 and stating that:
(i) the Trust is not in Default under this Indenture and the
issuance of the Notes will not result in any breach of any of the
terms, conditions or provisions of, or constitute a default under, the
Trust's Certificate of Trust or any indenture, mortgage, deed of trust
or other agreement or instrument to which the Trust is a party or by
which it is bound, or any order of any court or administrative agency
entered in any proceeding to which the Trust is a party or by which it
may be bound or to which it may be subject, and that all conditions
precedent provided in this Indenture relating to the authentication and
delivery of the Notes have been complied with;
(ii) the Trust is the owner of each Mortgage Loan, free and
clear of any lien, security interest or charge, has not assigned any
interest or participation in any such Mortgage Loan (or, if any such
interest or participation has been assigned, it has been released) and
has the right to Grant each such Mortgage Loan to the Indenture
Trustee;
(iii) the information set forth in the Mortgage Loan Schedule
attached as Schedule I to this Indenture is correct;
(iv) the Trust has Granted to the Indenture Trustee all of its
right, title and interest in each Mortgage Loan; and
(v) as of the Closing Date, no lien in favor of the United
States described in Section 6321 of the Code, or lien in favor of the
Pension Benefit Guaranty Corporation described in Section 4068(a) of
the ERISA, has been filed as described in subsections 6323(f) and
6323(g) of the Code upon any property belonging to the Trust.
(e) An executed counterpart of the Sale and Servicing
Agreement.
(f) An executed counterpart of the Unaffiliated Seller's
Agreement.
(g) An executed counterpart of the Trust Agreement.
(h) An executed copy of the Insurance Agreement.
(i) An original executed copy of the Policy.
(j) A copy of a letter from ▇▇▇▇▇'▇ that is has assigned a
rating of "Aaa" to the Notes and a copy of a letter from S&P that it has
assigned a rating of "AAA" to the Notes.
Section 2.12. Book-Entry Note. The Notes will be issued
initially as one or more certificates in the name of Cede & Co., as nominee for
the Clearing Agency maintaining book-entry records with respect to ownership and
transfer of such Notes, and registration of the Notes may not be transferred by
the Note Registrar except upon Book-Entry Termination. In such case, the Note
Registrar shall deal with the Clearing Agency as representative of the
Beneficial Owners of such Notes for purposes of exercising the rights of
Noteholders hereunder. Each payment of principal of and interest on a Book-Entry
Note shall be paid to the Clearing Agency, which shall credit the amount of such
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payments to the accounts of its Clearing Agency Participants in accordance with
its normal procedures. Each Clearing Agency Participant shall be responsible for
disbursing such payments to the Beneficial Owners of the Book-Entry Notes that
it represents and to each indirect participating brokerage firm (a "brokerage
firm" or "indirect participating firm") for which it acts as agent. Each
brokerage firm shall be responsible for disbursing funds to the Beneficial
Owners of the Book-Entry Notes that it represents. All such credits and
disbursements are to be made by the Clearing Agency and the Clearing Agency
Participants in accordance with the provisions of the Notes. None of the
Indenture Trustee, the Note Registrar, if any, the Trust or the Note Insurer
shall have any responsibility therefor except as otherwise provided by
applicable law. Requests and directions from, and votes of, such representatives
shall not be deemed to be inconsistent if they are made with respect to
different Beneficial Owners.
Section 2.13. Termination of Book Entry System. (a) The
book-entry system through the Clearing Agency with respect to the Book-Entry
Notes may be terminated upon the happening of any of the following:
(i) The Clearing Agency advises the Indenture Trustee that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities as nominee and depositary with respect to the Notes
and the Indenture Trustee at the direction of the Note Insurer or the
Majority Noteholder is unable to locate a qualified successor Clearing
Agency;
(ii) The Majority Certificateholders, on behalf of the Trust,
in their sole discretion, elects to terminate the book-entry system by
notice to the Clearing Agency and the Indenture Trustee; or
(iii) After the occurrence of an Event of Default (at which
time the Indenture Trustee shall use all reasonable efforts to promptly
notify each Beneficial Owner through the Clearing Agency of such Event
of Default), the Beneficial Owners of no less than 51% of the Note
Principal Balance of the Book-Entry Notes advise the Indenture Trustee
in writing, through the related Clearing Agency Participants and the
Clearing Agency, that the continuation of a book-entry system through
the Clearing Agency to the exclusion of any Definitive Notes being
issued to any person other than the Clearing Agency or its nominee is
no longer in the best interests of the Beneficial Owners.
(b) Upon the occurrence of any event described in subsection
(a) of this Section 2.13, the Indenture Trustee shall use all reasonable efforts
to notify all Beneficial Owners, through the Clearing Agency, of the occurrence
of such event and of the availability of Definitive Notes to Beneficial Owners
requesting the same, in an aggregate outstanding Note Principal Balance
representing the interest of each, making such adjustments and allowances as it
may find necessary or appropriate as to accrued interest and previous calls for
redemption. Definitive Notes shall be issued only upon surrender to the
Indenture Trustee of the global Note by the Clearing Agency, accompanied by
registration instructions for the Definitive Notes. Neither the Trust nor the
Indenture Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon issuance of the Definitive Notes, all references herein to
obligations imposed upon or to be performed by the Clearing Agency shall cease
to be applicable and the provisions relating to Definitive Notes shall be
applicable.
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Section 2.14. Limitations on Transfer of the Notes.
(a) Prior to the Registration Date, any transfer of a Note shall be made in
accordance with the Securities Act. Each prospective purchaser (other than the
Representative) and any subsequent transferee of a Note other than the
Depositor, the Representative or an affiliate of the Depositor (each, a
"Prospective Owner") shall represent and warrant in writing, to the Indenture
Trustee and the Note Registrar and any of their respective successors that:
(i) Such Person is duly authorized to purchase the Note and
its purchase of investments having the characteristics of the Note is
authorized under, and not directly or indirectly in contravention of,
any law, charter, trust instrument or other operative document,
investment guidelines or list of permissible or impermissible
investments that is applicable to the investor.
(ii) Such Person understands that each holder of a Note, by
virtue of its acceptance thereof, assents to the terms, provisions and
conditions of the Indenture.
(b) Each Prospective Owner of a Note (other than the
Representative) shall represent and warrant in writing, to the Indenture Trustee
and the Note Registrar and any of their respective successors that:
(i) Such Person is a Qualified Purchaser and either (A) a QIB
and is aware that the seller of such Note may be relying on the
exemption from the registration requirements of the Securities Act
provided by Rule 144A and is acquiring such Note for its own account or
for the account of one or more qualified institutional buyers, for whom
it is authorized to act, or (B) an institutional investor that is an
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act.
(ii) It understands that such Note has not been registered
under the Securities Act, and the Trust has not been registered under
the Investment Company Act, and that, if in the future it decides to
offer, resell, pledge or otherwise transfer such Note, such Note may be
offered, resold, pledged or otherwise transferred only (A) pursuant to
a Registration Statement which has been declared effective under the
Securities Act, (B) to a Qualified Purchaser, and (C) for so long as
such Note is eligible for resale pursuant to Rule 144A under the
Securities Act, to a person whom the seller reasonably believes is a
QIB, which is purchasing such Note for its own account or for the
account of a qualified institutional buyer, to whom notice is given
that the transfer is being made in reliance on Rule 144A, or (D) to an
institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act, which is
acquiring such Note for its own account or for the account of such an
institutional "accredited investor," for investment purposes and not
with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act, in each case in
compliance with the requirements of the Indenture.
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(c) In the event that a transfer of a Note is to be made in
reliance upon an exemption from the Securities Act, Investment Company Act or
state securities laws, in order to assure compliance with the Securities Act and
such laws, the prospective transferor and transferee shall certify to the
Indenture Trustee in writing the facts surrounding the transfer in substantially
the forms set forth in Exhibit B and Exhibit C.
(d) Prior to the Registration Date, the Servicer on behalf of
the Depositor shall provide to any Holder of a Note and any prospective
transferee designated by any such Holder, information regarding the Note and the
Mortgage Loans as shall be necessary to satisfy the condition to eligibility set
forth in Rule 144A(d)(4) for transfer of any such Note without registration
under the Securities Act pursuant to the registration exemption provided
thereunder. Each Holder of a Note desiring to effect such a transfer shall, and
does hereby agree to, indemnify the Trust, the Servicer, the Owner Trustee, the
Indenture Trustee and the Depositor against any liability that may result if the
transfer is not so exempt or is not made in accordance with federal and state
securities laws.
ARTICLE III
COVENANTS
Section 3.01. Payment of Notes. The Servicer, on behalf of the
Trust will pay or cause to be duly and punctually paid the principal of, and
interest on, the Notes in accordance with the terms of the Notes and this
Indenture. The Notes shall be non-recourse obligations of the Trust and shall be
limited in right of payment to amounts available from the Trust Estate as
provided in this Indenture and the Trust shall not otherwise be liable for
payments on the Notes. No person shall be personally liable for any amounts
payable under the Notes. If any other provision of this Indenture conflicts or
is deemed to conflict with the provisions of this Section 3.01, the provisions
of this Section 3.01 shall control.
Section 3.02. Maintenance of Office or Agency. The Indenture
Trustee will always maintain its corporate trust office at a location in the
United States of America where Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Trust in
respect of the Notes and this Indenture may be served. Such location shall be
the Corporate Trust Office of the Indenture Trustee.
The Owner Trustee, at the direction of the Majority
Certificateholder, on behalf of the Trust may also from time to time, at the
expense of the Majority Certificateholders, designate one or more other offices
or agencies within the United States of America where the Notes may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, any designation of an office or agency for
payment of Notes shall be subject to Section 3.03 hereof. The Owner Trustee, at
the direction of the Majority Certificateholders, on behalf of the Trust will
give prompt written notice to the Indenture Trustee and the Note Insurer of any
such designation or rescission and of any change in the location of any such
other office or agency.
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Section 3.03. Money for Note Payments to Be Held In Trust. All
payments of amounts due and payable with respect to any Notes that are to be
made from amounts withdrawn from the related Distribution Account pursuant to
Sections 5.07 or 8.02 hereof shall be made on behalf of the Trust by the
Indenture Trustee, and no amounts so withdrawn from the related Distribution
Account for payments on the Notes shall be paid over to the Trust under any
circumstances except as provided in this Section 3.03 or in Sections 5.07 or
8.02 hereof.
With respect to Definitive Notes, if the Trust shall have a
Note Registrar that is not also the Indenture Trustee, such Note Registrar shall
furnish, no later than the fifth (5th) calendar day after each Record Date, a
list, in such form as such Indenture Trustee may reasonably require, of the
names and addresses of the Holders of Notes and of the number of Individual
Notes held by each such Holder.
Whenever the Trust shall have a Paying Agent other than the
Indenture Trustee, the Servicer, on behalf of the Trust, will, on or before the
Business Day next preceding each Distribution Date, direct the Indenture Trustee
to deposit with such Paying Agent an aggregate sum sufficient to pay the amounts
then becoming due (to the extent funds are then available for such purpose in
the related Distribution Account, such sum to be held in trust for the benefit
of the Persons entitled thereto. Any moneys deposited with a Paying Agent in
excess of an amount sufficient to pay the amounts then becoming due on the Notes
with respect to which such deposit was made shall, upon Trust Order, be paid
over by such Paying Agent to the Indenture Trustee for application in accordance
with Article VIII hereof.
Subject to the prior written consent of the Note Insurer, any
Paying Agent other than the Indenture Trustee may be appointed by Trust Order
and at the expense of the Trust. The Trust shall not appoint any Paying Agent
(other than the Indenture Trustee) that is not, at the time of such appointment,
a depository institution or trust company whose obligations would be Permitted
Investments pursuant to clause (b) of the definition of the term "Permitted
Investments". The Servicer, on behalf of the Trust, will cause each Paying Agent
other than the Indenture Trustee to execute and deliver to the Indenture Trustee
and the Owner Trustee, on behalf of the Trust, an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
(a) allocate all sums received for payment to the Holders
of Notes on each Distribution Date among such Holders in the proportion
specified in the applicable Noteholder Statement, in each case to the extent
permitted by applicable law;
(b) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided and pay such sums to such Persons as herein provided;
(c) if such Paying Agent is not the Indenture Trustee,
immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee
all sums held by it in trust for the payment of the Notes if at any time the
Paying Agent ceases to meet the standards set forth above required to be met by
a Paying Agent at the time of its appointment;
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(d) if such Paying Agent is not the Indenture Trustee, give
the Indenture Trustee notice of any Default by the Trust (or any other obligor
upon the Notes) in the making of any payment required to be made with respect to
any Notes for which it is acting as Paying Agent;
(e) if such Paying Agent is not the Indenture Trustee, at any
time during the continuance of any such Default, upon the written request of the
Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in
trust by such Paying Agent; and
(f) comply with all requirements of the Code, and all
regulations thereunder, with respect to withholding from any payments made by it
on any Notes of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith;
provided, however, that with respect to withholding and reporting requirements
applicable to original issue discount (if any) on any of the Notes, the
Servicer, on behalf of the Trust, has provided the calculations pertaining
thereto to the Indenture Trustee and the Paying Agent.
The Trust may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Trust
Order direct any Paying Agent, if other than the Indenture Trustee, to pay to
the Indenture Trustee all sums held in trust by such Paying Agent, such sums to
be held by the Indenture Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and upon such payment by any Paying Agent
to the Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money held by the Indenture Trustee or any Paying Agent in
trust for the payment of any amount due with respect to any Note and remaining
unclaimed for two and one-half years after such amount has become due and
payable to the Holder of such Note (or if earlier, three months before the date
on which such amount would escheat to a governmental entity under applicable
law) shall be discharged from such trust and paid to the Trust; and the Holder
of such Note shall thereafter, as an unsecured general creditor, look only to
the Trust for payment thereof (but only to the extent of the amounts so paid to
the Trust), and all liability of the Indenture Trustee or such Paying Agent with
respect to such trust money shall thereupon cease. The Indenture Trustee may
adopt and employ, at the expense of the Trust, any reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or any Paying Agent, at the last address of record for each such
Holder).
Section 3.04. Existence of Trust. (a) Subject to clauses (b)
and (c) of this Section 3.04, the Trust will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware or under the laws of any other state of the United States of America,
and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Indenture, the Notes and the other Basic
Documents.
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(b) Subject to Section 3.09(g) hereof, and with the prior
written consent of the Note Insurer, any entity into which the Trust may be
merged or with which it may be consolidated, or any entity resulting from any
merger or consolidation to which the Trust shall be a party, shall be the
successor issuer under this Indenture without the execution or filing of any
paper, instrument or further act to be done on the part of the parties hereto,
anything in any agreement relating to such merger or consolidation, by which any
such Trust may seek to retain certain powers, rights and privileges therefore
obtaining for any period of time following such merger or consolidation to the
contrary notwithstanding (other than Section 3.09(g)).
(c) Upon any consolidation or merger of or other succession to
the Trust in accordance with this Section 3.04, the Person formed by or
surviving such consolidation or merger (if other than the Trust) may exercise
every right and power of, and shall have all of the obligations of, the Trust
under this Indenture with the same effect as if such Person had been named as
the issuer herein.
Section 3.05. Protection of Trust Estate. (a) The Trust will,
from time to time, execute and deliver all such supplements and amendments
hereto and all such financing statements, continuation statements, instruments
of further assurance and other instruments, and will take such other action as
may be necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust
Estate as made by this Indenture;
(ii) maintain or preserve the lien of this Indenture or carry
out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Mortgage Loans, the Sale and Servicing
Agreement, or the Unaffiliated Seller's Agreement; or
(v) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee, the Noteholders and the Note Insurer
in the Mortgage Loans and the other property held as part of the Trust
Estate against the claims of all Persons and parties.
(b) The Indenture Trustee shall not, and shall not permit the
Collateral Agent to, remove any portion of the Trust Estate that consists of
money or is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the Closing Date or cause or permit
ownership or the pledge of any portion of the Trust Estate that consists of
book-entry securities to be recorded on the books of a Person located in a
different jurisdiction from the jurisdiction in which such ownership or pledge
was recorded at such time unless the Indenture Trustee shall have first received
an Opinion of Counsel to the effect that the lien and security interest created
by this Indenture with respect to such property will continue to be maintained
after giving effect to such action or actions.
Section 3.06. Opinions as to the Trust Estate. On or before
December 31st in each calendar year, beginning in 2002, the Servicer, on behalf
of the Trust, shall furnish to the Indenture Trustee and the Note Insurer an
Opinion of Counsel reasonably satisfactory in form and substance to the
Indenture Trustee and the Note Insurer either stating that, in the opinion of
such counsel, such action has been taken as is necessary to maintain the lien
and security interest created by this Indenture and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe all such action, if any, that will, in the opinion of such
counsel, be required to be taken to maintain the lien and security interest of
this Indenture with respect to the Trust Estate until January 1st in the
following calendar year.
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Section 3.07. Performance of Obligations. (a) The Trust shall
punctually perform and observe all of its obligations under this Indenture and
the other Basic Documents.
(b) The Trust shall not take any action and will use its Best
Efforts not to permit any action to be taken by others that would release any
Person from any of such Person's covenants or obligations under any of the
Mortgage Files or under any instrument included in the Trust Estate, or that
would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any of the documents
or instruments contained in the Mortgage Files, except as expressly permitted in
this Indenture, the other Basic Documents or such document included in the
Mortgage File or other instrument or unless such action will not adversely
affect the interests of the Noteholders and the Note Insurer.
(c) If the Servicer or the Owner Trustee, on behalf of the
Trust, shall have knowledge of the occurrence of a default under the Sale and
Servicing Agreement or the Unaffiliated Seller's Agreement, the Servicer or the
Owner Trustee, as applicable, shall promptly notify the Indenture Trustee, the
Note Insurer and the Rating Agencies thereof, and, in the case of the Servicer,
shall specify in such notice the action, if any, the Servicer is taking with
respect to such default.
(d) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Indenture Trustee shall
promptly notify the Note Insurer and the Rating Agencies. As soon as any
successor Servicer is appointed, the Indenture Trustee shall notify the Note
Insurer and the Rating Agencies, specifying in such notice the name and address
of such successor Servicer.
Section 3.08. Investment Company Act. The Trust shall at all
times conduct its operations so as not to be subject to, or shall comply with,
the requirements of the Investment Company Act of 1940, as amended (or any
successor statute), and the rules and regulations thereunder.
Section 3.09. Covenants of the Trust. (a) The Trust has been
formed for the following purposes:
(i) to issue the Notes pursuant to the Indenture, to conduct
sales of the Notes and to distribute the proceeds of the sale of the
Notes to the Depositor in consideration of its contribution;
(ii) on the Closing Date for any such placement of Notes and
pursuant to the Basic Documents, to pledge the Mortgage Loans to the
Indenture Trustee, on behalf of the Noteholders and the Note Insurer,
as security for the Trust's obligations under the Notes;
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(iii) in the event of the occurrence of a breach of certain
representations and warranties, to cause the substitution or repurchase
of the related Mortgage Loans by the Originators;
(iv) to distribute to the Noteholders any portion of the Basic
Documents released from the lien of and remitted to the Trust pursuant
to the Basic Documents;
(v) to enter into and perform its obligations under the Basic
Documents and engage in those activities that are necessary, suitable
or convenient to accomplish the foregoing or are incidental thereto or
connected therewith and
(vi) to engage in other such activities as may be required in
connection with conservation of the Trust Estate and making of
distributions to the Notes.
(b) The Trust shall:
(i) maintain separate corporate records and books of account
from those of the Originators or any of their affiliates;
(ii) maintain its assets separate from those of the
Originators or any of their affiliates; and
(iii) conduct correspondence in their own name on its own
stationery.
(c) The Trust shall not:
(i) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate, except as expressly permitted by this
Indenture and the other Basic Documents;
(ii) claim any credit on, or make any deduction from, the
principal of, or interest on, any of the Notes by reason of the payment
of any taxes levied or assessed upon any portion of the Trust Estate;
(iii) engage in any business or activity other than as
permitted by the Trust Agreement or other than in connection with, or
relating to, the issuance of the Notes pursuant to this Indenture, or
amend the Trust Agreement, as in effect on the Closing Date, other than
with the consent of the Note Insurer in accordance with Section 11.01
of the Trust Agreement;
(iv) incur, issue, assume or otherwise become liable for any
indebtedness other than the Notes;
(v) incur, assume, guaranty or agree to indemnify any Person
with respect to any indebtedness of any Person, except for such
indebtedness as may be incurred by the Trust in connection with the
issuance of the Notes pursuant to this Indenture;
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(vi) subject to Article IX of the Trust Agreement, dissolve or
liquidate in whole or in part (until the Notes are paid in full);
(vii) become involved in the day to day management of any
other Person, and it shall operate so as not to be substantively
consolidated with any other Person;
(viii) not act as an agent of any other entity or Person
except pursuant to contractual documents indicating such capacity;
(ix) (A) permit the validity or effectiveness of this
Indenture or any Grant to be impaired, or permit the lien of this
Indenture to be impaired, amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any
covenants or obligations under this Indenture, except as may be
expressly permitted hereby, (B) permit any lien, charge, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or
the proceeds thereof, or (C) permit the lien of this Indenture not to
constitute a valid perfected first priority security interest in the
Trust Estate; or
(x) take any other action that should reasonably be expected
to, or fail to take any action if such failure should reasonably be
expected to, cause the Trust to be taxable as (X) an association
pursuant to Section 7701 of the Code or (Y) a taxable mortgage pool
pursuant to Section 7701(i) of the Code.
Section 3.10. Annual Statement as to Compliance. (a) On or
before December 31, 2002, and each December 31 thereafter, the Servicer, on
behalf of the Trust, shall deliver to the Indenture Trustee, the Note Insurer
and the Depositor a written statement, signed by an Authorized Officer of the
Servicer, on behalf of the Trust, stating that:
(b) a review of the fulfillment by the Trust during such year
of its obligations under this Indenture has been made under such Authorized
Officer's supervision; and
(c) to the best of such Authorized Officer's knowledge, based
on such review, the Trust has complied with all conditions and covenants under
this Indenture throughout such year, or, if there has been a Default in the
fulfillment of any such covenant or condition, specifying each such Default
known to such Authorized Officer and the nature and status thereof.
Section 3.11. Restricted Payments. The Trust shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Owner Trustee or any owner of a beneficial interest
in the Trust or otherwise with respect to any ownership or equity interest or
security in or of the Trust or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Trust may make, or cause to be made, distributions
to the Servicer, the Indenture Trustee, the Owner Trustee, the Note Insurer and
the Certificateholders as contemplated by, and to the extent funds are available
for such purpose under this Indenture and the other Basic Documents and the
Trust will not, directly or indirectly, make or cause to be made payments to or
distributions from either Distribution Account except in accordance with this
Indenture.
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Section 3.12. Treatment of Notes as Debt for Tax Purposes. For
purposes of federal, state and local income, franchise and any other income
taxes, the Trust will treat the Notes as indebtedness, and hereby instructs the
Indenture Trustee, Payee Agent and the Servicer, on behalf of the Trust to treat
the Notes as indebtedness for all applicable tax reporting purposes.
Section 3.13. Notice of Events of Default. The Servicer, on
behalf of the Trust, shall give the Indenture Trustee, the Note Insurer, the
Rating Agencies and the Depositor prompt written notice of each Event of Default
hereunder, each default on the part of the Servicer of its obligations under the
Sale and Servicing Agreement and each default on the part of the Unaffiliated
Seller of its obligations under the Unaffiliated Seller's Agreement.
Section 3.14. Further Instruments and Acts. Upon written
request of the Indenture Trustee or the Note Insurer, the Owner Trustee, on
behalf of the Trust, will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.15. Security Interest Matters. The Trust hereby
represents and warrants to the Indenture Trustee and the Note Insurer that:
(a) This Agreement and the other Basic Documents create a
valid and continuing security interest (as defined in
the New York Uniform Commercial Code) on the Trust
Estate in favor of the Indenture Trustee, which
security interest is prior to all other liens and
encumbrances thereon, to the extent such other liens
are enforceable against creditors of or purchasers of
the Trust and encumbrances could be perfected under
the applicable Uniform Commercial Code.
(b) The Mortgage Notes constitute "instruments" under the
New York Uniform Commercial Code.
(c) The Trust upon payment to the Depositor of the
purchase price for the Mortgage Loans, will own good
and marketable title to the Mortgage Loans free and
clear of any lien, charge or encumbrance of, any
person.
(d) The Trust has received all required consents and
approvals to the sale of the Mortgage Loans
by it hereunder.
(e) All original executed Mortgage Notes have been, or
will be delivered to the Collateral Agent as required
hereby and by the Sale and Servicing Agreement.
(f) The Trust, in connection with each delivery of
Mortgage Loans to the Collateral Agent, will receive
the Collateral Agent's written acknowledgment and
certification that it is holding such Mortgage Loans
on behalf of the Indenture Trustee.
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(g) Other than the interests created in the Mortgage
Loans pursuant to this Agreement and the other Basic
Documents, the Trust has not pledged, sold, assigned
or granted a security interest in, or otherwise
conveyed any of the Mortgage Loans to any other
Person. The Trust has not authorized the filing of,
and is not aware of, any financing statements naming
the Trust as "debtor" which cover the Mortgage Loans.
The Trust is not aware of any judgment or tax lien
filings against it.
(h) None of the Mortgage Notes has any ▇▇▇▇ or notations
indicating that it has been pledged, assigned or
conveyed to any Person other than in blank, or to the
Indenture Trustee.
The foregoing representations and warranties shall survive the conveyance of the
Mortgage Loans to the Trust. The Servicer, on behalf of the Trust, shall take
all actions necessary to preserve and protect the interests of the Indenture
Trustee in and to the related Mortgage Loans.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.
Whenever the following conditions shall have been satisfied:
(a) either
(i) all Notes theretofore authenticated and delivered (other
than (x) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.07 hereof, and (y) Notes
for whose payment money has theretofore been deposited in trust and
thereafter repaid to the Trust, as provided in Section 3.03 hereof)
have been delivered to the Note Registrar for cancellation; or
(ii) all Notes not theretofore delivered to the Note Registrar
for cancellation, (A) have become due and payable, or (B) will become
due and payable at the Final Stated Maturity Date within one (1) year,
or (C) are to be called for redemption pursuant to Section 10.01 hereof
within one (1) year under irrevocable arrangements satisfactory to the
Indenture Trustee for the giving of notice of redemption by the
Indenture Trustee in the name, and at the expense, of the
Certificateholder or Servicer, as applicable,
and the Certificateholder, in the case of clause ii(C), or Servicer, in the case
of clauses (ii)(A), (ii)(B) or (ii)(C) above, has irrevocably deposited or
caused to be deposited with the Indenture Trustee, in trust for such purpose, an
amount sufficient to pay and discharge the entire unpaid Note Principal Balance
of such Notes not theretofore delivered to the Indenture Trustee for
cancellation, for principal and interest to the Final Stated Maturity Date or to
the applicable Redemption Date, as the case may be, and in the case of Notes
that were not paid at the Final Stated Maturity Date of their entire unpaid Note
Principal Balance, for all overdue principal and all interest payable on such
Notes to the next succeeding Distribution Date therefor;
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(b) the Servicer, on behalf of the Trust, has paid or caused
to be paid all other sums payable hereunder by the Trust (including, without
limitation, amounts due the Note Insurer); and
(c) the Servicer, on behalf of the Trust, has delivered to the
Indenture Trustee and the Note Insurer an Officers' Certificate and an Opinion
of Counsel satisfactory in form and substance to the Indenture Trustee and the
Note Insurer each stating that all conditions precedent herein providing for the
satisfaction and discharge of this Indenture have been complied with;
then, upon a Trust Request, this Indenture and the lien, rights and interests
created hereby and thereby shall cease to be of further effect, and the
Indenture Trustee and each co-trustee and separate trustee, if any, then acting
as such hereunder shall, at the expense of the Trust (or of the Servicer in the
case of a redemption by the Servicer pursuant to Section 10.01 hereof), execute
and deliver all such instruments as may be necessary to acknowledge the
satisfaction and discharge of this Indenture and shall pay, or assign or
transfer and deliver, to the Trust or upon Trust Order all cash, securities and
other property held by it as part of the Trust Estate remaining after
satisfaction of the conditions set forth in clauses (a) and (b) above.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Indenture Trustee and any Paying Agent to the
Trust and the Holders of Notes under Section 3.03 hereof, the obligations of the
Indenture Trustee to the Holders of Notes under Section 4.02 hereof and the
provisions of Section 2.07 hereof with respect to lost, stolen, destroyed or
mutilated Notes, registration of transfers of Notes and rights to receive
payments of principal of and interest on the Notes shall survive.
Section 4.02. Application of Trust Money. All money deposited
with the Indenture Trustee pursuant to Sections 3.03 and 4.01 hereof shall be
held in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying Agent,
as the Indenture Trustee may determine, to the Persons entitled thereto, of the
principal and interest for whose payment such money has been deposited with the
Indenture Trustee.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Event of Default. "Event of Default", wherever
used herein, means, with respect to Notes issued hereunder, any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) if the Trust shall fail to distribute or cause to be
distributed to the Indenture Trustee, for the benefit of the holders of the
Notes, on any Distribution Date, any Interest Distribution Amount (determined in
each case without giving effect to any payment on the Notes made with the
proceeds of a draw under the Policy) or shall fail to pay any Net Mortgage Loan
Interest Shortfalls on the Final Stated Maturity Date for the applicable Class
of Notes;
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(b) if the Trust shall fail to distribute or cause to be
distributed to the Indenture Trustee, for the benefit of the holders of the
Notes, (x) on any Distribution Date, an amount equal to the Principal
Distribution Amount due on the Notes on such Distribution Date, to the extent
that sufficient funds are on deposit in the Collection Account or (y) on the
Final Stated Maturity Date for any Class of Notes, the aggregate outstanding
Note Principal Balance of such Class of Notes (determined in each case without
giving effect to any payment on the Notes made with the proceeds of a draw under
the Policy);
(c) if the Trust shall breach or default in the due observance
of any one or more of the covenants set forth in clauses (a) through (h) of
Section 3.09 hereof;
(d) if the Trust shall consent to the appointment of a
custodian, receiver, trustee or liquidator (or other similar official) of
itself, or of a substantial part of its property, or shall admit in writing its
inability to pay its debts generally as they come due, or a court of competent
jurisdiction shall determine that the Trust is generally not paying its debts as
they come due, or the Trust shall make a general assignment for the benefit of
creditors;
(e) if the Trust shall file a voluntary petition in bankruptcy
or a voluntary petition or an answer seeking reorganization in a proceeding
under any bankruptcy laws (as now or hereafter in effect) or an answer admitting
the material allegation of a petition filed against the Trust in any such
proceeding, or the Trust shall, by voluntary petition, answer or consent, seek
relief under the provisions of any now existing or future bankruptcy or other
similar law providing for the reorganization or winding-up of debtors, or
providing for an agreement, composition, extension or adjustment with its
creditors;
(f) if an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent (express or legally implied) of the Trust, a custodian, receiver,
trustee or liquidator (or other similar official) of the Trust or any
substantial part of its property, or sequestering any substantial part of its
respective property, and any such order, judgment or decree or appointment or
sequestration shall remain in force undismissed, unstayed or unvacated for a
period of forty-five (45) days after the date of entry thereof;
(g) if a petition against the Trust in a proceeding under
applicable bankruptcy laws or other insolvency laws, as now or hereafter in
effect, shall be filed and shall not be stayed, withdrawn or dismissed within
forty-five (45) days thereafter, or if, under the provisions of any law
providing for reorganization or winding-up of debtors which may apply to the
Trust, any court of competent jurisdiction shall assume jurisdiction, custody or
control of the Trust or any substantial part of its property, and such
jurisdiction, custody or control shall remain in force unrelinquished, unstayed
or unterminated for a period of forty-five (45) days; or
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(h) the Note Insurer shall notify the Indenture Trustee of an
"Event of Default" under (and as defined in) the Insurance Agreement.
Section 5.02. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default occurs and is continuing, then and in every
such case, but with the consent of the Note Insurer in the absence of a Note
Insurer Default, the Indenture Trustee may, and on request of the Note Insurer,
in the absence of a Note Insurer Default, or, with the prior written consent of
the Note Insurer, the Holders of Notes representing more than 50% of the Voting
Rights of the Outstanding Notes shall, declare all the Notes to be immediately
due and payable by a notice in writing to the Trust (and to the Indenture
Trustee if given by Noteholders), and upon any such declaration such Notes, in
an amount equal to the entire unpaid Note Principal Balance of such Notes,
together with accrued and unpaid interest thereon to the date of such
acceleration, shall become immediately due and payable, all subject to the prior
written consent of the Note Insurer in the absence of a Note Insurer Default.
At any time after such a declaration of acceleration of
maturity of the Notes has been made and before a judgment or decree for payment
of the money due has been obtained by the Indenture Trustee as hereinafter
provided in this Article V, the Note Insurer, in the absence of a Note Insurer
Default, or the Holders of Notes representing more than 50% of the Voting Rights
of the Outstanding Notes, with the prior written consent of the Note Insurer, by
written notice to the Trust and the Indenture Trustee, may rescind and annul
such declaration and its consequences if:
(a) the Trust has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(i) all payments of principal of, and interest on, all
Outstanding Notes and all other amounts that would then be due
hereunder or upon such Notes if the Event of Default giving rise to
such acceleration had not occurred; and
(ii) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the
principal of Notes that have become due solely by such acceleration, have been
cured or waived as provided in Section 5.14 hereof.
No such rescission shall affect any subsequent Default or
impair any right consequent thereon.
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. Subject to the provisions of Section 3.01
hereof and the following sentence, if an Event of Default occurs and is
continuing, the Indenture Trustee may, with the prior written consent of the
Note Insurer, proceed to protect and enforce its rights and the rights of the
Noteholders and the Note Insurer by any Proceedings the Indenture Trustee deems
appropriate to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or enforce any other proper remedy. Any
Proceedings brought by the Indenture Trustee, on behalf of the Noteholders and
the Note Insurer, or any Noteholder against the Trust shall be limited to the
preservation, enforcement and foreclosure of the liens, assignments, rights and
security interests under the Indenture and no attachment, execution or other
unit or process shall be sought, issued or levied upon any assets, properties or
funds of the Trust, other than the Trust Estate relative to the Notes in respect
of which such Event of Default has occurred. If there is a foreclosure of any
such liens, assignments, rights and security interests under this Indenture, by
private power of sale or otherwise, no judgment for any deficiency upon the
indebtedness represented by the Notes may be sought or obtained by the Indenture
Trustee or any Noteholder against the Trust. The Indenture Trustee shall be
entitled to recover the costs and expenses expended by it pursuant to this
Article V including reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel.
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Section 5.04. Remedies. If an Event of Default shall have
occurred and be continuing and the Notes been declared due and payable and such
declaration and its consequences have not been rescinded and annulled, the
Indenture Trustee, at the direction of the Note Insurer (subject to Section 5.17
hereof, to the extent applicable) may, for the benefit of the Noteholders and
the Note Insurer, do one or more of the following:
(a) institute Proceedings for the collection of all amounts
then payable on the Notes, or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Trust moneys
adjudged due, subject in all cases to the provisions of Sections 3.01 and 5.03
hereof;
(b) in accordance with Section 5.17 hereof, sell the Trust
Estate or any portion thereof or rights or interest therein, at one or more
public or private Sales called and conducted in any manner permitted by law;
(c) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust Estate;
(d) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee or the Holders of the Notes and the
Note Insurer hereunder; and
(e) refrain from selling the Trust Estate and apply all funds
on deposit in each of the Accounts pursuant to Section 5.07 hereof.
Section 5.05. Indenture Trustee May File Proofs of Claim. In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition or other judicial Proceeding relative
to the Trust or any other obligor upon any of the Notes or the property of the
Trust or of such other obligor or their creditors, the Indenture Trustee
(irrespective of whether the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand on the Trust for the payment of any
overdue principal or interest) shall, with the prior written consent of the Note
Insurer, be entitled and empowered, by intervention in such Proceeding or
otherwise to:
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(a) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Notes and file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel), the Noteholders and the Note Insurer allowed in such Proceeding, and
(b) collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any receiver,
assignee, trustee, liquidator, or sequestrator (or other similar official) in
any such Proceeding is hereby authorized by each Noteholder and the Note Insurer
to make such payments to the Indenture Trustee and, in the event that the
Indenture Trustee shall consent to the making of such payments directly to the
Noteholders and the Note Insurer, to pay to the Indenture Trustee any amount due
to it for the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee, its agents and counsel.
Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting any of the Notes or the rights of any Holder
thereof, or the Note Insurer, or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder or the Note Insurer in any such
Proceeding.
Section 5.06. Indenture Trustee May Enforce Claims Without
Possession of Notes. All rights of action and claims under this Indenture or any
of the Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any Proceeding
relating thereto, and any such Proceeding instituted by the Indenture Trustee,
at the direction of the Note Insurer, shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall be for the
ratable benefit of the Holders of the Notes and the Note Insurer in respect of
which such judgment has been recovered after payment of amounts required to be
paid pursuant to clause (a) of Section 5.07 hereof.
Section 5.07. Application of Money Collected. If the Notes
have been declared due and payable following an Event of Default and such
declaration and its consequences have not been rescinded and annulled, any money
collected by the Indenture Trustee with respect to either Mortgage Loan Group
pursuant to this Article V or otherwise and any other monies that may then be
held or thereafter received by the Indenture Trustee as security for the Notes
relating to such Mortgage Loan Group shall be applied in the following order, at
the date or dates fixed by the Indenture Trustee and, in case of the payment of
the entire amount due on account of principal of, and interest on, such Class of
Notes, upon presentation and surrender thereof:
(a) first, to the Indenture Trustee, any unpaid Indenture
Trustee Fees with respect to such Class then due and any other amounts payable
and due to the Indenture Trustee with respect to such Class under this
Indenture, including any costs or expenses incurred by it in connection with the
enforcement of the remedies provided for in this Article V;
(b) second, to the Servicer, any amounts required to pay the
Servicer for any unpaid Servicing Fees with respect to the related Mortgage Loan
Group then due;
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(c) third, to the payment of Interest Distribution Amounts
then due and unpaid upon the Notes relating to such Mortgage Loan Group through
the day preceding the date on which such payment is made;
(d) fourth, to the Note Insurer, any accrued and unpaid
Premium Amount with respect to the related Mortgage
Loan Group;
(e) fifth, to the payment of the Note Principal Balance of
each of the Outstanding Notes relating to such Mortgage Loan Group, up to the
amount of their respective unpaid Note Principal Balance, ratably, without
preference or priority of any kind;
(f) sixth, to the Note Insurer (x) the aggregate amount
necessary to pay in full any Reimbursement Amounts for the Notes relating to
such Mortgage Loan Group, together with interest thereon at the "Late Payment
Rate" specified in the Insurance Agreement from the date such Reimbursement
Amounts were due to the Note Insurer to such Distribution Date and (y) any other
amounts due and owing to the Note Insurer for such Class under the Insurance
Agreement;
(g) seventh, for payment in respect of the other Mortgage Loan
Group, in the priority set forth in this Section 5.07, to the extent of any
shortfall in the payment of the amounts described in clauses (a) through (f)
with respect to such other Mortgage Loan Group;
(h) eighth, to the payment of any Net Mortgage Loan Interest
Shortfalls of the Notes in both Mortgage Loan Groups through the day preceding
the date on which such payment is made;
(i) ninth, to reimburse the Servicer for Periodic Advances
with respect to the related Mortgage Loan Group previously made by, and not
previously reimbursed to or retained by, the Servicer and, upon the final
liquidation of the related Mortgage Loan or the final liquidation of the Trust
Estate, Servicing Advances with respect to the related Mortgage Loan Group
previously made by, and not previously reimbursed to or retained by, the
Servicer; and
(j) tenth, the remainder to the Holder of Trust Certificate
relating to such Class.
Section 5.08. Limitation on Suits. No Holder of a Note shall
have any right to institute any Proceedings, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(a) such Holder has previously given written notice to the
Indenture Trustee and the Note Insurer of a continuing Event of Default;
(b) the Holders of Notes representing not less than 25% of the
Note Principal Balance of the Outstanding Notes shall have made written request
to the Indenture Trustee to institute Proceedings in respect of such Event of
Default in its own name as Indenture Trustee hereunder;
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(c) such Holder or Holders have offered to the Indenture
Trustee indemnity in full against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Indenture Trustee, for sixty (60) days after its
receipt of such notice, request and offer of indemnity, has failed to institute
any such Proceeding;
(e) no direction inconsistent with such written request has
been given to the Indenture Trustee during such sixty (60) day period by the
Holders of Notes representing more than 50% of the Note Principal Balance of the
Outstanding Notes; and
(f) the consent of the Note Insurer shall have been obtained;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the Holders
of Notes.
In the event the Indenture Trustee shall receive conflicting
or inconsistent requests and indemnity from two or more groups of Holders of
Notes, each representing less than 50% of the Note Principal Balance of the
Outstanding Notes, the Indenture Trustee shall take the action prescribed by the
group representing a greater percentage of the Note Principal Balance of the
Outstanding Notes.
Section 5.09. Unconditional Rights of Noteholders to Receive
Principal and Interest. Subject to the provisions in this Indenture (including
Sections 3.01 and 5.03 hereof) limiting the right to recover amounts due on a
Note to recovery from amounts in the portion of the Trust Estate relating to
such Note, the Holder of any Note shall have the right, to the extent permitted
by applicable law, which right is absolute and unconditional, to receive payment
of each installment of interest on such Note on the respective Distribution Date
for such installments of interest, to receive payment of each installment of
principal of such Note when due (or, in the case of any Note called for
redemption, on the date fixed for such redemption) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
Section 5.10. Restoration of Rights and Remedies. If the
Indenture Trustee, the Note Insurer or any Noteholder has instituted any
Proceeding to enforce any right or remedy under this Indenture and such
Proceeding has been discontinued or abandoned for any reason, or has been
determined to be adverse to the Indenture Trustee, the Note Insurer or to such
Noteholder, then and in every such case the Indenture Trustee, the Note Insurer
and the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee, the Note Insurer
and the Noteholders shall continue as though no such Proceeding had been
instituted.
Section 5.11. Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Indenture Trustee, the Note
Insurer or to the Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
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Section 5.12. Delay or Omission Not Waiver. No delay or
omission of the Indenture Trustee, the Note Insurer or of any Holder of any Note
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article V or by
law to the Indenture Trustee, the Note Insurer or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Note Insurer or by the Noteholders with the prior consent
of the Note Insurer, as the case may be.
Section 5.13. Control by Noteholders. The Holders of Notes
representing more than 50% of the Note Principal Balance of the Outstanding
Notes on the applicable Record Date shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Indenture Trustee or exercising any trust or power conferred on the Indenture
Trustee; provided that:
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) any direction to the Indenture Trustee to undertake a Sale
of the Trust Estate shall be by the Holders of Notes representing the percentage
of the Note Principal Balance of the Outstanding Notes specified in Section
5.17(b)(i) hereof, unless Section 5.17(b)(ii) hereof is applicable; and
(c) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.01 hereof, the Indenture Trustee
need not take any action that it determines might involve it in liability or be
unjustly prejudicial to the Noteholders not consenting.
It is understood and agreed that, pursuant to Section 8.14,
the Note Insurer shall have the exclusive right to exercise the rights of the
Noteholders under this Section 5.13 so long as no Note Insurer Default shall be
continuing.
Section 5.14. Waiver of Past Defaults. The Holders of Notes
representing more than 50% of the Note Principal Balance of the Outstanding
Notes on the applicable Record Date may on behalf of the Holders of all the
Notes, and with the consent of the Note Insurer, waive any past Default
hereunder and its consequences, except a Default:
(a) in the payment of principal or any installment of interest
on any Note; or
(b) in respect of a covenant or provision hereof that under
Section 9.02 hereof cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected.
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Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
Section 5.15. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Note by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.15 shall not apply to any suit instituted by the
Indenture Trustee, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate Notes representing more than 10% of the
Note Principal Balance of the Outstanding Notes of both of the Classes, or to
any suit instituted by any Noteholder for the enforcement of the payment of any
Interest Distribution Amount or Principal Distribution Amount on any Note on or
after the related Distribution Date or for the enforcement of the payment of
principal of any Note on or after the Final Stated Maturity Date (or, in the
case of any Note called for redemption, on or after the applicable Redemption
Date).
Section 5.16. Waiver of Stay or Extension Laws. The Trust
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension of law wherever enacted, now or
at any time hereafter in force, that may affect the covenants in, or the
performance of, this Indenture; and the Trust (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 5.17. Sale of Trust Estate. (a) The power to effect
any sale (a "Sale") of any portion of the Trust Estate pursuant to Section 5.04
hereof shall not be exhausted by any one or more Sales as to any portion of the
Trust Estate remaining unsold, but shall continue unimpaired until the entire
Trust Estate shall have been sold or all amounts payable on the Notes and under
this Indenture with respect thereto shall have been paid. The Indenture Trustee
may from time to time postpone any public Sale by public announcement made at
the time and place of such Sale. The Indenture Trustee expressly waives its
rights to any amount fixed by law as compensation for any Sale.
(b) To the extent permitted by law, the Indenture Trustee
shall not in any private Sale sell or otherwise dispose of the Trust Estate, or
any portion thereof, unless:
(i) the Holders of Notes representing more than 50% of the
Note Principal Balance of the Notes then outstanding consent to or
direct the Indenture Trustee to make such Sale; or
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(ii) the proceeds of such Sale would be not less than the
entire amount that would be payable to the Holders of the Notes, in
full payment thereof in accordance with Section 5.07 hereof, on the
Distribution Date next succeeding the date of such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or disposition thereof for purposes
of this Section 5.17(b). In the absence of a Note Insurer Default, no Sale
hereunder shall be effective without the consent of the Note Insurer.
(c) Unless the Holders of all Outstanding Notes have otherwise
consented or directed the Indenture Trustee, at any public Sale of all or any
portion of the Trust Estate at which a minimum bid equal to or greater than the
amount described in paragraph (ii) of subsection (b) of this Section 5.17 has
not been established by the Indenture Trustee and no Person bids an amount equal
to or greater than such amount, the Indenture Trustee, acting in its capacity as
Indenture Trustee (i) on behalf of the Noteholders and the Note Insurer, shall
prevent such Sale and bid an amount (which shall include the Indenture Trustee's
right, in its capacity as Indenture Trustee, to credit bid) at least $1.00 more
than the highest other bid in order to preserve the Trust Estate on behalf of
the Noteholders and the Note Insurer.
(d) In connection with a Sale of all or any portion of the
Trust Estate:
(i) any Holder or Holders of Notes may bid for and purchase
the property offered for Sale, and upon compliance with the terms of
sale may hold, retain and possess and dispose of such property, without
further accountability, and may, in paying the purchase money therefor,
deliver any Outstanding Notes or claims for interest thereon in lieu of
cash up to the amount that shall, upon distribution of the net proceeds
of such Sale, be payable thereon, and such Notes, in case the amounts
so payable thereon shall be less than the amount due thereon, shall be
returned to the Holders thereof after being appropriately stamped to
show such partial payment;
(ii) the Indenture Trustee may bid for and acquire the
property offered for Sale in connection with any public Sale thereof,
and, in lieu of paying cash therefor, may make settlement for the
purchase price by crediting the gross Sale price against the sum of (A)
the amount that would be payable to the Holders of the Notes as a
result of such Sale in accordance with Section 5.07 hereof on the
Distribution Date next succeeding the date of such Sale and (B) the
expenses of the Sale and of any Proceedings in connection therewith
which are reimbursable to it, without being required to produce the
Notes in order to complete any such Sale or in order for the net Sale
price to be credited against such Notes, and any property so acquired
by the Indenture Trustee shall be held and dealt with by it in
accordance with the provisions of this Indenture;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Trust Estate in connection with a Sale thereof,
(iv) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Trust to transfer and convey its
interest in any portion of the Trust Estate in connection with a Sale
thereof, and to take all action necessary to effect such Sale; and
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(v) no purchaser or transferee at such a Sale shall be bound
to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any moneys.
Section 5.18. Action on Notes. The Indenture Trustee's right
to seek and recover judgment under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Indenture Trustee, the Note Insurer or the Holders of Notes shall be
impaired by the recovery of any judgment by the Indenture Trustee against the
Trust or by the levy of any execution under such judgment upon any portion of
the Trust Estate.
Section 5.19. No Recourse to Other Trust Estates or Other
Assets of the Trust. The Trust Estate Granted to the Indenture Trustee as
security for the Notes serves as security only for the Notes. Holders of the
Notes shall have no recourse against the trust estate granted as security for
any other series of Notes issued by the Trust, and no judgment against the Trust
for any amount due with respect to the Notes may be enforced against either the
trust estate securing any other series or any other assets of the Trust, nor may
any prejudgment lien or other attachment be sought against any such other trust
estate or any other assets of the Trust. The Noteholders shall have no recourse
against the Owner Trustee, the Indenture Trustee, the Note Registrar, the
Authenticating Agent, the Collateral Agent, the Depositor, the Unaffiliated
Seller, the Servicer or any of their respective Affiliates, or to the assets of
any of the foregoing entities.
Section 5.20. Application of the Trust Indenture Act. Pursuant
to Section 316(a) of the TIA, all provisions automatically provided for in
Section 316(a) are hereby expressly excluded.
Section 5.21. Note Insurer Default. Notwithstanding anything
elsewhere in this Indenture or in the Notes to the contrary, if a Note Insurer
Default exists, the provisions of this Article V and all other provisions of
this Indenture which (a) permit the Note Insurer to exercise rights of the
Noteholders, (b) restrict the ability of the Noteholders or the Indenture
Trustee to act without the consent or approval of the Note Insurer, (c) provide
that a particular act or thing must be acceptable to the Note Insurer, (d)
permit the Note Insurer to direct (or otherwise to require) the actions of the
Indenture Trustee or the Noteholders, (e) provide that any action or omission
taken with the consent, approval or authorization of the Note Insurer shall be
authorized hereunder or shall not subject the party taking or omitting to take
such action to any liability hereunder or (f) which have a similar effect, shall
be of no further force and effect and the Indenture Trustee shall administer the
Trust Estate and perform its obligations hereunder solely for the benefit of the
Holders of the Notes. Nothing in the foregoing sentence, nor any action taken
pursuant thereto or in compliance therewith, shall be deemed to have released
the Note Insurer from any obligation or liability it may have to any party or to
the Noteholders hereunder, under any other agreement, instrument or document
(including, without limitation, the Policy) or under applicable law.
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ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee. (a) If a
Responsible Officer of the Indenture Trustee shall have actual knowledge that an
Event of Default has occurred and is continuing, the Indenture Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) Except during the continuance of an Event of Default of
which a Responsible Officer of the Indenture Trustee shall have actual
knowledge:
(i) the Indenture Trustee need perform only those duties that
are specifically set forth in this Indenture and no others and no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may request and conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture. The Indenture Trustee
shall, however, examine such certificates and opinions to determine
whether they conform on their face to the requirements of this
Indenture.
(c) The Indenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of subsection (b)
of this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Sections 5.13 or 5.17
hereof or exercising any trust or power or remedy conferred upon the
Indenture Trustee under this Indenture.
(d) Except with respect to duties of the Indenture Trustee
prescribed by the TIA, as to which this Section 6.01(d) shall not apply, for all
purposes under this Indenture, the Indenture Trustee shall not be deemed to have
notice or knowledge of any Event of Default described in Sections 5.01(e) or
5.01(f) hereof or any Default described in Sections 5.01(c) or 5.01(d) hereof or
of any event described in Section 3.05 hereof unless a Responsible Officer
assigned to and working in the Indenture Trustee's corporate trust department
and having direct responsibility for this Indenture has actual knowledge thereof
or unless written notice of any event that is in fact such an Event of Default
or Default is received by the Indenture Trustee at the Corporate Trust Office,
and such notice references the Notes generally, the Trust, the Trust Estate or
this Indenture.
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(e) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it under this Indenture or the other
Basic Documents.
(f) Every provision of this Indenture that in any way relates
to the Indenture Trustee is subject to the provisions of this Section 6.01.
(g) Notwithstanding any extinguishment of all right, title and
interest of the Trust in and to the Trust Estate following an Event of Default
and a consequent declaration of acceleration of the maturity of the Notes,
whether such extinguishment occurs through a Sale of the Trust Estate to another
Person, the acquisition of the Trust Estate by the Indenture Trustee or
otherwise, the rights, powers and duties of the Indenture Trustee with respect
to the Trust Estate (or the proceeds thereof), the Noteholders and the Note
Insurer and the rights of Noteholders and the Note Insurer shall continue to be
governed by the terms of this Indenture.
(h) The Indenture Trustee, the Collateral Agent or any
successor Collateral Agent appointed pursuant to Section 9.08 of the Sale and
Servicing Agreement shall at all times retain possession of the Indenture
Trustee's Mortgage Files in the State of Delaware or the State of New York (or,
with respect to The Chase Manhattan Bank, as initial Collateral Agent, in the
State of Texas), except for those Indenture Trustee's Mortgage Files or portions
thereof released to the Servicer or the Note Insurer pursuant to this Indenture,
the Unaffiliated Seller's Agreement or the Sale and Servicing Agreement.
(i) Subject to the other provisions of this Indenture and
without limiting the generality of this Section 6.01, the Indenture Trustee
shall have no duty (A) to see to any recording, filing, or depositing of this
Indenture or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording, filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (B) to see to any insurance, (C) to see
to the payment or discharge of any tax, assessment, or other governmental charge
or any lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Estate from funds available in the Distribution
Accounts or (D) to confirm or verify the contents of any reports or certificates
of the Servicer delivered to the Indenture Trustee pursuant to this Indenture
believed by the Indenture Trustee to be genuine and to have been signed or
presented by the proper party or parties.
Section 6.02. Notice of Default. Immediately after the
occurrence of any Default known to the Indenture Trustee, the Indenture Trustee
shall transmit by mail to the Note Insurer and the Depositor notice of each such
Default and, within ninety (90) days after the occurrence of any Default known
to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall
transmit by mail to all Holders of Notes notice of each such Default, unless
such Default shall have been cured or waived; provided, however, that in no
event shall the Indenture Trustee provide notice, or fail to provide notice of a
Default known to a Responsible Officer of the Indenture Trustee in a manner
contrary to the requirements of the Trust Indenture Act. Concurrently with the
mailing of any such notice to the Holders of the Notes, the Indenture Trustee
shall transmit by mail a copy of such notice to the Rating Agencies.
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Section 6.03. Rights of Indenture Trustee. (a) Except as
otherwise provided in Section 6.01 hereof, the Indenture Trustee may rely on,
and be protected in acting or refraining to act upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Indenture Trustee need not investigate any fact or matter stated in any such
document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may require an Officer's Certificate, an Opinion of Counsel or advice of
counsel reasonably satisfactory in form and substance to the Indenture Trustee.
The Indenture Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on any such Officer's Certificate, Opinion of
Counsel or advice of counsel.
(c) With the consent of the Note Insurer, which consent shall
not be unreasonably withheld, the Indenture Trustee may act through agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes to be authorized or
within its rights or powers.
(e) The Indenture Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Indenture or to
institute, conduct or defend any litigation hereunder or in relation hereto at
the request, order or direction of any of the Noteholders or the Note Insurer,
pursuant to the provisions of this Indenture, unless such Noteholders or the
Note Insurer shall have offered to the Indenture Trustee reasonable security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which may be incurred therein or thereby.
(f) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by the Majority Noteholders or the Note Insurer; provided, however, that if the
payment within a reasonable time to the Indenture 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 Indenture Trustee, not reasonably assured to the
Indenture Trustee by the security afforded to it by the terms of this Indenture,
the Indenture Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to taking any such action.
(g) The right of the Indenture Trustee to perform any
discretionary act enumerated in this Indenture shall not be construed as a duty,
and the Indenture Trustee shall not be answerable for anything other than its
negligence or willful misconduct in the performance of such act.
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Section 6.04. Not Responsible for Recitals or Issuance of
Notes. The recitals, representations, warranties and covenants contained herein
and in the Notes, except, with respect to the Indenture Trustee, the
certificates of authentication on the Notes, shall be taken as the statements,
representations, warranties and covenants of the Trust, and the Owner Trustee,
the Indenture Trustee and the Authenticating Agent assume no responsibility for
their correctness. The Owner Trustee and the Indenture Trustee make no
representations with respect to the Trust Estate or as to the validity or
sufficiency of this Indenture or of the Notes. Neither the Indenture Trustee nor
the Owner Trustee shall be accountable for the use or application by the Trust
of the Notes or the proceeds thereof or any money paid to the Trust or upon a
Trust Order pursuant to the provisions hereof.
Section 6.05. May Hold Notes. The Indenture Trustee, any
Agent, or any other agent of the Trust, in its individual or any other capacity,
may become the owner or pledgee of Notes and, subject to Sections 6.07 and 6.13
hereof, may otherwise deal with the Trust or any Affiliate of the Trust with the
same rights it would have if it were not Indenture Trustee, Agent or such other
agent.
Section 6.06. Money Held in Trust. Money held by the Indenture
Trustee in trust hereunder need not be segregated from other funds except to the
extent required by this Indenture or by law. The Indenture Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Trust and except to the extent of income or other gain
on investments that are obligations of the Indenture Trustee, in its commercial
capacity, and income or other gain actually received by the Indenture Trustee on
investments, which are obligations of others.
Section 6.07. Eligibility, Disqualification. Irrespective of
whether this Indenture is qualified under the TIA, this Indenture shall always
have an indenture trustee who satisfies the requirements of TIA Sections
310(a)(1) and 310(a)(5). The Indenture Trustee shall always have a combined
capital and surplus as stated in Section 6.08 hereof. The Indenture Trustee
shall be subject to TIA Section 310(b).
Section 6.08. Indenture Trustee's Capital and Surplus. The
Indenture Trustee shall at all times (a)(i) have a combined capital and surplus
of at least $50,000,000, or (ii) be a member of a bank holding company system,
the aggregate combined capital and surplus of which is at least $100,000,000 and
(b) be rated (or have long-term debt rated) "BBB" or better by S&P and "Baa2" by
Moody's; provided, however, that the Indenture Trustee's separate capital and
surplus shall at all times be at least the amount required by TIA Section
310(a)(2). If the Indenture Trustee publishes annual reports of condition of the
type described in TIA Section 310(a)(1), its combined capital and surplus for
purposes of this Section 6.08 shall be as set forth in the latest such report.
If at any time the Indenture Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.08 and TIA Section 310(a)(2), it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article VI.
Section 6.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article VI shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 6.10 hereof.
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(b) The Indenture Trustee may resign at any time by giving
written notice thereof to the Trust, the Note Insurer and each Rating Agency. If
an instrument of acceptance by a successor Indenture Trustee shall not have been
delivered to the Indenture Trustee within thirty (30) days after the giving of
such notice of resignation, the resigning Indenture Trustee may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee.
(c) The Indenture Trustee may be removed at any time by the
Note Insurer or, with the consent of the Note Insurer, by Act of the Holders
representing more than 50% of the Note Principal Balance of the Outstanding
Notes of both of the Classes, by written notice delivered to the Indenture
Trustee and to the Trust.
(d) If at any time:
(i) the Indenture Trustee shall have a conflicting interest
prohibited by Section 6.07 hereof and shall fail to resign or eliminate
such conflicting interest in accordance with Section 6.07 hereof after
written request therefor by the Trust, by the Note Insurer or by any
Noteholder; or
(ii) the Indenture Trustee shall cease to be eligible under
Section 6.08 hereof or shall become incapable of acting or shall be
adjudged bankrupt or insolvent, or a receiver of the Indenture Trustee
or of its property shall be appointed, or any public officer shall take
charge or control of the Indenture Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation;
then, in any such case, (x) the Owner Trustee, on behalf of the Trust, by a
Trust Order, with the consent of the Note Insurer, may remove the Indenture
Trustee, and the Owner Trustee, on behalf of the Trust, by a Trust Order, shall
join with the Indenture Trustee in the execution, delivery and performance of
all instruments and agreements necessary or proper to appoint a successor
Indenture Trustee acceptable to the Note Insurer and to vest in such successor
Indenture Trustee any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Indenture; provided, however,
if the Owner Trustee, on behalf of the Trust, and the Note Insurer do not join
in such appointment within fifteen (15) days after the receipt by it of a
request to do so, or in case an Event of Default has occurred and is continuing,
the Indenture Trustee may petition a court of competent jurisdiction to make
such appointment, or (y) subject to Section 5.15 hereof, and, in the case of a
conflicting interest as described in clause (i) above, unless the Indenture
Trustee's duty to resign has been stayed as provided in TIA Section 310(b), the
Note Insurer or any Noteholder who has been a bona fide Holder of a Note for at
least six (6) months may, on behalf of himself and all others similarly
situated, with the consent of the Note Insurer, petition any court of competent
jurisdiction for the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of the
Indenture Trustee for any cause, the Owner Trustee, on behalf of the Trust, by a
Trust Order, shall promptly appoint a successor Indenture Trustee acceptable to
the Note Insurer. If within one (1) year after such resignation, removal or
incapability or the occurrence of such vacancy a successor Indenture Trustee
shall be appointed by the Note Insurer or, with the consent of the Note Insurer,
by Act of the Holders of Notes representing more than 50% of the Note Principal
Balance of the Outstanding Notes delivered to the Trust and the retiring
Indenture Trustee. The successor Indenture Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Indenture Trustee
and supersede the predecessor Indenture Trustee appointed by the Trust. If no
successor Indenture Trustee shall have been so appointed by the Trust, the Note
Insurer or Noteholders and shall have accepted appointment in the manner
hereinafter provided, any Noteholder who has been a bona fide Holder of a Note
for at least six (6) months may, on behalf of himself and all others similarly
situated, with the consent of the Note Insurer, petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
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(f) The Servicer, on behalf of the Trust, shall give notice of
each resignation and each removal of the Indenture Trustee and each appointment
of a successor Indenture Trustee to the Holders of Notes, the Rating Agencies
and the Note Insurer. Each notice shall include the name of the successor
Indenture Trustee and the address of its Corporate Trust Office.
Section 6.10. Acceptance of Appointment by Successor Indenture
Trustee. Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Trust, the Note Insurer and the retiring
Indenture Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective
and such successor Indenture Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Indenture Trustee. Notwithstanding the foregoing, upon a Trust
Request of the Owner Trustee, on behalf of the Trust, or the successor Indenture
Trustee, such retiring Indenture Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Indenture
Trustee all the rights, powers and trusts of the retiring Indenture Trustee, and
shall duly assign, transfer and deliver to such successor Indenture Trustee all
property and money held by such retiring Indenture Trustee hereunder. Upon a
written request of any such successor Indenture Trustee, the Owner Trustee, on
behalf of the Trust, shall, with the written consent of the Note Insurer,
execute and deliver any and all instruments for more fully and certainly vesting
in and confirming to such successor Indenture Trustee all such rights, powers
and trusts.
No successor Indenture Trustee shall accept its appointment
unless at the time of such acceptance such successor Indenture Trustee shall be
qualified and eligible under this Article VI.
Section 6.11. Merger, Conversion, Consolidation or Succession
to Business of Indenture Trustee. Any corporation or banking association into
which the Indenture Trustee may be merged or converted or with which it may be
consolidated, or any corporation or banking association resulting from any
merger, conversion or consolidation to which the Indenture Trustee shall be a
party, or any corporation or banking association succeeding to all or
substantially all of the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee hereunder; provided, that such
corporation or banking association shall be otherwise qualified and eligible
under this Article VI, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Notes have
been authenticated, but not delivered, by the Indenture Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Indenture Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Indenture Trustee had
authenticated such Notes.
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Section 6.12. Preferential Collection of Claims Against Trust.
The Indenture Trustee (and any co-trustee or separate trustee) shall be subject
to TIA Section 311(a), excluding any creditor relationship listed in TIA Section
31l(b), and an Indenture Trustee (and any co-trustee or separate trustee) who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.13. Co-Indenture Trustees and Separate Indenture
Trustees. At any time or times, for the purpose of meeting the legal
requirements of the TIA or of any jurisdiction in which any of the Trust Estate
may at the time be located, the Indenture Trustee shall have power to appoint,
and, upon the written request of the Indenture Trustee, the Note Insurer or of
the Holders of Notes representing more than 50% of the Note Principal Balance of
the Outstanding Notes with respect to which a co-trustee or separate trustee is
being appointed, with the written consent of the Note Insurer, the Owner
Trustee, on behalf of the Trust, shall for such purpose join with the Indenture
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to appoint, one or more Persons approved by the
Indenture Trustee either to act as co-trustee, jointly with the Indenture
Trustee, of all or any part of the Trust Estate, or to act as separate trustee
of any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section 6.13. If the Owner Trustee, on
behalf of the Trust, does not join in such appointment within fifteen (15) days
after the receipt by it of a request to do so, or in case an Event of Default
has occurred and is continuing, the Indenture Trustee alone shall have power to
make such appointment. All fees and expenses of any co-trustee or separate
trustee shall be payable by the Trust.
Should any written instrument from the Trust be required by
any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right or power, any
and all such instruments shall, on written request, be executed, acknowledged
and delivered by the Owner Trustee, on behalf of the Trust, with the written
consent of the Note Insurer.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the following
terms:
(a) The Notes shall be authenticated and delivered and all
rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Indenture Trustee
hereunder, shall be exercised, solely by the Indenture Trustee.
(b) The rights, powers, duties and obligations hereby
conferred or imposed upon the Indenture Trustee in respect of any
property covered by such appointment shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee or by the Indenture
Trustee and such co-trustee or separate trustee jointly, as shall be
provided in the instrument appointing such co-trustee or separate
trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Indenture Trustee
shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee.
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(c) The Indenture Trustee at any time, by an instrument in
writing, executed by it, with the concurrence of the Owner Trustee, on behalf of
the Trust, evidenced by a Trust Order, may accept the resignation of or remove
any co-trustee or separate trustee appointed under this Section 6.13, and, in
case an Event of Default has occurred and is continuing, the Indenture Trustee
shall have power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Trust, but upon the written
request of the Indenture Trustee, the Owner Trustee, on behalf of the Trust,
shall join with the Indenture Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided in this Section
6.13.
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Indenture Trustee, or
any other such trustee hereunder.
(e) Any Act of Noteholders delivered to the Indenture Trustee
shall be deemed to have been delivered to each such co-trustee and separate
trustee. Section 6.14. Authenticating Agents. The Owner Trustee, acting at the
direction of the Majority Certificateholders, shall appoint an Authenticating
Agent with power to act on the Trust's behalf, subject to the direction of the
Majority Certificateholders, in the authentication and delivery of the Notes
designated for such authentication and, containing provisions therein for such
authentication (unless the Owner Trustee, acting at the direction of the
Majority Certificateholders, has made other arrangements, satisfactory to the
Indenture Trustee and such Authenticating Agent, for notation on the Notes of
the authority of an Authenticating Agent appointed after the initial
authentication and delivery of such Notes) in connection with transfers and
exchanges under Section 2.06 hereof, as fully to all intents and purposes as
though the Authenticating Agent had been expressly authorized by Section 2.06
hereof to authenticate and deliver Notes. For all purposes of this Indenture
(other than in connection with the authentication and delivery of Notes pursuant
to Sections 2.05 and 2.11 hereof in connection with their initial issuance), the
authentication and delivery of Notes by the Authenticating Agent pursuant to
this Section 6.14 shall be deemed to be the authentication and delivery of Notes
"by the Indenture Trustee." Such Authenticating Agent shall at all times be a
Person that both meets the requirements of Section 6.07 hereof for the Indenture
Trustee hereunder and has an office for presentation of Notes in the United
States of America. The Indenture Trustee shall initially be the Authenticating
Agent and shall be the Note Registrar as provided in Section 2.06 hereof. The
office from which the Indenture Trustee shall perform its duties as Note
Registrar and Authenticating Agent shall be its Corporate Trust Office. Any
Authenticating Agent appointed pursuant to the terms of this Section 6.14 or
pursuant to the terms of any supplemental indenture shall deliver to the
Indenture Trustee as a condition precedent to the effectiveness of such
appointment an instrument accepting the trusts, duties and responsibilities of
Authenticating Agent and of Note Registrar or co-Note Registrar and indemnifying
the Indenture Trustee for and holding the Indenture Trustee harmless against,
any loss, liability or expense (including reasonable attorneys' fees) incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance, administration of the trust or exercise of authority by
such Authenticating Agent, Note Registrar or co-Note Registrar.
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Any corporation or banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or banking association resulting from any
merger, consolidation or conversion to which any Authenticating Agent shall be a
party, or any corporation or 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 is otherwise
eligible under this Section 6.14, without the execution or filing of any further
act on the part of the parties hereto or the Authenticating Agent or such
successor corporation or banking association.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trust. The Owner Trustee, acting at the
direction of the Majority Certificateholders, may at any time terminate the
agency of any Authenticating Agent by giving written notice of termination to
such Authenticating Agent and the Indenture Trustee. 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 6.14, the
Owner Trustee, acting at the direction of the Majority Certificateholders, shall
promptly appoint a successor Authenticating Agent, shall give written notice of
such appointment to the Indenture Trustee, and shall mail notice of such
appointment to all Holders of Notes.
The Indenture Trustee agrees, subject to Section 6.01(e)
hereof, to pay to any Authenticating Agent from time to time reasonable
compensation for its services and the Indenture Trustee shall be entitled to be
reimbursed for such payments pursuant to Section 6.16 hereof. The provisions of
Sections 2.09, 6.04 and 6.05 hereof shall be applicable to any Authenticating
Agent.
Section 6.15. Review of Mortgage Files. (a) The Indenture
Trustee shall, on or prior to the Closing Date, execute and deliver the
acknowledgement of receipt of the Policy required by Section 2.06(a) of the Sale
and Servicing Agreement.
(b) The Indenture Trustee shall cause the Collateral Agent to
(i) on or prior to the Closing Date, execute and deliver the acknowledgement of
receipt of the Mortgage Loans required by Section 2.06(b)(i) of the Sale and
Servicing Agreement, (ii) on or prior to thirty (30) days following the Closing
Date, execute and deliver the Initial Certificate required by Section
2.06(b)(ii) of the Sale and Servicing Agreement, and (iii) on or prior to ninety
(90) days following the Closing Date, execute and deliver the Final
Certification required by Section 2.06(b)(iii) of the Sale and Servicing
Agreement.
(c) In giving each of the acknowledgements, the Initial
Certification and the Final Certification referred to in clauses (a) and (b) of
this Section 6.15, neither the Indenture Trustee nor the Collateral Agent shall
be under any duty or obligation (i) to inspect, review or examine any such
documents, instruments, securities or other papers to determine that they or the
signatures thereto are genuine, enforceable, or appropriate for the represented
purpose or that they have actually been recorded or that they are other than
what they purport to be on their face or (ii) to determine whether any Mortgage
File should include a flood insurance policy, any rider, addenda, surety or
guaranty agreement, power of attorney, buy down agreement, assumption agreement,
modification agreement, written assurance or substitution agreement.
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(d) In the event that the Mortgage Loans are required to be
recorded in accordance with the provisions of Article II of the Sale and
Servicing Agreement, no later than the fifth Business Day of each third month,
commencing in December 2001, the Indenture Trustee shall cause the Collateral
Agent to deliver to the Servicer and the Note Insurer a recordation report dated
as of the first day of such month, identifying those Mortgage Loans for which it
has not yet received (i) an original recorded Mortgage or a copy thereof
certified to be true and correct by the public recording office in possession of
such Mortgage or (ii) an original recorded Assignment of Mortgage to the
Indenture Trustee and any required intervening Assignments of Mortgage or a copy
thereof certified to be a true and correct copy by the public recording office
in possession of such Assignment of Mortgage.
Section 6.16. Indenture Trustee Fees and Expenses. (a) The
Indenture Trustee acknowledges that in consideration of the services rendered by
the Indenture Trustee in the execution of the trust hereby created and in the
exercise and performance of any of the powers and duties hereunder it is
entitled to receive the Indenture Trustee's Fee in accordance with the provision
of Section 8.02(a) (which shall not be limited by any provision of law in regard
to the compensation of a Indenture Trustee of any express trust). Additionally,
the Indenture Trustee hereby covenants, for the benefit of the Depositor and the
Note Insurer, that the Indenture Trustee has arranged separately with the
Servicer for the payment or reimbursement to the Indenture Trustee of all of the
Indenture Trustee's expenses in connection with this Agreement, including,
without limitation, all reasonable out of pocket expenses, disbursements and
advances incurred or made by the Indenture Trustee in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ). Notwithstanding any other provision of this Agreement to the
contrary, the Servicer covenants and agrees to indemnify the Indenture Trustee
and its officers, directors, employees and agents from, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses incurred
in connection with any legal action relating to this Agreement, the Notes or
incurred in connection with the administration of the Trust Estate, other than
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence of the Indenture Trustee in the performance of its duties
hereunder or by reason of the Indenture Trustee's reckless disregard of
obligations and duties hereunder. For the avoidance of doubt, the parties hereto
acknowledge that it is the intent of the parties that the Depositor and the Note
Insurer shall not pay any of the Indenture Trustee's fees and expenses in
connection with this transaction.
(b) The Trust, the Indenture Trustee and any director,
officer, employee or agent of the Trust or the Indenture Trustee shall be
indemnified by the Servicer and held harmless against any loss, liability,
claim, damage or expense arising out of, or imposed upon the Trust or the
Indenture Trustee through the Servicer's acts or omissions in violation of this
Agreement, other than, with respect to the Indenture Trustee, any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence of the Indenture Trustee in the performance of its duties hereunder
or by reason of the Indenture Trustee's reckless disregard of obligations and
duties hereunder. The Servicer shall immediately notify the Indenture Trustee,
Owner Trustee, the Servicer, the Depositor, the Note Insurer and all Noteholders
if a claim is made by a third party with respect to this Agreement, and the
Servicer shall assume (with the consent of the Note Insurer) the defense of any
such claim and advance all expenses in connection therewith, including
reasonable counsel fees, and promptly advance funds to pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Depositor, the Indenture Trustee, the Note Insurer and/or any Noteholder in
respect of such claim. The obligations of the Servicer under this Section 6.16
arising prior to any resignation or termination of the Servicer hereunder shall
survive the resignation or removal of the Indenture Trustee, termination of the
Servicer and payment of the Notes, and shall extend to any co-Indenture Trustee
or separate Indenture Trustee appointed pursuant to this Article VI. Anything in
this Agreement to the contrary notwithstanding, in no event shall the Indenture
Trustee be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the
Indenture Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Note Registrar to Furnish Indenture Trustee
Names and Addresses of Noteholders. (a) The Note Registrar shall furnish or
cause to be furnished to the Indenture Trustee (i) semiannually, not less than
forty-five (45) days nor more than sixty (60) days after the Distribution Date
occurring closest to six (6) months after the Closing Date and each Distribution
Date occurring at six (6) month intervals thereafter, all information in the
possession or control of the Note Registrar, in such form as the Indenture
Trustee may reasonably require, as to names and addresses of the Holders of
Notes, and (ii) at such other times, as the Indenture Trustee may request in
writing, within thirty (30) days after receipt by the Note Registrar of any such
request, a list of similar form and content as of a date not more than ten (10)
days prior to the time such list is furnished; provided, however, that so long
as the Indenture Trustee is the Note Registrar, no such list shall be required
to be furnished.
(b) In addition to furnishing to the Indenture Trustee the
Noteholder lists, if any, required under clause (a) of this Section 7.01, the
Note Registrar shall also furnish all Noteholder lists, if any, required under
Section 3.03 hereof at the times required by such Section 3.03.
Section 7.02. Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list, if any, furnished to the Indenture Trustee as
provided in Section 7.01 hereof and the names and addresses of the Holders of
Notes received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in Section
7.01 hereof upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
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(c) The Trust, the Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
Section 7.03. Reports by Indenture Trustee. (a) Within sixty
(60) days after December 31 of each year (the "reporting date"), commencing
December 31, 2001, (i) the Indenture Trustee shall, if required by TIA Section
313(a), mail to all Holders a brief report dated as of such reporting date that
complies with TIA Section 313(a); (ii) the Indenture Trustee shall, to the
extent not set forth in the Noteholder Statement pursuant to Section 2.08(d)
hereof, also mail to Holders of Notes and the Note Insurer with respect to which
it has made advances, any reports with respect to such advances that are
required by TIA Section 313(b)(2); and, the Indenture Trustee shall also mail to
Holders of Notes and the Note Insurer any reports required by TIA Section
313(b)(1). For purposes of the information required to be included in any such
reports pursuant to TIA Sections 313(a)(2), 313(b)(1) (if applicable), or
313(b)(2), the principal amount of indenture securities outstanding on the date
as of which such information is provided shall be the Note Principal Balance of
the then Outstanding Notes covered by the report.
(b) A copy of each report required under this Section 7.03
shall, at the time of such transmission to Holders of Notes and the Note Insurer
be filed by the Indenture Trustee with the Commission and with each securities
exchange upon which the Notes are listed. The Servicer, on behalf of the Trust,
will notify the Indenture Trustee when the Notes are listed on any securities
exchange.
(c) On each Distribution Date, the Indenture Trustee shall
forward to each Holder, to the Note Insurer, to the Representative and to the
Rating Agencies the report provided by the Servicer pursuant to Section 5.16 of
the Sale and Servicing Agreement (the "Servicer Remittance Report"), setting
forth information including, without limitation, the following information:
(i) the amount of the distribution with respect to the Class
A-1 and Class A-2 Notes and the Trust Certificates;
(ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Prepayments or other
unscheduled recoveries of principal included therein and separately
identifying any Over-collateralization Increase Amounts;
(iii) the amount of such distributions allocable to interest
and the calculation thereof;
(iv) the Class A-1 Note Principal Balance as of such
Distribution Date, together with the principal amount of the Class A-1
Notes (based on a Note in an original principal amount of $1,000) then
outstanding, in each case after giving effect to any payment of
principal on such Distribution Date;
(v) the Class A-2 Note Principal Balance as of such
Distribution Date, together with the principal amount of the Class A-2
Notes (based on a Note in an original principal amount of $1,000) then
outstanding, in each case after giving effect to any payment of
principal on such Distribution Date;
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(vi) the amount of any Insured Payment included in the amounts
distributed to the Class A-1 and Class A-2 Noteholders on such
Distribution Date;
(vii) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in such distribution; and
(viii) the amounts, if any, of any Liquidated Loan Losses for
consumer purpose loans and for business purpose loans for the related
Due Period and cumulative Liquidated Loan Losses since the Closing Date
for consumer purpose loans and for business purpose loans.
Items (i), (ii) and (iii) above shall, with respect to the
Class A-1 and Class A-2 Notes, be presented on the basis of a Note having a
$1,000 denomination. In addition, by January 31 of each calendar year following
any year during which the Notes are outstanding, the Indenture Trustee shall
furnish a report to each Holder of record if so requested in writing at any time
during each calendar year as to the aggregate of amounts reported pursuant to
(i), (ii) and (iii) with respect to the Notes for such calendar year.
Section 7.04. Reports by Trust. The Servicer, on behalf of the
Trust, (a) shall deliver to the Indenture Trustee within fifteen (15) days after
the Trust is required to file the same with the Commission copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may by rules and regulations
prescribe) that the Trust is required to file with the Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and (b)
shall also comply with the other provisions of TIA Section 314(a).
ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.01. Accounts; Investment; Collection of Moneys. (a)
The Trust hereby directs the Indenture Trustee to establish, on or before the
Closing Date, for each of the Class A-1 Notes and the Class A-2 Notes, at its
Corporate Trust Office, one or more Eligible Accounts that shall collectively be
the "Distribution Account" for such Class. The Indenture Trustee shall promptly
deposit in the related Distribution Account (i) the Servicer Remittance Amount
for the related Mortgage Loan Group received by it from the Servicer on the
Servicer Remittance Date pursuant to the Sale and Servicing Agreement, (ii) any
other funds from any deposits for such Mortgage Loan Group to be made pursuant
to the Sale and Servicing Agreement or the Unaffiliated Seller's Agreement,
(iii) any amount for such Mortgage Loan Group required to be deposited in such
Distribution Account pursuant to this Section 8.01, (iv) all amounts for such
Mortgage Loan Group received pursuant to Section 8.03 hereof, (v) any amount for
such Mortgage Loan Group required to be deposited pursuant to Section 8.05
hereof, (vi) the Termination Price received by it from the Servicer on the
Clean-up Call Date pursuant to Section 10.01 and (vii) all other amounts for
such Mortgage Loan Group received for deposit in such Distribution Account,
including the payment of any Loan Repurchase Price for a Mortgage Loan in such
Mortgage Loan Group received by the Indenture Trustee. All amounts that are
deposited from time to time in a Distribution Account are subject to withdrawal
by the Indenture Trustee for the purposes set forth in Sections 5.07 and 8.02
hereof. All funds withdrawn from a Distribution Account pursuant to Sections
5.07 and 8.02 hereof for the purpose of making payments to the Holders of Notes
shall be applied in accordance with Sections 3.03, 5.07 and 8.02 hereof.
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(b) [Reserved]
(c) The Trust hereby directs the Indenture Trustee to
establish, on or before the Closing Date, an Eligible Account that shall be the
"Cross-collateralization Reserve Account" for such Class. The Indenture Trustee
shall deposit and withdraw funds in the Cross-collateralization Reserve Account
in accordance with the provisions of Sections 8.01(a) and 8.02 hereof.
(d) The Indenture Trustee shall establish and maintain the
Interest Reserve Account which shall be titled "Interest Reserve Account, The
Chase Manhattan Bank, as Indenture Trustee for the registered holders of ABFS
Mortgage Loan Trust 2001-3, Mortgage Backed Notes, Series 2001-3" which account
shall be an Eligible Account. Upon receipt of the proceeds of the sale of the
Notes, on the Closing Date, the Indenture Trustee shall, upon the Unaffiliated
Seller's direction, from the proceeds of the sale of the Notes, deposit, on
behalf of the Noteholders in the Interest Reserve Account, an amount equal to
$800,000.00. Amounts on deposit in the Interest Reserve Account shall be
invested by the Indenture Trustee, at the written direction of the Servicer in
Permitted Investments. In the event that the Servicer fails to provide written
investment instructions, the Indenture Trustee shall invest such funds pursuant
to clause (e) of the definition of Permitted Investments. Any such Permitted
Investment shall mature no later than the Servicer Remittance Date. All income
realized from any such Permitted Investment shall be for the benefit of the
Servicer as additional servicing compensation. The amount of any losses incurred
in respect of any such Permitted Investment shall be deposited in the Interest
Reserve Account by the Servicer out if its own funds immediately as realized.
(e) So long as no Default or Event of Default shall have
occurred and be continuing, amounts held in the Accounts, other than the
Collection Account and the Note Insurance Payment Account, shall at the written
direction of the Servicer be invested in Permitted Investments, which Permitted
Investments shall mature no later than the Business Day preceding the
immediately following Distribution Date. In the event that the Servicer fails to
provide written investment instructions, the Indenture Trustee shall invest such
funds pursuant to clause (e) of the definition of Permitted Investments.
So long as no Servicer Event of Default or Event of Default
shall have occurred, all income or other gains, if any, from investment of
moneys deposited in each Account shall be for the benefit of the Servicer and on
each Distribution Date, any such amounts may be released from such Account and
paid to the Servicer as part of its compensation for acting as Servicer. Any
loss resulting from such investment of moneys deposited in an Account shall be
reimbursed immediately as incurred to the related Account by the Servicer.
Subject to Section 6.01 hereof and the preceding sentence, neither the Indenture
Trustee nor the Servicer shall in any way be held liable by reason of any
insufficiency in the Accounts.
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The Indenture Trustee shall not in any way be held liable by
reason of any insufficiency in any Account held by the Indenture Trustee
resulting from any investment loss on any Permitted Investment included therein
(except to the extent that the Indenture Trustee is the obligor and has
defaulted thereon).
(f) Except as otherwise expressly provided herein, the
Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall hold
all such money and property received by it as part of the Trust Estate and shall
apply it as provided in this Indenture.
If the Indenture Trustee shall not have received the Servicer
Remittance Amount by close of business on any related Servicer Remittance Date,
the Indenture Trustee shall, unless the Servicer shall have made provisions
satisfactory to the Indenture Trustee for delivery to the Indenture Trustee of
an amount equal to such Servicer Remittance Amount, deliver a notice, with a
copy to the Note Insurer, to the Servicer of its failure to remit such Servicer
Remittance Amount and that such failure, if not remedied by the close of
business on the Business Day after the date upon which such notice is delivered
to the Servicer, shall constitute a Servicer Event of Default under the Sale and
Servicing Agreement. If the Indenture Trustee shall subsequently receive any
such Servicer Remittance Amount by the close of business on such Business Day,
such Servicer Event of Default shall not be deemed to have occurred.
Notwithstanding any other provision hereof, the Indenture Trustee shall deliver
to the Servicer, or its designee or assignee, any Servicer Remittance Amount
received with respect to a Mortgage Loan after the related Servicer Remittance
Date to the extent that the Servicer previously made payment or provision for
payment with respect to such Servicer Remittance Amount in accordance with this
Section 8.01, and any such Servicer Remittance Amount shall not be deemed part
of the Trust Estate.
Except as otherwise expressly provided in this Indenture and
the Sale and Servicing Agreement, if, following delivery by the Indenture
Trustee of the notice described above, the Servicer shall fail to remit the
Servicer Remittance Amount on any Servicer Remittance Date, the Indenture
Trustee shall deliver a second notice to the Servicer, the Trust and the Note
Insurer by the close of business on the third Business Day prior to the related
Distribution Date indicating that a Servicer Event of Default occurred and is
continuing under the Sale and Servicing Agreement. Thereupon, the Indenture
Trustee shall take such actions as are required of the Indenture Trustee under
Article VII of the Sale and Servicing Agreement. In addition, if a default
occurs in any other performance required under the Sale and Servicing Agreement,
the Indenture Trustee may, and upon the request of the Note Insurer or, with the
consent of the Note Insurer, the Holders of Notes representing more than 50% of
the Note Principal Balance of the Outstanding Notes shall, take such action as
may be appropriate to enforce such payment or performance including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and to proceed thereafter as provided in Article V hereof.
Section 8.02. Payments; Statements. (a) On each Distribution
Date, unless the Notes have been declared due and payable pursuant to Section
5.02 hereof and moneys collected by the Indenture Trustee are being applied in
accordance with Section 5.07 hereof, Available Funds on deposit in each
Distribution Account on any Distribution Date or Redemption Date shall be
withdrawn from such Distribution Account, in the amounts required (based on the
Noteholder Statement prepared by the Indenture Trustee on or before such
Distribution Date), for application on such Distribution Date as follows:
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(i) to the Indenture Trustee, an amount equal to the Indenture
Trustee's Fees then due to it with respect to such Mortgage Loan Group;
(ii) to the Note Insurer, the Premium Amount for such
Distribution Date then due to it with respect to such Mortgage Loan
Group;
(iii) the Interest Distribution Amount for the related Class A
Notes with respect to such Mortgage Loan Group;
(iv) the Reimbursement Amount owing to the Note Insurer with
respect to such Mortgage Loan Group;
(v) the Principal Distribution Amount for that Mortgage Loan
Group, which will be distributed (x) with respect to Mortgage Loan
Group I, to the holders of the Class A-1 Notes, until the aggregate
Note Principal Balance of the Class A-1 Notes is reduced to zero; and
(y) with respect to Mortgage Loan Group II, to the holders of the Class
A-2 Notes, until the aggregate Note Principal Balance of the Class A-2
Notes is reduced to zero;
(vi) to the Cross-collateralization Reserve Account, the
amount necessary for the balance of such account to equal the Specified
Reserve Amount; provided, that if the outstanding aggregate Note
Principal Balance of the Notes related to such Mortgage Loan Group
shall have been reduced to zero, then (a) all Net Monthly Excess
Cashflow in respect of such Mortgage Loan Group plus (b) the Principal
Distribution Amount for such Mortgage Loan Group will be transferred to
the Cross-collateralization Reserve Account;
(vii) the amount of any Net Mortgage Loan Interest Shortfalls
for the Class A Notes;
(viii) to the Indenture Trustee, an amount equal to the
outstanding expenses due the Indenture Trustee pursuant to this
Agreement and not otherwise paid or reimbursed by the Servicer with
respect to such Mortgage Loan Group;
(ix) to the Servicer for reimbursement of any Nonrecoverable
Advances and nonrecoverable Servicing Advances with respect to such
Mortgage Loan Group;
(x) following the making by the Indenture Trustee of all
allocations, transfers and disbursements described above, from amounts
then on deposit in the related Distribution Account, the Indenture
Trustee shall distribute to the Holders of the related Trust
Certificates, the amount remaining on such Distribution Date, if any.
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(b) (i) On each Distribution Date, to the extent there
would be any outstanding Shortfall Amount for either Mortgage Loan
Group after the application of the Available Funds for such Mortgage
Loan Group pursuant to clauses (i) through (v) of Section 8.02(a)
(without taking into account any transfers from the
Cross-collateralization Reserve Account or Insured Payments included in
such Available Funds on that date), amounts on deposit in the
Cross-collateralization Reserve Account, including any amounts to be
deposited from the other Mortgage Loan Group pursuant to clause (vi) of
Section 8.02(a) on that Distribution Date, shall be withdrawn from the
Cross-collateralization Reserve Account and applied on that
Distribution Date towards the payment of any outstanding Shortfall
Amount with respect to such Mortgage Loan Group on that Distribution
Date.
(ii) If on any Distribution Date a Shortfall Amount exists
with respect to only one Mortgage Loan Group (the "Shortfall Group"),
then distributions from the Distribution Account with respect to such
Shortfall Group shall not be made until after the distributions with
respect to the other Mortgage Loan Group have been completed, and the
Available Funds for the Shortfall Group shall include (to the extent of
such Shortfall Amount for the Shortfall Group) all amounts on deposit
in the Cross-collateralization Reserve Account after giving effect to
the distributions from the other Mortgage Loan Group. If on any
Distribution Date a Shortfall Amount exists with respect to both
Mortgage Loan Groups and the funds in the Cross-collateralization
Reserve Account are not sufficient to pay such Shortfall Amounts in
full, then the funds in the Cross-collateralization Reserve Account
shall be applied to the payment of such Shortfall Amounts in such order
of priority as the Note Insurer shall direct or, in the absence of such
direction, pro rata in proportion to the respective Shortfall Amounts
for each Mortgage Loan Group.
(iii) Any amounts withdrawn from the Cross- collateralization
Reserve Account pursuant to the above two clauses (i) and (ii) shall be
deemed to have been withdrawn first, from amounts other than the
Reserved Principal Amount and, second, from the Reserved Principal
Amount (which withdrawals deemed to have been made from the Reserved
Principal Amount shall pro tanto reduce the dollar amount thereof).
(iv) If the amount on deposit in the Cross- collateralization
Reserve Account on any Distribution Date, after the deposit in such
account on such date of any amounts pursuant to Section 8.02(a)(vi)
above and the use of such amounts pursuant to the preceding paragraph,
but exclusive of the Reserved Principal Amount, if any, then on deposit
in the Cross-collateralization Reserve Account, exceeds or would exceed
the Specified Reserve Amount for such date, the amount of such excess
shall be withdrawn from the Cross-collateralization Reserve Account and
deposited into the Distribution Account to be applied pursuant to
clauses (vii) through (x) of Section 8.02(a) above.
Section 8.03. Claims against the Policy. (a) Within two (2)
Business Days of receipt of each Servicer Remittance Report, the Indenture
Trustee shall determine with respect to the immediately following Distribution
Date, the amount to be on deposit in each Distribution Account on such
Distribution Date as a result of the Servicer's remittance of the Servicer
Remittance Amount on the related Servicer Remittance Date and transfers from the
Cross-Collateralization Reserve Account, excluding the amount of any Insured
Payment and prior to the application of the amounts described in clauses (i)
through (vii) of Section 8.02(a) hereof for the related Distribution Date.
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(b) If on any Distribution Date there is a Deficiency Amount
for either Mortgage Loan Group, the Indenture Trustee shall complete a Notice in
the form of Exhibit A to the Policy and submit such notice to the Note Insurer
no later than 12:00 noon New York City, New York time on the third Business Day
preceding such Distribution Date as a claim for an Insured Payment in an amount
equal to such Deficiency Amount.
(c) The Indenture Trustee shall establish a separate Eligible
Account for the benefit of Holders of the Notes and the Note Insurer referred to
herein as the "Note Insurance Payment Account" over which the Indenture Trustee
shall have exclusive control and sole right of withdrawal. The Indenture Trustee
shall deposit upon receipt any amount paid under the Policy in the Note
Insurance Payment Account and distribute such amount only for purposes of
payment to the Noteholders of the related Mortgage Loan Group of the Insured
Amount for such Mortgage Loan Group for which a claim was made and such amount
may not be applied to satisfy any costs, expenses or liabilities of the
Servicer, the Indenture Trustee or the Trust. Amounts paid under the Policy, to
the extent needed to pay the Insured Amount shall be transferred to the related
Distribution Account on the related Distribution Date and disbursed by the
Indenture Trustee to the Noteholders in accordance with Section 8.02. It shall
not be necessary for such payments to be made by checks or wire transfers
separate from the checks or wire transfers used to pay the Insured Amount with
other funds available to make such payment. However, the amount of any payment
of principal or of interest on the Notes to be paid from funds transferred from
the Note Insurance Payment Account shall be noted as provided in subsection (d)
of this Section 8.03 in the Note Register and in the Noteholder Statement. Funds
held in the Note Insurance Payment Account shall not be invested. Any funds
remaining in the Note Insurance Payment Account on the first Business Day
following a Distribution Date shall be returned to the Note Insurer pursuant to
the written instructions of the Note Insurer by the end of such Business Day.
(d) The Indenture Trustee shall keep a complete and accurate
record of the amount of interest and principal paid in respect of any Note from
moneys received under the Policy. The Note Insurer shall have the right to
inspect such records at reasonable times during normal business hours upon one
(1) Business Day's prior notice to the Indenture Trustee.
(e) In the event that the Indenture Trustee has received a
certified copy of an order of the appropriate court that any Insured Payment has
been voided in whole or in part as a preference payment under applicable
bankruptcy law, the Indenture Trustee shall so notify the Note Insurer, shall
comply with the provisions of the Policy to obtain payment by the Note Insurer
of such voided Insured Payment, and shall, at the time it provides notice to the
Note Insurer, notify, by mail to the Noteholders of the affected Notes that, in
the event any Noteholder's Insured Payment is so recovered, such Noteholder will
be entitled to payment pursuant to the Policy, a copy of which shall be made
available through the Indenture Trustee, the Note Insurer or the Note Insurer's
fiscal agent, if any, and the Indenture Trustee shall furnish to the Note
Insurer or its fiscal agent, if any, its records evidencing the payments which
have been made by the Indenture Trustee and subsequently recovered from the
Noteholders, and dates on which such payments were made.
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(f) The Indenture Trustee shall promptly notify the Note
Insurer of any proceeding or the institution of any action, of which a
Responsible Officer of the Indenture Trustee has actual knowledge, seeking the
avoidance as a preferential transfer under applicable bankruptcy, insolvency,
receivership or similar law (a "Preference Claim") of any payment made with
respect to the Notes. Each Noteholder, by its purchase of Notes, the Servicer
and the Indenture Trustee agree that, the Note Insurer (so long as no Note
Insurer Default exists) may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim, including, without limitation, (i) the direction of any appeal
of any order relating to such Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Note Insurer shall be subrogated to,
and each Noteholder, the Servicer and the Indenture Trustee hereby delegate and
assign to the Note Insurer, to the fullest extent permitted by law, the rights
of the Servicer, the Indenture Trustee and each Noteholder in the conduct of any
such Preference Claim, including, without limitation, all rights of any party to
any adversary proceeding or action with respect to any court order issued in
connection with any such Preference Claim.
(g) The Indenture Trustee shall, upon retirement of the Notes,
furnish to the Note Insurer a notice of such retirement, and, upon retirement of
the Notes and the expiration of the term of the Policy, surrender the Policy to
the Note Insurer for cancellation.
(h) Unless a Note Insurer Default exists and is continuing,
the Indenture Trustee and the Trust shall cooperate in all respects with any
reasonable request by the Note Insurer for action to preserve or enforce the
Note Insurer's rights or interests hereunder without limiting the rights or
affecting the interests of the Noteholders as otherwise set forth herein.
(i) Each Noteholder, by its purchase of Notes, and the
Indenture Trustee hereby agree that, unless a Note Insurer Default exists and is
continuing, the Note Insurer shall have the right to direct all matters relating
to the Notes in any proceeding in a bankruptcy of the Trust, including without
limitation any proceeding relating to a Preference Amount and the posting of any
surety or Note pending any such appeal.
(j) Anything herein to the contrary notwithstanding, any
payment with respect to principal of or interest on the Notes which is made with
moneys received pursuant to the terms of the Policy shall not be considered
payment of the Notes from the Trust. The Trust and the Indenture Trustee
acknowledge, and each Holder by its acceptance of a Note agrees, that without
the need for any further action on the part of the Note Insurer, the Trust, the
Indenture Trustee or the Note Registrar (x) to the extent the Note Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Notes to the Holders of such Notes, the Note Insurer will be fully subrogated
to, and each Noteholder, the Trust and the Indenture Trustee hereby delegate and
assign to the Note Insurer, to the fullest extent permitted by law, the rights
of such Holders to receive such principal and interest from the Trust,
including, without limitation, any amounts due to the Noteholders in respect of
securities law violations arising from the offer and sale of the Notes, and (y)
the Note Insurer shall be paid such amounts from the sources and in the manner
provided herein for the payment of such amounts.
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Section 8.04. General Provisions Regarding the Distribution
Accounts and Mortgage Loans. (a) Each Distribution Account shall relate
solely to the Notes of the related Class and to the Mortgage Loans in the
related Mortgage Loan Group, Permitted Investments and other property securing
the related Notes. Funds and other property in each Distribution Account shall
not be commingled with the other Distribution Account or any other moneys or
property of the Trust or any Affiliate thereof. Notwithstanding the foregoing,
the Indenture Trustee may hold any funds or other property received or held by
it as part of a Distribution Account in collective accounts maintained by it in
the normal course of its business and containing funds or property held by it
for other Persons (which may include the Trust or an Affiliate); provided, that
such accounts are under the sole control of the Indenture Trustee and the
Indenture Trustee maintains adequate records indicating the ownership of all
such funds or property and the portions thereof held for credit to the related
Distribution Account.
(b) If any amounts are needed for payment from a Distribution
Account and sufficient uninvested funds are not available therein to make such
payment, the Indenture Trustee shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in such Distribution Account.
(c) The Indenture Trustee shall, at all times while any Notes
are Outstanding, maintain in its possession, or in the possession of an agent
whose actions with respect to such items are under the sole control of the
Indenture Trustee, all certificates or other instruments, if any, evidencing any
investment of funds in the Distribution Accounts. The Indenture Trustee shall
relinquish possession of such items, or direct its agent to do so, only for
purposes of collecting the final payment receivable on such investment or
certificate or, in connection with the sale of any investment held in the
Distribution Accounts, against delivery of the amount receivable in connection
with any sale.
(d) The Indenture Trustee shall not invest any part of the
Trust Estate in Permitted Investments that constitute uncertificated securities
(as defined in Section 8-102 of the Uniform Commercial Code, as enacted in the
relevant jurisdiction) or in any other book-entry securities unless it has
received an Opinion of Counsel reasonably satisfactory in form and substance to
the Indenture Trustee setting forth, with respect to each type of security for
which authority to invest is being sought, the procedures that must be followed
to maintain the lien and security interest created by this Indenture with
respect to the Trust Estate.
Section 8.05. Releases of Deleted Mortgage Loans. Upon notice
or discovery by a Responsible Officer of the Indenture Trustee that any of the
representations or warranties of the Unaffiliated Seller or any Originator set
forth in Section 3.03 of the Unaffiliated Seller's Agreement was materially
incorrect or otherwise misleading with respect to any Mortgage Loan as of the
time made, the Indenture Trustee shall direct the Unaffiliated Seller and the
Originators to either cure, repurchase or substitute for such Mortgage Loan as
provided in Section 3.05 of the Unaffiliated Seller's Agreement. Upon any
purchase of or substitution for a Deleted Mortgage Loan by the Unaffiliated
Seller or an Originator in accordance with Section 3.05 of the Unaffiliated
Seller's Agreement, the Indenture Trustee shall cause the Collateral Agent to
deliver the Indenture Trustee's Mortgage File relating to such Deleted Mortgage
Loan to the Unaffiliated Seller or such Originator, as the case may be, and the
Trust, the Collateral Agent and the Indenture Trustee shall execute such
instruments of transfer as are necessary to convey title to such Deleted
Mortgage Loan to the Unaffiliated Seller or such Originator, as the case may be,
free from the lien of this Indenture. Nothing in this Section 8.05 should be
construed to obligate the Indenture Trustee to actively monitor the correctness
or accuracy of the representations and warranties of the Unaffiliated Seller.
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Section 8.06. Reports by Indenture Trustee to Noteholders;
Access to Certain Information. On each Distribution Date, the Indenture Trustee
shall deliver the written reports required by Section 2.08(d) to Noteholders of
record as of the related Record Date (including the Clearing Agency, if any).
The Indenture Trustee shall make available at its Corporate
Trust Office, during normal business hours, for review by any Noteholder or any
person identified to the Indenture Trustee as a prospective Noteholder,
originals or copies of the following items: (a) the Indenture and any amendments
thereto, (b) all Noteholder Statements and other reports delivered since the
Closing Date pursuant to Section 2.08(d) hereof, (c) any Officers' Certificates
delivered to the Indenture Trustee since the Closing Date as described in the
Indenture and (d) any Accountants' reports delivered to the Indenture Trustee
since the Closing Date as required under the Sale and Servicing Agreement.
Copies of any and all of the foregoing items will be available from the
Indenture Trustee upon request; however, the Indenture Trustee will be permitted
to require payment of a sum sufficient to cover the reasonable costs and
expenses of providing such copies and shall not be required to provide such
copies without reasonable assurances that such sum will be paid.
Section 8.07. Release of Trust Estate. The Indenture Trustee
shall, at such time as there are no Notes Outstanding, release all of the Trust
Estate to the Trust (other than any cash held for the payment of the Notes
pursuant to Section 3.03 or 4.02 hereof).
Section 8.08. Amendment to Sale and Servicing Agreement. The
Indenture Trustee may, with the consent of the Note Insurer, but without the
consent of any Holder, enter into or consent to any amendment or supplement to
the Sale and Servicing Agreement for the purpose of increasing the obligations
or duties of any party other than the Indenture Trustee or the Holders of the
Notes. The Indenture Trustee may, in its discretion, decline to enter into or
consent to any such supplement or amendment: (i) unless the Indenture Trustee
receives an Opinion of Counsel that the position of the Holders would not be
materially adversely affected or written confirmation of satisfaction of the
Rating Agency Condition or (ii) if its own rights, duties or immunities would be
adversely affected.
Section 8.09. Delivery of the Mortgage Files Pursuant to Sale
and Servicing Agreement. As is appropriate for the servicing or foreclosure of
any Mortgage Loan, the Indenture Trustee shall cause the Collateral Agent to
deliver to the Servicer the Mortgage Files for such Mortgage Loan upon receipt
by the Indenture Trustee and the Collateral Agent on or prior to the date such
release is to be made of:
52
(a) such Officer's Certificates, if any, as are required by
the Sale and Servicing Agreement; and
(b) a Request for Release, executed by the Servicer, providing
that the Servicer will hold or retain the Indenture Trustee's Mortgage Files in
trust for the benefit of the Indenture Trustee, the Note Insurer and the Holders
of Notes.
Section 8.10. Servicer as Agent. In order to facilitate the
servicing of the Mortgage Loans by the Servicer of such Mortgage Loans, the
Servicer of the Mortgage Loans has been appointed by the Trust to retain, in
accordance with the provisions of the Sale and Servicing Agreement and this
Indenture, all Servicer Remittance Amounts on such Mortgage Loans prior to their
deposit into the related Distribution Account on or prior to the related
Servicer Remittance Date.
Section 8.11. Termination of Servicer. In the event of the
occurrence of a Servicer Event of Default specified in Section 7.01 of the Sale
and Servicing Agreement, the Indenture Trustee may, with the consent of the Note
Insurer or, with the prior written consent of the Note Insurer, the Holder of
Notes representing more than 50% of the Note Principal Balance of the
Outstanding Notes of both of the Classes, and shall, upon the direction of the
Note Insurer (or as otherwise provided in the Sale and Servicing Agreement),
terminate the Servicer as provided in Section 7.01 of the Sale and Servicing
Agreement. If the Indenture Trustee terminates the Servicer, the Indenture
Trustee shall, pursuant to Section 7.02 of the Sale and Servicing Agreement,
assume the duties of the Servicer or appoint a successor Servicer acceptable to
the Trust, the Note Insurer and the Rating Agencies and meeting the requirements
set forth in the Sale and Servicing Agreement.
Section 8.12. Opinion of Counsel. The Indenture Trustee shall
be entitled to receive at least five (5) Business Days' notice of any action to
be taken pursuant to Sections 8.08 and 8.09 hereof (other than in connection
with releases of Mortgage Loans that were subject to a prepayment in full),
accompanied by copies of any instruments involved, and the Indenture Trustee
shall be entitled to receive an Opinion of Counsel, in form and substance
reasonably satisfactory to the Indenture Trustee, stating the legal effect of
any such action, outlining the steps required to complete the same, and
concluding that all conditions precedent to the taking of such action have been
complied with. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
Section 8.13. Appointment of Collateral Agents. The Indenture
Trustee may, at no additional cost to the Trust or to the Indenture Trustee,
with the consent of the Note Insurer, appoint one or more Collateral Agents to
hold all or a portion of the Indenture Trustee Mortgage Files, as Agent for the
Indenture Trustee. Such Collateral Agent shall meet the requirements of Article
IX of the Sale and Servicing Agreement. Matters concerning the Collateral Agents
shall be governed by said Article IX. Chase Bank of Texas, N.A. is hereby
appointed as the initial Collateral Agent hereunder.
Section 8.14. Rights of the Note Insurer to Exercise Rights of
Noteholders. The Issuer, the Indenture Trustee and, by accepting its Notes, each
Noteholder holding Voting Rights in an Outstanding Note agrees that unless a
Note Insurer Default exists, the Note Insurer shall have the right to exercise
all rights of the Noteholders under this Indenture, without any further consent
of the Noteholders, including, without limitation:
53
(a) the right to require the Servicer to effect foreclosures
upon Mortgage Loans upon failure of the Servicer to do so;
(b) the right to require the Unaffiliated Seller to repurchase
or substitute for Deleted Mortgage Loans pursuant to Section 8.05;
(c) the right to direct the actions of the Indenture Trustee
during the continuance of an Event of Default; and
(d) the right to vote on proposed amendments to this
Indenture.
In addition, each Noteholder agrees that, unless a Note Insurer Default exists,
the rights specifically set forth above may be exercised by the Noteholders only
with the prior written consent of the Note Insurer.
Except as otherwise provided in Section 8.03 hereof and
notwithstanding any provision in this Indenture to the contrary, so long as a
Note Insurer Default has occurred and is continuing, the Note Insurer shall have
no rights to exercise any voting rights of the Noteholders hereunder, nor shall
the Indenture Trustee be required to obtain the consent of, or act at the
direction of, the Note Insurer.
All notices, statements, reports, certificates or opinions
required by this Indenture to be sent to any other party hereto or to the
Noteholders shall also be sent to the Note Insurer.
Section 8.15. Trust Estate and Accounts Held for Benefit of
the Note Insurer. The Collateral Agent, on behalf of the Indenture Trustee,
shall hold the Trust Estate and the Indenture Trustee's Mortgage Files, for the
benefit of the Noteholders and the Note Insurer, and all references in this
Indenture and in the Notes to the benefit of Holders of the Notes shall be
deemed to include the Note Insurer (provided there does not exist a Note Insurer
Default).
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of
Noteholders. With the consent of the Note Insurer and without the consent of the
Holders of any Notes, the Trust and the Indenture Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(a) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
54
(b) to add to the conditions, limitations and restrictions on
the authorized amount, terms and purposes of the issuance, authentication and
delivery of any Notes, as herein set forth, additional conditions, limitations
and restrictions thereafter to be observed;
(c) to evidence the succession of another Person to the Trust
to the extent permitted herein, and the assumption by any such successor of the
covenants of the Trust herein and in the Notes contained;
(d) to add to the covenants of the Trust, for the benefit of
the Holders of all Notes and the Note Insurer, or to surrender any right or
power herein conferred upon the Trust;
(e) to cure any ambiguity, to correct or supplement any
provision herein that may be defective or inconsistent with any other provision
herein, or to amend any other provisions with respect to matters or questions
arising under this Indenture, which shall not be inconsistent with the
provisions of this Indenture, provided that such action shall not adversely
affect in any material respect the interests of the Holders of the Notes or the
Holders of the Trust Certificates; provided, that the amendment shall not be
deemed to adversely affect in any material respect the interests of the Holders
of the Notes and the Note Insurer if the Person requesting the amendment obtains
written confirmation of the satisfaction of the Rating Agency Condition; or
(f) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification of
this Indenture under the TIA or under any similar federal statute hereafter
enacted, and to add to this Indenture such other provisions as may be expressly
required by the TIA.
Section 9.02. Supplemental Indentures With Consent of
Noteholders. With the consent of the Note Insurer and with the consent of
Holders of Notes representing not less than a majority of the Note Principal
Balance of all Outstanding Notes by Act of said Holders delivered to the Trust
and the Indenture Trustee, the Trust and the Indenture Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(a) change any Distribution Date or the Final Stated Maturity
Date of the Notes or, with respect to the Notes, reduce the Note Principal
Balance thereof or the Note Rate thereon, change the earliest date on which any
Note may be redeemed at the option of the Servicer, change any place of payment
where, or the coin or currency in which, any Note or any interest thereon is
payable, or impair the right to institute suit for the enforcement of the
payment of any installment of interest due on any Note on or after the Final
Stated Maturity Date thereof or for the enforcement of the payment of the entire
remaining unpaid principal amount of any Note on or after the Final Stated
Maturity Date (or, in the case of redemption, on or after the applicable
Redemption Date);
55
(b) reduce the percentage of the Note Principal Balance of the
Outstanding Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required for
any waiver of compliance with provisions of this Indenture or Defaults hereunder
and their consequences provided for in this Indenture;
(c) modify any of the provisions of this Section 9.02 or
Sections 5.13 or 5.17(b) hereof, except to increase any percentage specified
therein or to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(d) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(e) permit the creation of any lien other than the lien of
this Indenture with respect to any part of the Trust Estate or terminate the
lien of this Indenture on any property at any time subject hereto or deprive the
Holder of any Note of the security afforded by the lien of this Indenture;
(f) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the Interest Distribution Amount or
Principal Distribution Amount for any Distribution Date and either Class
(including the calculation of any of the individual components of such amounts)
or to affect rights of the Holders of the Notes to the benefits of any
provisions for the mandatory redemption of Notes contained herein; or
(g) incur any indebtedness, other than the Notes, that would
cause the Trust or the Trust Estate to be treated as a "taxable mortgage pool"
within the meaning of Code Section 7701(i).
The Indenture Trustee may in its discretion determine whether
or not any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under
this Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Trust and the Indenture
Trustee of any supplemental indenture pursuant to this Section 9.02, the
Indenture Trustee shall mail to the Holders of the Notes to which such
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
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Section 9.03. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and (subject to Section 6.01 hereof) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise. The Servicer, on behalf of the
Trust, shall cause executed copies of any supplemental indentures to be
delivered to the Note Insurer and the Rating Agencies.
Section 9.04. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article IX, this Indenture
shall be modified in accordance therewith, and such supplemental indenture shall
form a part of this Indenture for all purposes; and every Holder of Notes to
which such supplemental indenture relates that have theretofore been or
thereafter are authenticated and delivered hereunder shall be bound thereby.
Section 9.05. Conformity With Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article IX shall conform to the
requirements of the TIA as then in effect so long as this Indenture shall then
be qualified under the TIA.
Section 9.06. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Owner Trustee,
acting at the direction of the Majority Certificateholders, shall so determine,
new Notes so modified as to conform, in the opinion of the Indenture Trustee and
the Owner Trustee, acting at the direction of the Majority Certificateholders,
to any such supplemental indenture may be prepared by the Servicer and executed
by the Owner Trustee, acting at the direction of the Majority
Certificateholders, on behalf of the Trust, and authenticated and delivered by
the Indenture Trustee in exchange for Outstanding Notes.
Section 9.07. Amendments to Governing Documents. The Indenture
Trustee shall, upon a Trust Request, consent to any proposed amendment to the
Trust's governing documents, or an amendment to or waiver of any provision of
any other document relating to the Trust's governing documents, such consent to
be given without the necessity of obtaining the consent of the Holders of any
Notes upon receipt by the Indenture Trustee of:
(a) an Officer's Certificate, to which such proposed amendment
or waiver shall be attached, stating that such attached copy is a true copy of
the proposed amendment or waiver and that all conditions precedent to such
consent specified in this Section 9.07 have been satisfied; and
(b) written confirmation of the satisfaction of the Rating
Agency Condition with respect to such proposed amendment.
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Notwithstanding the foregoing, the Indenture Trustee may
decline to consent to a proposed waiver or amendment that adversely affects its
own rights, duties or immunities under this Indenture or otherwise.
Nothing in this Section 9.07 shall be construed to require
that any Person obtain the consent of the Indenture Trustee to any amendment or
waiver or any provision of any document where the making of such amendment or
the giving of such waiver without obtaining the consent of the Indenture Trustee
is not prohibited by this Indenture or by the terms of the document that is the
subject of the proposed amendment or waiver.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption. (a) The Servicer may, at its option
and at its sole cost and expense, elect to cause this Indenture to be terminated
and all the Notes to be redeemed in whole, but not in part, terminate this
Agreement on the first Distribution Date after any Distribution Date on which
the Aggregate Principal Balance is less than 10% of the Original Aggregate
Principal Balance (the "Clean-Up Call Date") by purchasing, on such succeeding
Distribution Date, all of the outstanding Mortgage Loans and REO Properties at a
price equal to the sum of (i) 100% of the aggregate Principal Balance of each
outstanding Mortgage Loan and each REO Property and (ii) the greater of (1) the
Aggregate amount of accrued and unpaid interest on the Mortgage Loans through
the related Due Period and (2) 30 days' accrued interest thereon computed at a
rate equal to the related Mortgage Interest Rate, in each case net of the
Servicing Fee, (iii) any Reimbursement Amounts or Premium Amounts due to the
Note Insurer under this Agreement and (iv) any Indenture Trustee Fees or other
amounts due to the Indenture Trustee hereunder (the "Termination Price");
provided, that in no event will the Termination Price be less than the sum of
the Class A-1 Note Principal Balance and the Class A-2 Note Principal Balance,
plus all accrued and unpaid interest on the Class A-1 and Class A-2 Notes plus
all accrued and unpaid Premium Amounts, Reimbursement Amounts and all amounts
due the Indenture Trustee hereunder plus all unreimbursed Periodic Advances and
Servicing Advances. Any such purchase shall be accomplished by deposit of the
Termination Price into the Distribution Account (such deposit to be made ratably
between the Distribution Accounts in proportion to the amounts described in the
proviso to the preceding sentence for each Mortgage Loan Group). No such
termination is permitted without the prior written consent of the Note Insurer
if it would result in a draw on the Policy.
(b) Any such purchase or redemption shall be accomplished by
deposit by the exercising party, into the related Distribution Account or
Accounts of the Termination Price on the Servicer Remittance Date preceding the
Redemption Date. The amounts on deposit therein shall be distributed by the
Indenture Trustee on such Redemption Date in accordance with the priority set
forth in Section 8.02 hereof. No termination or redemption is permitted without
the prior written consent of the Note Insurer if any termination or redemption
would result in a draw on the Policy.
(c) Notice by the Servicer referred to in paragraph (a) of
this Section 10.01 of the election to redeem the Notes pursuant to subsection
(a) of this Section 10.01 shall be furnished to the Indenture Trustee not later
than thirty (30) days prior to the Distribution Date selected for such
redemption. Upon receiving such notice, the Indenture Trustee shall notify each
Holder of such Notes and Note Insurer of such election pursuant to Section 10.02
hereof. Any expenses associated with the compliance of the provisions hereof in
connection with a redemption of the Notes shall be paid by the Servicer for
exercising redemption.
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(d) Upon the redemption of all of the Notes, the Mortgage
Loans in the Trust Estate shall be released and delivered to the Servicer.
(e) Upon receipt of the notice from the Servicer of their
respective election to redeem the Notes pursuant to Section 10.01(a) hereof
(which shall state, in the case of an election by the Servicer, that the
Servicer has determined that the conditions to redemption at the option of the
Servicer have been satisfied and setting forth the amount, if any, to be
withdrawn from each Distribution Account and paid to the Servicer as
reimbursement for Nonrecoverable Advances in respect of the related Mortgage
Loans and such other information as may be required to accomplish such
redemption), the Indenture Trustee shall prepare and deliver to the Trust, the
Servicer and the Note Insurer, no later than the related Redemption Date, a
Noteholder Statement.
Section 10.02. Form of Redemption Notice. Notice of redemption
shall be given by the Indenture Trustee in the name of and at the expense of the
Trust by first class mail, postage prepaid, mailed not less than ten days prior
to the Redemption Date to each Holder of Notes to be redeemed, such Holders
being determined as of the Record Date for such Distribution Date, and to the
Note Insurer.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the price at which the Notes of such Class will be
redeemed; and
(c) the fact of payment in full on such Notes, the place where
such Notes are to be surrendered for final payment (which shall be the office or
agency of the Trust to be maintained as provided in Section 3.02 hereof), and
that no interest shall accrue on such Note for any period after the date fixed
for redemption.
Failure to give notice of redemption, or any defect therein,
to any Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Note.
Section 10.03. Notes Payable on Optional Redemption. Notice of
redemption having been given as provided in Section 10.02 hereof, the Notes to
be redeemed shall, on the applicable Redemption Date, become due and payable and
(unless the Trust shall default in such payment) no interest shall accrue on
such Notes for any period after such Redemption Date; provided, however, that if
such payment is not made on the Redemption Date, the Note Principal Balance
shall, until paid, bear interest from the Redemption Date at the applicable Note
Rate.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions. (a) Upon
any application or request by any Person to the Indenture Trustee to take any
action under any provision of this Indenture, such Person shall furnish to the
Indenture Trustee an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel, if requested by the
Indenture Trustee, stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
(b) Every certificate, opinion or letter with respect to
compliance with a condition or covenant provided for in this Indenture,
including one furnished pursuant to specific requirements of this Indenture
relating to a particular application or request (other than certificates
provided pursuant to TIA Section 314(a)(4)) shall include and shall be deemed to
include (regardless of whether specifically stated therein) the following:
(i) a statement that each individual signing such certificate,
opinion or letter has read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate, opinion or letter are based;
(iii) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02. Form of Documents Delivered to Indenture
Trustee. In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of the Trust may be based, insofar
as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any Opinion of Counsel may be based on the written opinion of other
counsel, in which event such Opinion of Counsel shall be accompanied by a copy
of such other counsel's opinion and shall include a statement to the effect that
such counsel believes that such counsel and the Indenture Trustee may reasonably
rely upon the opinion of such other counsel.
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Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Wherever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the Trust
shall deliver any document as a condition of the granting of such application,
or as evidence of the Trust's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Trust to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Section 6.01(b)(ii) hereof.
Whenever in this Indenture it is provided that the absence of
the occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Indenture Trustee at the request or
direction of the Trust, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Trust's right to make such request or
direction, the Indenture Trustee shall be protected in acting in accordance with
such request or direction if it does not have knowledge of the occurrence and
continuation of such Default or Event of Default as provided in Section 6.01(d)
hereof.
Section 11.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee, and,
where it is hereby expressly required, to the Trust. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Noteholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Indenture
Trustee and the Trust, if made in the manner provided in this Section 11.03.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
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(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Indenture Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Notes.
Section 11.04. Notices, etc., to Indenture Trustee, the Note
Insurer and Trust. Any request, demand, authorization, direction, notice,
consent, waiver or Act of Noteholders or other documents provided or permitted
by this Indenture to be made upon, given or furnished to, or filed with:
(a) the Indenture Trustee by any Noteholder or by the Trust
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with and received by the Indenture Trustee at its
Corporate Trust Office; or
(b) the Trust by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder (except as provided in Section
5.01(c) and (d)) hereof if in writing and mailed, first-class postage prepaid,
to the Trust addressed to it at ABFS Mortgage Loan Trust 2001-3, in care of
First Union Trust Company, National Association, One ▇▇▇▇▇▇ Square, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: Corporate Trust
Administration, or at any other address previously furnished in writing to the
Indenture Trustee by the Trust.
(c) the Note Insurer by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder if in writing and
mailed, first-class, postage prepaid, to MBIA Insurance Corporation addressed to
it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Surveillance
Department (in each case in which notice or other communication to the Note
Insurer refers to an Event of Default, a claim on the Policy or with respect to
which failure on the part of the Note Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of General Counsel and shall
be marked to indicate "URGENT MATERIAL ENCLOSED"), or at any other address
previously furnished in writing to the Indenture Trustee by the Note Insurer; or
(d) the Depositor by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder if in writing and
mailed, first-class, postage paid, to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; Attention: Managing Director - Structured
Finance Group, or at any other address previously furnished in writing to the
Indenture Trustee by the Depositor; or
(e) the Unaffiliated Seller or the Servicer by the Indenture
Trustee or by any Noteholder shall be sufficient for every purpose hereunder if
in writing and mailed, first-class, postage paid, to such party, in care of
American Business Financial Services, Inc., ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice President or at any other address previously
furnished in writing to the Indenture Trustee by the Unaffiliated Seller or the
Servicer; or
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(f) the Underwriter by any party or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed, first-class,
postage prepaid, to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, & Co. Incorporated, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Managing Director - Structured Finance Group, or at
any other address previously furnished in writing to the Indenture Trustee by
the Underwriter.
Notices required to be given to the Rating Agencies by the
Trust or the Indenture Trustee shall be in writing, personally delivered or
mailed first-class postage pre-paid, to (i) in the case of Moody's, at the
following address: ▇▇▇▇▇'▇ Investors Service, Inc., Residential Mortgage
Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and (ii) in
the case of S&P, at the following address: Standard & Poor's Ratings Services,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: Asset-Backed Surveillance
Department or as to each of the foregoing, at such other address as shall be
designed by written notice to the other parties.
Section 11.05. Notices and Reports to Noteholders; Waiver of Notices. Where this
Indenture provides for notice to Noteholders of any event or the mailing of any
report to Noteholders, such notice or report shall be sufficiently given (unless
otherwise herein expressly provided) if mailed, first-class postage prepaid, to
each Noteholder affected by such event or to whom such report is required to be
mailed, at the address of such Noteholder as it appears on the Note Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice or the mailing of such report. In any
case where a notice or report to Noteholders is mailed in the manner provided
above, neither the failure to mail such notice or report, nor any defect in any
notice or report so mailed, to any particular Noteholder shall affect the
sufficiency of such notice or report with respect to other Noteholders, and any
notice or report that is mailed in the manner herein provided shall be
conclusively presumed to have been duly given or provided.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Section 11.06. Rules by Indenture Trustee. The Indenture
Trustee may make reasonable rules for any meeting of Noteholders.
Section 11.07. Conflict With Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this Indenture by any of the provisions of
the TIA, such required provision shall control.
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Section 11.08. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 11.09. Successors and Assigns. All covenants and
agreements in this Indenture by the Trust shall bind its successors and assigns,
whether so expressed or not.
Section 11.10. Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 11.11. Benefits of Indenture. Nothing in this
Indenture or in the Notes, expressed or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, any separate trustee or
co-trustee appointed under Section 6.14 hereof, the Note Insurer and the
Noteholders, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 11.12. Legal Holidays. In any case where the date of
any Distribution Date, Redemption Date or any other date on which principal of
or interest on any Note is proposed to be paid shall not be a Business Day, then
(notwithstanding any other provision of the Notes or this Indenture) payment
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the nominal date of any such
Distribution Date, Redemption Date or other date for the payment of principal of
or interest on any Note and no interest shall accrue for the period from and
after any such nominal date, provided such payment is made in full on such next
succeeding Business Day.
Section 11.13. Governing Law; Consent to Jurisdiction; Waiver
of Jury Trial. (a) IN VIEW OF THE FACT THAT NOTEHOLDERS ARE EXPECTED TO RESIDE
IN MANY STATES AND OUTSIDE THE UNITED STATES AND THE DESIRE TO ESTABLISH WITH
CERTAINTY THAT THIS INDENTURE WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAW OF A STATE HAVING A WELL-DEVELOPED BODY OF COMMERCIAL
AND FINANCIAL LAW RELEVANT TO TRANSACTIONS OF THE TYPE CONTEMPLATED HEREIN, THIS
INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED THEREIN.
(b) THE TRUST AND THE INDENTURE TRUSTEE HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND
EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS
SET FORTH IN SECTION 11.04 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S.
MAILS, POSTAGE PREPAID. THE TRUST AND THE INDENTURE TRUSTEE EACH HEREBY WAIVE
ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
11.13 SHALL AFFECT THE RIGHT OF THE TRUST OR THE INDENTURE TRUSTEE TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS
TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
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(c) THE TRUST AND THE INDENTURE TRUSTEE EACH HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
Section 11.14. Counterparts. This instrument may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.15. Recording of Indenture. This Indenture is
subject to recording in any appropriate public recording offices, such recording
to be effected by the Servicer, on behalf of the Trust, and at its expense in
compliance with any Opinion of Counsel delivered pursuant to Sections 2.11(c) or
3.06 hereof.
Section 11.16. Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Trust, the Owner
Trustee or the Indenture Trustee on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Trust or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Indenture Trustee or the Owner Trustee in its individual capacity, any holder of
a beneficial interest in the Trust, the Owner Trustee or the Indenture Trustee
or of any successor or assign of the Indenture Trustee or the Owner Trustee in
its individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Trust
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of the Trust Agreement.
Section 11.17. No Petition. The Indenture Trustee, by entering
into this Indenture, and each Noteholder and Beneficial Owner, by accepting a
Note, hereby covenant and agree that they will not at any time institute against
the Unaffiliated Seller or the Trust, or join in any institution against the
Unaffiliated Seller or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the Basic
Documents. In addition, the Indenture Trustee will on behalf of the Holders of
the Notes, (a) file a written objection to any motion or other proceeding
seeking the substantive consolidation of any Originator with the Unaffiliated
Seller or the Trust, (b) file an appropriate memorandum of points and
authorities or other brief in support of such objection, or (c) endeavor to
establish at the hearing on such objection that the substantive consolidation of
such entity would be materially prejudicial to the Noteholders.
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This Section 11.17 will survive for one year and one day
following the termination of this Indenture.
Section 11.18. Inspection. The Trust agrees that, on
reasonable prior notice, it will permit any representative of the Indenture
Trustee and the Note Insurer, during the Trust's normal business hours, to
examine all of books of account, records, reports and other papers of the Trust,
to make copies and extracts therefrom, to cause such books to be audited by
Independent Accountants selected by the Indenture Trustee or the Note Insurer,
as the case may be, and to discuss its affairs, finances and accounts with its
officers, employees and Independent Accountants (and by this provision the Trust
hereby authorizes its Accountants to discuss with such representatives such
affairs, finances and accounts), all at such reasonable times and as often as
may be reasonably requested. Any expense incident to the exercise by the
Indenture Trustee of any right under this Section 11.18 shall be borne by the
Trust.
Section 11.19. Usury. The amount of interest payable or paid
on any Note under the terms of this Indenture shall be limited to an amount that
shall not exceed the maximum nonusurious rate of interest allowed by the
applicable laws of the United States or the State of New York (whichever shall
permit the higher rate), that could lawfully be contracted for, charged or
received (the "Highest Lawful Rate"). In the event any payment of interest on
any Note exceeds the Highest Lawful Rate, the Trust stipulates that such excess
amount will be deemed to have been paid as a result of an error on the part of
both the Indenture Trustee, acting on behalf of the Holder of such Note, and the
Trust, and the Holder receiving such excess payment shall promptly, upon
discovery of such error or upon notice thereof from the Trust or the Indenture
Trustee, refund the amount of such excess or, at the option of the Indenture
Trustee, apply the excess to the payment of principal of such Note, if any,
remaining unpaid. In addition, all sums paid or agreed to be paid to the
Indenture Trustee for the benefit of Holders of Notes for the use, forbearance
or detention of money shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
Notes.
Section 11.20. Note Insurer Default. Any right conferred to
the Note Insurer shall be suspended during any period in which a Note Insurer
Default exists. At such time as the Notes are no longer Outstanding under this
Indenture, the Policy has terminated in accordance with its terms and no amounts
owed to the Note Insurer under the Basic Documents and no Reimbursement Amounts
remain unpaid, the Note Insurer's rights under this Indenture shall terminate.
Section 11.21. Third-Party Beneficiary. The Note Insurer is
intended as a third- party beneficiary of this Indenture which shall be binding
upon and inure to the benefit of the Note Insurer; provided, that,
notwithstanding the foregoing, for so long as a Note Insurer Default is
continuing with respect to its obligations under the Policy, the Noteholders
shall succeed to the Note Insurer's rights hereunder. Without limiting the
generality of the foregoing, all covenants and agreements in this Indenture that
expressly confer rights upon the Note Insurer shall be for the benefit of and
run directly to the Note Insurer, and the Note Insurer shall be entitled to rely
on and enforce such covenants to the same extent as if it were a party to this
Indenture.
66
Section 11.22. Additional Rights of Note Insurer. (a) Unless a
Note Insurer Default exists and is continuing, the Trust and the Indenture
Trustee shall cooperate in all respects with any reasonable request by the Note
Insurer for action to preserve or enforce the Note Insurer's rights or interests
hereunder without limiting the rights or affecting the interests of the
Noteholders as otherwise set forth herein.
(b) Unless a Note Insurer Default exists and is continuing,
the Note Insurer shall have the right to participate in, to direct the
enforcement or defense of, and, at the Note Insurer's sole option, to institute
or assume the defense of, any action, proceeding or investigation for any remedy
available to the Indenture Trustee with respect to any matter that could
adversely affect the Trust, the Trust Estate or the rights or obligations of the
Note Insurer hereunder or under any other Basic Document, including (without
limitation) any insolvency or bankruptcy proceeding in respect of any
Originator, the Unaffiliated Seller, the Servicer, the Depositor, the Trust or
any Affiliate thereof; provided that such participation or direction shall not
be in conflict with any rule of law or with the terms of this Indenture.
Following written notice to the Indenture Trustee, the Note Insurer shall have
exclusive right to determine, in its sole discretion, the actions necessary to
preserve and protect the Trust and the Trust Estate. The Note Insurer shall be
entitled to reimbursement for all out-of-pocket costs and expenses of the Note
Insurer in connection with such action, proceeding or investigation, including
(without limitation) reasonable attorneys' fees and any judgment or settlement
entered into affecting the Note Insurer or the Note Insurer's interests, all of
which shall be included in the Reimbursement Amount.
(c) In connection with any such action, proceeding or
investigation for any remedy available to the Indenture Trustee with respect to
any matter that could adversely affect the Trust, the Trust Estate or the rights
or obligations of the Note Insurer hereunder or under the Policy or the Basic
Documents, including (without limitation) any insolvency or bankruptcy
proceeding in respect of any Originator, the Unaffiliated Seller, the Servicer,
the Depositor, the Trust or any Affiliate thereof, the Indenture Trustee hereby
agrees to cooperate with, and (unless a Note Insurer Default exists and is
continuing) to take such action as reasonably directed by, the Note Insurer,
including (without limitation) entering into such agreements and settlements as
the Note Insurer shall direct, in its sole discretion, without the consent of
any Noteholder. Notwithstanding any other provision herein or in any of the
other Basic Documents, the Indenture Trustee shall not be liable to the Note
Insurer or any Noteholder for any such action that conforms to the direction of
the Note Insurer.
(d) Any judgment or settlement entered against or affecting
the Trust or the Trust Estate in connection with any action, proceeding or
investigation shall be paid by the Indenture Trustee from the Trust Estate out
of funds that would otherwise be distributed to the holders of the Trust
Certificates.
67
(e) The Indenture Trustee hereby agrees to provide to the Note
Insurer prompt written notice of any action, proceeding or investigation that
names the Trust or the Indenture Trustee as a party or that could adversely
affect the Trust, the Trust Estate or the rights or obligations of the Note
Insurer hereunder or under the Policy or the Basic Documents, including (without
limitation) any insolvency or bankruptcy proceeding in respect of any
Originator, the Unaffiliated Seller, the Servicer, the Depositor, the Trust or
any Affiliate thereof.
(f) Notwithstanding anything contained herein or in any of the
other Basic Documents to the contrary (other than at any time during which a
Note Insurer Default exists or is continuing), the Indenture Trustee shall not,
without the Note Insurer's prior written consent or unless directed by the Note
Insurer, undertake or join any litigation or agree to any settlement of any
action, proceeding or investigation affecting the Trust, the Trust Estate or the
rights or obligations of the Note Insurer hereunder or under the Policy or the
Basic Documents.
(g) Each Holder of a Note, by acceptance of its Note, and the
Indenture Trustee agree that the Note Insurer shall have such rights as set
forth in this Section, which are in addition to any rights of the Note Insurer
pursuant to the other provisions of the Basic Documents, that the rights set
forth in this Section may be exercised by the Note Insurer, in its sole
discretion, without the need for the consent or approval of any Noteholder or
the Indenture Trustee, notwithstanding any other provision contained herein or
in any of the other Basic Documents, and that nothing contained in this Section
shall be deemed to be an obligation of the Note Insurer to exercise any of the
rights provided for herein.
(h) The Indenture Trustee shall, upon reasonable prior written
request, permit any representative of the Note Insurer, during the Indenture
Trustee's normal business hours, to examine all books of accounts, records,
reports and other information of the Indenture Trustee relating to the Notes and
the Trust Estate (including, without limitation, the Indenture Trustee's
Mortgage Files), to make copies and extracts therefrom and to discuss the
Indenture Trustee's performance of its duties with respect to the Basic
Documents with the Responsible Officers of the Indenture Trustee.
[Remainder of Page Intentionally Left Blank]
68
IN WITNESS WHEREOF, the Trust and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers thereunto
duly authorized, all as of the day and year first above written.
ABFS MORTGAGE LOAN TRUST 2001-3
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Owner
Trustee under the Trust Agreement
By:
--------------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By:
--------------------------------------------
Name:
Title:
[Signature Page to Indenture]
EXECUTION COPY
APPENDIX I
DEFINED TERMS
"ABFS": American Business Financial Services, Inc.
"Accepted Servicing Practices": The Servicer's normal
servicing practices including practices regarding reconciliation of bank
accounts, processing of mortgage payments, processing of disbursements for tax
and insurance payments, maintenance of mortgage loan records, performance of
collection efforts including disposition of delinquent loans, foreclosure
activities and disposition of real estate owned and performance of investor
accounting and reporting processes. Such practices will conform to the mortgage
servicing practices of prudent mortgage lending institutions which service, for
their own account, mortgage loans of the same type as the Mortgage Loans in the
jurisdiction in which the related Mortgaged Properties are located, which may
change from time to time; provided that such practices shall at all times
conform to the Credit and Servicing Policy Manuals.
"Account": Any of the Collection Account, the Distribution
Accounts, the Interest Reserve Account, the Cross-collateralization Reserve
Account or the Note Insurance Payment Account.
"Accountant": A Person engaged in the practice of accounting
who (except when the Indenture provides that an Accountant must be Independent)
may be employed by or affiliated with the Trust or an Affiliate of the Trust.
"Accrual Period": With respect to the Class A Notes and any
Distribution Date, the prior calendar month.
"Act": With respect to any Noteholder, as defined in Section
11.03 of the Indenture.
"Administrative Costs": With respect to the Notes and any
Distribution Date, the sum of the Indenture Trustee Fee, the Premium Amount and
the Servicing Fee for such Distribution Date.
"Affiliate": With respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent": Any Note Registrar, Collateral Agent, or
Authenticating Agent.
"Aggregate Principal Balance": With respect to any Mortgage
Loans and any date of determination, the aggregate of the Principal Balances of
such Mortgage Loans as of such date of determination.
"Appraised Value": As to any Mortgaged Property, the appraised
value of the Mortgaged Property based upon the appraisal made by or on behalf of
the related Originator at the time referred to in the related Basic Documents
or, in the case of a Mortgage Loan that is a purchase money mortgage loan, the
sales price of the Mortgaged Property, if such sales price is less than such
appraised value.
"Assignment of Mortgage": With respect to each Mortgage Loan,
an assignment of the Mortgage, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
"Authenticating Agent": The Person, if any, appointed as
Authenticating Agent by the Owner Trustee, acting at the direction of the
Majority Certificateholders, pursuant to Section 6.14 of the Indenture, until
any successor Authenticating Agent for the Notes is named, and thereafter
"Authenticating Agent" shall mean such successor. The initial Authenticating
Agent shall be the Indenture Trustee. Any Authenticating Agent other than the
Indenture Trustee shall sign an instrument under which it agrees to be bound by
all of the terms of this Indenture applicable to the Authenticating Agent.
"Authorized Denominations": The Notes are issuable only in the
minimum Percentage Interest corresponding to a minimum denomination of $1,000 or
integral multiples of $1,000, in excess thereof, in each case of Note Principal
Balance; provided, however, that one Note of each Class is issuable in a
denomination equal to any such multiple plus an additional amount such that the
aggregate denomination of all Notes of such Class shall be equal to the Original
Note Principal Balance of such Class.
"Authorized Officer": With respect to (i) the Indenture
Trustee, any Responsible Officer, (ii) the Owner Trustee or the Collateral
Agent, the president, any vice president, any assistant vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, any
trust officer, any financial services officer or any other officer of the Owner
Trustee or the Collateral Agent customarily performing functions similar to
those performed by the above officers and (iii) any other Person, the chairman,
chief operating officer, president or any vice president of such Person.
"Available Funds": With respect to any Distribution Date and
any Mortgage Loan Group, the amount to be on deposit in the related Distribution
Account on such Distribution Date (excluding the amount of any Insured Payment
and prior to the application of such amounts as described in Section 8.02 of the
Indenture for such Distribution Date) or otherwise available to make payments on
the Notes in such Mortgage Loan Group, as a result of (i) the Servicer's
remittance of the Servicer Remittance Amount to such Distribution Account on the
related Servicer Remittance Date and (ii) any transfers made from the
Cross-collateralization Reserve Account in respect of the Shortfall Amount for
such Mortgage Loan Group. For purposes of calculating the Available Funds, any
Loan Repurchase Price or Substitution Adjustment that is paid shall be deemed
deposited in the Distribution Account in the Due Period preceding such Servicer
Remittance Date.
2
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title
11 of the United States Code), as amended.
"Base Specified Over-Collateralization Amount": 4.00% of the
Original Aggregate Principal Balance.
"Basic Documents": The Indenture, the Trust Agreement, the
Sale and Servicing Agreement, the Unaffiliated Seller's Agreement, the Insurance
Agreement and the Indemnification Agreement.
"Beneficial Owner": With respect to a Book-Entry Note, the
Person who is the beneficial owner of such Note as reflected on the books of the
Clearing Agency for the Notes or on the books of a Person maintaining an account
with such Clearing Agency (as either a Direct Participant or an Indirect
Participant, in accordance with the rules of such Clearing Agency).
"Best Efforts": Efforts determined to be in good faith and
reasonably diligent by the Person performing such efforts, specifically the
Trust or the Servicer or any other agent of the Trust, as the case may be, in
its reasonable discretion. Such efforts do not require the Trust or the Servicer
or any other agent of the Trust, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Trust or the Servicer or any other agent of the Trust, as the case
may be, to advance or expend fees or sums of money in addition to those
specifically set forth in this Indenture and the Sale and Servicing Agreement.
"Book-Entry Notes": Any Notes registered in the name of the
Clearing Agency or its nominee, ownership of which is reflected on the books of
the Clearing Agency or on the books of a person maintaining an account with such
Clearing Agency (as either a Direct Participant or an Indirect Participant in
accordance with the rules of such Clearing Agency).
"Book-Entry Termination": The time at which the book-entry
registration of the Book-Entry Notes shall terminate, as specified in Section
2.13 of the Indenture.
"Business Day": Any day other than (i) a Saturday or Sunday or
(ii) a day that is either a legal holiday or a day on which the Note Insurer or
banking institutions in the State of New York, the State of Delaware, the State
of Texas, the State of New Jersey, the State of Pennsylvania or the state in
which the Indenture Trustee's office from which payments will be made to
Noteholders, are authorized or obligated by law, regulation or executive order
to be closed.
"Business Purpose Property": Any mixed-use property,
commercial property, or four or more unit multifamily property.
"CERCLA": The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Change Of Control": Any of the following: ABFS shall cease to
own, beneficially and of record, 100% of the issued and outstanding Stock of the
Servicer; the consummation of a merger or consolidation of ABFS with or into
another entity or any other corporate reorganization, if more that 50% of the
combined voting power of the continuing or surviving entity's Stock outstanding
immediately after such merger, consolidation or such other reorganization is
owned by persons who were not stockholders of ABFS immediately prior to such
merger, consolidation or other reorganization; or the sale, transfer, or other
disposition of all or substantially all of ABFS's assets. For purposes of the
foregoing, "Stock" means all shares, options, warrants, interests, participation
or other equivalents (regardless of how designated) of or in a corporation or
equivalent entity, whether voting or nonvoting, including common stock,
preferred stock, convertible debentures and all agreements, instruments and
documents convertible, in whole or in part, into any one or more or all of the
foregoing.
3
"Class": Each class of Notes designated as the Class A-1 Notes
or Class A-2 Notes.
"Class A Notes": Each class of Notes designated as the Class
A-1 Notes or the Class A-2 Notes.
"Class A-1 Carry Forward Amount": As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-1 Interest
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the amount actually distributed on the Class A-1 Notes in respect of
interest on such immediately preceding Distribution Date and (b) 30 days'
interest on the amount described in clause (a) calculated at an interest rate
equal to the Class A-1 Note Rate applicable to such Distribution Date.
"Class A-1 Current Interest": With respect to the Class A-1
Notes for any Distribution Date and the related Accrual Period, the interest
accrued at the Class A-1 Note Rate applicable to such Distribution Date and such
Accrual Period on the Class A-1 Note Principal Balance as of such Distribution
Date (and prior to making any distributions on such Distribution Date).
"Class A-1 Distribution Amount": With respect to the Class A-1
Notes for any Distribution Date, the amount to be distributed to the Holders of
the Class A-1 Notes on such Distribution Date, applied first to interest and
then to principal, which amount shall be the lesser of (x) the Class A-1 Formula
Distribution Amount for such Distribution Date or (y) the amount (including any
applicable portion of any Insured Payment) available for distribution on account
of the Class A-1 Notes for such Distribution Date.
"Class A-1 Final Scheduled Maturity Date": The March 2032
Distribution Date.
"Class A-1 Formula Distribution Amount": With respect to the
Class A-1 Notes for any Distribution Date, the sum of the Class A-1 Interest
Distribution Amount and the Class A-1 Principal Distribution Amount.
"Class A-1 Interest Distribution Amount": With respect to the
Class A-1 Notes for any Distribution Date an amount equal to (a) the related
Class A-1 Current Interest, minus (b) the amount of any Class A-1 Mortgage Loan
Interest Shortfalls, if any, plus (c) any Class A-1 Carry-Forward Amount, less
(d) any amounts paid by the Note Insurer in respect of such Class A-1
Carry-Forward Amount.
4
"Class A-1 Mortgage Loan Interest Shortfalls": With respect to
the Class A-1 Notes for any Distribution Date will be the aggregate of the
Mortgage Loan Interest Shortfalls in Mortgage Loan Group I, if any, for such
Distribution Date, to the extent such Mortgage Loan Interest Shortfalls are not
paid by the Servicer as Compensating Interest.
"Class A-1 Note": Any Note designated as a "Class A-1 Note" on
the face thereof, in the form of Exhibit A to the Indenture. The Class A-1 Notes
shall be issued with an initial aggregate Note Principal Balance equal to the
Original Aggregate Principal Balance therefor.
"Class A-1 Note Principal Balance": As of any time of
determination, the Original Aggregate Principal Balance of the Class A-1 Notes
less any amounts actually distributed with respect to principal thereon on all
prior Distribution Dates.
"Class A-1 Note Rate": With respect to any Distribution Date,
the per annum rate equal to 5.63% (or, for each Distribution Date, if any,
occurring after the Clean-up Call Date, 6.13%).
"Class A-1 Principal Distribution Amount": With respect to the
Class A-1 Notes for any Distribution Date, the lesser of (x) the Principal
Distribution Amount for Mortgage Loan Group I for such Distribution Date, or (y)
the Class A-1 Note Principal Balance as of such Distribution Date.
"Class A-2 Carry Forward Amount": As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-2 Interest
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the amount actually distributed on the Class A-2 Notes in respect of
interest on such immediately preceding Distribution Date and (b) 30 days'
interest on the amount described in clause (a) calculated at an interest rate
equal to the Class A-2 Note Rate applicable to such Distribution Date.
"Class A-2 Current Interest": With respect to the Class A-2
Notes for any Distribution Date and the related Accrual Period, the interest
accrued at the Class A-2 Note Rate applicable to such Distribution Date and such
Accrual Period on the Class A-2 Note Principal Balance as of such Distribution
Date (and prior to making any distributions on such Distribution Date).
"Class A-2 Distribution Amount": With respect to the Class A-2
Notes for any Distribution Date, the amount to be distributed to the Holders of
the Class A-2 Notes on such Distribution Date, applied first to interest and
then to principal, which amount shall be the lesser of (x) the Class A-2 Formula
Distribution Amount for such Distribution Date or (y) the amount (including any
applicable portion of any Insured Payment) available for distribution on account
of the Class A-2 Notes for such Distribution Date.
"Class A-2 Final Scheduled Maturity Date": The March 2032
Distribution Date.
"Class A-2 Formula Distribution Amount": With respect to the
Class A-2 Notes for any Distribution Date, the sum of the Class A-2 Interest
Distribution Amount and the Class A-2 Principal Distribution Amount.
5
"Class A-2 Interest Distribution Amount": With respect to the
Class A-2 Notes for any Distribution Date an amount equal to (a) the related
Class A-2 Current Interest, minus (b) the amount of any Class A-2 Mortgage Loan
Interest Shortfalls, if any, plus (c) any Class A-2 Carry-Forward Amount, less
(d) any amounts paid by the Note Insurer in respect of such Class A-2
Carry-Forward Amount.
"Class A-2 Mortgage Loan Interest Shortfalls": With respect to
the Class A-2 Notes for any Distribution Date will be the aggregate of the
Mortgage Loan Interest Shortfalls in Mortgage Loan Group II, if any, for such
Distribution Date, to the extent such Mortgage Loan Interest Shortfalls are not
paid by the Servicer as Compensating Interest.
"Class A-2 Note": Any Note designated as a "Class A-2 Note" on
the face thereof, in the form of Exhibit A to the Indenture. The Class A-2 Notes
shall be issued with an initial aggregate Note Principal Balance equal to the
Original Aggregate Principal Balance therefor.
"Class A-2 Note Principal Balance": As of any time of
determination, the Original Aggregate Principal Balance of the Class A-2 Notes
less any amounts actually distributed with respect to principal thereon on all
prior Distribution Dates.
"Class A-2 Note Rate": With respect to any Distribution Date,
the per annum rate equal to 6.17% (or, for each Distribution Date, if any,
occurring after the Clean-up Call Date, 6.67%).
"Class A-2 Principal Distribution Amount": With respect to the
Class A-2 Notes for any Distribution Date, the lesser of (x) the Principal
Distribution Amount for Mortgage Loan Group II for such Distribution Date, or
(y) the Class A-2 Note Principal Balance as of such Distribution Date.
"Clean-Up Call Date": The first Distribution Date on which the
Aggregate Principal Balance is less than or equal to 10% of the Original
Aggregate Principal Balance.
"Clearing Agency": An organization registered as a "clearing
agency" pursuant to Section 17A of the Securities and Exchange Act of 1934, as
amended, and the regulations of the Commission thereunder and shall initially be
The Depository Trust Company of New York, the nominee for which is Cede & Co.
"Clearing Agency Participants": The entities for whom the
Clearing Agency will maintain book-entry records of ownership and transfer of
Book-Entry Notes, which may include securities brokers and dealers, banks and
trust companies and clearing corporations and certain other organizations.
"Closing Date": September 26, 2001.
"Code": The Internal Revenue Code of 1986, as amended.
6
"Collateral Agent": The Chase Manhattan Bank, a New York
banking corporation, or its successor-in-interest, or any successor Collateral
Agent appointed as provided in Section 9.08 of the Sale and Servicing Agreement.
"Collection Account": The Eligible Account established and
maintained by the Servicer pursuant to Section 5.02(b) of the Sale and Servicing
Agreement.
"Combined Loan-to-Value Ratio" or "CLTV": As to any Mortgage
Loan at any time, the fraction, expressed as a percentage, the numerator of
which is the sum of (i) the Principal Balance thereof at such time and (ii) if
such Mortgage Loan is subject to a second mortgage, the unpaid principal balance
of any related first mortgage loan or loans, if any, as of such time, and the
denominator of which is the Appraised Value of any related Mortgaged Property or
Properties as of the date of the appraisal used by or on behalf of the
Unaffiliated Seller to underwrite such Mortgage Loan.
"Commission": The United States Securities and Exchange
Commission.
"Compensating Interest": As defined in Section 6.05 of the
Sale and Servicing Agreement.
"Corporate Trust Office": With respect to (x) the Indenture
Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of the Basic Documents is located at
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: Capital
Institutional Trust Services, ABFS Mortgage Loan Trust 2001-3; (y) the Owner
Trustee, the principal office of the Owner Trustee at which at any particular
time its corporate trust business shall be principally administered, which
office at the date of the execution of the Basic Documents is located at One
▇▇▇▇▇▇ Square, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Administration; and (z) the Collateral Agent, the
principal office of the Collateral Agent at which at any particular time its
corporate trust business shall be principally administered, which office at the
date of the execution of the Basic Documents is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: Capital Markets Fiduciary
Services, ABFS Mortgage Loan Trust 2001-3.
"Co-Underwriter": Bear ▇▇▇▇▇▇▇ & Co. Incorporated.
"Credit And Servicing Policy Manuals": With respect to an
Originator, its written policies and procedures regarding underwriting,
origination and servicing of mortgage loans, as delivered to the Note Insurer on
or prior to the Closing Date, with such changes notified to the Note Insurer (a)
that do not have a material adverse effect on such policies and procedures, or
(b) that are approved by the Note Insurer, such approval not to be unreasonably
withheld, conditional or delayed or (c) that the Servicer does not apply to the
Mortgage Loans.
"Cross-collateralization Reserve Account": The segregated
trust account, which shall be an Eligible Account, established and maintained
pursuant to Section 8.01(c) of the Indenture and entitled "The Chase Manhattan
Bank, as Indenture Trustee for ABFS Mortgage Loan Trust 2001-3 Mortgage Backed
Notes, Series ▇▇▇▇-▇, ▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ Reserve Account," as the case may
be, on behalf of the related Noteholders and the Note Insurer.
7
"Cross-Over Date": With respect to a Mortgage Loan Group means
the first Payment Date on which (x) the excess of (i) the aggregate, cumulative
amount of Over-collateralization Increase Amounts paid out with respect to that
Mortgage Loan Group since the Closing Date over (ii) the aggregate, cumulative
amount of the principal portion of all Liquidated Loan Losses which have
occurred in the Mortgage Loan Group since the Cut-Off Date exceeds (y) the
Initial Over-Funding Amount for that Mortgage Loan Group.
"Cumulative Loss Percentage": As of any date of determination
thereof in both Mortgage Loan Groups, the aggregate of all Liquidated Loan
Losses since the Closing Date as a percentage of the aggregate Principal Balance
of the Mortgage Loans in both Mortgage Loan Groups as of the Cut-Off Date.
"Cut-Off Date": The close of business on August 30, 2001 (or
with respect to any Mortgage Loan originated or otherwise acquired by an
Originator after August 30, 2001, the date of origination or acquisition of such
Mortgage Loan).
"Cut-Off Date Aggregate Principal Balance": Means the
aggregate unpaid principal balance of the Mortgage Loans as of the Cut-Off Date
(or, with respect to Mortgage Loans which were originated after the Cut-Off
Date, as of the date of origination). The Cut-Off Date Aggregate Principal
Balance for the Trust is $299,976,048.18. The Cut-Off Date Aggregate Principal
Balance for the Mortgage Loans in Mortgage Loan Group I and Mortgage Loan Group
II is $244,957,423.36 and $55,018,624.82, respectively.
"Cut-Off Date Principal Balance": Means as to each Mortgage
Loan, its unpaid principal balance as of the Cut-Off Date (or, with respect to
Mortgage Loans which were originated after the Cut-Off Date, as of the date of
origination).
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the Bankruptcy Code, except such a
reduction that constitutes a Deficient Valuation or a permanent forgiveness of
principal.
"Default": Any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"Deficiency Amount": With respect to either Mortgage Loan
Group and any Distribution Date, an amount equal to the excess, if any, of (i)
the Required Distribution relating to that Mortgage Loan Group for such
Distribution Date over (ii) the Available Funds for that Mortgage Loan Group for
such Distribution Date; such amount shall never be less than zero.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding Principal Balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
"Definitive Notes": Notes other than Book-Entry Notes.
8
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquency Amount": Means with respect to the end of a Due
Period, the product of (i) the Rolling Three Month Delinquency Rate and (ii) the
Aggregate Principal Balance of all Mortgage Loans in both Mortgage Loan Groups
as of the first day of the applicable three month period.
"Delinquency Ratio": With respect to any Distribution Date,
the percentage equivalent of a fraction (a) the numerator of which equals the
aggregate Principal Balances of all Mortgage Loans that are ninety (90) or more
days Delinquent, in foreclosure or converted to REO Property as of the last day
of the related Due Period and (b) the denominator of which is the aggregate
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period.
"Delinquent": A Mortgage Loan is "delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Depositor": ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I, Inc., a Delaware
corporation.
"Direct Participant": Any broker-dealer, bank or other
financial institution for which the Clearing Agency holds Notes from time to
time as a securities depositary.
"Distribution Account": With respect to either Mortgage Loan
Group, the segregated trust account, which shall be an Eligible Account,
established and maintained for such Mortgage Loan Group pursuant to Section
8.01(a) of the Indenture and entitled "The Chase Manhattan Bank, as Indenture
Trustee for ABFS Mortgage Loan Trust 2001-3 Mortgage Backed Notes, Series
2001-3, Mortgage Loan Group [I], [II] Distribution Account," on behalf of the
Noteholders and the Note Insurer.
"Distribution Date": The 15th day of any month or if such 15th
day is not a Business Day, the first Business Day immediately following,
commencing on October 15, 2001.
"Due Date": With respect to each Mortgage Loan and any
Distribution Date, the day of the calendar month preceding the calendar month in
which such Distribution Date occurs on which the Monthly Payment for such
Mortgage Loan was due.
"Due for Payment": Means the Distribution Date on which
Insured Payments are due.
"Due Period": With respect to each Distribution Date, the
calendar month preceding the related Distribution Date.
9
"Eligible Account": Either (A) an account or accounts
maintained with an institution (which may include the Indenture Trustee;
provided, that, the Indenture Trustee otherwise meets these requirements) whose
deposits are insured by the FDIC, the unsecured and uncollateralized debt
obligations of which institution shall be rated "AA" or better by S&P and "Aa2"
or better by Moody's and in the highest short term rating category by S&P and
Moody's, and which is (i) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (ii) an
institution (including the Indenture Trustee) duly organized, validly existing
and in good standing under the applicable banking laws of any state, (iii) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws, (iv) a principal subsidiary of a bank
holding company, or (v) approved in writing by the Note Insurer and the Rating
Agencies or (B) a trust account or accounts maintained with the trust department
of a federal or state chartered depository institution or trust company (which
may include the Indenture Trustee; provided, that, the Indenture Trustee
otherwise meets these requirements), having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"Excess Over-Collateralized Amount": With respect to a
Mortgage Loan Group and any Distribution Date, the excess, if any, of (a) the
Over-collateralized Amount for such Mortgage Loan Group that would apply on such
Distribution Date after taking into account all distributions that would be made
on such Distribution Date if the related Over-collateralization Reduction
Amounts for such Mortgage Loan Group were not deducted from the Principal
Distribution Amount for the Class A-1 Notes or Class A-2 Notes, as applicable,
over (b) the Specified Over-collateralized Amount for such Mortgage Loan Group.
"Exchange Act": Means the Securities Exchange Act of 1934, as
amended.
"Event of Default": As defined in Section 5.01 of the
Indenture.
"▇▇▇▇▇▇ ▇▇▇": The Federal National Mortgage Association, and
any successor thereto.
"FDIC": The Federal Deposit Insurance Corporation, and any
successor thereto.
"Final Certification": A certification as to the completeness
of each Indenture Trustee's Mortgage File prepared by the Collateral Agent, on
behalf of the Indenture Trustee, and provided by the Collateral Agent within
ninety (90) of the Closing Date pursuant to Section 2.06(b)(iii) of the Sale and
Servicing Agreement.
"Final Stated Maturity Date": With respect to the Class A
Notes, the March 2032 Distribution Date.
"Foreclosure Profits": As to any Distribution Date, the
excess, if any, of (i) Net Liquidation Proceeds in respect of each Mortgage Loan
that became a Liquidated Mortgage Loan during the related Due Period over (ii)
the sum of the unpaid Principal Balance of each such Liquidated Mortgage Loan
plus accrued and unpaid interest at the applicable Mortgage Interest Rate on the
unpaid Principal Balance thereof from the Due Date on which interest was last
paid by the Mortgagor (or, in the case of a Liquidated Mortgage Loan that had
been an REO Mortgage Loan, from the Due Date on which interest was last deemed
to have been paid pursuant to Section 5.06 of the Sale and Servicing Agreement)
to the next succeeding Due Date following the date such Loan became a Liquidated
Mortgage Loan.
10
"▇▇▇▇▇▇▇ Mac": The Federal Home Loan Mortgage Corporation, and
any successor thereto.
"GAAP": Generally accepted accounting principles,
consistently applied.
"Grant": To assign, transfer, mortgage, pledge, create and
grant a security interest in, deposit, set-over and confirm. A Grant of a
Mortgage Loan and the related Mortgage Files, a Permitted Investment, the Sale
and Servicing Agreement, the Unaffiliated Seller's Agreement, or any other
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including, without limitation,
the immediate and continuing right to claim for, collect, receive and give
receipts for principal and interest payments thereunder, Insurance Proceeds,
Loan Repurchase Prices and all other moneys payable thereunder and all proceeds
thereof, to give and receive notices and other communications, to make waivers
or other agreements, to exercise all rights and options, to bring Proceedings in
the name of the Granting party or otherwise, and generally to do and receive
anything that the Granting party is or may be entitled to do or receive
thereunder or with respect thereto.
"Highest Lawful Rate": As defined in Section 11.19 of the
Indenture.
"Indemnification Agreement": As defined in the Insurance
Agreement.
"Indenture": The Indenture, dated as of September 1, 2001,
between the Trust and the Indenture Trustee, relating to the issuance of the
Notes.
"Indenture Trustee": The Chase Manhattan Bank, a New York
banking corporation, or its successor-in-interest, or any successor Indenture
Trustee appointed as provided for in Section 6.09 of the Indenture.
"Indenture Trustee Fee": As to any Distribution Date, the fee
payable to the Indenture Trustee in respect of its services as Indenture Trustee
pursuant to Section 6.16 of the Indenture that accrues at a monthly rate equal
to one-twelfth of 0.00625% on the Principal Balance of each Mortgage Loan, as of
the immediately preceding Due Date.
"Indenture Trustee's Mortgage File": The documents delivered
to the Collateral Agent, on behalf of the Indenture Trustee, pursuant to Section
2.05 of the Sale and Servicing Agreement.
"Independent": When used with respect to any specified Person,
means such a Person who (i) is in fact independent of the Trust and any other
obligor upon the Notes, (ii) does not have any direct financial interest or any
material indirect financial interest in the Trust or in any such other obligor
or in an Affiliate of the Trust or such other obligor, and (iii) is not
connected with the Trust or any such other obligor as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions. Whenever it is herein provided that any Independent Person's opinion
or certificate shall be furnished to the Indenture Trustee, such Person shall be
appointed by a Trust Order and such opinion or certificate shall state that the
signer has read this definition and that the signer is Independent within the
meaning hereof.
11
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in a Note.
"Individual Note": A Note of an Original Note Principal
Balance of $1,000; a Note of an Original Note Principal Balance in excess of
$1,000 shall be deemed to be a number of Individual Notes equal to the quotient
obtained by dividing such Original Note Principal Balance of amount by $1,000.
"Initial Certification": A certification as to the
completeness of each Mortgage File prepared by the Collateral Agent, on behalf
of the Indenture Trustee, and provided by the Collateral Agent within thirty
(30) of the Closing Date pursuant to Section 2.06(b)(ii) of the Sale and
Servicing Agreement.
"Initial Over-collateralized Amount": An amount equal to 0% of
the Maximum Collateral Amount.
"Initial Over-Funding Amount": with respect to Mortgage Loan
Group I, $4,999,986.82; with respect to Mortgage Loan Group II, $1,023,965.00.
"Insurance Agreement": The Insurance and Reimbursement
Agreement dated as of September 26, 2001 among the Note Insurer, the Depositor,
the Trust, the Indenture Trustee, the Servicer, the Unaffiliated Seller, and the
Originators as such agreement may be amended or supplemented in accordance with
the provisions thereof.
"Insurance Policies": All insurance policies insuring any
Mortgage Loan or Mortgaged Property, to the extent the Trust or the Indenture
Trustee has any interest therein.
"Insurance Proceeds": Proceeds paid by any insurer other than
the Note Insurer pursuant to any insurance policy covering a Mortgage Loan to
the extent such proceeds are not applied to the restoration of the related
Mortgaged Property or released to the related Mortgagor in accordance with
Accepted Servicing Practices. "Insurance Proceeds" do not include
"Insured Payments."
"Insured Payment": With respect to any Distribution Date, any
amount paid by the Note Insurer under the Note Insurance Policy for such
distribution date.
"Insurer Defense Costs": All costs and expenses of the Note
Insurer (including out of pocket costs and expenses of the Indenture Trustee or
the Depositor that the Note Insurer may have paid) in connection with any
action, proceeding or investigation that could adversely affect the Trust or the
rights or obligations of the Note Insurer under any of the Insurance Agreement,
the Indenture, the Sale and Servicing Agreement, the Unaffiliated Seller's
Agreement or any other document delivered with respect thereto, including
(without limitation) any judgment or settlement entered into affecting the Note
Insurer or the Note Insurer's interests, together with interest thereon at a
rate equal to the Late Payment Rate from the date such expenses are incurred up
to but not including the date the Note Insurer is reimbursed for such expenses
in full.
12
"Interest Distribution Amount": Means (i) with respect to
Mortgage Loan Group I, the Class A-1 Interest Distribution Amount and (ii) with
respect to Mortgage Loan Group II, the Class A-2 Interest Distribution Amount.
"Interest Reserve Account": The Interest Reserve Account
established in accordance with Section 8.01(d) of the Indenture and maintained
by the Indenture Trustee.
"Late Payment Rate": Has the meaning ascribed thereto in the
Insurance Agreement.
"Letter Agreement": The Letter of Representations to the
Clearing Agency from the Indenture Trustee and the Trust dated September 26,
2001.
"Liquidated Loan Loss": With respect to any Distribution Date,
as of the related Due Date an amount equal to the excess of (i) the unpaid
Principal Balance of each such Liquidated Mortgage Loan, plus accrued interest
thereon in accordance with the amortization schedule at the time applicable
thereto at the applicable Mortgage Interest Rate from the Due Date as to which
interest was last paid with respect thereto through the next succeeding Due Date
following the date such Loan became a Liquidated Mortgage Loan, over (ii) Net
Liquidation Proceeds with respect to such Liquidated Mortgage Loan.
"Liquidated Mortgage Loan": Means (a) a Mortgage Loan with
respect to which the related Mortgaged Property has been acquired, liquidated or
foreclosed and with respect to which the Servicer determines that all
Liquidation Proceeds which it expects to recover have been recovered or (b) a
Mortgage Loan which is still outstanding on February 29, 2032 (the last day of
the month preceding the Final Stated Maturity Date for the Notes).
"Liquidation Expenses": Expenses incurred by the Servicer in
connection with the liquidation of any defaulted Mortgage Loan or property
acquired in respect thereof (including, without limitation, legal fees and
expenses, committee or referee fees, and, if applicable, brokerage commissions
and conveyance taxes), any unreimbursed amount expended by the Servicer pursuant
to Sections 5.04 and 5.06 of the Sale and Servicing Agreement respecting the
related Mortgage Loan and any unreimbursed expenditures for real property taxes
or for property restoration or preservation of the related Mortgaged Property.
Liquidation Expenses shall not include any previously incurred expenses in
respect of an REO Mortgage Loan which have been netted against related REO
Proceeds.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds) received by the Servicer in connection with (i) the taking of all or a
part of Mortgaged Property by exercise of the power of eminent domain or
condemnation, (ii) the liquidation of a defaulted Mortgage Loan through a
Indenture Trustee's sale, foreclosure sale, REO Disposition or otherwise or
(iii) the liquidation of any other security for such Mortgage Loan, including,
without limitation, pledged equipment, inventory and working capital and
assignments of rights and interests made by the related Mortgagor.
13
"Loan Repurchase Price": With respect to any Mortgage Loan,
the Principal Balance of such Mortgage Loan as of the date of purchase, plus all
accrued and unpaid interest on such Principal Balance computed, as of the next
succeeding Due Date for such repurchased Mortgage Loan, at the Mortgage Interest
Rate, net of the Servicing Fee if the Unaffiliated Seller or any of its
Affiliates is the Servicer, plus the amount of any unreimbursed Servicing
Advances made by the Servicer with respect to such Mortgage Loan, which purchase
price shall be deposited in the Collection Account on the next succeeding
Servicer Remittance Date, after deducting therefrom any amounts received in
respect of such repurchased Mortgage Loan or Loans and being held in the
Collection Account for future payment to the extent such amounts have not yet
been applied to principal or interest on such Mortgage Loan.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage
Loan as of its date of origination, the ratio on such date borne by the
outstanding Principal Balance of the Mortgage Loan to the Appraised Value of the
related Mortgaged Property.
"Majority Certificateholders": The Holder or Holders of Trust
Certificates evidencing Percentage Interests in excess of 51% in the aggregate.
"Majority Noteholders": The Holder or Holders of the Class A-1
and Class A-2 Notes evidencing Percentage Interests in excess of 51% in the
aggregate.
"Maximum Collateral Amount": The Original Aggregate Principal
Balance.
"Monthly Payment": As to any Mortgage Loan (including any REO
Mortgage Loan) and any Due Date, the payment of principal and interest due
thereon as specified for such Due Date in the related amortization schedule at
the time applicable thereto (after adjustment for any Deficient Valuations
occurring prior to such Due Date but before any adjustment to such amortization
schedule by reason of any bankruptcy, other than Deficient Valuations, or
similar proceeding or any moratorium or similar waiver or grace period).
"Monthly Servicing Fee": As defined in Section 5.08 of the
Sale and Servicing Agreement.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc., a corporation
organized and existing under Delaware law, or any successor thereto and if such
corporation no longer for any reason performs the services of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized rating agency designated by the Note Insurer.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on the Mortgaged Property.
"Mortgage File": As described in Exhibit A to the Sale and
Servicing Agreement.
"Mortgage Interest Rate": As to any Mortgage Loan, the per
annum fixed rate at which interest accrues on the unpaid Principal Balance
thereof.
"Mortgage Loan Interest Shortfall": With respect to any
Distribution Date, as to any Mortgage Loan, the sum of (a) any Prepayment
Interest Shortfall for which no payment of Compensating Interest is paid and (b)
any Relief Act Interest Shortfall in respect of such Mortgage Loan for such
Distribution Date.
14
"Mortgage Loan Group": Mortgage Loan Group I and Mortgage Loan
Group II.
"Mortgage Loan Group I": Those Mortgage Loans listed on the
Mortgage Loan Schedule as being designated to Mortgage Loan Group I.
"Mortgage Loan Group II": Those Mortgage Loans listed on the
Mortgage Loan Schedule as being designated to Mortgage Loan Group II.
"Mortgage Loan Schedule": The schedule of Mortgage Loans as of
the Cut-Off Date as attached hereto as Schedule I to the Indenture, which will
be deemed to be modified automatically upon any replacement, sale, substitution,
liquidation, transfer or addition of any Mortgage Loan pursuant to the terms of
the Sale and Servicing Agreement. The Mortgage Loan Schedule sets forth as to
each Mortgage Loan: (i) its identifying number and the name of the related
Mortgagor; (ii) the billing address for the related Mortgaged Property including
the state and zip code; (iii) its date of origination; (iv) the original number
of months to stated maturity; (v) the original stated maturity; (vi) the
original Principal Balance; (vii) the Principal Balance as of the Cut-Off Date;
(viii) the Mortgage Interest Rate and (ix) the scheduled monthly payment of
principal and interest.
"Mortgage Loans": The mortgage loans set forth on the Mortgage
Loan Schedule, together with any Qualified Substitute Mortgage Loans substituted
therefor in accordance with the Basic Documents, as from time to time are held
as a part of the Trust. When used in respect of any Distribution Date, the term
Mortgage Loans shall mean all Mortgage Loans (including those in respect of
which the Indenture Trustee has acquired the related Mortgaged Property) which
have not been repaid in full prior to the related Due Period, did not become
Liquidated Mortgage Loans prior to such related Due Period or were not
repurchased or replaced by the Unaffiliated Seller prior to such related Due
Period.
"Mortgage Note": The original, executed note or other evidence
of any indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgaged Property": The underlying property or properties
securing a Mortgage Loan, consisting of a fee simple interest in such real
property .
"Mortgagor": The obligor on a Mortgage Note.
"Net Available Funds": With respect to any Distribution Date,
the excess of (i) the Available Funds over the sum of (ii) the Indenture Trustee
Fee, (iii) the Owner Trustee Fee and (iv) the Premium Amount.
"Net Foreclosure Profits": As to any Distribution Date, the
excess, if any, of (i) the aggregate Foreclosure Profits with respect to such
Distribution Date over (ii) Liquidated Loan Losses with respect to such
Distribution Date.
15
"Net Income": For any fiscal quarter of ABFS, the net income
(or loss) of ABFS and its consolidated subsidiaries for such quarter, determined
in accordance with GAAP.
"Net Liquidation Proceeds": As to any Liquidated Mortgage
Loan, Liquidation Proceeds net of Liquidation Expenses and net of any
unreimbursed Periodic Advances and Servicing Advances made by the Servicer;
provided, that, the Net Liquidation Proceeds for a Mortgage Loan which became a
Liquidated Mortgage Loan by operation of clause (b) of the definition thereof
shall be deemed to be zero . For all purposes of the Basic Documents, Net
Liquidation Proceeds shall be allocated first to accrued and unpaid interest on
the related Mortgage Loan and then to the unpaid Principal Balance thereof.
"Net Mortgage Loan Interest Shortfalls": As of any
Distribution Date, the aggregate of the Class A-1 Mortgage Loan Interest
Shortfalls and Class A-2 Mortgage Loan Interest Shortfalls, if any, for such
Distribution Date.
"Net Monthly Excess Cashflow": With respect to any
Distribution Date and any Mortgage Loan Group, the excess of (x) the Available
Funds for such Mortgage Loan Group then on deposit in the related Distribution
Account over (y) the sum of (i) the Interest Distribution Amount for such
Mortgage Loan Group and such Distribution Date, (ii) the Principal Distribution
Amount for such Mortgage Loan Group or such Distribution Date, calculated for
this purpose without regard to any Over-collateralization Increase Amount (or
portion thereof included therein) for such Mortgage Loan Group and such
Distribution Date, (iii) the amounts due to the Note Insurer, if any, for such
Mortgage Loan Group on such Distribution Date pursuant to Section 8.02 of the
Indenture, and (iv) the Indenture Trustee Fees allocable to such Mortgage Loan
Group for such Distribution Date.
"Net REO Proceeds": As to any REO Mortgage Loan, REO Proceeds
net of any related expenses of the Servicer.
"Net Weighted Average Mortgage Interest Rate": With respect to
any Due Period, and any Mortgage Loan Group, the weighted average Mortgage
Interest Rates (weighted by Principal Balances) of the Mortgage Loans,
calculated at the opening of business on the first day of such Due Period, less
the Servicing Fee Rate, and less the Premium Percentage.
"Net Worth": As of any date, the consolidated total
stockholder's equity of ABFS and its consolidated subsidiaries, determined in
accordance with GAAP.
"Nonrecoverable Advances": With respect to any Mortgage Loan,
(a) any Periodic Advance previously made and not reimbursed from late
collections pursuant to Section 5.03 of the Sale and Servicing Agreement, or (b)
a Periodic Advance proposed to be made in respect of a Mortgage Loan or REO
Property either of which, in the good faith business judgment of the Servicer,
as evidenced by an Officer's Certificate delivered to the Note Insurer and the
Indenture Trustee no later than the Business Day following such determination,
would not ultimately be recoverable pursuant to Section 5.03 of the Sale and
Servicing Agreement.
"Note": Any Class A Note executed by the Owner Trustee on
behalf of the Trust and authenticated by the Indenture Trustee.
16
"Noteholder" or "Holder": Each Person in whose name a Note is
registered in the Note Register, except that, solely for the purposes of giving
any consent, waiver, request or demand pursuant to the Indenture, any Note
registered in the name of the Servicer or any Subservicer or the Unaffiliated
Seller, or any Affiliate of any of them, shall be deemed not to be outstanding
and the undivided Percentage Interest evidenced thereby shall not be taken into
account in determining whether the requisite percentage of Notes necessary to
effect any such consent, waiver, request or demand has been obtained. For
purposes of any consent, waiver, request or demand of Noteholders pursuant to
the Indenture, upon the Indenture Trustee's request, the Servicer and the
Unaffiliated Seller shall provide to the Indenture Trustee a notice identifying
any of their respective Affiliates or the Affiliates of any Subservicer that is
a Noteholder as of the date(s) specified by the Indenture Trustee in such
request. Any Notes on which payments are made under the Policy shall be deemed
to be Outstanding and held by the Note Insurer to the extent of such payment.
"Noteholder's Statement": The statement prepared pursuant to
Section 2.08(d) of the Indenture, containing the following information with
respect to the Notes:
(a) the amount of the payment with respect to the Notes and
the Trust Certificates;
(b) the amount of such payments allocable to principal,
separately identifying the aggregate amount of any Prepayments or other
unscheduled recoveries of principal included therein and separately
identifying any Over-collateralization Increase Amount;
(c) the amount of such payments allocable to interest and the
calculation thereof;
(d) the Note Principal Balance of the Notes as of such
Distribution Date, together with the Note Principal Balance of the
Notes (based on a Note in an Original Aggregate Principal Balance of
$1,000) then outstanding, in each case after giving effect to any
payment of principal on such Distribution Date;
(e) the amount of any Insured Payment included in the amounts
paid to the Noteholders on such Distribution Date;
(f) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in such payment; and
(g) the amounts, if any, of any Liquidated Loan Losses for
consumer purpose loans and for business purpose loans for the related
Due Period and cumulative Liquidated Loan Losses since the Closing Date
for consumer purpose loans and for business purpose loans.
Items (a), (b) and (c) above shall, with respect to the Notes,
be presented on the basis of a Note having a $1,000 denomination. In addition,
by January 31 of each calendar year following any year during which the Notes
are outstanding, the Indenture Trustee shall furnish a report to each Holder of
record if so requested in writing at any time during each calendar year as to
the aggregate of amounts reported pursuant to (a), (b) and (c) with respect to
the Notes for such calendar year.
17
"Note Insurance Payment Account": The Note Insurance Payment
Account established in accordance with Section 8.03(c) of the Indenture and
maintained by the Indenture Trustee.
"Note Insurer": MBIA Insurance Corporation, and any successors
thereto.
"Note Insurer Default": The existence and continuance of any
of the following:
(a) the Note Insurer shall have failed to make a required
payment when due under the Policy;
(b) the Note Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the
Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization, (ii) made a general
assignment for the benefit of its creditors or (iii) had an order for
relief entered against it under the Bankruptcy Code, the New York State
Insurance Law or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation, or reorganization
that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department
of Insurance, or any other competent regulatory authority shall have
entered a final and nonappealable order, judgment or decree (i)
appointing a custodian, indenture trustee, agent, or receiver for the
Note Insurer or for all or any material portion of its property or (ii)
authorizing the taking of possession by a custodian, indenture trustee,
agent, or receiver of the Note Insurer or of all or any material
portion of its property.
"Note Principal Balance": As to any particular Class A-1 Note,
Class A-2 Note and date of determination, the product of the Percentage Interest
evidenced thereby and the aggregate principal balance of the Class A-1 Notes or
the Class A-2 Notes, respectively, as of such date of determination. The Trust
Certificates do not have a "Note Principal Balance".
"Note Rate": The Class A-1 Note Rate or the Class A-2 Note
Rate.
"Note Register": As defined in Section 2.06 of the Indenture.
"Note Registrar": As defined in Section 2.06 of the Indenture.
"Notes": The Class A Notes.
"Offering Memorandum": The Offering Memorandum, dated
September 26, 2001, relating to the Notes.
"Officer's Certificate": A certificate signed by the chairman
of the board, the president or a vice president and the treasurer, the secretary
or one of the assistant treasurers or assistant secretaries of the Unaffiliated
Seller, the Servicer, or the Depositor, or, with respect to the Trust, a
certificate signed by a Responsible Officer of the Owner Trustee, at the
direction of the related Majority Certificateholders as required by any Basic
Document.
18
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be counsel for the Unaffiliated Seller, the Servicer, the
Depositor, the Indenture Trustee, the Owner Trustee, a Noteholder or a
Noteholder's prospective transferee or the Note Insurer (including except as
otherwise provided herein, in-house counsel) reasonably acceptable to each
addressee of such opinion and experienced in matters relating to the subject of
such opinion.
"Original Aggregate Principal Balance": The aggregate original
Principal Balance of the Mortgage Loans of both Mortgage Loan Groups, as of the
Cut-Off Date, which amount is equal to $300,147,927.25.
"Original Note Aggregate Principal Balance": As of the Closing
Date and as to the Class A-1 Notes, $253,800,000, and as to Class A-2 Notes,
$52,200,000. The Trust Certificates do not have an "Original Note Aggregate
Principal Balance."
"Originators": American Business Credit, Inc., HomeAmerican
Credit, Inc., d/b/a Upland Mortgage and American Business Mortgage Services,
Inc.
"Outstanding": As of the date of determination, all Notes
theretofore authenticated and delivered under the Indenture except:
(a) Definitive Notes theretofore canceled by the Note
Registrar or delivered to the Note Registrar for cancellation;
(b) Notes or portions thereof for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Indenture Trustee in trust for the Holders of such Notes; provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor, satisfactory to the Indenture Trustee, has been made;
(c) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser (as defined by the Uniform
Commercial Code of the applicable jurisdiction); and
(d) Notes alleged to have been destroyed, lost or stolen that
have been paid as provided for in Section 2.07 of the Indenture;
provided, however, that in determining whether the Holders of the requisite
percentage of the Note Principal Balance of the Outstanding Notes have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Notes owned by the Trust, any other obligor upon the Notes or any Affiliate of
the Trust, the Unaffiliated Seller, the Servicer or the Depositor or such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Notes that the Indenture Trustee knows to be so owned shall be so disregarded.
Notes so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Trust, any other obligor upon the Notes or any Affiliate of
the Trust, the Unaffiliated Seller, the Servicer or the Depositor or such other
obligor; provided, further, however, that Notes that have been paid with the
proceeds of the Policy shall be deemed to be Outstanding for the purposes of
this Indenture, such payment to be evidenced by written notice from the Note
Insurer to the Indenture Trustee, and the Note Insurer shall be deemed to be the
Holder thereof to the extent of any payments thereon made by the Note Insurer
which have not been reimbursed.
19
"Over-Collateralization Deficiency Amount": With respect to a
Mortgage Loan Group and any Distribution Date, the difference, if greater than
zero, between (a) the Specified Over-collateralized Amount for such Mortgage
Loan Group applicable to such Distribution Date and (b) the Over-collateralized
Amount for such Mortgage Loan Group applicable to such Distribution Date.
"Over-Collateralization Deficit": As of any Distribution Date
with respect to either Mortgage Loan Group, the amount, if any, by which (a) the
sum of (i) the Class A-1 Note Principal Balance or (ii) the Class A-2 Note
Principal Balance, as applicable, with respect to the related Mortgage Loan
Group, after taking into account the payment of the Principal Distribution
Amount for the related Mortgage Loan Group (except for any amount in respect of
the Over-collateralization Deficit) on such date exceeds (b) the sum of (i) the
Aggregate Principal Balance of the related Mortgage Loan Group determined as of
the end of the immediately preceding Due Period and (ii) the amount on deposit
in the Cross-collateralization Reserve Account on such Distribution Date
allocated to such Mortgage Loan Group (it being understood that any such amount
allocated to one Mortgage Loan Group will be excluded for purposes of
calculating the Over-collateralization Deficit for the other Mortgage Loan
Group), after application of all amounts due on such Distribution Date (other
than amounts in respect of Over-collateralization Deficit, plus in the case of
this clause (b), and for any Distribution Date prior to the Cross-Over Date for
the related Mortgage Loan Group, the amount by which (x) the related Initial
Under Collateralization Amount exceeds (y) an amount equal to (i) the aggregate,
cumulative amount of Over-collateralization Increase Amounts paid out with
respect to that Mortgage Loan Group since the Closing Date minus (ii) the
aggregate, cumulative amount of the principal portion of all Liquidated Loan
Losses which have occurred in that Mortgage Loan Group since the Cut-Off Date.
"Over-Collateralization Increase Amount": With respect to any
Mortgage Loan Group and to any Distribution Date, the Over-collateralization
Deficiency Amount for such Mortgage Loan Group and as of such Distribution Date
(after taking into account the payment of the Principal Distribution Amount
(except for clause (b)(viii) thereof) for such Mortgage Loan Group on such
Distribution Date). Such distribution is limited to the extent of the Available
Funds for that Mortgage Loan Group.
"Over-Collateralization Reduction Amount": With respect to any
Mortgage Loan Group and any Distribution Date, an amount equal to the lesser of
(a) the Excess Over-collateralized Amount for such Distribution Date or (b) the
Principal Distribution Amount for such Mortgage Loan Group for such Distribution
Date (without regard to any Over-collateralization Reduction Amounts for such
Mortgage Loan Group included in the definition thereof).
20
"Over-Collateralized Amount": With respect to any Mortgage
Loan Group and any Distribution Date, the difference, if any, between (a) the
Aggregate Principal Balance of the Mortgage Loans in such Mortgage Loan Group as
of the close of business on the last day of the related Due Period and (b) the
Note Principal Balance of the related Class of Notes as of such Distribution
Date (after taking into account the payment of the Principal Distribution Amount
for such Mortgage Loan Group on such Distribution Date except for any portion
thereof related to an Insured Payment and any Over-collateralization Increase
Amount); provided, however, that such amount shall not be less than zero.
"Owner-Occupied Mortgaged Property": A Residential Dwelling as
to which (a) the related Mortgagor represented an intent to occupy as such
Mortgagor's primary residence at the origination of the Mortgage Loan, and (b)
the Unaffiliated Seller has no actual knowledge that such Residential Dwelling
is not so occupied.
"Ownership Interest": As to any Note, any ownership or
security interest in such Note, including any interest in such Note as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
"Owner Trustee": First Union Trust Company, National
Association, a national banking association, not in its individual capacity, but
solely as owner trustee under the Trust Agreement, and any successor owner
trustee thereunder.
"Owner Trustee Fee": As defined in Section 8.01 of the Trust
Agreement.
"Paying Agent": The Indenture Trustee or any other depository
institution or trust company that is authorized by the Trust pursuant to Section
3.03 of the Indenture to pay the principal of, or interest on, any Notes on
behalf of the Trust, which agent, if not the Indenture Trustee, shall have
signed an instrument agreeing to be bound by the terms of the Indenture
applicable to such Paying Agent.
"Percentage Interest": With respect to a Note, the portion
evidenced by such Note, expressed as a percentage rounded to four decimal
places, equal to a fraction the numerator of which is the denomination
represented by original principal balance of such Note and the denominator of
which is the Original Aggregate Principal Balance of the Notes. With respect to
a Trust Certificate, the portion evidenced thereby as stated on the face of such
Trust Certificate.
"Periodic Advance": The aggregate of the advances required to
be made by the Servicer on any Servicer Remittance Date pursuant to Section 5.18
of the Sale and Servicing Agreement, the amount of any such advances being equal
to the sum of:
(a) with respect to each Mortgage Loan that was Delinquent as
of the close of business on the last day of the Due Period preceding
the related Servicer Remittance Date, the product of (i) the Principal
Balance of such Mortgage Loan and (ii) one-twelfth of the Mortgage
Interest Rate for such Mortgage Loan net of the Servicing Fee, and
21
(b) with respect to each REO Property which was acquired
during or prior to the related Due Period and as to which an REO
Disposition did not occur during the related Due Period, an amount
equal to the excess, if any, of (i) interest on the Principal Balance
of such REO Mortgage Loan at the Mortgage Interest Rate for such REO
Mortgage Loan net of the Servicing Fee, for the most recently ended Due
Period over (ii) the net proceeds from the REO Property transferred to
either Distribution Account for such Distribution Date;
provided, however, that in each such case such advance has not been determined
by the Servicer to be a Nonrecoverable Advance.
"Permitted Investments": As used herein, Permitted Investments
shall include the following:
(a) obligations of, or guaranteed as to principal and interest
by, the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United
States;
(b) repurchase agreements on obligations specified in clause
(a) maturing not more than three months from the date of acquisition
thereof, provided that the unsecured obligations of the party agreeing
to repurchase such obligations are at the time rated in one of the two
highest rating categories by the Rating Agencies;
(c) certificates of deposit, time deposits and bankers'
acceptances (which, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days) of any U.S.
depository institution or trust company, incorporated under the laws of
the United States or any state; provided, that, the debt obligations of
such depository institution or trust company at the date of acquisition
thereof have been rated in one of the two highest rating categories by
the Rating Agencies;
(d) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated in the highest short-term rating category by the Rating
Agencies;
(e) the VISTA U.S. Government Money Market Fund, the VISTA
Prime Money Market Fund and the VISTA Treasury Plus Fund, so long as
any such fund is rated in the highest rating category by Moody's or S&P;
provided, that, no instrument described hereunder shall evidence either the
right to receive (x) only interest with respect to the obligations underlying
such instrument or (y) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal payments
with respect to such instrument provided a yield to maturity at par greater than
120% of the yield to maturity at par of the underlying obligations; and
provided, further, that no instrument described hereunder may be purchased at a
price greater than par if such instrument may be prepaid or called at a price
less than its purchase price prior to stated maturity; or (z) provide any voting
right or substantially equivalent interest in the producer of such investment,
whether directly or indirectly, through conversion or any other manner or
method. or be disposed of prior to its maturity.
22
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": A pension or benefit plan or individual retirement
arrangement that is subject to ERISA or Section 4975 of the Code.
"Policy": The Note Insurance Policy No. 36220, and all
endorsements thereto dated the Closing Date, issued by the Note Insurer for the
benefit of the Noteholders.
"Predecessor Notes": With respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.07 of the Indenture in lieu of
a lost, destroyed or stolen Note shall be deemed to evidence the same debt as
the lost, destroyed or stolen Note.
"Preference Amount": Any amounts paid in respect of the Class
A-1 or Class A-2 Notes which are recovered from any Holder of a Note as a
voidable preference by a trustee in bankruptcy pursuant to the Bankruptcy Code
or other similar law in accordance with a final, nonappealable order of a court
having competent jurisdiction and which have not theretofore been repaid to such
Holder.
"Preference Claim": As defined in Section 8.03(f) of the
Indenture.
"Premium Amount": The product of the Premium Percentage and
the aggregate outstanding Note Principal Balance for the Class A-1 Notes and the
Class A-2 Notes, as applicable, on the related Distribution Date, before any
payments of principal on such Distribution Date; provided, however, the Premium
Amount for the Distribution Date in October 2001 will be equal to zero.
"Premium Percentage": The rate at which the "Premium" is
determined, as described in the letter dated September 26, 2001, between ABFS
and the Note Insurer.
"Prepayment Assumption": A constant prepayment rate of 23%
HEP, used solely for determining the accrual of original issue discount and
market discount on the Class A-1 Notes and Class A-2 Notes for federal income
tax purposes.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was the subject during the
related Due Period of a Principal Prepayment, an amount equal to the excess, if
any, of (a) 30 days' interest on the Principal Balance of such Mortgage Loan at
a per annum rate equal to (i) the Mortgage Interest Rate (or at such lower rate
as may be in effect for such Mortgage Loan pursuant to application of the Relief
Act, any Deficient Valuation and/or any Debt Service Reduction) minus (ii) the
Servicing Fee Rate over (b) the amount of interest actually remitted by the
Mortgagor in connection with such Principal Prepayment less the Servicing Fee
for such Mortgage Loan in such month.
23
"Principal Balance": As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination after giving effect to Principal Prepayments received
prior to the end of the related Due Period and Deficient Valuations incurred
prior to the related Due Date. The Principal Balance of a Mortgage Loan which
becomes a Liquidated Mortgage Loan on or prior to the related Due Date shall be
zero (except for purposes of calculating the Loan Repurchase Price of such
Mortgage Loans).
"Principal Distribution Amount": For any Distribution Date
with respect to any Mortgage Loan Group, will be the lesser of:
(a) the excess of (i) the sum, as of such Distribution Date,
of (A) the Available Funds for such Mortgage Loan Group and (B) any
Insured Payment for such Mortgage Loan Group plus if the Note Insurer,
to the extent not obligated hereunder or under the Insurance Agreement,
shall so elect in its sole discretion, an amount of principal
(including Liquidated Loan Losses) that would have been payable
pursuant to clauses (b)(i)-(ix) below if sufficient funds were made
available to the Indenture Trustee in accordance with the terms of the
Policy over (ii) sum of (w) the Interest Distribution Amount, (x) the
Indenture Trustee Fees and (y) the amount due to the Note Insurer on
such Distribution Date pursuant to Section 8.02 of the Indenture, in
each case with respect to such Mortgage Loan Group; and
(b) the sum, without duplication, of:
(i) all principal in respect of the Mortgage Loans in
such Mortgage Loan Group actually collected during the related
Due Period,
(ii) the Principal Balance of each Mortgage Loan
that either was repurchased by the Unaffiliated Seller or by
an Originator or purchased by the Servicer on the related
Servicer Remittance Date from such Mortgage Loan Group, to the
extent such Principal Balance is actually received by the
Indenture Trustee,
(iii) any Substitution Adjustments delivered on
the related Servicer Remittance Date in connection with a
substitution of a Mortgage Loan in such Mortgage Loan Group,
to the extent such Substitution Adjustments are actually
received by the Indenture Trustee,
(iv) the Net Liquidation Proceeds actually
collected by the Servicer on all Mortgage Loans in such
Mortgage Loan Group during the related Due Period (to the
extent such Net Liquidation Proceeds relate to principal),
(v) the proceeds received by the Indenture Trustee
upon the exercise by the Servicer of the option to repurchase
the Mortgage Loans in such Mortgage Loan Group on or after the
Clean-up Call Date, (to the extent that such proceeds relate
to principal)
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(vi) the amount of any Over-collateralization Deficit with
respect to such Mortgage Loan Group for such Distribution
Date,
(vii) the proceeds received by the Indenture Trustee on
any termination of the Trust to the extent such proceeds
relate to principal allocable to such Mortgage Loan Group,
(viii) the amount of any Over-collateralization Increase
Amount with respect to such Mortgage Loan Group for such
Distribution Date, and
(ix) if the Note Insurer shall so elect in its sole
discretion, an amount of principal (including Liquidated Loan
Losses) that would have been payable pursuant to clauses
(i)-(viii) above if sufficient funds were made available to
the Indenture Trustee in accordance with the terms of the
Policy,
minus
(x) the amount of any Over-collateralization Reduction
Amount with respect to such Mortgage Loan Group for such
Distribution Date.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its
scheduled Due Date.
"Proceeding": Any suit in equity, action at law or other
judicial or administrative proceeding.
"Prospectus Supplement": The Prospectus Supplement relating to
the Notes filed with the Commission in connection with the Registration
Statement heretofore filed or to be filed with the Commission pursuant to Rule
424(b)(2) or 424(b)(5).
"Qualified Appraiser": An appraiser, duly appointed by the
Unaffiliated Seller, who had no interest, direct or indirect, in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of the Mortgage Loan, and such
appraiser and the appraisal made by such appraiser both satisfy the requirements
of Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
"Qualified Institutional Buyer" or "QIB": As defined in Rule
144 under the Securities Act.
"Qualified Purchaser": A "qualified purchaser" as defined in
Section 2(a)(51) of the Investment Company Act.
"Qualified Substitute Mortgage Loan": A mortgage loan or
mortgage loans substituted for a Deleted Mortgage Loan pursuant to Section
2.06(c) or 4.02(b) of the Sale and Servicing Agreement, which (a) has or have an
interest rate at least equal to that applicable to the Deleted Mortgage Loan,
(b) relates or relate to a detached one-family residence or to the same type of
Residential Dwelling or Business Purpose Property, or any combination thereof,
as the Deleted Mortgage Loan and in each case has or have the same or a better
lien priority as the Deleted Mortgage Loan and has or have the same occupancy
status as the Deleted Mortgage Loan or is or are Owner-Occupied Mortgaged
Property(ies), (c) matures or mature no later than (and not more than one year
earlier than) the Deleted Mortgage Loan, (d) has or have a Loan-to-Value Ratio
or Loan-to-Value Ratios at the time of such substitution no higher than the
Loan-to-Value of the Deleted Mortgage Loan, (e) has or have a Combined
Loan-to-Value Ratio or Combined Loan-to-Value Ratios at the time of such
substitution no higher than the Combined Loan-to-Value Ratio of the Deleted
Mortgage Loan, (f) has or have a Principal Balance or Principal Balances (after
application of all payments received on or prior to the date of substitution)
not substantially less and not more than the Principal Balance of the Deleted
Mortgage Loan as of such date, and (g) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01,
3.02 and 3.03 of the Unaffiliated Seller's Agreement.
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"Rating Agency": S&P or ▇▇▇▇▇'▇.
"Rating Agency Condition": Means, with respect to any action
to which a Rating Agency Condition applies, that each Rating Agency shall have
been given ten (10) days (or such shorter period as is acceptable to each Rating
Agency) prior notice thereof and that each of the Rating Agencies shall have
notified the Indenture Trustee, the Servicer, the Depositor, the Note Insurer
and the Trust in writing that such action will not result in a reduction,
qualification or withdrawal of the then current "implied" rating of the Notes
that it maintains without taking into account the Policy.
"Record Date": With respect to the Class A Notes, the last
Business Day of the month immediately preceding the month in which a
Distribution Date occurs, or, in the case of the October 15, 2001 Distribution
Date, the Closing Date.
"Redemption Date": The Distribution Date, if any, on which the
Indenture is terminated and all of the Notes are redeemed pursuant to Article X
of the Indenture, which date may occur on or after the Clean-Up Call Date.
"Registration Date": The date on which the Depositor notifies
the Indenture Trustee that an effective registration statement is in place with
respect to the Notes.
"Reimbursement Amount": As of any Distribution Date, the sum
of (a)(i) all payments under the Policy previously received by the Indenture
Trustee and all Preference Amounts previously paid by the Note Insurer and in
each case not previously repaid to the Note Insurer pursuant to Section 8.02 of
the Indenture plus (ii) interest accrued on each such payment and Preference
Amounts not previously repaid calculated at the Late Payment Rate from the date
the Indenture Trustee received the related payment or Preference Amount paid by
the Note Insurer and (b)(i) any amounts then due and owing to the Note Insurer
under the Insurance Agreement (excluding the Premium Amount due on such
Distribution Date), as certified to the Indenture Trustee by the Note Insurer
plus (ii) interest on such amounts at the Late Payment Rate and (c) to the
extent not otherwise included, all Insurer Defense Costs. Any Reimbursement
Amounts described in clause (a) shall be allocated to the Mortgage Loan Group in
respect of which the relevant payment under the Policy was made. Any other
Reimbursement Amounts shall be allocated between the Mortgage Loan Groups in
such manner as the Note Insurer shall still direct in its sole discretion. The
Note Insurer shall notify the Indenture Trustee and the Servicer of the amount
of any Reimbursement Amount.
26
"Relief Act": The Soldiers' and Sailors' Relief Act of 1940,
as amended.
"Relief Act Shortfall": With respect to any Distribution Date,
for any Mortgage Loan as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended Due Period as a result
of the application of the Relief Act, the amount, if any, by which (a) interest
collectible on such Mortgage Loan during the most recently ended calendar month
is less than (b) the sum of one month's interest on the Principal Balance of
such Mortgage Loan, calculated at a rate equal to the related Mortgage Interest
Rate.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REO Disposition": The final sale by the Servicer of a REO
Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure.
"REO Mortgage Loan": Any Mortgage Loan which is not a
Liquidated Mortgage Loan and as to which the indebtedness evidenced by the
related Mortgage Note is discharged and the related Mortgaged Property is held
as part of the Trust.
"REO Proceeds": Proceeds received in respect of any REO
Mortgage Loan (including, without limitation, proceeds from the rental of the
related Mortgaged Property).
"REO Property": A Mortgaged Property acquired by the Servicer
in the name of the Indenture Trustee on behalf of the Noteholders through
foreclosure or deed-in-lieu of foreclosure.
"Representative": ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.
"Request for Release": A request for release in substantially
the form attached as Exhibit F of the Sale and Servicing Agreement.
"Required Distributions": For any Mortgage Loan Group, with
respect to (1) any Distribution Date occurring prior to the Distribution Date on
March 15, 2032, the sum of (x) the Interest Distribution Amount for such
Mortgage Loan Group net of any Net Mortgage Loan Interest Shortfalls and (y) the
Over-collateralization Deficit with respect to such Mortgage Loan Group, and (2)
the final scheduled Distribution Date on March 15, 2032, the sum of (x) the
amount set forth in clause (1)(x) above and (y) the outstanding aggregate Note
Principal Balance, if any, of the Class A-1 or Class A-2 Notes, as applicable
for that Mortgage Loan Group, after giving effect to all other distributions of
principal on such Notes, on that Distribution Date.
"Reserved Principal Amount": As of any date of determination,
the excess of (i) the aggregate, cumulative amount of amounts previously
deposited to the Over-collateralization Reserve Account as Principal
Distribution Amounts, as provided in Section 8.02(a)(vi)(b) of the Indenture
over (ii) the aggregate, cumulative amount of the pro tanto reductions thereon
resulting from deemed withdrawals therefrom pursuant to Section 8.02(b)(iii) of
the Indenture.
27
"Residential Dwelling": A one- to four-family dwelling, a unit
in a planned unit development, a unit in a condominium development or a
townhouse.
"Responsible Officer": When used with respect to the Indenture
Trustee or the Owner Trustee, any officer assigned to the Corporate Trust
division (or any successor thereto), including any Vice President, Second or
Assistant Vice President, Senior Trust Officer, Trust Officer, Assistant Trust
Officer, any Assistant Secretary, any trust officer or any other officer of the
Indenture Trustee or the Owner Trustee customarily performing functions similar
to those performed by any of the above designated officers in each case, having
direct responsibility for the administration of the Indenture and to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject. When used
with respect to the Unaffiliated Seller or the Servicer, the president or any
vice president, assistant vice president, or any secretary or assistant
secretary.
"Retained Interest": An interest in a Mortgage Loan Group of
promissory notes, mortgage loans, or other financial assets which entitles the
holder to receive excess cash flows derived from such assets after payments to
senior holders of direct or indirect beneficial or other interests in such
assets as well as expenses and other payments accorded priority in right or
payment to such residual interest.
"Rolling Three Month Delinquency Rate": For any Distribution
Date, a percentage, equal to the average of the Delinquency Ratio for each of
the three (1 or 2 in the case of the first three Distribution Dates, as the case
may be) immediately preceding Due Periods.
"Sale": The meaning specified in Section 5.17 of the
Indenture.
"Sale and Servicing Agreement": The Sale and Servicing
Agreement, dated as of September 1, 2001, among the Trust, the Servicer, the
Depositor, the Collateral Agent and the Indenture Trustee, providing for, among
other things, the sale of the Mortgage Loans from the Depositor to the Trust and
the servicing of the Mortgage Loans.
"Securities Act": Means the Securities Act of 1933, as
amended.
"Servicer": American Business Credit, Inc., a Pennsylvania
corporation, or any successor appointed as herein provided.
"Servicer Event of Default": As defined in Section 7.01 of the
Sale and Servicing Agreement.
"Servicer Remittance Amount": With respect to any Servicer
Remittance Date, an amount equal to the sum of (i) all collections of principal
and interest on the Mortgage Loans (including Principal Prepayments, Net REO
Proceeds and Net Liquidation Proceeds, if any) collected by the Servicer during
the related Due Period, (ii) all Periodic Advances made by the Servicer with
respect to interest payments due to be received on the Mortgage Loans on the
related Due Date and (iii) any other amounts required to be placed in the
Collection Account by the Servicer pursuant to the Sale and Servicing Agreement
but excluding the following:
28
(a) amounts received on particular Mortgage Loans as late
payments of interest and respecting which the Servicer has previously
made an unreimbursed Periodic Advance;
(b) amounts received on a particular Mortgage Loan with
respect to which the Servicer has previously made an unreimbursed
Servicing Advance, to the extent of such unreimbursed Servicing
Advance;
(c) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(d) that portion of Liquidation Proceeds and REO Proceeds to
the extent of any unpaid Servicing Fee;
(e) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(f) all amounts in respect of late payment charges, assumption
fees, prepayment premiums, extension or other administrative charges
payable by obligors and similar fees;
(g) certain other amounts which are reimbursable to the
Servicer, as provided in this Sale and Servicing Agreement; and
(h) Net Foreclosure Profits.
"Servicer Remittance Date": With respect to any Distribution
Date, the 10th day of the month in which such Distribution Date occurs, or if
such 10th day is not a Business Day, the Business Day preceding such 10th day.
"Servicer Remittance Report": The monthly report prepared by
the Servicer and delivered to the parties specified in Section 5.16(a) of the
Sale and Servicing Agreement.
"Servicing Advances": All reasonable and customary
"out-of-pocket" costs and expenses incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost and
expenses relating to (a) the preservation, restoration and protection of the
Mortgaged Property, (b) any enforcement or judicial proceedings, including
foreclosures, (c) the management and liquidation of the REO Property, including
reasonable fees paid to any independent contractor in connection therewith, (d)
compliance with the obligations under Section 5.22 of the Sale and Servicing
Agreement, all of which reasonable and customary out-of-pocket costs and
expenses are reimbursable to the Servicer to the extent provided in Sections
5.03 and 5.22 of the Sale and Servicing Agreement.
"Servicing Compensation": The Servicing Fee and other amounts
to which the Servicer is entitled pursuant to Section 5.08 of the Sale and
Servicing Agreement.
29
"Servicing Fee": As to each Mortgage Loan, the annual fee
payable to the Servicer, which is calculated as an amount equal to the product
of (a) 0.50% per annum, and (b) the Principal Balance thereof (or, in the case
of any successor Servicer, such other amount as the Note Insurer and such
successor may agree upon in writing; provided however that if the Indenture
Trustee is acting as successor Servicer in no event shall the Servicing Fee be
less than the amount paid to the initial Servicer hereunder). Such fee shall be
calculated and payable monthly only from the amounts received in respect of
interest on such Mortgage Loan and shall be computed on the basis of the same
principal amount and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The Servicing Fee includes any servicing
fees owed or payable to any Subservicer.
"Servicing Officer": Any officer of the Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee, the Collateral Agent and the Note Insurer by the
Servicer, as such list may from time to time be amended.
"Shortfall Amount": With respect to any Mortgage Loan Group
and Distribution Date, an amount, not less than zero, equal to the sum, without
duplication, of:
(a) the excess, if any, of the sum of the amounts
described in clauses (i) through (iv) of Section
8.02(a) of the Indenture over the Available Funds
(excluding any funds which are to be transferred from
the Cross-collateralization Reserve Account on that
date) for such Mortgage Loan Group and Distribution
Date; and
(b) the aggregate amount of Liquidated Loan Losses
incurred during the prior Due Period for such
Mortgage Loan Group, to the extent not paid as part
of the related Principal Distribution Amount for such
Distribution Date; and
(c) any Over-collateralization Deficit for such Mortgage
Loan Group and Distribution Date, to the extent not
paid as part of the related Principal Distribution
Amount for such Distribution Date; and
(d) provided, that, if the Cross-Over Date with respect
to that Mortgage Loan Group has previously occurred,
then, for the Final Stated Maturity Date of March 15,
2032, the outstanding Note Principal Balance, if any,
of the Class A-1 Notes and the outstanding Note
Principal Balance, if any, of the Class A-2 Notes, as
applicable, to the extent not otherwise paid on that
Distribution Date.
"Special Advance": As defined in Section 5.18(b) of the Sale
and Servicing Agreement.
"Specified Over-Collateralized Amount": With respect to either
Mortgage Loan Group, an amount equal to the product of (x) a fraction, the
numerator of which is the Aggregate Principal Balance of the Mortgage Loans in
such Mortgage Loan Group as of the Closing Date, and the denominator of which is
equal to the Aggregate Principal Balance for both Mortgage Loan Groups as of the
Closing Date; provided, that, if on any Distribution Date, after giving effect
to all distributions on that Distribution Date, the Note Principal Balance of
the Notes relating to any Mortgage Loan Group will be reduced to zero, then the
fraction described in this clause (x) for the other Mortgage Loan Group for such
Distribution Date and all subsequent Distribution Dates shall be equal to 100%
and (y) an amount computed as follows:
30
(a) during the period commencing on the Closing Date and
ending on the later of (x) the thirtieth Distribution Date following
the Closing Date and (y) the date upon which the Aggregate Principal
Balance for both Mortgage Loan Groups is less than or equal to 50% of
the Original Aggregate Principal Balance, the greater of (i) the Base
Specified Over-collateralization Amount, and (ii) 80.00% of the
Delinquency Amount;
(b) thereafter, the greatest of:
(i) the product of 8.0% times the Aggregate Principal
Balance as of such determination date,
(ii) 80.00% of the Delinquency Amount,
(iii) 0.75% of the Original Aggregate Principal Balance,
or
(iv) the aggregate Principal Balance of the three largest
Mortgage Loans;
provided, however, that for any date occurring after the end of the
period in clause (a) above, if the average Delinquency Ratio for the
three calendar month period then most recently ended exceeds 9.75%, the
Specified Over-collateralization Amount shall be no less than the
Specified Over-collateralization Amount as of the previous Distribution
Date; and provided, further that the Note Insurer may, in its sole
discretion, at the request of the Servicer, reduce the Specified
Over-collateralization Amount for the purpose of reducing or
eliminating, in whole or in part, its application hereunder. The
Indenture Trustee and the Rating Agencies shall be notified in writing
of any such modification prior to the Distribution Date with respect to
which such reduction is to take effect, and such modification shall not
take effect unless each Rating Agency shall have confirmed that such
modification would not result in a reduction or withdrawal of the then
current ratings of the Notes.
"Specified Reserve Amount": Means, with respect to any
Distribution Date, the sum of (a) the Shortfall Amount with respect to both
Mortgage Loan Groups on that Distribution Date and (b) the excess, if any, of
(x) the Specified Over-collateralized Amount for both Mortgage Loan Groups and
such Distribution Date, over (y) the Over-collateralized Amount for both
Mortgage Loan Groups and for such Distribution Date.
"Standard & Poor's" or "S&P": Standard & Poor's Ratings
Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or any successor thereto
and if such corporation no longer for any reason performs the services of a
securities rating agency, "S&P" shall be deemed to refer to any other nationally
recognized statistical rating organization designated by the Note Insurer.
31
"Startup Day": The day designated as such pursuant to Section
2.07(a) of the Trust Agreement.
"Subservicers": HomeAmerican Credit, Inc., d/b/a Upland
Mortgage, a Pennsylvania corporation, or its successor in interest and American
Business Mortgage Services, Inc., a New Jersey corporation, or its successor in
interest.
"Subservicing Agreement": The agreement between the Servicer
and the Subservicers relating to subservicing and/or administration of certain
Mortgage Loans as provided in Section 5.13 of the Sale and Servicing Agreement,
a copy of which shall be delivered, along with any modifications thereto, to the
Indenture Trustee and the Note Insurer.
"Substitution Adjustment": As to any date on which a
substitution occurs pursuant to Sections 2.06(b) or 4.02(b) of the Sale and
Servicing Agreement, the amount (if any) by which the aggregate principal
balances (after application of principal payments received on or before the date
of substitution) of any Qualified Substitute Mortgage Loans as of the date of
substitution, are less than the aggregate of the Principal Balances of the
related Deleted Mortgage Loans together with 30-days' interest thereon at the
Mortgage Interest Rate.
"Termination Price": With respect to a Clean-Up Call Date, the
sum of (i) 100% of the Aggregate Principal Balance of the Mortgage Loans in both
Mortgage Loan Groups and (ii) the greater of (A) the aggregate amount of accrued
and unpaid interest on the Mortgage Loans through the related Due Period and (B)
thirty (30) days' interest thereon, computed at a rate equal to the related
Mortgage Interest Rate, in each case net of the Servicing Fee, and (iii) any
unpaid amount due the Note Insurer.
"Trust": ABFS Mortgage Loan Trust 2001-3, a Delaware statutory
business trust.
"Trust Agreement": The Trust Agreement, dated as of September
1, 2001, among the Unaffiliated Seller, the Depositor and the Owner Trustee,
relating to the establishment of the Trust.
"Trust Certificate": A certificate evidencing the beneficial
interest of a Trust Certificateholder in the Trust, substantially in the form of
Exhibit A to the Trust Agreement.
"Trust Certificateholder" or "Holder": A Person in whose name
a Trust Certificate is registered.
"Trust Estate": All money, instruments and other property
subject or intended to be subject to the lien of the Indenture, for the benefit
of the Noteholders and the Note Insurer, as of any particular time, including,
without limitation, all property and interests, including all proceeds thereof,
Granted to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, pursuant to the Granting Clauses of the Indenture.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of
1939, as it may be amended from time to time.
32
"Trust Order" and "Trust Request": A written order or request
of the Trust signed on behalf of the Trust by an Authorized Officer of the Owner
Trustee, pursuant to Section 6.01 of the Trust Agreement or at the direction of
the Majority Certificateholders and delivered to the Indenture Trustee or the
Authenticating Agent, as applicable.
"Twelve Month Loss Amount": With respect to any Distribution
Date, an amount equal to the aggregate of all Liquidated Loan Losses on the
Mortgage Loans which became Liquidated Mortgage Loans during the twelve (12)
preceding Due Periods.
"Unaffiliated Seller": ABFS 2001-3, Inc., a Delaware
corporation.
"Unaffiliated Seller's Agreement": The Unaffiliated Seller's
Agreement, dated as of September 1, 2001, among the Unaffiliated Seller, the
Originators and the Depositor relating to the sale of the Mortgage Loans from
the Originators to the Unaffiliated Seller and from the Unaffiliated Seller to
the Depositor.
"Underwriters": The Representative and the Co-Underwriter.
"Underwriting Guidelines": The underwriting guidelines of the
Originators as approved by the Note Insurer and the Depositor.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States, any state thereof or the District of
Columbia, an estate whose income from sources without the United States is
includable in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States or a trust if a court within the United States can exercise
primary jurisdiction over its administration and at least one United States
fiduciary has the authority to control all substantial decisions of the trust.
33
SCHEDULE I
MORTGAGE LOAN SCHEDULE
[See Schedule 1 to Unaffiliated Seller's Agreement.]
EXHIBIT A
FORM OF NOTE
ABFS MORTGAGE LOAN TRUST 2001-3
CLASS A-[1], [2] NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE 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 NOTE IS A NON-RECOURSE OBLIGATION OF THE TRUST, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AND THE NOTE INSURANCE POLICY
AS PROVIDED IN THE INDENTURE REFERRED TO BELOW. THE TRUST IS NOT OTHERWISE
PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
-------------------------------------------
Note No.: CUSIP No.:
A-[1], [2] -
Class A-[1] [2] Original Note [Principal], Percentage Interest:
Balance: 100%
$----------
Date of Indenture: First Distribution Date:
As of September 1, 2001 October 15, 2001
------------------------------------------
A-1
ABFS MORTGAGE LOAN TRUST 2001-3
MORTGAGE BACKED NOTES, SERIES 2001-3, CLASS A-[1][2]
ABFS Mortgage Loan Trust 2001-3, a statutory business trust formed and
existing under the laws of the State of Delaware (herein referred to as the
"Trust"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of $__________ (_________________________
Thousand Dollars) payable on each Distribution Date in an amount equal to the
result obtained by multiplying (x) the Percentage Interest of this Note set
forth on the cover page hereof, by (y) the aggregate amount, if any, payable
from the related Distribution Account in respect of principal on the Class
A-[1][2] Notes, pursuant to the Indenture, dated as of September 1, 2001,
between the Trust and The Chase Manhattan Bank, a New York banking corporation,
as Indenture Trustee (the "Indenture Trustee"); provided, however, that the
entire unpaid Note Principal Balance of this Note shall be due and payable on
the earlier of (i) the Distribution Date occurring in March 2032 (this Note's
"Final Stated Maturity Date"), (ii) the Redemption Date, if any, applicable to
this Notes pursuant to Article X of the Indenture or (iii) the date on which an
Event of Default shall have occurred and be continuing, if the Notes have been
declared to be immediately due and payable in the manner provided in Section
5.02 of the Indenture. Capitalized terms used but not defined herein are defined
in Appendix I to the Indenture.
Pursuant to the terms of the Indenture, payments will be made on the 15th day of
each month or, if such day is not a Business Day, on the Business Day
immediately following such 15th day (each a "Distribution Date"), commencing on
the first Distribution Date specified on the cover page hereof, to the Person in
whose name this Note is registered at the close of business on the applicable
Record Date, in an amount equal to the product of (a) the Percentage Interest
evidenced by this Note and (b) the sum of the amounts to be paid on the Class
A-[1], [2] Notes with respect to such Distribution Date, all as more
specifically set forth in the Indenture.
Notwithstanding the foregoing, in the case of Definitive Notes, upon written
request at least five (5) days prior to the related Record Date with appropriate
instructions by the Holder of this Note (holding an aggregate initial Note
Principal Balance of at least $1,000,000), any payment of principal or interest,
other than the final installment of principal or interest, shall be made by wire
transfer to an account in the United States of America designated by such Holder
reasonably satisfactory to the Indenture Trustee.
On each Distribution Date, Noteholders will be entitled to receive interest
payments in an aggregate amount equal to the Current Interest for such Class for
such Distribution Date, together with principal payments in an aggregate amount
equal to the Principal Distribution Amount for such Class for such Distribution
Date, plus, until the Over-collateralization Amount for the related Mortgage
Loan Group and such Distribution Date is equal to the Specified
Over-collateralization Amount for such Mortgage Loan Group and such Distribution
Date, the Net Monthly Excess Cashflow, if any, for such Mortgage Loan Group and
such Distribution Date. The "Note Principal Balance" of a Note as of any date of
determination is equal to the initial Note Principal Balance thereof as of the
Closing Date, reduced by the aggregate of all amounts previously paid with
respect to such Note on account of principal.
A-2
The principal of and interest on this Note are payable in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts. All payments made by the Trust with respect
to this Note shall be applied first to interest due and payable on this Note as
provided above and then to the unpaid principal of this Note.
This Note is one of a duly authorized issue of Notes of the Trust, designated as
the "ABFS Mortgage Loan Trust 2001-3, Mortgage Backed Notes, Series 2001-3,
Class A-[1], [2]," issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Trust, the Indenture Trustee
and the Holders of the Notes. Also issued under the Indenture are the "ABFS
Mortgage Loan Trust 2001-3, Mortgage Backed Notes, Series 2001-3, Class A[1],
[2]." To the extent that any provision of this Note contradicts or is
inconsistent with the provisions of the Indenture, the provisions of the
Indenture shall control and supersede such contradictory or inconsistent
provision herein. The Notes are subject to all terms of the Indenture.
The Class A-[1], [2] Notes are and will be equally and ratably secured by the
Mortgage Loans in Mortgage Loan Group [I][II], the other collateral related
thereto pledged as security therefor as provided in the Indenture, and, to the
extent provided in the Indenture, by the Mortgage Loans in Mortgage Loan Group
[I][II].
As described above, the entire unpaid Note Principal Balance of this Note shall
be due and payable on the earlier of the Final Stated Maturity Date and any
Redemption Date applicable to such Class, pursuant to Article X of the
Indenture. Notwithstanding the foregoing, the entire unpaid Note Principal
Balance of the Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing if the Indenture Trustee, at the
direction or upon the prior written consent of MBIA Insurance Corporation (the
"Note Insurer") in the absence of a Note Insurer Default, or the Holders of the
Notes representing not less than 50% of the Note Principal Balance of the
Outstanding Notes (with the prior written consent of the Note Insurer in the
absence of a Note Insurer Default), shall have declared the Notes to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Notes shall be made pro rata to the
Noteholders entitled thereto.
The Note Insurer, in consideration of the payment of the premium and subject to
the terms of the Note Guaranty Insurance Policy (the "Note Insurance Policy")
thereby has unconditionally and irrevocably guaranteed the payment of the
Insured Payments.
Pursuant to the Indenture, unless a Note Insurer Default exists (i) the Note
Insurer shall be deemed to be the holder of the Notes for certain purposes
specified in the Indenture and will be entitled to exercise all rights of the
Noteholders thereunder, including the rights of Noteholders relating to the
occurrence of, and the remedies with respect to, an Event of Default, without
the consent of such Noteholders, and (ii) the Indenture Trustee may take actions
which would otherwise be at its option or within its discretion, including
actions relating to the occurrence of, and the remedies with respect to, an
Event of Default, only at the direction of the Note Insurer. In addition, on
each Distribution Date, after the Noteholders have been paid all amounts to
which they are entitled, the Note Insurer will be entitled to be reimbursed for
any unreimbursed Insured Payments, unreimbursed Premium Amounts (each with
interest thereon at the "Late Payment Rate" specified in the Insurance
Agreement) and any other amounts owed under the Policy.
A-3
The Trust shall not be liable upon the indebtedness evidenced by the Notes
except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Notes. The assets included in the
Trust Estate and payments under the Policy will be sole source of payments on
the Notes, and each Holder hereof, by its acceptance of this Note, agrees that
(i) such Note will be limited in right of payment to amounts available from the
Trust Estate and the Policy as provided in the Indenture and (ii) such Holder
shall have no recourse to the Trust, the Owner Trustee, the Indenture Trustee,
the Depositor, the Seller, the Servicer or any of their respective affiliates,
or to the assets of any of the foregoing entities, except the assets of the
Trust pledged to secure the Notes pursuant to the Indenture.
Payments of interest on this Note due and payable on each Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Holder of this Note (or one or more Predecessor Notes) on the
Note Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Notwithstanding the foregoing, in the case of Definitive
Notes, upon written request at least five days prior to the related Record Date
with appropriate instructions by the Holder of this Note (holding an aggregate
initial Note Principal Balance of at least $1,000,000), any payment of principal
or interest, other than the final installment of principal or interest, shall be
made by wire transfer to an account in the United States of America designated
by such Holder reasonably satisfactory to the Indenture Trustee. Any reduction
in the principal amount of this Note (or any one or more Predecessor Notes)
effected by any payments made on any Distribution Date shall be binding upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Note on a
Distribution Date, then the Indenture Trustee, in the name of and on behalf of
the Trust, will notify the Person who was the Holder hereof as of the Record
Date preceding such Distribution Date by notice mailed or transmitted by
facsimile prior to such Distribution Date, and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes.
As provided in the Indenture, both of the Classes of Notes may be redeemed in
whole, but not in part, at the option of the Servicer, on any Distribution Date
on and after the date on which the aggregate unpaid Note Principal Balance of
the Notes is less than or equal to 10% of the aggregate Original Note Principal
Balance of the Notes.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Trust pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
A-4
In the case of a transfer of a Class A-[1], [2] Note, the Note Registrar shall
not register the transfer of this Note unless the Note Registrar has received a
representation letter from the transferee to the effect that either (i) the
transferee is not, and is not acquiring the Note on behalf of or with the assets
of, an employee benefit plan or other retirement plan or arrangement that is
subject to Title I of the Employee Retirement Income Security Act or 1974, as
amended, or Section 4975 of the Code or (ii) the acquisition and holding of this
Note by the transferee qualifies for exemptive relief under a Department of
Labor Prohibited Transaction Class Exemption. Each Beneficial Owner, by
acceptance of a beneficial interest herein, shall be deemed to make one of the
foregoing representations.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the case of
a Beneficial Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Trust, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Trust or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Trust, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Indenture Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the case of
a Beneficial Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Beneficial Owner
will not at any time institute against American Business Financial Services,
Inc. or the Trust, or join in any institution against American Business
Financial Services, Inc. or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture, the Trust Agreement, the Unaffiliated
Seller's Agreement, the Sale and Servicing Agreement, the Insurance Agreement
and the Indemnification Agreement (the "Basic Documents").
The Trust has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Trust
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Beneficial Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Trust.
A-5
Prior to the due presentment for registration of transfer of this Note, the
Trust, the Indenture Trustee and any agent of the Trust or the Indenture Trustee
may treat the Person in whose name this Note (as of the day of determination or
as of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and none of
the Trust, the Indenture Trustee or any such agent shall be affected by notice
to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust and the rights of the Holders of the Notes under the Indenture at any time
by the Trust with the consent of the Note Insurer and the Holders of Notes
representing a majority of the Note Principal Balance of all Outstanding Notes.
The Indenture also contains provisions permitting the (i) Note Insurer or (ii)
if a Note Insurer Default exists, the Holders of Notes representing specified
percentages of the Note Principal Balance of Outstanding Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Trust with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Note Insurer or by the
Holder of this Note (or any one or more Predecessor Notes) shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the amendment thereof, in certain limited
circumstances, or the waiver of certain terms and conditions set forth in the
Indenture, without the consent of Holders of the Notes issued thereunder.
The term "Trust" as used in this Note includes any successor to the Trust under
the Indenture.
Initially, each Class of Notes will be represented by one Note registered in the
name of Cede & Co. as nominees of the Clearing Agency. The Notes will be
delivered in denominations as provided in the Indenture and subject to certain
limitations therein set forth. The Notes are exchangeable for a like aggregate
initial Note Principal Balance of Notes of different authorized denominations,
as requested by the Holder surrendering the same.
THIS NOTE AND THE INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Trust, which is absolute
and unconditional, to pay the principal of and interest on this Note at the
times, place and rate, and in the coin or currency herein prescribed.
A-6
Unless the certificate of authentication hereon has been executed by the
Authenticating Agent whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to herein, or
be valid or obligatory for any purpose.
A-7
IN WITNESS WHEREOF, the Trust has caused this Instrument to be signed, manually
or in facsimile, by its Authorized Officer, as of the date set forth below.
Dated:
ABFS MORTGAGE LOAN TRUST 2001-3
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By:
------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[1], [2] Notes designated above and referred to in
the within-mentioned Indenture.
Dated:
THE CHASE MANHATTAN BANK,
as Authenticating Agent
By:
---------------------------------------------
Authorized Signatory
A-8
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints_____________________________________, attorney, to transfer said
Note on the books kept for registration thereof, with full power of substitution
in the premises.
Dated:_____________________________________*/
Signature Guaranteed:
___________________________________________*/
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-9
EXHIBIT B
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: ABFS Mortgage Loan Trust 2001-3 Mortgage Backed Notes,
Series 2001-3, Class A-1 and Class A-2 (the "Class A Notes")
------------------------------------------------------------
Reference is hereby made to the Indenture dated as of September 1, 2001 (the
"Indenture") between ABFS Mortgage Loan Trust 2001-3, as Issuer and The Chase
Manhattan Bank, as Indenture Trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture. This letter
relates to $[253,800,000][52,200,000] initial Note Principal Balance of Class
A[-1][-2] Notes which are held in the form of a definitive Note registered in
the name of (the "Transferor"). The Transferor has requested a
transfer of such definitive Note for a definitive Note of such Class registered
in the name of [insert name of transferee]. In connection with such request, and
in respect of such Notes, the Transferor hereby certifies that such Notes are
being transferred in accordance with (i) the transfer restrictions set forth in
the Indenture and the Class A Notes and (ii) Rule 144A under the Securities Act
to a purchaser that the Transferor reasonably believes is a Qualified Purchaser
and a "qualified institutional buyer" within the meaning of Rule 144A,
purchasing for its own account or for the account of a "qualified institutional
buyer," and is aware that the sale to it is being made in reliance upon Rule
144A, in a transaction meeting the requirements of Rule 144A and in accordance
with any applicable securities laws of any state of the United States or any
other applicable jurisdiction. This certificate and the statements contained
herein are made for your benefit and the benefit of the Indenture Trustee.
-------------------------------------
[Name of Transferor]
By:
----------------------------------
Name:
Title:
Dated: ___________, ____
B-1
EXHIBIT C
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
Date
Dear Sirs:
In connection with our proposed purchase of $______________ aggregate
principal balance of ABFS Mortgage Loan Trust 2001-3 Mortgage-Backed Notes,
Series 2001-3, Class A-1 and Class A-2 (the "Class A Notes"), we confirm that:
(1) We understand that the Class A Notes has not been, and will not be,
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we
should sell any Class A Notes within three years of the later of the
date of original issuance of the Class A Notes or the last day on which
such Class A Notes is owned by the Depositor or any affiliate of the
Depositor we will do so only (A) to the Depositor, (B) to "qualified
institutional buyers" (within the meaning of Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act
("QIBs"), (C) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act, or (D) to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act that is not a QIB (an
"Institutional Accredited Investor") which prior to such transfer,
delivers to the Indenture Trustee under the Indenture dated as of
September 1, 2001 between ABFS Mortgage Loan Warehouse Trust 2001-3, as
Issuer, and The Chase Manhattan Bank, as Indenture Trustee, a signed
letter in the form of this letter; and we further agree, in the
capacities stated above, to provide to any person purchasing the Class
A Notes from us a notice advising such purchaser that resales of the
Class A Notes is restricted as stated herein.
(2) We understand that, in connection with any proposed resale of the Class
A Notes to an Institutional Accredited Investor, we will be required to
furnish to the Indenture Trustee a certification from such transferee
in the form hereof to confirm that the proposed sale is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act.
(3) We are acquiring the Class A Notes for investment purposes and not with
a view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act. We have such knowledge and experience
in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Class A Notes, and we and any
account for which we are acting are each able to bear the economic risk
of such investment.
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(4) We are an Institutional Accredited Investor, and we are acquiring the
Class A Notes purchased by us for our own account or for one or more
accounts (each of which is an Institutional Accredited Investor) as to
each of which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in order to
make our investment decision.
Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Indenture.
ABFS MORTGAGE LOAN TRUST 2001-3
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Owner
Trustee under the Trust Agreement
By:
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Name:
Title:
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You and the Indenture Trustee are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
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[Purchaser]
By:
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Name:
Title
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