Exhibit 4.1 Executed Copy
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2002
by and among
Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc.
(Depositor)
and
American Business Credit, Inc.
(Servicer)
and
JPMorgan Chase Bank
(Trustee and Collateral Agent)
ABFS Mortgage Loan Trust 2002-1
Mortgage Pass-Through Certificates,
Series 2002-1
Class A-1, Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-4, Class A-5,
Class A-IO, Class R and Class X
Table of Contents
Page
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms.......................................................................1
Section 1.02 Provisions of General Application..........................................................36
Section 1.03 Business Day Certificate...................................................................36
ARTICLE II
ESTABLISHMENT OF THE TRUST
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 Establishment of the Trust.................................................................37
Section 2.02 Purchase and Sale of Initial Mortgage Loans................................................37
Section 2.03 Purchase and Sale of Subsequent Mortgage Loans.............................................37
Section 2.04 Possession of Mortgage Files; Access to Mortgage Files.....................................39
Section 2.05 Delivery of Mortgage Loan Documents........................................................40
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain Substitutions; Certification by
Trustee....................................................................................43
Section 2.07 Designations under REMIC Provisions; Designation of Startup Day............................45
Section 2.08 Execution of Certificates..................................................................48
Section 2.09 Application of Principal and Interest......................................................48
Section 2.10 Grant of Security Interest.................................................................48
Section 2.11 Further Action Evidencing Assignments......................................................49
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Servicer and the Unaffiliated Seller................................49
Section 3.02 Representations, Warranties and Covenants of the Depositor.................................51
Section 3.03 Purchase and Substitution..................................................................53
Section 3.04 Representations, Warranties and Covenants of the Collateral Agent..........................55
Section 3.05 Representations, Warranties and Covenants of the Trustee...................................55
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates...........................................................................56
Section 4.02 Registration of Transfer and Exchange of Certificates......................................56
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates..........................................62
Section 4.04 Persons Deemed Owners......................................................................63
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ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 REMIC Matters; The Servicer................................................................63
Section 5.02 Collection of Certain Mortgage Loan Payments; Collection Account...........................65
Section 5.03 Permitted Withdrawals from the Collection Account..........................................66
Section 5.04 Hazard Insurance Policies; Property Protection Expenses....................................67
Section 5.05 Assumption and Modification Agreements.....................................................68
Section 5.06 Realization Upon Defaulted Mortgage Loans..................................................68
Section 5.07 Trustee to Cooperate.......................................................................70
Section 5.08 Servicing Compensation; Payment of Certain Expenses by Servicer............................70
Section 5.09 Annual Statement as to Compliance..........................................................71
Section 5.10 Annual Independent Public Accountants' Servicing Report....................................71
Section 5.11 Access to Certain Documentation............................................................71
Section 5.12 Maintenance of Fidelity Bond...............................................................71
Section 5.13 The Subservicers...........................................................................71
Section 5.14 Reports to the Trustee; Collection Account Statements......................................72
Section 5.15 Optional Purchase of Defaulted Mortgage Loans..............................................72
Section 5.16 Reports to be Provided by the Servicer.....................................................73
Section 5.17 Adjustment of Servicing Compensation in Respect of Prepaid Mortgage Loans..................73
Section 5.18 Periodic Advances; Special Advance.........................................................73
Section 5.19 Indemnification; Third Party Claims........................................................74
Section 5.20 Maintenance of Corporate Existence and Licenses; Merger or Consolidation of the
Servicer...................................................................................75
Section 5.21 Assignment of Agreement by Servicer; Servicer Not to Resign................................75
Section 5.22 Periodic Filings with the Securities and Exchange Commission; Additional
Information................................................................................76
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01 Establishment of Accounts; Withdrawals from Accounts; Deposits to the Distribution
Account....................................................................................76
Section 6.02 Permitted Withdrawals From the Distribution Account........................................78
Section 6.03 Collection of Money........................................................................78
Section 6.04 The Certificate Insurance Policy...........................................................79
Section 6.05 Distributions..............................................................................80
Section 6.06 Investment of Accounts.....................................................................82
Section 6.07 Reports by the Trustee.....................................................................82
Section 6.08 Additional Reports by Trustee..............................................................85
Section 6.09 Compensating Interest......................................................................85
Section 6.10 Effect of Payments by the Certificate Insurer; Subrogation.................................86
Section 6.11 Additional Rights of Certificate Insurer...................................................86
Section 6.12 Supplemental Interest Payment Account......................................................88
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ARTICLE VII
DEFAULT
Section 7.01 Events of Default..........................................................................88
Section 7.02 Trustee to Act; Appointment of Successor...................................................90
Section 7.03 Waiver of Defaults.........................................................................92
Section 7.04 Rights of the Certificate Insurer to Exercise Rights of Class A Certificateholders.........92
Section 7.05 Trustee To Act Solely with Consent of the Certificate Insurer..............................93
Section 7.06 Mortgage Loans, Trust Fund and Accounts Held for Benefit of the Certificate Insurer........93
Section 7.07 Certificate Insurer Default................................................................94
ARTICLE VIII
TERMINATION
Section 8.01 Termination................................................................................94
Section 8.02 Additional Termination Requirements........................................................96
Section 8.03 Accounting Upon Termination of Servicer....................................................97
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of Trustee..........................................................................97
Section 9.02 Certain Matters Affecting the Trustee.....................................................102
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans.....................................104
Section 9.04 Trustee May Own Certificates..............................................................104
Section 9.05 Trustee's Fees and Expenses; Indemnity....................................................104
Section 9.06 Eligibility Requirements for Trustee......................................................105
Section 9.07 Resignation and Removal of the Trustee....................................................105
Section 9.08 Successor Trustee.........................................................................106
Section 9.09 Merger or Consolidation of Trustee........................................................106
Section 9.10 Appointment of Co-Trustee or Separate Trustee.............................................107
Section 9.11 Tax Returns...............................................................................108
Section 9.12 Retirement of Certificates................................................................108
Section 9.13 Trustee May Enforce Claims Without Possession of Certificates.............................108
Section 9.14 Suits for Enforcement.....................................................................108
ARTICLE X
THE COLLATERAL AGENT
Section 10.01 Duties of the Collateral Agent............................................................108
Section 10.02 Certain Matters Affecting the Collateral Agent............................................110
Section 10.03 Collateral Agent Not Liable for Certificates or Mortgage Loans............................111
Section 10.04 Collateral Agent May Own Certificates.....................................................111
Section 10.05 Collateral Agent's Fees and Expenses; Indemnity...........................................111
Section 10.06 Eligibility Requirements for Collateral Agent.............................................112
Section 10.07 Resignation and Removal of the Collateral Agent...........................................112
Section 10.08 Successor Collateral Agent................................................................113
Section 10.09 Merger or Consolidation of Collateral Agent...............................................113
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Limitation on Liability of the Depositor and the Servicer.................................114
Section 11.02 Acts of Certificateholders................................................................114
Section 11.03 Amendment.................................................................................115
Section 11.04 Recordation of Agreement..................................................................115
Section 11.05 Duration of Agreement.....................................................................116
Section 11.06 Notices...................................................................................116
Section 11.07 Severability of Provisions................................................................116
Section 11.08 No Partnership............................................................................116
Section 11.09 Counterparts..............................................................................116
Section 11.10 Successors and Assigns....................................................................117
Section 11.11 Headings..................................................................................117
Section 11.12 The Certificate Insurer Default...........................................................117
Section 11.13 Third Party Beneficiary...................................................................117
Section 11.14 [RESERVED]................................................................................117
Section 11.15 Appointment of Tax Matters Person.........................................................117
Section 11.16 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL..............................117
EXHIBITS
EXHIBIT A Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates
EXHIBIT B Class A-IO Certificate
EXHIBIT C Class R Certificate
EXHIBIT D Class X Certificate
EXHIBIT E Contents of the Mortgage File
EXHIBIT F Certificate Re: Prepaid Loans
EXHIBIT G Trustee's Acknowledgement of Receipt
EXHIBIT H Initial Certification of Collateral Agent
EXHIBIT I Final Certification of Collateral Agent
EXHIBIT J Request for Release of Documents
EXHIBIT K Transfer Affidavit and Agreement
EXHIBIT L Transferor's Certificate
EXHIBIT M ERISA Investment Representation Letter
EXHIBIT N Resale Certification
EXHIBIT O Assignment
EXHIBIT P Wiring Instruction Form
EXHIBIT Q Collateral Agent's Acknowledgment of Receipt
EXHIBIT R Form of Subsequent Transfer Agreement
SCHEDULES
SCHEDULE I Mortgage Loan Schedule
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POOLING AND SERVICING AGREEMENT, relating to ABFS MORTGAGE
LOAN TRUST 2002-1, dated as of March 1, 2002 (this "Agreement"), by and among
BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES, INC., a Delaware corporation, in its
capacity as depositor (the "Depositor"), AMERICAN BUSINESS CREDIT, INC., a
Pennsylvania corporation, in its capacity as servicer (the "Servicer"), and
JPMORGAN CHASE BANK, a New York banking corporation, in its capacity as trustee
(the "Trustee").
WHEREAS, the Depositor wishes to establish a trust which
provides for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the trust estate;
WHEREAS, JPMorgan Chase Bank is willing to serve in the
capacity of Trustee hereunder; and
WHEREAS, Ambac Assurance Corporation (the "Certificate
Insurer") is intended to be a third party beneficiary of this Agreement and is
hereby recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Depositor, the Servicer and the Trustee
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings.
ABFS: American Business Financial Services, Inc.
ACCEPTED SERVICING PRACTICES: The Servicer's normal servicing
practices 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 Policy and Servicing Manuals.
ACCOUNT: Any of the Collection Account, the Distribution
Account, the Interest Reserve Account, the Capitalized Interest Account, the
Pre-Funding Account, the Supplemental Interest Payment Account or the
Certificate Insurance Payment Account.
ACCRUAL PERIOD: With respect to the Class ▇-▇, ▇▇▇▇▇ ▇-▇,
Class A-4, Class A-5 and Class A-IO Certificates and any Distribution Date, the
prior calendar month; with respect to the Class A-1 Certificates and any
Distribution Date, the period from and including the prior Distribution Date
(or, in the case of the April 2002 Distribution Date, from and including the
Closing Date) to and including the day immediately preceding such Distribution
Date.
ADDITION NOTICE: A written notice from the Unaffiliated Seller
to the Trustee, the Rating Agencies and the Certificate Insurer that the
Unaffiliated Seller desires to make a Subsequent Transfer.
ADJUSTED PASS-THROUGH RATE: With respect to any Distribution
Date, the weighted average (weighted by outstanding Certificate Principal
Balance) of (a) the percentage equal to the sum of (i) the Class A-1
Pass-through Rate plus (ii) the Premium Percentage, (b) the percentage equal to
the sum of (i) the Class A-2 Pass-through Rate, plus (ii) the Premium
Percentage, (c) the percentage equal to the sum of (i) the Class A-3
Pass-through Rate, plus (ii) the Premium Percentage, (d) the percentage equal to
the sum of (i) the Class A-4 Pass-through Rate, plus (ii) the Premium
Percentage, and (e) the percentage equal to the sum of (i) the Class A-5
Pass-through Rate, plus (ii) the Premium Percentage.
ADMINISTRATIVE COSTS: With respect to any Distribution Date,
the sum of the Trustee Fee, the Premium Amount and the Servicing Fee for such
Distribution Date.
AFFILIATE: With respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
AGGREGATE PRINCIPAL BALANCE: With respect to the Mortgage
Loans and any date of determination, the aggregate Principal Balance of the
Mortgage Loans as of such date of determination.
AGREEMENT: This Pooling and Servicing Agreement, including the
Exhibits hereto, and all amendments hereof and supplements hereto.
APPRAISED VALUE: As to any Mortgaged Property and time
referred to herein, the appraised value of the Mortgaged Property based upon the
appraisal made by or on behalf of the related Originator at the time referred to
herein or, in the case of a Mortgage Loan that is a purchase money mortgage
loan, the sales price of the Mortgaged Property, if such sales price is less
than such appraised value.
ASSIGNMENT OF MORTGAGE: With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage to the Trustee
for the benefit of the Certificateholders and the Certificate Insurer.
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AUTHORIZED DENOMINATIONS: Each of the Class A-1 Certificates,
the Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates,
Class A-5 Certificates and Class A-IO Certificates is issuable only in the
minimum Percentage Interest corresponding to a minimum denomination of $1,000 or
integral multiples of $1,000 in excess thereof, in each case of Certificate
Principal Balance; provided, however, that one Certificate of each Class is
issuable in a denomination equal to any such multiple plus an additional amount
such that the aggregate denomination of all Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates and Class A-IO Certificates shall be equal to the applicable
Original Certificate Principal Balance or the Class A-IO Notional Amount, as
applicable.
AVAILABLE FUNDS: As defined in Section 6.04(a).
BANKRUPTCY CODE: The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
BASE SPECIFIED OVER-COLLATERALIZATION AMOUNT: means 4.50% of
the Maximum Pool Principal Balance.
BASIC DOCUMENTS: The Pooling and Servicing Agreement, the
Unaffiliated Seller's Agreement, the Insurance Agreement, the Indemnification
Agreement and the Underwriting Agreement.
BUSINESS DAY: Any day other than (a) a Saturday or Sunday, or
(b) a day on which banking institutions in the States of Pennsylvania, New York,
Delaware or New Jersey are authorized or obligated by law or executive order to
be closed.
BUSINESS PURPOSE PROPERTY: Any mixed-use property, commercial
property, or four or more unit multifamily property.
CAPITALIZED INTEREST ACCOUNT: The Capitalized Interest Account
established in accordance with Section 6.01(a) hereof and maintained by the
Trustee.
CAPITALIZED INTEREST REQUIREMENT: With respect to any
Distribution Date, $0.
CERCLA: The Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
CERTIFICATE: Any Class A-1 Certificate, Class A-2 Certificate,
Class A-3 Certificate, Class A-4 Certificate, Class A-5 Certificate, Class A-IO
Certificate, Class X Certificate or Class R Certificate executed by the Trustee
on behalf of the Trust Fund and authenticated by the Trustee.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Certificate registered in the name of the Servicer or any
Subservicer or the Unaffiliated Seller, or any Affiliate of any of them, shall
be deemed not to be outstanding and the undivided Percentage Interest evidenced
thereby shall not be taken into account in determining whether the requisite
percentage of Certificates necessary to effect any such consent, waiver, request
or demand has been obtained. For purposes of any consent, waiver, request or
demand of Certificateholders pursuant to this Agreement, upon the Trustee's
request, the Servicer and the Unaffiliated Seller shall provide to the Trustee a
notice identifying any of their respective Affiliates or the Affiliates of any
Subservicer that is a Certificateholder as of the date(s) specified by the
Trustee in such request. Any Certificates on which payments are made under the
Certificate Insurance Policy shall be deemed to be outstanding and held by the
Certificate Insurer to the extent of such payment.
3
CERTIFICATE INSURANCE PAYMENT ACCOUNT: The Certificate
Insurance Payment Account established in accordance with Section 6.04(c) hereof
and maintained by the Trustee.
CERTIFICATE INSURANCE POLICY: The Certificate Insurance Policy
No. AB0541BE issued by the Certificate Insurer and all endorsements thereto
dated the Closing Date, issued by the Certificate Insurer for the benefit of the
Class A Certificateholders.
CERTIFICATE INSURER: Ambac Assurance Corporation.
CERTIFICATE INSURER DEFAULT: The existence and continuance of
any of the following:
(a) the Certificate Insurer shall have failed to make a
required payment when due under the Certificate Insurance Policy;
(b) the Certificate Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law, the Wisconsin
Department of Insurance or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation, or reorganization, (ii)
made a general assignment for the benefit of its creditors or (iii) had an order
for relief entered against it under the United States Bankruptcy Code, the New
York State Insurance Law or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation, or reorganization that is
final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department
of Insurance or any other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a custodian,
trustee, agent, or receiver for the Certificate Insurer or for all or any
material portion of its property or (ii) authorizing the taking of possession by
a custodian, trustee, agent, or receiver of the Certificate Insurer or of all or
any material portion of its property.
CERTIFICATE PRINCIPAL BALANCE: As of any date of
determination, means the Class A-1 Certificate Principal Balance, Class A-2
Certificate Principal Balance, Class A-3 Certificate Principal Balance, Class
A-4 Certificate Principal Balance, or Class A-5 Certificate Principal Balance,
respectively, as of such date. The Class A-IO, Class X and Class R Certificates
do not have a "Certificate Principal Balance".
4
CERTIFICATE REGISTER: As described in Section 4.02.
CHANGE OF CONTROL: Any of the following: ABFS shall cease to
own, beneficially and of record, 100% of the issued and outstanding Stock of the
Servicer; the consummation of a merger or consolidation of ABFS with or into
another entity or any other corporate reorganization, if more that 50% of the
combined voting power of the continuing or surviving entity's Stock outstanding
immediately after such merger, consolidation or such other reorganization is
owned by persons who were not stockholders of ABFS immediately prior to such
merger, consolidation or other reorganization; or the sale, transfer, or other
disposition of all or substantially all of ABFS's assets. For purposes of the
foregoing, "Stock" means all shares, options, warrants, interests, participation
or other equivalents (regardless of how designated) of or in a corporation or
equivalent entity, whether voting or nonvoting, including common stock,
preferred stock, convertible debentures and all agreements, instruments and
documents convertible, in whole or in part, into any one or more or all of the
foregoing.
CIVIL RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act
of 1940, as amended.
CIVIL RELIEF ACT INTEREST SHORTFALL: With respect to any
Distribution Date, for any Mortgage Loan as to which there has been a reduction
in the amount of interest collectible thereon for the most recently ended Due
Period as a result of the application of the Civil Relief Act, the amount, if
any, by which (a) interest collectible on such Mortgage Loan during the most
recently ended calendar month is less than (b) the sum of one month's interest
on the Principal Balance of such Mortgage Loan, calculated at a rate equal to
the Mortgage Interest Rate.
CLASS: Each class of Certificates designated as the Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-IO Certificates, Class
X Certificates or the Class R Certificates.
CLASS A CERTIFICATES: The Class A-1 Certificates, the Class
A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the
Class A-5 Certificates, and the Class A-IO Certificates.
CLASS A-1 AVAILABLE FUNDS CAP CARRY-FORWARD AMOUNT: With
respect to the Class A-1 Certificates and any Distribution Date, the sum of:
(a) the excess, if any, of (x) the Class A-1 Current Interest
calculated at the Class A-1 Pass-through Rate, without
taking into account clause (Z) thereof, over (y) the Class
A-1 Current Interest calculated at the Class A-1 Available
Funds Cap Rate, in each case as of such Distribution Date,
and
(b) the amount of any Class A-1 Available Funds Cap
Carry-Forward Amount remaining unpaid from any previous
Distribution Date, with interest thereon at the Class A-1
Pass-through Rate.
CLASS A-1 AVAILABLE FUNDS CAP RATE: A per annum rate equal to,
with the respect to any Due Period, (a) the product of (I) the amount by which
(x) the aggregate accrued interest on the Mortgage Loans for such Due Period
exceeds, (y) the sum of (i) the Class A-2 Current Interest, the Class A-3
Current Interest, the Class A-4 Current Interest, the Class A-5 Current Interest
and the Class A-IO Current Interest, and (ii) the Servicer Fee, the Trustee Fee
and the Premium Amount then due, and (II) 12; divided by (b) the Class A-1
Certificate Principal Balance.
CLASS A-1 CARRY-FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-1 Interest
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the amount actually distributed on the Class A-1 Certificates to the
holders of the Class A-1 Certificates in respect of interest on such immediately
preceding Distribution Date and (b) 30 days' interest on the amount described in
clause (a) calculated at an interest rate equal to the Class A-1 Pass-Through
Rate applicable to such Distribution Date.
5
CLASS A-1 CERTIFICATE: Any Certificate designated as a "Class
A-1 Certificate" on the face thereof, in the form of Exhibit A hereto. The Class
A-1 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-1 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-1
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates.
CLASS A-1 CURRENT INTEREST: With respect to the Class A-1
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-1 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-1 Certificate Principal
Balance as of such Distribution Date (and prior to making any distributions on
such Distribution Date).
CLASS A-1 DISTRIBUTION AMOUNT: With respect to the Class A-1
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-1 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be the sum of (i) the pro
rata portion of any moneys released from the Pre-Funding Account as a prepayment
of principal on the Class A-1 Certificates pursuant to Section 6.01(g) hereof,
and (ii) the lesser of (x) the Class A-1 Formula Distribution Amount for such
Distribution Date or (y) the amount (including any applicable portion of any
Insured Payment) available for distribution on account of the Class A-1
Certificates for such Distribution Date.
CLASS A-1 FINAL SCHEDULED MATURITY DATE: The January 15, 2018
Distribution Date.
CLASS A-1 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-1 Certificates for any Distribution Date, the sum of the Class A-1
Interest Distribution Amount and the Class A-1 Principal Distribution Amount.
CLASS A-1 FORMULA PASS-THROUGH RATE: With respect to any
Distribution Date, the per annum rate equal to LIBOR plus 0.19%.
6
CLASS A-1 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-1 Certificates for any Distribution Date an amount equal to (a) the
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 Certificate Insurer in respect of such Class A-1
Carry-Forward Amount.
CLASS A-1 MORTGAGE LOAN INTEREST SHORTFALLS: With respect to
the Class A-1 Certificates for any Distribution Date will be the Class A-1
Certificates' pro rata portion of any Mortgage Loan Interest Shortfalls, 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 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to the lesser of (x) the Class A-1 Formula
Pass-Through Rate, (y) 11.00%, and (z) the Class A-1 Available Funds Cap Rate
for such Distribution Date.
CLASS A-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-1 Certificates for any Distribution Date, the lesser of (x) the
Principal Distribution Amount for such Distribution Date, and (y) the Class A-1
Certificate 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 Certificates to the
holders of the Class A-2 Certificates in respect of interest on such immediately
preceding Distribution Date and (b) 30 days' interest on the amount described in
clause (a) calculated at an interest rate equal to the Class A-2 Pass-Through
Rate applicable to such Distribution Date.
CLASS A-2 CERTIFICATE: Any Certificate designated as a "Class
A-2 Certificate" on the face thereof, in the form of Exhibit A hereto. The Class
A-2 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-2 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-2
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates.
CLASS A-2 CURRENT INTEREST: With respect to the Class A-2
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-2 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-2 Certificate 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
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-2 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be sum of (i) the pro rata
portion of any moneys released from the Pre-Funding Account as a prepayment of
principal on the Class A-2 Certificates pursuant to Section 6.01(g) hereof, and
(ii) 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
Certificates for such Distribution Date.
7
CLASS A-2 FINAL SCHEDULED MATURITY DATE: The April 15, 2019
Distribution Date.
CLASS A-2 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-2 Certificates for any Distribution Date, the sum of the Class A-2
Interest Distribution Amount and the Class A-2 Principal Distribution Amount.
CLASS A-2 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-2 Certificates 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 Certificate 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 Certificates for any Distribution Date will be the Class A-2
Certificates' pro rata portion of the Mortgage Loan Interest Shortfalls, 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 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to 4.04%.
CLASS A-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-2 Certificates for any Distribution Date, the lesser of (x) the
Principal Distribution Amount for such Distribution Date, (net of the Class A-1
Principal Distribution Amount) or (y) the Class A-2 Certificate Principal
Balance as of such Distribution Date.
CLASS A-3 CARRY FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-3 Interest
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the amount actually distributed on the Class A-3 Certificates to the
holders of the Class A-3 Certificates in respect of interest on such immediately
preceding Distribution Date and (b) 30 days interest on the amount described in
clause (a) calculated at an interest rate equal to the Class A-3 Pass-Through
Rate applicable to such Distribution Date.
CLASS A-3 CERTIFICATE: Any Certificate designated as a "Class
A-3 Certificate" on the face thereof, in the form of Exhibit A hereto. The Class
A-3 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-3 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-3
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates.
8
CLASS A-3 CURRENT INTEREST: With respect to the Class A-3
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-3 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-3 Certificate Principal
Balance as of such Distribution Date (and prior to making any distributions on
such Distribution Date).
CLASS A-3 DISTRIBUTION AMOUNT: With respect to the Class A-3
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-3 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be sum of (i) the pro rata
portion of any moneys released from the Pre-Funding Account as a prepayment of
principal on the Class A-3 Certificates pursuant to Section 6.01(g) hereof and
(ii) the lesser of (x) the Class A-3 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-3
Certificates for such Distribution Date.
CLASS A-3 FINAL SCHEDULED MATURITY DATE: The April 15, 2019
Distribution Date.
CLASS A-3 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-3 Certificates for any Distribution Date, the sum of the Class A-3
Interest Distribution Amount and the Class A-3 Principal Distribution Amount.
CLASS A-3 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-3 Certificates for any Distribution Date an amount equal to (a) the
related Class A-3 Current Interest, minus (b) the amount of any Class A-3
Mortgage Loan Interest Shortfalls, if any, plus (c) any Class A-3 Carry-Forward
Amount, less (d) any amounts paid by the Certificate Insurer in respect of such
Class A-3 Carry-Forward Amount.
CLASS A-3 MORTGAGE LOAN INTEREST SHORTFALLS: With respect to
the Class A-3 Certificates for any Distribution Date will be the Class A-3
Certificates' pro rata portion of the Mortgage Loan Interest Shortfalls, 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-3 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to 4.75%.
CLASS A-3 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-3 Certificates for any Distribution Date, the lesser of (x) the
Principal Distribution Amount for such Distribution Date (net of the Class A-1
Principal Distribution Amount and the Class A-2 Principal Distribution Amount)
or (y) the Class A-3 Certificate Principal Balance as of such Distribution Date.
CLASS A-4 CARRY FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-4 Interest
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the amount actually distributed on the Class A-4 Certificates to the
holders of the Class A-4 Certificates in respect of interest on such immediately
preceding Distribution Date and (b) 30 days interest on the amount described in
clause (a) calculated at an interest rate equal to the Class A-4 Pass-Through
Rate applicable to such Distribution Date.
9
CLASS A-4 CERTIFICATE: Any Certificate designated as a "Class
A-4 Certificate" on the face thereof, in the form of Exhibit A hereto. The Class
A-4 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-4 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-4
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates.
CLASS A-4 CURRENT INTEREST: With respect to the Class A-4
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-4 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-4 Certificate Principal
Balance as of such Distribution Date (and prior to making any distributions on
such Distribution Date).
CLASS A-4 DISTRIBUTION AMOUNT: With respect to the Class A-4
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-4 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be the sum of (i) the pro
rata portion of any moneys released from the Pre-Funding Account as a prepayment
of principal on the Class A-4 Certificates pursuant to Section 6.01(g) hereof
and (ii) the lesser of (x) the Class A-4 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-4
Certificates for such Distribution Date.
CLASS A-4 FINAL SCHEDULED MATURITY DATE: The February 15, 2026
Distribution Date.
CLASS A-4 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-4 Certificates for any Distribution Date, the sum of the Class A-4
Interest Distribution Amount and the Class A-4 Principal Distribution Amount.
CLASS A-4 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-4 Certificates for any Distribution Date an amount equal to (a) the
related Class A-4 Current Interest, minus (b) the amount of any Class A-4
Mortgage Loan Interest Shortfalls, if any, plus (c) any Class A-4 Carry-Forward
Amount, less (d) any amounts paid by the Certificate Insurer in respect of such
Class A-4 Carry-Forward Amount.
CLASS A-4 MORTGAGE LOAN INTEREST SHORTFALLS: For any
Distribution Date will be the Class A-4 Certificates' pro rata portion of the
Mortgage Loan Interest Shortfalls, 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-4 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to 5.61%.
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CLASS A-4 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-4 Certificates for any Distribution Date, the lesser of (x) the
Principal Distribution Amount for such Distribution Date (net of the Class A-1
Principal Distribution Amount, the Class A-2 Principal Distribution Amount and
the Class A-3 Principal Distribution Amount), or (y) the Class A-4 Certificate
Principal Balance as of such Distribution Date.
CLASS A-5 CARRY FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-5 Interest
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the amount actually distributed on the Class A-5 Certificates to the
holders of the Class A-5 Certificates in respect of interest on such immediately
preceding Distribution Date and (b) 30 days interest on the amount described in
clause (a) calculated at an interest rate equal to the Class A-5 Pass-Through
Rate applicable to such Distribution Date.
CLASS A-5 CERTIFICATE: Any Certificate designated as a "Class
A-5 Certificate" on the face thereof, in the form of Exhibit A hereto. The Class
A-5 Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-5 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-5
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates.
CLASS A-5 CURRENT INTEREST: With respect to the Class A-5
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-5 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-5 Certificate Principal
Balance as of such Distribution Date (and prior to making any distributions on
such Distribution Date).
CLASS A-5 DISTRIBUTION AMOUNT: With respect to the Class A-5
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-5 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be the sum of (i) the pro
rata portion of any moneys released from the Pre-Funding Account as a prepayment
of principal on the Class A-5 Certificates pursuant to Section 6.01(g) hereof
and (ii) the lesser of (x) the Class A-5 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-5
Certificates for such Distribution Date.
CLASS A-5 FINAL SCHEDULED MATURITY DATE: The December 15, 2032
Distribution Date.
CLASS A-5 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-5 Certificates for any Distribution Date, the sum of the Class A-5
Interest Distribution Amount and the Class A-5 Principal Distribution Amount.
CLASS A-5 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-5 Certificates for any Distribution Date an amount equal to (a) the
related Class A-5 Current Interest, minus (b) the amount of any Class A-5
Mortgage Loan Interest Shortfalls, if any, plus (c) any Class A-5 Carry-Forward
Amount, less (d) any amounts paid by the Certificate Insurer in respect of such
Class A-5 Carry-Forward Amount.
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CLASS A-5 MORTGAGE LOAN INTEREST SHORTFALLS: For any
Distribution Date will be the Class A-5 Certificates' pro rata portion of the
Mortgage Loan Interest Shortfalls, 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-5 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to 6.51% provided, that, on any Distribution Date
after the Clean-Up Call Date, such rate will be 7.01%.
CLASS A-5 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-5 Certificates for any Distribution Date, the lesser of (x) the
Principal Distribution Amount for such Distribution Date (net of the Class A-1
Principal Distribution Amount, the Class A-2 Principal Distribution Amount, the
Class A-3 Principal Distribution Amount and the Class A-4 Principal Distribution
Amount), or (y) the Class A-5 Certificate Principal Balance as of such
Distribution Date.
CLASS A-IO AVAILABLE FUNDS CAP CURRENT SHORTFALL AMOUNT: Is,
with respect to the Class A-IO Certificates and any Distribution Date, the
excess, if any, of (x) the Class A-IO Current Interest calculated at the Class
A-IO Pass-through Rate, without taking into account clause (y) thereof, over (y)
the Class A-IO Current Interest calculated at the Class A-IO Available Funds Cap
Rate, in each case as of such Distribution Date.
CLASS A-IO AVAILABLE FUNDS CAP RATE: Is a per annum rate equal
to, with respect to any Due Period, the Net Weighted Average Mortgage Interest
Rate for such Due Period.
CLASS A-IO CARRY-FORWARD AMOUNT: For any Distribution Date is
the sum of (a) the amount, if any, by which (x) the Class A-IO Interest
Distribution Amount as of the immediately preceding Distribution Date exceeded
(y) the amount actually paid to the holders of the Class A-IO Certificates on
such immediately preceding Distribution Date and (b) thirty days' interest on
the amount described in clause (a), calculated at an interest rate equal to the
Class A-IO Pass-through Rate.
CLASS A-IO CERTIFICATE: Any Certificate designated as a "Class
A-IO Certificate" on the face thereof, in the form of Exhibit B hereto.
CLASS A-IO CURRENT INTEREST: With respect to the Class A-IO
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-IO Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-IO Notional Amount as
of such Distribution Date.
CLASS A-IO INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-IO Certificates for any Distribution Date an amount equal to (a) the
related Class A-IO Current Interest, minus (b) the amount of any Class A-IO
Mortgage Loan Interest Shortfalls, if any, plus (c) any Class A-IO Carry-Forward
Amount, less (d) any amounts paid by the Certificate Insurer in respect of such
Class A-IO Carry-Forward Amount.
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CLASS A-IO MORTGAGE LOAN INTEREST SHORTFALLS: With respect to
the Class A-IO Certificates for any Distribution Date will be the Class A-IO
Certificates' pro rata portion of the Mortgage Loan Interest Shortfalls, 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-IO NOTIONAL AMOUNT: With respect to each Distribution
Date occurring (i) prior to the October 2004 Distribution Date, an amount equal
to the lesser of (x) $32,000,000 or (y) the Aggregate Principal Balance as of
the first day of the related Due Period; and (ii) on and after the Distribution
Date occurring in October 2004, $0.
CLASS A-IO PASS-THROUGH RATE: A per annum rate equal to the
lesser of (x) 10.00% and (y) the Class A-IO Available Funds Cap Rate.
CLASS R CERTIFICATE: Any Certificate denominated as a Class R
Certificate and subordinate to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-IO and Class X Certificates in right of payment to the extent
set forth herein, which Certificate shall be in the form of Exhibit C hereto.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLASS X CERTIFICATE: Any Certificate denominated as a Class X
Certificate and subordinate to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5 and Class A-IO Certificates in right of payment to the extent set
forth herein, which Certificate shall be in the form of Exhibit D hereto.
CLASS X CERTIFICATEHOLDER: A Holder of a Class X Certificate.
CLEAN-UP CALL DATE: As defined in Section 8.01(b).
CLOSING DATE: March 21, 2002.
CODE: The Internal Revenue Code of 1986, as amended.
COLLATERAL AGENT: JPMorgan Chase Bank, its successors and
assigns.
COLLECTION ACCOUNT: The Eligible Account established and
maintained by the Servicer pursuant to Section 5.02(b).
COMBINED LOAN-TO-VALUE RATIO or CLTV: As to any Mortgage Loan
at any time, the fraction, expressed as a percentage, the numerator of which is
the sum of (i) the Principal Balance thereof at such time and (ii) if such
Mortgage Loan is subject to a second mortgage, the unpaid principal balance of
any related first mortgage loan or loans, if any, as of such time, and the
denominator of which is the Appraised Value of any related Mortgaged Property or
Properties as of the date of the appraisal used by or on behalf of the
Unaffiliated Seller to underwrite such Mortgage Loan.
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COMMISSION: The Securities and Exchange Commission.
COMPENSATING INTEREST: As defined in Section 6.09 hereof.
CORRESPONDING CLASS: Means the Class of Master REMIC Interests
as used in the Table in Section 2.07.
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 Certificate
Insurer on or prior to the Closing Date, with such changes notified to the
Certificate Insurer (a) that do not have a material adverse effect on such
policies and procedures, or (b) that are approved by the Certificate Insurer,
such approval not to be unreasonably withheld, conditional or delayed or (c)
that the Servicer does not apply to the Mortgage Loans.
CUMULATIVE LOSS PERCENTAGE: As of any date of determination
thereof, the aggregate of all Liquidated Loan Losses since the Closing Date as a
percentage of the Aggregate Principal Balance of the Initial Mortgage Loans as
of the Initial Cut-Off Date and (ii) the aggregate Principal Balance of any
Subsequent Mortgage Loans transferred to the Trust as of the related Subsequent
Cut-Off Date.
CUT-OFF DATE: With respect to the Initial Mortgage Loans, the
Initial Cut-Off Date, and with respect to the Subsequent Mortgage Loans, the
Subsequent Cut-Off Date.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the United States Bankruptcy Code,
except such a reduction that constitutes a Deficient Valuation or a permanent
forgiveness of principal.
DEFICIENCY AMOUNT: With respect to any Distribution Date, an
amount equal to the excess, if any, of (i) the Required Distribution for such
Distribution Date over (ii) the Available Funds 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 United
States Bankruptcy Code.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced by or to be
replaced by a Qualified Substitute Mortgage Loan.
DELINQUENCY AMOUNT: means, as of the end of a Due Period, the
product of (i) the Rolling Six Month Delinquency Rate and (ii) the Aggregate
Principal Balance as of the first day of the applicable three month period.
DELINQUENCY RATIO: With respect to any Distribution Date, the
percentage equivalent of a fraction (a) the numerator of which equals the
aggregate Principal Balances of all Mortgage Loans that are 90 or more days
Delinquent, in foreclosure or converted to REO Property as of the last day of
the related Due Period and (b) the denominator of which is the aggregate
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period.
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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: Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc., a
Delaware corporation, and any successor thereto.
DEPOSITORY: The Depository Trust Company, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and any successor Depository hereafter named.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial
institution for which the Depository holds Class A-1, Class ▇-▇, ▇▇▇▇▇ ▇-▇,
Class A-4, Class A-5 or Class A-IO Certificates from time to time as a
securities depository.
DISTRIBUTION ACCOUNT: The Distribution Account established in
accordance with Section 6.01(a) hereof and maintained by the Trustee.
DISTRIBUTION DATE: The 15th day of any month or if such 15th
day is not a Business Day, the first Business Day immediately following,
commencing on April 15, 2002.
DUE DATE: With respect to each Mortgage Loan and any
Distribution Date, the day of the calendar month preceding the calendar month in
which such Distribution Date occurs on which the Monthly Payment for such
Mortgage Loan was due.
DUE PERIOD: With respect to each Distribution Date, the
calendar month preceding the related Distribution Date.
ELIGIBLE ACCOUNT: Either (A) an account or accounts maintained
with an institution (which may include the Trustee, provided such institution
otherwise meets these requirements) whose deposits are insured by the FDIC, the
unsecured and uncollateralized debt obligations of which institution shall be
rated "AA" or better by S&P and "Aa2" or better by ▇▇▇▇▇'▇ and in the highest
short term rating category by S&P and ▇▇▇▇▇'▇, and which is (i) a federal
savings and loan association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution (including the
Trustee) duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Certificate Insurer and the Rating Agencies or (B) a trust
account or accounts maintained with the trust department of a federal or state
chartered depository institution or trust company (which may include the
Trustee, provided that the Trustee otherwise meets these requirements), having
capital and surplus of not less than $50,000,000, acting in its fiduciary
capacity.
15
ERISA: As defined in Section 4.02(n) hereof.
EVENT OF DEFAULT: As described in Section 7.01.
EXCESS OVER-COLLATERALIZED AMOUNT: With respect to any
Distribution Date, the excess, if any, of (a) the Over-collateralized Amount
that would apply on such Distribution Date after taking into account all
distributions that would be made on such Distribution Date if the
Over-collateralization Reduction Amounts were not deducted from the Principal
Distribution Amount over (b) the Specified Over-collateralized Amount.
FDIC: The Federal Deposit Insurance Corporation, and any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, and any
successor thereto.
FNMA: The Federal National Mortgage Association, and any
successor thereto.
FORECLOSURE PROFITS: As to any Distribution Date, the excess,
if any, of (i) Net Liquidation Proceeds in respect of each Mortgage Loan that
became a Liquidated Mortgage Loan during the related Due Period over (ii) the
sum of the unpaid principal balance of each such Liquidated Mortgage Loan plus
accrued and unpaid interest at the applicable Mortgage Interest Rate on the
unpaid principal balance thereof from the Due Date to which interest was last
paid by the Mortgagor (or, in the case of a Liquidated Mortgage Loan that had
been an REO Mortgage Loan, from the Due Date to which interest was last deemed
to have been paid pursuant to Section 5.06 to the first day of the month
following the month in which such Mortgage Loan became a Liquidated Mortgage
Loan).
GAAP: Generally accepted accounting principles, consistently
applied, as of the date of such application.
INDIRECT PARTICIPANT: Any financial institution for whom any
Direct Participant holds an interest in a Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5 or Class A-IO Certificate.
INITIAL CUT-OFF DATE: The close of business on March 1, 2002
(or with respect to any Initial Mortgage Loan originated or otherwise acquired
by an Originator after March 1, 2002, the date of origination or acquisition of
such Mortgage Loan).
INITIAL MORTGAGE LOANS: The Mortgage Loans delivered by the
Depositor on the Closing Date.
INSURANCE AND INDEMNITY AGREEMENT: The Insurance and Indemnity
Agreement dated as of March 21, 2002 among the Certificate Insurer, the
Depositor, the Trustee, the Servicer, the Unaffiliated Seller, HomeAmerican
Credit, Inc., d/b/a Upland Mortgage and American Business Mortgage Services,
Inc., as such agreement may be amended or supplemented in accordance with the
provisions thereof.
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INSURANCE POLICIES: All insurance policies insuring any
Mortgage Loan or Mortgaged Property to the extent the Trust or the Trustee has
any interest therein.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to
any insurance policy covering a Mortgage Loan to the extent such proceeds are
not applied to the restoration of the related Mortgaged Property or released to
the related Mortgagor in accordance with Accepted Servicing Practices.
"Insurance Proceeds" do not include "Insured Payments."
INSURED PAYMENT: Means the aggregate amount paid by the
Certificate Insurer to the Trustee under the Certificate Insurance Policy in
respect of (i) Insured Amounts for any Distribution Date and (ii) Preference
Amounts for any given Business Day.
INSURER DEFENSE COSTS: All costs and expenses of the
Certificate Insurer (including out of pocket costs and expenses of the Trustee
or the Depositor that the Certificate Insurer may have paid) in connection with
any action, proceeding or investigation that could adversely affect the Trust or
the rights or obligations of the Certificate Insurer under any of the Insurance
and Indemnity Agreement, this Agreement, the Unaffiliated Seller Agreement or
any other document delivered with respect thereto, including (without
limitation) any judgment or settlement entered into affecting the Certificate
Insurer or the Certificate Insurer's interests, together with interest thereon
at a rate equal to the Late Payment Rate from the date such expenses are
incurred up to but not including the date the Certificate Insurer is reimbursed
for such expenses in full.
Interest Determination Date: With respect to any Accrual
Period for the Class A-1 Certificates, the second London Business Day preceding
the first day of such Accrual Period; provided, however, that with respect to
the April 2002 Distribution Date, the Interest Determination Date shall be the
second London Business Day preceding the Closing Date.
INTEREST DISTRIBUTION AMOUNT: Means the sum of (i) the Class
A-1 Interest Distribution Amount, (ii) the Class A-2 Interest Distribution
Amount, (iii) the Class A-3 Interest Distribution Amount, (iv) the Class A-4
Interest Distribution Amount, (v) the Class A-5 Interest Distribution Amount,
and (vi) the Class A-IO Interest Distribution Amount.
INTEREST RESERVE ACCOUNT: The Interest Reserve Account
established in accordance with Section 6.01(a) hereof and maintained by the
Trustee.
LATE PAYMENT RATE: Has the meaning ascribed thereto in the
Insurance and Indemnity Agreement.
LIBOR: With respect to any Accrual Period for the Class A-1
Certificates, the rate determined by the Trustee on the related Interest
Determination Date on the basis of the offered rates of the Reference Banks for
one-month U.S. dollar deposits, as such rates appear on Telerate Page 3750, as
of 11:00 a.m. (London time) on such Interest Determination Date. On each
Interest Determination Date, LIBOR for the related Accrual Period will be
established by the Trustee as follows:
17
(a) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period for the Class A-1 Certificates shall be the arithmetic
mean of such offered quotations (rounded upwards if necessary to the
nearest whole multiple of 1/16%).
(b) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period for the Class A-1 Certificates shall be the higher of
(i) LIBOR as determined on the previous Interest Determination Date and
(ii) the Reserve Interest Rate.
LIQUIDATED LOAN LOSS: With respect to any Distribution Date as
of the related Due Date, an amount equal to the excess of (i) the unpaid
principal balance of a Liquidated Mortgage Loan, plus accrued interest thereon
in accordance with the amortization schedule at the time applicable thereto at
the applicable Mortgage Interest Rate from the Due Date as to which interest was
last paid with respect thereto through the last day of the month in which such
Mortgage Loan became a Liquidated Mortgage Loan, over (ii) Net Liquidation
Proceeds with respect to such Liquidated Mortgage Loan.
LIQUIDATED MORTGAGE LOAN: A Mortgage Loan with respect to
which the related Mortgaged Property has been acquired, liquidated or foreclosed
and with respect to which the Servicer determines that all Liquidation Proceeds
which it expects to recover have been recovered.
LIQUIDATION EXPENSES: Expenses incurred by the Servicer in
connection with the liquidation of any defaulted Mortgage Loan or property
acquired in respect thereof (including, without limitation, legal fees and
expenses, committee or referee fees, and, if applicable, brokerage commissions
and conveyance taxes), any unreimbursed amount expended by the Servicer pursuant
to Sections 5.04 and 5.06 hereof in respect of the related Mortgage Loan and any
unreimbursed expenditures for real property taxes or for property restoration or
preservation of the related Mortgaged Property. Liquidation Expenses shall not
include any previously incurred expenses in respect of an REO Mortgage Loan
which have been netted against related REO Proceeds.
LIQUIDATION PROCEEDS: The amount (other than Insurance
Proceeds) received by the Servicer in connection with (i) the taking of all or a
part of Mortgaged Property by exercise of the power of eminent domain or
condemnation, (ii) the liquidation of a defaulted Mortgage Loan through a
trustee's sale, foreclosure sale, REO Disposition or otherwise or (iii) the
liquidation of any other security for such Mortgage Loan, including, without
limitation, pledged equipment, inventory and working capital and assignments of
rights and interests made by the related mortgagor.
LOAN REPURCHASE PRICE: As defined in Section 2.06(c).
LONDON BUSINESS DAY: A day on which banks are open for dealing
in foreign currency and exchange in London and New York City.
18
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class
▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class A-5 and Class A-IO Certificates
evidencing Percentage Interests in excess of 51% in the aggregate.
MAXIMUM POOL PRINCIPAL BALANCE: The aggregate stated principal
balances of the Mortgage Loans (both Initial Mortgage Loans and Subsequent
Mortgage Loans) as of their respective Cut-off Dates.
MONTHLY PAYMENT: As to any Mortgage Loan (including any REO
Mortgage Loan) and any Due Date, the payment of principal and interest due
thereon as specified for such Due Date in the related amortization schedule at
the time applicable thereto (after adjustment for any Deficient Valuations
occurring prior to such Due Date but before any adjustment to such amortization
schedule by reason of any bankruptcy, other than Deficient Valuations or similar
proceeding or any moratorium or similar waiver or grace period).
MONTHLY SERVICING FEE: As defined in Section 5.08 hereof.
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc., a corporation
organized and existing under Delaware law, or any successor thereto and if such
corporation no longer for any reason performs the services of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized rating agency designated by the Certificate Insurer.
MORTGAGE: The mortgage, deed of trust or other instrument
creating a first or second lien on the Mortgaged Property.
MORTGAGED PROPERTY: The underlying property or properties
securing a Mortgage Loan, consisting of a fee simple estate in such real
property.
MORTGAGE FILE: As described in Exhibit E.
MORTGAGE INTEREST RATE: As to any Mortgage Loan, the per annum
fixed rate at which interest accrues on the unpaid principal balance thereof as
set forth on the related Mortgage Note.
MORTGAGE LOAN INTEREST SHORTFALL: With respect to any
Distribution Date, as to any Mortgage Loan, the sum of (a) any Prepayment
Interest Shortfall for which no payment of Compensating Interest is paid and (b)
any Civil Relief Act Interest Shortfall in respect of such Mortgage Loan for
such Distribution Date.
MORTGAGE LOAN GROUP: Those Initial Mortgage Loans listed on
the initial Mortgage Loan Schedule together with any Subsequent Mortgage Loans
listed on Subsequent Mortgage Loan Schedules.
MORTGAGE LOANS: The Initial Mortgage Loans and the Subsequent
Mortgage Loans, together with any Qualified Substitute Mortgage Loans
substituted therefor in accordance with this Agreement, as from time to time are
held as a part of the Trust Fund. When used in respect of any Distribution Date,
the term Mortgage Loans shall mean all Mortgage Loans (including those in
respect of which the Trustee has acquired the related Mortgaged Property) which
have not been repaid in full prior to the related Due Period, did not become
Liquidated Mortgage Loans prior to such related Due Period or were not
repurchased or replaced by the Unaffiliated Seller prior to such related Due
Period.
19
MORTGAGE LOAN SCHEDULE: The initial schedule of Initial
Mortgage Loans as of the Initial Cut-Off Date as attached hereto as Schedule I,
which will be deemed to be modified automatically upon any replacement, sale,
substitution, liquidation, transfer or addition of any Mortgage Loan, including
the addition of a Subsequent Mortgage Loan, pursuant to the terms hereof. The
initial Mortgage Loan Schedule sets forth as to each Initial Mortgage Loan, and
any subsequent Mortgage Loan Schedule provided in connection with the Subsequent
Mortgage Loans will set forth as to each Subsequent Mortgage Loan: (i) its
identifying number and the name of the related Mortgagor; (ii) the billing
address for the related Mortgaged Property including the state and zip code;
(iii) its date of origination; (iv) the original number of months to stated
maturity; (v) the original stated maturity; (vi) the original Principal Balance;
(vii) the Principal Balance as of the Cut-Off Date; (viii) the Mortgage Interest
Rate and (ix) the scheduled monthly payment of principal and interest.
MORTGAGE NOTE: The original, executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
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 MONTHLY EXCESS CASHFLOW: With respect to any Distribution
Date, the excess of (x) the Available Funds then on deposit in the Distribution
Account, including amounts deposited therein from the Pre-Funding Account and
the Capitalized Interest Account on that Distribution Date over (y) the sum of
(i) the Interest Distribution Amount for such Distribution Date, (ii) the
Principal Distribution Amount for such Distribution Date, calculated for this
purpose without regard to any Over-collateralization Increase Amount (or portion
thereof included therein) for such Distribution Date, (iii) the amounts due to
the Certificate Insurer, if any, for such Distribution Date pursuant to Section
6.05 of this Agreement, and (iv) the Trustee Fee for such Distribution Date.
NET FORECLOSURE PROFITS: As to any Distribution Date, the
excess, if any, of (i) the aggregate Foreclosure Profits with respect to such
Distribution Date over (ii) Liquidated Loan Losses with respect to such
Distribution Date.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances made by the Servicer out of its own funds. For all purposes of
this Agreement, Net Liquidation Proceeds shall be allocated first to accrued and
unpaid interest on the related Mortgage Loan and then to the unpaid principal
balance thereof.
NET MORTGAGE LOAN INTEREST SHORTFALLS: As of any Distribution
Date, the aggregate of the Class A-1 Mortgage Loan Interest Shortfalls, Class
A-2 Mortgage Loan Interest Shortfalls, Class A-3 Mortgage Loan Interest
Shortfalls, Class A-4 Mortgage Loan Interest Shortfalls, Class A-5 Mortgage Loan
Interest Shortfalls and Class A-IO Mortgage Loan Interest Shortfalls, if any,
for such Distribution Date.
20
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 OR NET WAC: With
respect to any Due Period, the weighted average Mortgage Interest Rates
(weighted by Principal Balances) of the Mortgage Loans, calculated at the
opening of business on the first day of such Due Period, less the rate at which
the Servicing Fee is then calculated, less the rate at which the Trustee Fee is
then calculated, less the Premium Percentage and any taxes imposed on any REMIC
created hereunder pursuant to Section 9.01(d) herein.
NET WORTH: As of any date, the consolidated total
stockholder's equity of ABFS and its consolidated subsidiaries, determined in
accordance with GAAP.
NONRECOVERABLE ADVANCES: With respect to any Mortgage Loan,
(a) any Periodic Advance previously made and not reimbursed from late
collections pursuant to Section 5.03, or (b) a Periodic Advance proposed to be
made in respect of a Mortgage Loan or REO Property either of which, in the good
faith business judgment of the Servicer, as evidenced by an Officer's
Certificate delivered to the Certificate Insurer and the Trustee no later than
the Business Day following such determination, would not ultimately be
recoverable pursuant to Sections 5.03.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of
the Board, the President or a Vice President, the Treasurer, the Secretary or
one of the Assistant Treasurers or Assistant Secretaries of the Unaffiliated
Seller and/or the Servicer, or the Depositor, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may,
without limitation, be counsel for the Unaffiliated Seller, the Servicer, the
Trustee, a Certificateholder or a Certificateholder's prospective transferee or
the Certificate Insurer (including except as otherwise provided herein, in-house
counsel) reasonably acceptable to each addressee of such opinion and experienced
in matters relating to the subject of such opinion; except that any opinion of
counsel relating to (a) the qualification of any of the REMICs described in
Section 2.07 hereof as a REMIC or (b) compliance with the REMIC Provisions must
be an opinion of counsel who (i) is in fact independent of the Unaffiliated
Seller, the Servicer and the Trustee, (ii) does not have any direct financial
interest or any material indirect financial interest in the Unaffiliated Seller
or the Servicer or the Trustee or in an Affiliate thereof, (iii) is not
connected with the Unaffiliated Seller or the Servicer or the Trustee as an
officer, employee, director or person performing similar functions and (iv) is
reasonably acceptable to the Certificate Insurer.
ORIGINAL CERTIFICATE PRINCIPAL BALANCE: As of the Startup Day
and as to the Class A-1 Certificates, $107,527,000, as to the Class A-2
Certificates, $38,958,000, as to the Class A-3 Certificates, $57,167,000, as to
the Class A-4 Certificates, $63,457,000 and as to the Class A-5 Certificates,
$52,891,000. The Class A-IO, Class X and Class R Certificates do not have an
Original Certificate Principal Balance.
21
ORIGINAL AGGREGATE PRINCIPAL BALANCE: The Aggregate Principal
Balance of the Mortgage Loan Group as of the Initial Cut-Off Date, which amount
is equal to $320,000,055.66.
ORIGINAL PRE-FUNDED AMOUNT: $0.
ORIGINATORS: American Business Credit, Inc., HomeAmerican
Credit, Inc., d/b/a Upland Mortgage and American Business Mortgage Services,
Inc.
OVER-COLLATERALIZATION DEFICIENCY AMOUNT: With respect to any
Distribution Date, the difference, if greater than zero, between (a) the
Specified Over-collateralized Amount for such Distribution Date and (b) the
Over-collateralized Amount for such Distribution Date.
OVER-COLLATERALIZATION DEFICIT: As of any Distribution Date,
the amount, if any, by which (a) the sum of (i) the Class A-1 Certificate
Principal Balance, (ii) the Class A-2 Certificate Principal Balance, (iii) the
Class A-3 Certificate Principal Balance, (iv) the Class A-4 Certificate
Principal Balance and (v) the Class A-5 Certificate Principal Balance, after
taking into account the payment of the Principal Distribution Amount (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 Mortgage Loan
Group determined as of the end of the immediately preceding Due Period and (ii)
the amount, if any, on deposit in the Pre-Funding Account as of the close of
business on the last day of the immediately preceding Due Period, after
application of all amounts due on such Distribution Date (other than amounts in
respect of Over-collateralization Deficit).
OVER-COLLATERALIZATION INCREASE AMOUNT: With respect to any
Distribution Date, the Over-collateralization Deficiency Amount as of such
Distribution Date (after taking into account the payment of the Principal
Distribution Amount (except for clause (b)(vii) thereof). Such distribution is
limited to the extent of the Available Funds.
OVER-COLLATERALIZATION REDUCTION AMOUNT: With respect to 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 Distribution Date (without regard to any
Over-collateralization Reduction Amounts included in the definition thereof).
OVER-COLLATERALIZED AMOUNT: With respect to any Distribution
Date, the difference, if any, between (a) the sum of (x) the Aggregate Principal
Balance of the Mortgage Loans as of the close of business on the last day of the
related Due Period and (y) the amounts, if any, on deposit in the Pre-Funding
Account, and (b) the Principal Balance of the related Classes of Certificates as
of such Distribution Date (after taking into account the payment of the
Principal Distribution Amount 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.
OVERFUNDED INTEREST AMOUNT: With respect to each Subsequent
Transfer Date occurring in April 2002, the excess of (i) the amount on deposit
in the Capitalized Interest Account, over (ii) three-months' interest calculated
at the Adjusted Pass-Through Rate on the amount on deposit in the Pre-Funding
Account (net of any Pre-Funding Earnings) immediately following such Subsequent
Transfer Date (disregarding any amount applied from the Pre-Funding Account to a
Subsequent Mortgage Loan that does not have a Due Date in April 2002).
22
With respect to each Subsequent Transfer Date occurring in May
2002, the excess of (i) the amount on deposit in the Capitalized Interest
Account, over (ii) two-month's interest calculated at the Adjusted Pass-Through
Rate on the amount on deposit in the Pre-Funding Account (net of any Pre-Funding
Earnings) immediately following such Subsequent Transfer Date (disregarding any
amount applied from the Pre-Funding Account to a Subsequent Mortgage Loan that
does not have a Due Date in May 2002).
With respect to each Subsequent Transfer Date occurring in
June 2002, the excess of (i) the amount on deposit in the Capitalized Interest
Account, over (ii) one-month's interest calculated at the Adjusted Pass-Through
Rate on the amount on deposit in the Pre-Funding Account (net of any Pre-Funding
Earnings) immediately following such Subsequent Transfer Date (disregarding any
amount applied from the Pre-Funding Account to a Subsequent Mortgage Loan that
does not have a Due Date in June 2002).
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as
to which (a) the related Mortgagor represented an intent to occupy as such
Mortgagor's primary, secondary or vacation residence at the origination of the
Mortgage Loan, and (b) the Unaffiliated Seller has no actual knowledge that such
Residential Dwelling is not so occupied.
OWNERSHIP INTEREST: As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
PERCENTAGE INTEREST: With respect to a Class A-1 Certificate,
Class A-2 Certificate, Class A-3 Certificate, Class A-4 Certificate, or Class
A-5 Certificate, the portion evidenced by such Certificate, expressed as a
percentage rounded to four decimal places, equal to a fraction the numerator of
which is the denomination represented by such Certificate and the denominator of
which is the Original Certificate Principal Balance of such Class. With respect
to a Class A-IO, Class X or Class R Certificate, the portion evidenced thereby
as stated on the face of such Certificate.
PERIODIC ADVANCE: The aggregate of the advances required to be
made by the Servicer on any Servicer Remittance Date pursuant to Section 5.18
hereof, the amount of any such advances being equal to the sum of:
(a) with respect to each Mortgage Loan that was Delinquent as of the
close of business on the last day of the Due Period preceding the related
Servicer 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
(b) with respect to each REO Property which was acquired during or
prior to the related Due Period and as to which an REO Disposition did not occur
during the related Due Period, an amount equal to the excess, if any, of (i)
interest on the Principal Balance of such REO Mortgage Loan at the Mortgage
Interest Rate for such REO Mortgage Loan net of the Servicing Fee, for the most
recently ended Due Period over (ii) the net income from the REO Property
transferred to the Distribution Account for such Distribution Date;
23
provided, however, that in each such case such advance has not been determined
by the Servicer to be a Nonrecoverable Advance.
PERMITTED INVESTMENTS: As used herein, Permitted Investments
shall include the following:
(i) obligations of, or guaranteed as to principal and interest
by, the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than three months from the date of acquisition thereof,
provided that the unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated in one of the two highest rating categories by
the Rating Agencies;
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, in the case of bankers' acceptances, shall in no event have
an original maturity of more than 365 days) of any U.S. depository institution
or trust company, incorporated under the laws of the United States or any state;
provided, that the debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated in one of the two
highest rating categories by the Rating Agencies;
(iv) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been rated in
the highest short-term rating category by the Rating Agencies;
(v) the VISTA U.S. Government Money Market Fund, the VISTA
Prime Money Market Fund and the VISTA Treasury Plus Fund, so long as any such
fund is rated in the highest rating category by Moody's or S&P;
provided, that, each such Permitted Investment shall be a "permitted investment"
within the meaning of Section 860G(a)(5) of the Code and that no instrument
described hereunder shall evidence either the right to receive (x) only interest
with respect to the obligations underlying such instrument or (y) both principal
and interest payments derived from obligations underlying such instrument and
the interest and principal payments with respect to such instrument provided a
yield to maturity at par greater than 120% of the yield to maturity at par of
the underlying obligations; and provided, further, that no instrument described
hereunder may: (yy) 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 (zz) 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.
24
PERMITTED TRANSFEREE: Any Person other than (a) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (b) a foreign government, International
Organization or any agency or instrumentality of either of the foregoing, (c) an
organization (except certain farmers' cooperatives described in Section 521 of
the Code) which is exempt from tax imposed by Chapter 1 of the Code (including
the tax imposed by Section 511 of the Code on unrelated business taxable income)
on any excess inclusions (as defined in Section 860E(c)(1) of the Code) with
respect to any Class R Certificate, (d) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (e) an "electing
large partnership" within the meaning Section 775 of the Code' and (f) any other
Person so designated by the Trustee based upon an Opinion of Counsel to the
Trustee and the Certificate Insurer that the transfer of an Ownership Interest
in a Class R Certificate to such Person may cause either (i) any of the REMICs
described in Section 2.07 hereof to fail to qualify as a REMIC at any time that
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-IO or Class X
Certificates are outstanding or (ii) the Trust Fund or any Person having an
Ownership Interest in any Class of Certificates, other than such Person, to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Class R
Certificate to such Person. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax and, with
the exception of FHLMC, a majority of its board of directors is not selected by
such governmental unit.
PERSON: Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
PLAN: As defined in Section 4.02(n).
PREFERENCE AMOUNT: Any amounts distributed in respect of the
Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class A-5 and Class A-IO
Certificates which are recovered from any Holder of a Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5 or Class A-IO Certificate as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time in accordance with a final,
nonappealable order of a court having competent jurisdiction.
PREFERENCE CLAIM: As defined in Section 6.04(f).
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in
accordance with Section 6.01 hereof and maintained by the Trustee.
PRE-FUNDING AMOUNT: With respect to any date, the amount on
deposit in the Pre-Funding Account.
PRE-FUNDING EARNINGS: The actual investment earnings realized
on amounts deposited in the Pre-Funding Account.
25
PRE-FUNDING PERIOD: The period commencing on the Startup Date
and ending on the earliest to occur of (i) the date on which the amount on
deposit in the Pre-Funding Account (exclusive of any investment earnings) is
less than $50,000, (ii) the date on which any Servicer Default occurs and (iii)
June 10, 2002.
PREMIUM AMOUNT: The sum of (a) the product of the Premium
Percentage and the Class A-1 Certificate Principal Balance for the related
Distribution Date, (b) the product of the Premium Percentage and the Class A-2
Certificate Principal Balance for the related Distribution Date, (c) the product
of the Premium Percentage and the Class A-3 Certificate Principal Balance for
the related Distribution Date, (d) the product of the Premium Percentage and the
Class A-4 Certificate Principal Balance for the related Distribution Date and
(e) the product of the Premium Percentage and the Class A-5 Certificate
Principal Balance for the related Distribution Date (after giving effect to any
distributions on that date).
PREMIUM PERCENTAGE: Has the meaning assigned to such term in
the Insurance and Indemnity Agreement.
PREPAYMENT ASSUMPTION: A constant prepayment rate of 23% HEP
for the Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-5 Certificates, Class A-IO Certificates and
Class X Certificates used solely for determining the accrual of original issue
discount and market discount on the Certificates for federal income tax
purposes.
PREPAYMENT INTEREST SHORTFALL: With respect to any
Distribution Date, for each Mortgage Loan that was the subject during the
related Due Period of a Principal Prepayment, an amount equal to the excess, if
any, of (a) 30 days' interest on the Principal Balance, prior to giving effect
to a principal distribution for the related Due Period, of such Mortgage Loan at
a per annum rate equal to (i) the Mortgage Interest Rate (or at such lower rate
as may be in effect for such Mortgage Loan pursuant to application of the Civil
Relief Act, any Deficient Valuation and/or any Debt Service Reduction) minus
(ii) the rate at which the Servicing Fee is calculated over (b) the amount of
interest actually remitted by the Mortgagor in connection with such Principal
Prepayment less the Servicing Fee for such Mortgage Loan in such month.
PRINCIPAL BALANCE: As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination after giving effect to Principal Prepayments received
prior to the end of the related Due Period and Deficient Valuations incurred
prior to the related Due Date. The Principal Balance of a Mortgage Loan which
becomes a Liquidated Mortgage Loan on or prior to the related Due Date shall be
zero (except for purposes of calculating the Loan Repurchase Price of such
Mortgage Loan).
PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, will
be the lesser of:
(a) the excess of (i) the sum, as of such Distribution Date, of (A) the
Available Funds and (B) any Insured Payment plus if the Certificate
Insurer, to the extent not obligated hereunder or under the Insurance
and Indemnity Agreement, shall so elect in its sole discretion, an
amount of principal (including Liquidated Loan Losses) that would have
been payable pursuant to clauses (b)(i)-(ix) below if sufficient funds
were made available to the Trustee in accordance with the terms of the
Certificate Insurance Policy over (ii) sum of (w) the Interest
Distribution Amount, (x) the Class A-IO Available Funds Cap Current
Shortfall Amount and (y) the Reimbursement Amount, and
26
(b) the sum, without duplication, of:
(i) all principal in respect of the Mortgage Loans actually
collected during the related Due Period,
(ii) the Principal Balance of each Mortgage Loan that either was
repurchased by the Unaffiliated Seller or by an Originator or
purchased by the Servicer on the related Servicer Remittance
Date, to the extent such Principal Balance is actually
received by the Trustee,
(iii) any Substitution Adjustments delivered on the related Servicer
Remittance Date in connection with a substitution of a
Mortgage Loan, to the extent such Substitution Adjustments are
actually received by the Trustee,
(iv) the Net Liquidation Proceeds actually collected by the
Servicer on all Mortgage Loans during the related Due Period
(to the extent such Net Liquidation Proceeds relate to
principal),
(v) with respect to the April 2002, the May 2002 or the June 2002
Distribution Dates, moneys released from the Pre-Funding
Account,
(vi) the proceeds received by the Trustee upon the exercise by the
Servicer of the option to repurchase the Mortgage Loans on or
after the Clean-up Call Date, (to the extent that such
proceeds relate to principal)
(vii) the amount of any Over-collateralization Deficit for such
Distribution Date,
(viii) the proceeds received by the Trustee on any termination of the
Trust to the extent such proceeds relate to principal,
(ix) the amount of any Over-collateralization Increase Amount for
such Distribution Date, and
(x) if the Certificate Insurer shall so elect in its sole
discretion, an amount of principal (including Liquidated Loan
Losses) that would have been payable pursuant to clauses
(i)-(ix) above if sufficient funds were made available to the
Trustee in accordance with the terms of the Certificate
Insurance Policy,
minus
27
(xi) the amount of any Over-collateralization Reduction Amount for
such Distribution Date.
PRINCIPAL PREPAYMENT: Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated
February 15, 2002 relating to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4,
Class A-5 and Class A-IO Certificates filed with the Commission in connection
with the Registration Statement heretofore filed or to be filed with the
Commission pursuant to Rule 424(b)(2) or 424(b)(5).
QUALIFIED APPRAISER: An appraiser, duly appointed by the
Unaffiliated Seller, who had no interest, direct or indirect, in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of the Mortgage Loan, and such
appraiser and the appraisal made by such appraiser both satisfy the requirements
of Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
QUALIFIED MORTGAGE: "Qualified Mortgage" shall have the
meaning set forth from time to time in the definition thereof at Section
860G(a)(3) of the Code (or any successor statute thereto).
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or
mortgage loans substituted for a Deleted Mortgage Loan pursuant to Section
2.06(c) or 3.03 hereof, which (a) has or have an interest rate at least equal to
that applicable to the Deleted Mortgage Loan, (b) relates or relate to a
detached one-family residence or to the same type of Residential Dwelling or
Business Purpose Property, or any combination thereof, as the Deleted Mortgage
Loan and in each case has or have the same or a better lien priority as the
Deleted Mortgage Loan and has the same occupancy status or is an Owner Occupied
Mortgaged Property, (c) matures or mature no later than (and not more than one
year earlier than) the Deleted Mortgage Loan, (d) has or have a Loan-to-Value
Ratio at the time of such substitution no higher than the Loan-to-Value Ratio of
the Deleted Mortgage Loan, (e) has or have a Combined Loan-to-Value Ratio or
Combined Loan-to-Value Ratios at the time of such substitution no higher than
the Combined Loan-to-Value Ratio of the Deleted Mortgage Loan, (f) has or have a
Principal Balance or Principal Balances (after application of all payments
received on or prior to the date of substitution) not substantially less and not
more than the Principal Balance of the Deleted Mortgage Loan as of such date,
(g) satisfies or satisfy the criteria set forth from time to time in the
definition of "qualified replacement mortgage" at Section 860G(a)(4) of the Code
(or any successor statute thereto), and (h) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01,
3.02 and 3.03 of the Unaffiliated Seller's Agreement.
RATING AGENCY: S&P or ▇▇▇▇▇'▇.
RECORD DATE: With respect to the Certificates, the last
Business Day of the month immediately preceding the month in which a
Distribution Date occurs.
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REFERENCE BANKS: Citibank, ▇▇▇▇▇▇▇'▇ Bank PLC, The Bank of
Tokyo-Mitsubishi and National Westminster Bank PLC; provided, that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Unaffiliated Seller which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the control
of or under common control with the Unaffiliated Seller or any affiliate
thereof, (iii) whose quotations appear on the Telerate Page 3750 on the relevant
Interest Determination Date and (iv) which have been designated as such by the
Trustee.
REIMBURSEMENT AMOUNT: As of any Distribution Date, the sum of
(a)(i) all Insured Payments paid by the Certificate Insurer pursuant to the
Certificate Insurance Policy but for which the Certificate Insurer has not been
reimbursed prior to such Distribution Date pursuant to Sections 6.05(a) hereof
plus (ii) interest accrued on such Insured Payments not previously repaid
calculated at the Late Payment Rate from the date the Trustee received the
related Insured Payments or the date such Insured Payments were made and (b)(i)
any amounts then due and owing to the Certificate Insurer under the Insurance
and Indemnity Agreement (including but not limited to Insurer Defense Costs, but
excluding the Premium Amount due on such Distribution Date to the extent
previously paid), as certified to the Trustee by the Certificate Insurer plus
(ii) interest on such amounts at the Late Payment Rate. The Certificate Insurer
shall notify the Trustee and the Depositor of the amount of any Reimbursement
Amount.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC I: As described in Section 2.07 herein.
REMIC I REGULAR INTERESTS: As described in Section 2.07
herein.
REMIC II: As described in Section 2.07 herein.
REMIC II REGULAR INTERESTS: As described in Section 2.07
herein.
REMIC II Net WAC: On each Distribution Date up to and
including the Distribution Date in September 2004, a rate equal to the weighted
average of the interest rates on Class I-1 and Class I-2, where the rate on
Class I-2 is first reduced by 10.00% (but to not less than 0). On each
Distribution Date thereafter, a rate equal to the weighted average of the
interest rate on Class I-1 and Class I-2.
REMIC PROVISIONS: Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and temporary and final regulations promulgated thereunder and
published rulings, notices and announcements, as the foregoing may be in effect
from time to time.
REMIC TRUST: The segregated pool of assets consisting of the
Trust Fund, provided, however, that the Capitalized Interest Account, the
Supplemental Interest Payment Account and the Pre-funding Account shall not be
part of the REMIC Trust.
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REO DISPOSITION: The final sale by the Servicer of a Mortgaged
Property acquired by the Servicer in foreclosure or by deed-in-lieu of
foreclosure.
REO MORTGAGE LOAN: Any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the related Mortgage
Note is discharged and the related Mortgaged Property is held as part of the
Trust Fund.
REO PROCEEDS: Proceeds received in respect of any REO Mortgage
Loan (including, without limitation, proceeds from the rental of the related
Mortgaged Property).
REO PROPERTY: A Mortgaged Property acquired by the Servicer in
the name of the Trustee on behalf of the Certificateholders through foreclosure
or deed-in-lieu of foreclosure.
REPRESENTATION LETTER: Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates, Class A-5 Certificates and Class A-IO Certificates registered in
the Certificate Register under the nominee name of the Depository.
REPRESENTATIVE: Bear, ▇▇▇▇▇▇▇ & Co. Inc. as the representative
underwriter for the Underwriters listed on Schedule A to the Underwriting
Agreement.
REQUEST FOR RELEASE: A request for release in substantially
the form attached as Exhibit H hereto.
REQUIRED DISTRIBUTIONS: means, with respect to (1) any
Distribution Date occurring prior to the Distribution Date on December 15, 2032,
the sum of (x) the Interest Distribution Amount for all Class A Certificates and
any Class A-IO Available Funds Cap Current Shortfall Amount net of any Net
Mortgage Loan Interest Shortfalls and Class A-1 Available Funds Cap
Carry-Forward Amounts and (y) the sum of the Over-collateralization Deficit(s)
after the application of Available Funds, and (2) the final scheduled
Distribution Date on December 15, 2032, the sum of (x) the amount set forth in
clause (1)(x) above and (y) the outstanding aggregate Certificate Principal
Balance, if any, of the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5
Certificates, after giving effect to all other distributions of principal on the
Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4 and Class A-5 Certificates on that
Distribution Date.
RESERVE INTEREST RATE: With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which three New
York City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which three
New York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
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RESIDENTIAL DWELLING: A one- to four-family dwelling, a unit
in a planned unit development, a unit in a condominium development, a townhouse
or a manufactured housing unit which is non-mobile.
RESPONSIBLE OFFICER: When used with respect to the Trustee,
any officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Assistant Vice President, Trust Officer, any
Assistant Secretary, any trust officer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and to whom, with respect to a particular matter, such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject in each case having direct responsibility for the
administration of this Agreement. When used with respect to the Unaffiliated
Seller or the Servicer, the President or any Vice President, Assistant Vice
President, or any Secretary or Assistant Secretary.
RETAINED INTEREST: An interest in a pool of promissory notes,
mortgage loans, or other financial assets which entitles the holder to receive
excess cash flows derived from such assets after payments to senior holders of
direct or indirect beneficial or other interests in such assets as well as
expenses and other payments accorded priority in right or payment to such
residual interest.
ROLLING SIX MONTH DELINQUENCY RATE: For any Distribution Date,
the fraction, expressed as a percentage, equal to the average of the Delinquency
Ratio for each of the six (1, 2, 3, 4 or 5 in the case of the first six
Distribution Dates, as the case may be) immediately preceding Due Periods.
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or any successor thereto and if such corporation no longer for
any reason performs the services of a securities rating agency, "S&P" shall be
deemed to refer to any other nationally recognized statistical rating
organization designated by the Certificate Insurer.
SERVICER: American Business Credit, Inc., a Pennsylvania
corporation, or any successor appointed as herein provided.
SERVICER 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 this Agreement but excluding the
following:
(a) amounts received on particular Mortgage Loans as late
payments of interest and respecting which the Servicer has previously made an
unreimbursed Periodic Advance out of its own funds;
(b) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
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(c) that portion of Liquidation Proceeds and REO Proceeds to
the extent of any unpaid Servicing Fee;
(d) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(e) all amounts in respect of late fees, assumption fees,
prepayment fees and similar fees;
(f) certain other amounts which are reimbursable to the
Servicer, as provided in this Pooling and Servicing Agreement; and
(g) Net Foreclosure Profits.
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: As defined in Section 6.07 hereof.
SERVICING ADVANCES: All reasonable and customary
"out-of-pocket" costs and expenses incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost and
expenses relating to (a) the preservation, restoration and protection of the
Mortgaged Property, (b) any enforcement or judicial proceedings, including
foreclosures, (c) the management and liquidation of the REO Property, including
reasonable fees paid to any independent contractor in connection therewith, (d)
compliance with the obligations under Section 5.22, all of which reasonable and
customary out-of-pocket costs and expenses are reimbursable to the Servicer to
the extent provided in Sections 5.03 and 5.22.
SERVICING COMPENSATION: The Servicing Fee and other amounts to
which the Servicer is entitled pursuant to Section 5.08.
SERVICING FEE: As to each Mortgage Loan, the annual fee
payable to the Servicer, which is calculated as an amount equal to the product
of (a) 0.50% per annum, and (b) the Principal Balance thereof (or, in the case
of any successor Servicer, such other amount as the Certificate Insurer and such
successor may agree upon in writing; provided, however, that if the Trustee is
acting as successor Servicer in no event shall the Servicing Fee be less than
the amount paid to the initial Servicer hereunder). Such fee shall be calculated
and payable monthly only from the amounts received in respect of interest on
such Mortgage Loan and shall be computed on the basis of the same principal
amount and for the period respecting which any related interest payment on a
Mortgage Loan is computed. The Servicing Fee includes any servicing fees owed or
payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee and the Certificateholders by the Servicer, as such list may from
time to time be amended.
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SPECIAL ADVANCE: As defined in Section 5.18(b) hereof.
SPECIFIED OVER-COLLATERALIZED AMOUNT: Means, as of any
Distribution Date, the greatest of (a) (i) prior to the Step Down Date 4.50% of
the Maximum Pool Principal Balance or (ii) on or after the Step Down Date 9.00%
of the Aggregate Principal Balance of all of the Mortgage Loans, (b) the amount
equal to the sum of the Aggregate Principal Balance of the three largest
Mortgage Loans, (c) the product of (i) two and (ii) (1) 50% of the sum of the
Aggregate Principal Balance of the Mortgage Loans which are sixty (60) days or
more delinquent (including all foreclosures and REO Properties) minus (2) the
product of (x) four and (y) the current Net Monthly Excess Cashflow and (d)
0.50% of the Maximum Pool Principal Balance; provided, however, the Specified
Over-collateralized Amount shall increase to 6.50% of the Maximum Pool Principal
Balance, prior to the Stepdown Date, or 11.00% of the Aggregate Principal
Balance of all of the Mortgage Loans, on or after the Step Down Date, upon the
occurrence of a Trigger Event.
STARTUP DAY: The day designated as such pursuant to Section
2.07(b) hereof.
SUBSEQUENT CUT-OFF DATE: As to any Subsequent Mortgage Loans,
the date specified in the Addition Notice delivered in connection therewith,
which date shall be the close of business on the last day of the month
immediately preceding the month in which such Subsequent Mortgage Loans will be
conveyed to the Trust.
SUBSEQUENT MORTGAGE LOANS: The Mortgage Loans hereafter
transferred and assigned to the Trust pursuant to Section 2.03.
SUBSEQUENT TRANSFER: The transfer and assignment by the
Depositor to the Trust of the Subsequent Mortgage Loans pursuant to the terms
hereof.
SUBSEQUENT TRANSFER DATE: The Business Day on which a
Subsequent Transfer occurs.
SUBSERVICERS: HomeAmerican Credit, Inc., d/b/a Upland
Mortgage, a Pennsylvania corporation, or its successor in interest and American
Business Mortgage Services, Inc., a New Jersey corporation, or its successor in
interest.
SUBSERVICING AGREEMENT: The agreement between the Servicer and
the Subservicers relating to subservicing and/or administration of certain
Mortgage Loans as provided in Section 5.13, a copy of which shall be delivered,
along with any modifications thereto, to the Trustee and the Certificate
Insurer.
SUBSTITUTION ADJUSTMENT: As to any date on which a
substitution occurs pursuant to Sections 2.06 or 3.03, the amount (if any) by
which the aggregate principal balances (after application of principal payments
received on or before the date of substitution) of any Qualified Substitute
Mortgage Loans as of the date of substitution, are less than the aggregate of
the Principal Balances of the related Deleted Mortgage Loans together with 30
days' interest thereon at the Mortgage Interest Rate.
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SUPPLEMENTAL INTEREST PAYMENT ACCOUNT: The Eligible Account
established and maintained in accordance to Section 6.12.
SUPPLEMENTAL INTEREST PAYMENT AMOUNT AVAILABLE: The amount, if
any, on deposit in the Supplemental Interest Payment Account on any Distribution
Date.
SUPPLEMENTAL INTEREST RIGHT: The right of the Class A-1 and
Class A-IO Certificateholders to receive Class A-1 Available Funds Cap
Carry-Forward Amounts and Class A-IO Available Funds Cap Current Shortfall
Amounts, respectively, in accordance with Section 6.12.
SUPPLEMENTAL INTEREST TRUST: The trust established in
accordance with Section 6.12 to hold the Supplemental Interest Payment Account.
The Supplemental Interest Trust will not be an asset of any REMIC.
TAX MATTERS PERSON: The Person or Persons appointed pursuant
to Section 11.15 from time to time to act as the "tax matters person" (within
the meaning of the REMIC Provisions) for each of the REMICs created hereunder.
TAX RETURN: The federal income tax return on Internal Revenue
Service Form 1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax
Return," including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of each REMIC created hereunder due to its classification
as a REMIC under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provision of federal, state
or local tax laws.
Telerate Page 3750: The display designated as Telerate Page
3750 on the Telerate Service (or such other page as may replace the Telerate
page on that service for the purpose of displaying London interbank offered
rates of major banks).
TRANSFER: Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
TRANSFER AFFIDAVIT AND AGREEMENT: As defined in Section
4.02(l)(ii).
TRANSFEREE: Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
TRANSFEROR: Any Person who is disposing by Transfer any
Ownership Interest in a Certificate.
TRUST: ABFS Mortgage Loan Trust 2002-1, the trust created
hereunder.
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TRUSTEE: JPMorgan Chase Bank, a New York banking corporation,
or its successor-in-interest, or any successor trustee appointed as herein
provided.
TRUSTEE FEE: As to any Distribution Date, the fee payable to
the Trustee in respect of its services as Trustee that accrues at a monthly rate
equal to one-twelfth of 0.00625% on the Principal Balance of each Mortgage Loan
as of the immediately preceding Due Date.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the
Trustee or its designated agent pursuant to Section 2.05.
TRUSTEE'S REMITTANCE REPORT: As defined in Section 6.07.
TRUST FUND: The segregated pool of assets subject hereto,
constituting the trust created hereby and to be administered hereunder,
consisting of: (i) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all principal collected and interest due and accruing thereon after the related
Cut-Off Date, and any proceeds thereof; (ii) any REO Property, together with all
collections thereon and proceeds thereof; (iii) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof; any other
security for such Mortgage Loan, including, without limitation, pledged
equipment, inventory and working capital and assignments of rights and interests
made by the related mortgagor; (v) the rights and remedies of the Trustee
against any Person making any representation or warranty to the Trustee
hereunder, to the extent provided herein; (vi) all rights of the Depositor under
the Unaffiliated Seller's Agreement; (vii) each Account and such assets that are
deposited therein from time to time and any investments thereof, together with
any and all income, proceeds and payments with respect thereto and (viii) all
proceeds of the foregoing.
TWELVE MONTH LOSS AMOUNT: With respect to any Distribution
Date, an amount equal to the aggregate of all Liquidated Loan Losses on the
Mortgage Loans which became Liquidated Mortgage Loans during the 12 preceding
Due Periods.
UNAFFILIATED SELLER: ABFS 2002-1, Inc.
UNAFFILIATED SELLER'S AGREEMENT: The Unaffiliated Seller's
Agreement, dated as of the date hereof, among the Unaffiliated Seller, the
Originators and the Depositor relating to the sale of the Mortgage Loans from
the Originators to the Unaffiliated Seller and from the Unaffiliated Seller to
the Depositor.
UNDERWRITERS: The Representative and Credit Suisse First
Boston Corporation.
UNDERWRITING AGREEMENT: The Underwriting Agreement, dated as
of February 15, 2002 between the Depositor and the Representative.
UNDERWRITING GUIDELINES: The underwriting guidelines of the
Originators, a copy of which is attached as an exhibit to the Unaffiliated
Seller's Agreement.
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UNITED STATES PERSON: A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States, any state thereof or the District of
Columbia, an estate whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States or a trust if a court within the United States can exercise
primary jurisdiction over its administration and at least one United States
fiduciary has the authority to control all substantial decisions of the trust.
Section 1.02 Provisions of General Application. (a) All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.
(b) The terms defined in this Article include the plural as well as the
singular.
(c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Any reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
(e) All calculations of interest (other than with respect to the
Mortgage Loans) provided for herein shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All calculations of interest with respect to
any Mortgage Loan provided for herein shall be made in accordance with the terms
of the related Mortgage Note and Mortgage or, if such documents do not specify
the basis upon which interest accrues thereon, on the basis of a 360-day year
consisting of twelve 30-day months, to the extent permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the date such
payment is actually received by the Servicer, provided, however, that for
purposes of calculating distributions on the Certificates prepayments with
respect to any Mortgage Loan are deemed to be received on the date they are
applied in accordance with Accepted Servicing Practices consistent with the
terms of the related Mortgage Note and Mortgage to reduce the outstanding
principal balance of such Mortgage Loan on which interest accrues.
Section 1.03 Business Day Certificate. On the Closing Date (with
respect to the calendar year 2002) and thereafter, within 15 days prior to the
end of each calendar year while this Agreement remains in effect (with respect
to the succeeding calendar years), the Servicer shall provide to the Trustee and
the Depositor a certificate of a Servicing Officer specifying the days on which
banking institutions in the State of Pennsylvania are authorized or obligated by
law, executive order or governmental decree to be closed.
36
ARTICLE II
ESTABLISHMENT OF THE TRUST
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 Establishment of the Trust. (a) The Depositor does hereby
establish, pursuant to the further provisions of this Agreement and the laws of
the State of New York, an express trust to be known, for convenience, as "ABFS
Mortgage Loan Trust 2002-1" and does hereby appoint JPMorgan Chase Bank as
Trustee in accordance with the provisions of this Agreement.
(a) (b) The Trust may perform the following permitted activities:
(i) hold receivables transferred from the Unaffiliated Seller and
other passive assets of the Trust, which assets can not be
contrary to the status of the Trust as a qualified special
purpose entity under existing accounting literature, including
passive derivative financial instruments that pertain to
beneficial interests issued or sold to parties other than the
Unaffiliated Seller, its affiliates or agents;
(ii) issue Certificates and other interests in the Trust;
(iii) receive collections and make payments on such Certificates and
interests in accordance with the terms of this Agreement; and
(iv) engage in other activities that are necessary or incidental to
accomplish these limited purposes, which activities can not be
contrary to the status of the Trust as a qualified special
purpose entity under existing accounting literature.
Section 2.02 Purchase and Sale of Initial Mortgage Loans. The Depositor
does hereby sell, transfer, assign, set over and convey to the Trustee, on
behalf of the Trust, without recourse but subject to the terms and provisions of
this Agreement, all of the right, title and interest of the Depositor in and to
the Initial Mortgage Loans, including the outstanding principal as of and
interest due and accruing after the Initial Cut-off Date on such Mortgage Loans,
and all other assets included or to be included in the Trust Fund for the
benefit of the Certificateholders and the Certificate Insurer. In connection
with such transfer and assignment, and pursuant to Section 2.07 of the
Unaffiliated Seller's Agreement, the Depositor does hereby also irrevocably
transfer, assign, set over and otherwise convey to the Trustee, on behalf of the
Trust, all of its rights under the Unaffiliated Seller's Agreement, including,
without limitation, its right to exercise the remedies created by Sections 2.06
and 3.05 of the Unaffiliated Seller's Agreement for defective documentation and
for breaches of representations and warranties, agreements and covenants of the
Unaffiliated Seller and the Originators contained in Sections 3.01, 3.02 and
3.03 of the Unaffiliated Seller's Agreement.
Section 2.03 Purchase and Sale of Subsequent Mortgage Loans. (a)
Subject to the satisfaction of the conditions set forth in paragraph (b) below,
in consideration of the Trustee's delivery on the related Subsequent Transfer
Dates to or upon the order of the Depositor of all or a portion of the balance
of funds in the Pre-Funding Account, the Depositor shall on any Subsequent
Transfer Date sell, transfer, assign, set over and convey to the Trustee without
recourse but subject to terms and provisions of this Agreement, all of the
right, title and interest of the Depositor in and to the Subsequent Mortgage
Loans, including the outstanding principal of and interest due on such
Subsequent Mortgage Loans, and all other assets included or to be included in
the Trust Fund for the benefit of the Certificateholders and the Certificate
Insurer. In connection with such transfer and assignment, and pursuant to
Section 2.07 of the Unaffiliated Seller's Agreement, the Depositor does hereby
also irrevocably transfer, assign, set over and otherwise convey to the Trustee,
for the benefit of the Certificateholders and the Certificate Insurer, all of
its rights under the Unaffiliated Seller's Agreement, including, without
limitation, its right to exercise the remedies created by Sections 2.06 and 3.05
of the Unaffiliated Seller's Agreement for defective documentation and for
breaches of representations and warranties, agreements and covenants of the
Unaffiliated Seller contained in Sections 3.01, 3.02 and 3.03 of the
Unaffiliated Seller's Agreement.
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The amount released from the Pre-Funding Account with respect
to a transfer of Subsequent Mortgage Loans shall be one-hundred percent (100%)
of the aggregate principal balances as of the related Subsequent Cut-Off Date of
the Subsequent Mortgage Loans so transferred.
(b) The Subsequent Mortgage Loans and the other property and rights
related thereto described in paragraph (a) above shall be transferred by the
Depositor to the Trust only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Unaffiliated Seller shall have provided the Trustee, the
Rating Agencies and the Certificate Insurer with a timely
Addition Notice, which shall include a Mortgage Loan Schedule,
listing the Subsequent Mortgage Loans and shall have provided
any other information reasonably requested by any of the
foregoing with respect to the Subsequent Mortgage Loans;
(ii) the Unaffiliated Seller shall have deposited in the Collection
Account all collections of (x) principal in respect of the
Subsequent Mortgage Loans received after the related
Subsequent Cut-Off Date and (y) interest due on the Subsequent
Mortgage Loans after the related Subsequent Cut-Off Date;
(iii) as of each Subsequent Transfer Date, the Depositor was not
insolvent nor will be made insolvent by such transfer nor is
the Depositor aware of any pending insolvency;
(iv) such addition will not result in a material adverse tax
consequence to the Trust or the Holders of the Certificates;
(v) the Pre-Funding Period shall not have terminated;
(vi) the Unaffiliated Seller shall have delivered to the Trustee
and the Certificate Insurer an Officer's Certificate
confirming the satisfaction of each condition precedent
specified in this paragraph (b) and that the Subsequent
Mortgage Loans comply with the provisions of this Section 2.03
and each complies with the terms of the Unaffiliated Seller's
Agreement, including each of the representations and
warranties made with respect thereto;
38
(vii) there shall have been delivered to the Certificate Insurer,
the Rating Agencies and the Trustee, Independent Opinions of
Counsel with respect to the transfer of the Subsequent
Mortgage Loans substantially in the form of the Opinions of
Counsel delivered to the Certificate Insurer and the Trustee
on the Startup Date (bankruptcy, corporate and tax opinions);
and
(viii) the Originators, the Certificate Insurer, the Unaffiliated
Seller and the Depositor shall have delivered to the Trustee
an executed copy of a subsequent transfer agreement,
substantially in the form of Exhibit R hereto.
(c) The obligation of the Trust to purchase the Subsequent Mortgage
Loans on a Subsequent Transfer Date is subject to the requirements in Section
2.02 of the Unaffiliated Seller's Agreement.
(d) In connection with the transfer and assignment of the Subsequent
Mortgage Loans, the Depositor shall satisfy the document delivery requirements
set forth in Section 2.05.
(e) On each Subsequent Transfer Date upon written instruction from the
Unaffiliated Seller, the Trustee shall withdraw from the Capitalized Interest
Account and pay to the Unaffiliated Seller on such Subsequent Transfer Date the
Overfunded Interest Amount for such Subsequent Transfer Date, as calculated by
the Servicer with the cooperation of the Unaffiliated Seller and subject to the
approval of the Certificate Insurer.
(f) For any Subsequent Mortgage Loan that has a first Due Date that
occurs later than the last day of the Due Period following the Due Period in
which the Subsequent Mortgage Loan was sold to the Trust, on each applicable
Servicer Remittance Date, the Servicer will deposit into the Distribution
Account 30 days' interest at the Mortgage Interest Rate, net of the Servicing
Fee, for each month after the month in which the Subsequent Transfer occurs
until, but not including, the month in which the first Due Date occurs.
Section 2.04 Possession of Mortgage Files; Access to Mortgage Files.
(a) Upon the issuance of the Certificates, the ownership of each Mortgage Note,
the Mortgage and the contents of the related Mortgage File related to each
Initial Mortgage Loan is vested, and on each Subsequent Transfer Date the
ownership of each Mortgage Note, the Mortgage and the contents of the related
Mortgage File related to each Subsequent Mortgage Loan will be vested in the
Trustee for the benefit of the Certificateholders and the Certificate Insurer.
(b) Pursuant to Section 2.05 of the Unaffiliated Seller's Agreement,
the Depositor has delivered or caused to be delivered the Trustee's Mortgage
File related to each Mortgage Loan to the Trustee.
(c) The Collateral Agent, on behalf of the Trustee, will be the
custodian or may, with the consent of the Certificate Insurer, enter into a
custodial agreement pursuant to which the Trustee will appoint a custodian (the
"Collateral Agent") to hold the Mortgage Files in trust for the benefit of all
present and future Certificateholders and the Certificate Insurer; provided,
however, that the custodian so appointed shall in no event be the Depositor or
the Servicer or any Person known to a Responsible Officer of the Trustee to be
an Affiliate of the Depositor or the Servicer and shall be approved by the
Certificate Insurer.
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(d) The Custodian shall afford the Depositor, the Certificate Insurer
and the Servicer reasonable access to all records and documentation regarding
the Mortgage Loans relating to this Agreement, such access being afforded upon
reasonable request and during normal business hours at the offices of the
Custodian at customary charges.
Section 2.05 Delivery of Mortgage Loan Documents. (a) In connection
with the transfer and assignment of the Mortgage Loans, the Depositor does
hereby with respect to the Initial Mortgage Loans, and will on or before the
Subsequent Transfer Date with respect to Subsequent Mortgage Loans, deliver or
cause to be delivered to the Collateral Agent, on behalf of the Trustee the
following documents or instruments with respect to each Mortgage Loan so
transferred or assigned:
(i) the original Mortgage Note, endorsed without recourse in blank
by the related Originator, including all intervening
endorsements showing a complete chain of endorsement;
(ii) the related Mortgage with evidence of recording indicated
thereon or a copy thereof certified by the applicable
recording office;
(iii) the recorded Assignment of Mortgage, or copy thereof certified
by the applicable recording office, if any, showing a complete
chain of assignment from the originator of the related
Mortgage Loan to the related Originator (which assignment may,
at such Originator's option, be combined with the assignment
referred to in subpart (iv) hereof);
(iv) an Assignment of Mortgage in recordable form (which, if
acceptable for recording in the relevant jurisdiction, may be
included in a blanket assignment or assignments) of each
Mortgage from the related Originator to the Trustee;
(v) originals of all assumption, modification and substitution
agreements in those instances where the terms or provisions of
a Mortgage or Mortgage Note have been modified or such
Mortgage or Mortgage Note has been assumed; and
(vi) an original title insurance policy (or (A) a copy of the title
insurance policy, or (B) a binder thereof or copy of such
binder together with a certificate from the related Originator
that the original Mortgage has been delivered to the title
insurance company that issued such binder for recordation).
In instances where the original recorded Mortgage and any
original recorded Assignment of Mortgage thereof pursuant to clause (iii) above
cannot be delivered by the Depositor to the Collateral Agent on behalf of the
Trustee prior to or concurrently with the execution and delivery of this
Agreement (or, with respect to Subsequent Mortgage Loans, prior to or on the
Subsequent Transfer Date), due to a delay in connection with recording, the
Depositor may:
40
(x) In lieu of delivering such original recorded Mortgage,
deliver to the Collateral Agent on behalf of the Trustee a copy thereof provided
that the related Originator certifies that the original Mortgage has been
delivered to a title insurance company for recordation after receipt of its
policy of title insurance or binder therefor; and
(y) In lieu of delivering the original recorded Assignment of
Mortgage, deliver to the Collateral Agent on behalf of the Trustee a copy of the
Assignment of Mortgage certified by the related Originator.
The Trustee shall promptly upon receipt thereof, with respect
to each Mortgage Note described in (i) above and each Assignment of Mortgage
described in (iv) above, endorse such Mortgage Note and Assignment of Mortgage
as follows: "JPMorgan Chase Bank, as Trustee under the Pooling and Servicing
Agreement dated as of March 1, 2002, ABFS Mortgage Loan Trust 2002-1."
As promptly as practicable, but in any event within thirty
(30) days from the Closing Date, or the Subsequent Transfer Date, as applicable,
the related Originator shall cause to be recorded, at the related Originator's
expense, in the appropriate public office for real property records, the
Assignments of Mortgages to the Trustee.
All original documents relating to the Mortgage Loans which
are not delivered to the Trustee, as permitted by Section 2.05(a) of the
Unaffiliated Seller's Agreement and this Section 2.05(a), are and shall be held
by the related Originator, the Unaffiliated Seller or the Servicer in trust for
the benefit of the Trustee on behalf of the Certificateholders.
(b) Within thirty (30) days following delivery of the Mortgage Files to
the Collateral Agent on behalf of the Trustee, the Collateral Agent will review
each Mortgage File to ascertain that all required documents set forth in Section
2.05(a) (other than clause (v) thereof) have been executed and received, and
that such documents relate to the Mortgage Loans identified on the Mortgage Loan
Schedule, and in so doing the Trustee may rely on the purported due execution
and genuineness of any signature thereon. If within such 30-day period (or, with
respect to any Qualified Substitute Mortgage Loan, within thirty (30) days after
the assignment thereof) the Collateral Agent on behalf of the Trustee finds any
document constituting a part of a Mortgage File not to have been executed or
received or to be unrelated to the Mortgage Loans identified in the Mortgage
Loan Schedule, the Collateral Agent shall promptly notify the Servicer, the
Trustee and the Certificate Insurer, and the Servicer shall have a period of
sixty (60) days after such notice within which to correct or cure any such
defect. Each original recorded Assignment of Mortgage shall be delivered to the
Trustee within ten (10) days following the date on which it is returned to the
Servicer by the office with which such Assignment of Mortgage was filed for
recording and within ten (10) days following receipt by the Trustee, the Trustee
shall review such Assignment of Mortgage to confirm the information specified
above with respect to the documents constituting the Mortgage File. Upon receipt
by the Trustee of the recorded assignment such recorded assignment shall become
part of the Mortgage File. The Trustee shall notify the Servicer of any defect
in such assignment based on such review. The Servicer shall have a period of 60
days following such notice to correct or cure such defect. In the event that the
Servicer fails to record an Assignment of Mortgage as herein provided the
Trustee shall, at the Servicer's expense, use reasonable efforts to prepare and,
if required hereunder, file such assignments for recordation in the appropriate
real property or other records and the Servicer hereby appoints the Collateral
Agent, on behalf of the Trustee as its attorney-in-fact with full power and
authority acting in its stead for the purpose of such preparation, execution and
filing.
41
(c) It is intended that the conveyance of the Mortgage Loans and other
property by the Depositor to the Trustee as provided in this Section 2.05 and
Section 2.02 be, and be construed as, a sale of the Mortgage Loans and such
other property by the Depositor to the Trustee for the benefit of the
Certificateholders. It is, further, not intended that such conveyance be deemed
a pledge of the Mortgage Loans or such other property by the Depositor to the
Trustee to secure a debt or other obligation of the Depositor. However, in the
event that the Mortgage Loans or any of such other property are held to be
property of the Depositor, or if for any reason this Agreement is held or deemed
to create a security interest in the Mortgage Loans or any of such other
property, then it is intended that: (i) this Agreement shall also be deemed to
be a security agreement within the meaning of the Uniform Commercial Code; (ii)
the conveyance provided for in this Section shall be deemed to be a grant by the
Depositor to the Trustee of a security interest in all of the Depositor's right,
title and interest in and to the Mortgage Loans, the Trust Fund and such other
property and all amounts payable to the holders of the Mortgage Loans in
accordance with the terms thereof and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities or other
property, including, without limitation, all amounts from time to time held or
invested in the Distribution Account, whether in the form of cash, instruments,
securities or other property; (iii) the possession by the Trustee or its agent
of the Mortgage Notes and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to the Uniform Commercial Code; and (iv) notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from financial intermediaries,
bailees or agents (as applicable) of the Trustee for the purpose of perfecting
such security interest under applicable law. The Depositor and the Trustee
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, the Trust Fund or any of such other property,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of this Agreement.
(d) Without diminution of the requirements of Sections 2.04(c) and this
Section 2.05, all original documents relating to the Mortgage Loans that are not
delivered to the Trustee, are and shall be held by the Servicer in trust for the
benefit of the Trustee on behalf of the Certificateholders and the Certificate
Insurer. In the event that any such original document is required pursuant to
the terms of this Section 2.05 to be a part of a Mortgage File, such document
shall be delivered promptly to the Trustee pursuant to the Unaffiliated Seller's
Agreement. In acting as custodian of any such original document, the Servicer
agrees further that it does not and will not have or assert any beneficial
ownership interest in the Mortgage Loans or the Mortgage Files. Promptly upon
the Depositor's and the Trust's acquisition thereof and the Servicer's receipt
thereof, the Servicer on behalf of the Trust shall ▇▇▇▇ conspicuously each
original document not delivered to the Trustee, and the Unaffiliated Seller's
master data processing records evidencing each Mortgage Loan with a legend,
acceptable to the Trustee, evidencing that the Trust has purchased the Mortgage
Loans and all right and title thereto and interest therein pursuant to the
Unaffiliated Seller's Agreement and this Agreement.
42
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee. (a) The Trustee, agrees to execute and
deliver to the Depositor, the Certificate Insurer, the Servicer and the
Unaffiliated Seller on or prior to the Closing Date an acknowledgment of receipt
of the Certificate Insurance Policy, in a form attached as Exhibit G hereto,
and, on or prior to the Closing Date or any Subsequent Transfer Date, with
respect to each Mortgage Loan transferred on such date, the original Mortgage
Note (with any exceptions noted), in the form attached as Exhibit Q hereto and
declares that it will hold or cause the Collateral Agent, on its behalf to hold
such documents and any amendments, replacements or supplements thereto, as well
as any other assets included in the definition of Trust Fund and delivered to
the Trustee or the Collateral Agent on its behalf, as Trustee in trust upon and
subject to the conditions set forth herein for the benefit of the
Certificateholders and the Certificate Insurer. The Collateral Agent agrees, for
the benefit of the Certificateholders and the Certificate Insurer, to review (or
cause to be reviewed) each Trustee's Mortgage File within thirty (30) days after
the Closing Date (with respect to the Initial Mortgage Loans), within thirty
(30) days after receipt by the Collateral Agent, on behalf of the Trustee,
thereof (with respect to Qualified Substitute Mortgage Loans) or any Subsequent
Transfer Date (with respect to the Subsequent Mortgage Loans), as applicable,
and to deliver to the Unaffiliated Seller, the Servicer, the Depositor and the
Certificate Insurer a certification in the form attached hereto as Exhibit I to
the effect that, as to each Mortgage Loan listed in the related Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to it pursuant to
Section 2.05 (other than the items listed in clause (a)(v) thereof) are in its
possession, (ii) each such document has been reviewed by it and has not been
mutilated, damaged, torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical alteration if initialed by
the Mortgagor), appears regular on its face and relates to such Mortgage Loan,
and (iii) based on its examination and only as to the foregoing documents, the
information set forth on the Mortgage Loan Schedule as to the information set
forth in (i), (ii), (v) and (vi) of the definition of "Mortgage Loan Schedule"
set forth herein accurately reflects the information set forth in the Trustee's
Mortgage File delivered on such date. The Collateral Agent, on behalf of the
Trustee shall be under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, or appropriate for the represented purpose or that
they are other than what they purport to be on their face.
(b) Within ninety (90) days of the Closing Date, with respect to the
Initial Mortgage Loans, and within 90 days of any Subsequent Transfer Date, with
respect to the Subsequent Mortgage Loans transferred on such date; the Trustee
shall deliver (or cause to be delivered) to the Servicer, the Unaffiliated
Seller, the Depositor, the Rating Agencies and the Certificate Insurer a final
certification in the form attached hereto as Exhibit G to the effect that, as to
each Mortgage Loan listed in the related Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), (i) all documents required
to be delivered to it pursuant to Section 2.05 (other than the items listed in
clause (a)(v) thereof) are in its possession, (ii) each such document has been
reviewed by it and has not been mutilated, damaged, torn or otherwise physically
altered (handwritten additions, changes or corrections shall not constitute
physical alteration if initialed by the Mortgagor), appears regular on its face
and relates to such Mortgage Loan, and (iii) based on its examination and only
as to the foregoing documents, the information set forth in (i), (ii), (v) and
(vi) of the definition of "Mortgage Loan Schedule" set forth herein accurately
reflects the information set forth in the Trustee's Mortgage File delivered on
such date.
43
(c) If the Collateral Agent on behalf of the Trustee during the process
of reviewing the Trustee's Mortgage Files finds any document constituting a part
of a Trustee's Mortgage File which is not executed, has not been received, is
unrelated to the Mortgage Loan identified in the related Mortgage Loan Schedule,
or does not conform to the requirements of Section 2.05 or the description
thereof as set forth in the related Mortgage Loan Schedule, the Trustee or the
Certificate Insurer, as applicable, shall promptly so notify the Servicer, the
Unaffiliated Seller and the Certificate Insurer. In performing any such review,
the Collateral Agent on behalf of the Trustee may conclusively rely on the
Unaffiliated Seller as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Collateral Agent or
the Trustee's review of the Mortgage Files is limited solely to confirming that
the documents listed in Section 2.05 (other than those listed in clause (v)
thereof) have been executed and received and relate to the Mortgage Files
identified in the related Mortgage Loan Schedule. The Collateral Agent on behalf
of the Trustee shall have no responsibility for determining whether any document
is valid and binding, whether the text of any assignment or endorsement is in
proper or recordable form, whether any document has been recorded in accordance
with the requirements of any applicable jurisdiction, or whether a blanket
assignment is permitted in any applicable jurisdiction. Pursuant to the
Unaffiliated Seller's Agreement, the Unaffiliated Seller and the Originators
have agreed to use reasonable efforts to cause to be remedied a material defect
in a document constituting part of a Mortgage File of which it is so notified by
the Collateral Agent or the Trustee. If, however, within sixty (60) days after
the Collateral Agent or the Trustee's notice to it respecting such defect the
Unaffiliated Seller has not caused to be remedied the defect and the defect
materially and adversely affects the value of, or the interest of the
Certificateholders in the related Mortgage Loan or the interests of the
Certificate Insurer, the Unaffiliated Seller and the Originators will be
obligated, pursuant to the Unaffiliated Seller's Agreement, to either (i)
substitute in lieu of such Mortgage Loan a Qualified Substitute Mortgage Loan in
the manner and subject to the conditions set forth in Section 3.03 or (ii)
purchase such Mortgage Loan at a purchase price equal to the Principal Balance
of such Mortgage Loan as of the date of purchase, plus all accrued and unpaid
interest on such Principal Balance computed at the Mortgage Interest Rate, net
of the Servicing Fee if the Unaffiliated Seller or an Originator, as applicable,
is the Servicer, plus the amount of any unreimbursed Servicing Advances made by
the Servicer with respect to such Mortgage Loan, which purchase price shall be
deposited in the Collection Account on the next succeeding Servicer 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 distribution to the extent such amounts have not yet been applied to
principal or interest on such Mortgage Loan (the "Loan Repurchase Price"). For
purposes of calculating the Available Funds, any Loan Repurchase Price or
Substitution Adjustment that is paid shall be deemed deposited in the
Distribution Account in the Due Period preceding such Servicer Remittance Date.
44
(d) Upon receipt by the Trustee of a certification of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt of the related Trustee's Mortgage File, and the deposit of the
amounts described above in the Collection Account (which certification shall be
in the form of Exhibit J hereto), the Trustee shall release to the Servicer for
release or cause the Collateral Agent to release to the Unaffiliated Seller the
related Trustee's Mortgage File and shall execute, without recourse, and deliver
such instruments of transfer furnished by the Unaffiliated Seller as may be
necessary to transfer such Mortgage Loan to the Unaffiliated Seller. The Trustee
shall notify the Certificate Insurer if the Unaffiliated Seller fails to
repurchase or substitute for a Mortgage Loan in accordance with the foregoing.
Section 2.07 Designations under REMIC Provisions; Designation of
Startup Day. (a) REMIC I will consist of all of the assets of the Trust Fund
(other than the Capitalized Interest Account, the Supplemental Interest Payment
Account and the Pre-Funding Account) and will be evidenced by the Class I-1
Interest and Class I-2 Interest (the "REMIC I Regular Interests") which will be
uncertificated and will represent the "regular interests" in REMIC I. REMIC II
will consist of the REMIC I Regular Interests and will be evidenced by the Class
II-A-1 Interest, Class II-A-2 Interest, Class II-A-3 Interest, Class II-A-4
Interest, Class II-A-5 Interest, Class II-Accrual Interest and II-A-IO Interest
(the "REMIC II Regular Interests)", which will be uncertificated and will
represent the "regular interests" in REMIC II. The Class R-I Interest and Class
R-II Interest will represent the sole class of residual interest in each of
REMIC I and REMIC II, respectively. The Trustee will hold the REMIC I Regular
Interests and REMIC II Regular Interests. The Master REMIC will consist of the
REMIC II Regular Interests and will be evidenced by the Class A-1 (other than
the Class A-1 Supplemental Interest Right), Class A-2, Class A-3, Class A-4,
Class A-5, Class A-IO (other than the Class A-IO Supplemental Interest Right),
and Class X Certificates (which will represent the "regular interests" in the
Master REMIC) and the Class R-III Interest as the single "residual interest" in
the Master REMIC. The Class R Certificates will represent the beneficial
ownership of the Class R-I, R-II and R-III Interests.
(i) The following table sets forth characteristics of the Certificates,
each of which, except for the Class R Certificates, is hereby
designated as a "regular interest" in the Master REMIC:
---------------------- ---------------------- ------------------
Original Certificate
Principal Pass-Through
Balance Rate
---------------------- ---------------------- ------------------
Class A-1(1) $107,527,000 (2)
---------------------- ---------------------- ------------------
Class A-2 $38,958,000 4.04%
---------------------- ---------------------- ------------------
Class A-3 $57,167,000 4.75%
---------------------- ---------------------- ------------------
Class A-4 $63,457,000 5.61%
---------------------- ---------------------- ------------------
Class A-5 $52,891,000 6.51% (3)
---------------------- ---------------------- ------------------
Class A-IO(4) (5) 10.00%
---------------------- ---------------------- ------------------
Class X (6) (7)
---------------------- ---------------------- ------------------
Class R (8) (8)
---------------------- ---------------------- ------------------
45
(1) The Class A-1 Certificates represent two separate investments:
(i) the Class A-1 Certificates without the Class A-1
Supplemental Interest Right (the "Class A-1 Regular Interest")
and (ii) the Class A-1 Supplemental Interest Right. Only the
first investment, the Class A-1 Regular Interest, will be
treated as a regular interest in the Master REMIC.
(2) Class A-1 Pass-Through Rate.
(3) 7.01% for each Distribution Date after the Clean-Up Call Date.
(4) The Class A-IO Certificates represent two separate
investments: (i) the Class A-IO Certificates without the Class
A-IO Supplemental Interest Right (the "Class A-IO Regular
Interest") and (ii) the Class A-IO Supplemental Interest
Right. Only the first investment, the Class A-IO Regular
Interest, will be treated as a regular interest in the Master
REMIC.
(5) On each Distribution Date up to and including the Distribution
Date in September, 2004, the Class A-IO Certificates will have
a notional balance equal to the notional balance of the Class
II A-IO Interest, and for each Distribution Date thereafter,
$0.
(6) The Class X Certificates will have a notional principal
balance equal to the sum of (i) the aggregate principal
balance of the Mortgage Loans and (ii) the Pre-Funding Amount
(net of Pre-Funding Earnings).
(7) The pass-through rate of the Class X Certificates will be the
excess of: (i) the REMIC II Net WAC over (ii) the product of:
(A) two and (B) the weighted average pass-through rate of the
REMIC II Regular Interests (other than the Class II-AIO
Interest), where the Class II-Accrual Interest is subject to a
cap equal to zero and the Class II-A-1, Class II-A-2, Class
II-A-3, Class II-A-4 and Class II-A-5 are each subject to a
cap equal to the pass-through rate on its Corresponding Class.
(8) The Class R Certificates will represent the beneficial
ownership of the R-I, R-II and R-III Interests.
46
(ii) The REMIC II Regular Interests shall have the following principal
balances, pass-through rates and Corresponding Classes of Certificates
in the manner set forth in the following table:
---------------- ------------------------------- ------------------- -----------------
Corresponding
REMIC Initial Interest Class of Master
Interests Balance Rate REMIC Interest
---------------- ------------------------------- ------------------- -----------------
II-A-1 50% of the Corresponding Class REMIC II Net WAC A-1
balance
---------------- ------------------------------- ------------------- -----------------
II-Accrual 50% of the Aggregate Principal REMIC II Net WAC N/A
Balance for the Mortgage Loans
plus 50% of the
Over-collateralization Amount
---------------- ------------------------------- ------------------- -----------------
II-A-2 50% of the Corresponding Class REMIC II Net WAC A-2
balance
---------------- ------------------------------- ------------------- -----------------
II-A-3 50% of the Corresponding Class REMIC II Net WAC A-3
balance
---------------- ------------------------------- ------------------- -----------------
II-A-4 50% of the Corresponding Class REMIC II Net WAC A-4
balance
---------------- ------------------------------- ------------------- -----------------
II-A-5 50% of the Corresponding Class REMIC II Net WAC A-5
balance
---------------- ------------------------------- ------------------- -----------------
II-A-IO a notional balance equal to the (1) A-IO
Class I-2 balance
---------------- ------------------------------- ------------------- -----------------
(1) On each Distribution Date up to and including the Distribution
Date in September 2004, a per annum rate equal to the excess
of (i) the Net WAC over (ii) the Net WAC minus 10.00%. On each
Distribution Date thereafter, 0%.
On each Distribution Date, 50% of the increase in the
Over-collateralization Amount will be payable as a reduction of the principal
balances of Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4 and Class
II-A-5 (in the order and amount of such reduction to the principal balance of
each classes' Corresponding Class) and will be accrued and added to the
principal balance of the Class II-Accrual Interest. On each Distribution Date,
the increase in principal balance of the Class II-Accrual Interest may not
exceed interest accruals for such Distribution Date for the Class II-Accrual
Interest. In the event that (i) 50% of the increase in the
Over-collateralization Amount exceeds (ii) interest accruals on the Class
II-Accrual Interest for such Distribution Date, the excess for such Distribution
Date (accumulated with all such excesses for all prior Distribution Dates) will
be added to any increase in the Over-collateralization Amount for purposes of
determining the amount of interest accrual on the Class II-Accrual Interest
payable as principal on the Class II-Accrual Interest on the next Distribution
Date pursuant to the first sentence of this paragraph.
All payments of scheduled principal and prepayments of
principal generated by the Mortgage Loans shall be allocated 50% to the Class
II-Accrual Interest and 50% to the Class II-A-1, Class II-A-2, Class II-A-3,
Class II-A-4 and Class II-A-5 (in the order and amount of reductions to the
principal balances of each classes' Corresponding Class) until paid in full.
Notwithstanding the above, principal payments allocated to the Class X
Certificates that result in the reduction of the Over-collateralization Amount
shall be allocated to the Class II-Accrual Interest (until paid in full).
Liquidated Loan Losses shall be applied so that after all distributions have
been made on each Distribution Date the principal balances of the Class II-A-1,
Class II-A-2, Class II-A-3, Class II-A-4 and Class II-A-5 are each equal to 50%
of the principal balance of its Corresponding Class and the Class II-Accrual
Interest is equal to the sum of (i) 50% of the Aggregate Principal Balance, (ii)
50% of the Over-collateralization Amount and (iii) 50% of the Pre-Funding Amount
(net of Pre-Funding Earnings).
47
(iii) The REMIC I Regular Interests shall have the following principal
balances, pass-through rates and Corresponding Classes of Certificates
in the manner set forth in the following table:
-------------- ------------------- ---------------------- ---------------
Corresponding
REMIC Initial Interest Class of Master
Interests Balance Rate REMIC Interest
-------------- ------------------- ---------------------- ---------------
I-1 $288,000,000 Net WAC N/A
-------------- ------------------- ---------------------- ---------------
I-2 $32,000,000 Net WAC N/A
-------------- ------------------- ---------------------- ---------------
On each Distribution Date, all Liquidated Loan Losses, prepayments,
payments of scheduled principal and distributions of amounts from the
Pre-Funding Account (other than Pre-Funding Earnings) will be allocated
to Class I-1 until such class is paid in full or eliminated by such
losses, thereafter all additional Liquidated Loan Losses, prepayments,
and payments of scheduled principal and distributions of amounts from
the Pre-Funding Account (other than Pre-Funding Earnings) will be
allocated to Class I-2.
(b) The Closing Date will be the "startup day" of each REMIC created
hereunder within the meaning of Section 860G(a)(9) of the Code.
Section 2.08 Execution of Certificates. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the delivery of the Trustee's
Mortgage Files relating thereto to it and, concurrently with such delivery, has
executed, authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, the Trustee's Mortgage Files and the other
assets included in the definition of Trust Fund, Certificates duly authenticated
by the Trustee in Authorized Denominations evidencing the entire ownership of
the Trust Fund.
Section 2.09 Application of Principal and Interest. In the event that
Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than the
Principal Balance of the related Mortgage Loan plus accrued interest thereon, or
any Mortgagor makes a partial payment of any Monthly Payment due on a Mortgage
Loan, such Net Liquidation Proceeds or partial payment shall be applied as
provided in the related Mortgage Note, and if not so provided, first to interest
accrued at the Mortgage Interest Rate and then to principal.
Section 2.10 Grant of Security Interest. (a) Except with respect to the
REMIC Provisions, it is the intention of the parties hereto that the conveyance
by the Depositor of the Trust Fund to the Trustee on behalf of the Trust shall
constitute a purchase and sale of such Trust Fund and not a loan. In the event,
however, that a court of competent jurisdiction were to hold that the
transaction evidenced hereby constitutes a loan and not a purchase and sale, it
is the intention of the parties hereto that this Agreement shall constitute a
security agreement under applicable law, and that the Depositor shall be deemed
to have granted to the Trustee, on behalf of the Trust, a first priority
perfected security interest in all of the Depositor's right, title and interest
in, to and under the Trust Fund. The conveyance by the Depositor of the Trust
Fund to the Trustee on behalf of the Trust shall not constitute and is not
intended to result in an assumption by the Trustee or any Certificateholder of
any obligation of the Unaffiliated Seller or any other Person in connection with
the Trust Fund.
48
(b) The Depositor and the Servicer shall take no action inconsistent
with the Trust's ownership of the Trust Fund and each shall indicate or shall
cause to be indicated in its records and records held on its behalf that
ownership of each Mortgage Loan and the assets in the Trust Fund are held by the
Trustee on behalf of the Trust. In addition, the Depositor and the Servicer
shall respond to any inquiries from third parties with respect to ownership of a
Mortgage Loan or any other asset in the Trust Fund by stating that it is not the
owner of such asset and that ownership of such Mortgage Loan or other Trust Fund
asset is held by the Trustee on behalf of the Trust.
Section 2.11 Further Action Evidencing Assignments. (a) The Servicer
agrees that, from time to time, at its expense, it shall cause the Unaffiliated
Seller (and the Depositor on behalf of itself also agrees that it shall),
promptly to execute and deliver all further instruments and documents, and take
all further action, that may be necessary or appropriate, or that the Servicer,
the Certificate Insurer (absent a Certificate Insurer Default), the Collateral
Agent or the Trustee may reasonably request, in order to perfect, protect or
more fully evidence the transfer of ownership of the Trust Fund or to enable the
Trustee to exercise or enforce any of its rights hereunder. Without limiting the
generality of the foregoing, the Servicer and the Depositor will, upon the
request of the Servicer, the Certificate Insurer (absent a Certificate Insurer
Default), the Collateral Agent or the Trustee, execute and file (or cause to be
executed and filed) such real estate filings, financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate.
(b) The Depositor hereby grants to the Servicer and the Trustee powers
of attorney to execute all documents on its behalf under this Agreement and the
Unaffiliated Seller's Agreement as may be necessary or desirable to effectuate
the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Servicer and the Unaffiliated
Seller. The Servicer and the Unaffiliated Seller hereby represent and warrant to
the Collateral Agent, the Trustee, the Depositor, the Certificate Insurer and
the Certificateholders as of the Closing Date and during the term of this
Agreement that:
(a) Each of the Unaffiliated Seller, the Servicer and the Subservicers
is a corporation duly organized, validly existing and in good standing under the
laws of their respective states of incorporation and has the corporate power to
own its assets and to transact the business in which it is currently engaged.
Each of the Unaffiliated Seller, the Servicer and the Subservicers is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it or the performance of its obligations hereunder
requires such qualification and in which the failure so to qualify could
reasonably be expected to have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Unaffiliated
Seller, the Servicer or the Subservicers or the performance of their respective
obligations hereunder;
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(b) The Unaffiliated Seller and the Servicer each has the power and
authority to make, execute, deliver and perform this Agreement and all of the
transactions contemplated under this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Unaffiliated Seller and the Servicer,
enforceable in accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting the rights of creditors generally and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(c) Neither the Unaffiliated Seller nor the Servicer is required to
obtain the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency which consent already has not been obtained in
connection with the execution, delivery, performance, validity or enforceability
of this Agreement, except such as have been obtained prior to the Closing Date;
(d) The execution, delivery and performance of this Agreement by the
Unaffiliated Seller and the Servicer will not violate any provision of any
existing law or regulation or any order or decree of any court or the Articles
of Incorporation or Bylaws of the Unaffiliated Seller or the Servicer,
respectively, or constitute a breach of any mortgage, indenture, contract or
other agreement to which the Unaffiliated Seller or the Servicer, respectively,
is a party or by which it may be bound;
(e) There is no action, suit, proceeding or investigation pending or
threatened against the Servicer, the Unaffiliated Seller or the Subservicers
which, either in any one instance or in the aggregate, is, likely to result in
any material adverse change in the business, operations, financial condition,
properties, or assets of the Servicer, the Unaffiliated Seller or the
Subservicers, or in any material impairment of the right or ability of any of
them to carry on its business substantially as now conducted, or in any material
liability on the part of any of them, or which would draw into question the
validity of this Agreement, the Certificates, or the Mortgage Loans or of any
action taken or to be taken in connection with the obligations of the
Unaffiliated Seller or the Servicer contemplated herein or therein, or which
would be likely to impair materially the ability of the Unaffiliated Seller or
the Servicer to perform its obligations hereunder;
(f) Neither this Agreement nor any statement, report, or other document
furnished or to be furnished by the Servicer, the Unaffiliated Seller or the
Subservicer pursuant to this Agreement, or the Insurance and Indemnity Agreement
or in connection with the transactions contemplated hereby, including, without
limitation, the sale or placement of the Certificates, contains any untrue
statement of fact provided by or on behalf of the Unaffiliated Seller or the
Servicer or omits to state a fact necessary to make the statements provided by
or on behalf of the Unaffiliated Seller or the Servicer contained herein or
therein not misleading;
(g) Neither the Unaffiliated Seller nor the Servicer believes, nor does
either have any reason or cause to believe, that it cannot perform each and
every covenant contained in this Agreement;
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(h) The transfer, assignment, and conveyance of the Mortgage Loans by
the Unaffiliated Seller pursuant to this Agreement is not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(i) The Unaffiliated Seller is solvent and will not as a result of this
Agreement and the undertakings of the Unaffiliated Seller hereunder be rendered
insolvent;
(j) None of the Unaffiliated Seller, the Servicer or the Subservicers
is an "investment company" or a company "controlled by an investment company,"
within the meaning of the Investment Company Act of 1940, as amended; and
(k) Immediately prior to the transfer and assignment by the Depositor
to the Trustee, the Depositor had good title to, and was the sole owner of each
Mortgage Loan, free of any interest of any other Person, and the Depositor has
transferred all right, title and interest in each Mortgage Loan to the Trustee.
The transfer of the Mortgage Note and the Mortgage as and in the manner
contemplated by this Agreement is sufficient either (i) fully to transfer to the
Trustee, for the benefit of the Certificateholders and the Certificate Insurer,
all right, title, and interest of the Depositor thereto as note holder and
mortgagee or (ii) to grant to the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, the security interest referred
to in Section 2.10 hereof. The Mortgage has been duly assigned and the Mortgage
Note has been duly endorsed. The Assignment of Mortgage delivered to the Trustee
pursuant to Section 2.05(a)(iv) is in recordable form and is acceptable for
recording under the laws of the applicable jurisdiction. The endorsement of the
Mortgage Note, the delivery to the Trustee of the endorsed Mortgage Note, and
such Assignment of Mortgage, and the delivery of such Assignment of Mortgage for
recording to, and the due recording of such Assignment of Mortgage in, the
appropriate public recording office in the jurisdiction in which the Mortgaged
Property is located are sufficient to permit the Trustee to avail itself of all
protection available under applicable law against the claims of any present or
future creditors of the Depositor, and are sufficient to prevent any other sale,
transfer, assignment, pledge, or hypothecation of the Mortgage Note and Mortgage
by the Depositor from being enforceable.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.01 shall survive the
delivery of the respective Mortgage Files to the Collateral Agent on behalf of
the Trustee or to a custodian, as the case may be, and inure to the benefit of
the Trustee and the Certificate Insurer.
Section 3.02 Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Collateral Agent, the Servicer, the Trustee, the Unaffiliated Seller, the
Certificate Insurer and the Certificateholders that as of the date of this
Agreement or as of such date specifically provided herein:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement;
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(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the
Servicer and the Trustee, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except as have been made on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the Depositor or its subsidiaries; or (iii)
results in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement;
(g) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency that may materially and adversely affect its performance
hereunder; and
(h) Immediately prior to the transfer and assignment by the Depositor
to the Trustee, the Depositor had good title to, and was the sole owner of each
Mortgage Loan, free of any interest of any other Person, and the Depositor has
transferred all right, title and interest in each Mortgage Loan to the Trustee.
The transfer of the Mortgage Note and the Mortgage as and in the manner
contemplated by this Agreement is sufficient either (i) fully to transfer to the
Trustee, for the benefit of the Certificateholders and the Certificate Insurer,
all right, title, and interest of the Depositor thereto as note holder and
mortgagee or (ii) to grant to the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, the security interest referred
to in Section 2.10 hereof. The Mortgage has been duly assigned and the Mortgage
Note has been duly endorsed. The Assignment of Mortgage delivered to the
Collateral Agent on behalf of the Trustee pursuant to Section 2.05(a)(iv) is in
recordable form and is acceptable for recording under the laws of the applicable
jurisdiction. The endorsement of the Mortgage Note, the delivery to the
Collateral Agent on behalf of the Trustee of the endorsed Mortgage Note, and
such Assignment of Mortgage, and the delivery of such Assignment of Mortgage for
recording to, and the due recording of such Assignment of Mortgage in, the
appropriate public recording office in the jurisdiction in which the Mortgaged
Property is located are sufficient to permit the Trustee to avail itself of all
protection available under applicable law against the claims of any present or
future creditors of the Depositor, and are sufficient to prevent any other sale,
transfer, assignment, pledge, or hypothecation of the Mortgage Note and Mortgage
by the Depositor from being enforceable.
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It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.02 shall survive delivery
of the respective Mortgage Files to the Collateral Agent on behalf of the
Trustee or to a custodian, as the case may be, and shall inure to the benefit of
the Trustee and the Certificate Insurer.
Section 3.03 Purchase and Substitution. (a) It is understood and agreed
that the representations and warranties set forth in Sections 3.01, 3.02 and
3.03 of the Unaffiliated Seller's Agreement shall survive delivery of the
Certificates to the Certificateholders. Pursuant to the Unaffiliated Seller's
Agreement, with respect to any representation or warranty contained in Sections
3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement that is made to the
best of the Unaffiliated Seller's knowledge, the Unaffiliated Seller shall be
deemed to have knowledge of all facts and circumstances in existence as of such
date and, if it is discovered by the Servicer, any Subservicer, the Trustee, the
Certificate Insurer or any Certificateholder that the substance of such
representation and warranty was inaccurate as of the Closing Date and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan or the interests of the Trustee or the Certificate Insurer with respect
thereto, then notwithstanding the Unaffiliated Seller's lack of knowledge with
respect to the inaccuracy at the time the representation or warranty was made,
such inaccuracy shall be deemed a breach of the applicable representation or
warranty. Upon discovery by the Unaffiliated Seller, the Servicer, any
Subservicer, the Trustee or the Certificate Insurer of a breach of any of such
representations and warranties which materially and adversely affects the value
of the Mortgage Loans or the interest of the Trustee, the Certificateholders or
the Certificate Insurer, or which materially and adversely affects the interests
of the Trustee, the Certificate Insurer or the Certificateholders in the related
Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan (notwithstanding that such representation and warranty
was made to the Unaffiliated Seller's best knowledge), the party discovering
such breach shall promptly (and in any event within five (5) Business Days of
the discovery) give written notice to the others. Subject to the last paragraph
of this Section 3.03, within sixty (60) days of the earlier of its discovery or
its receipt of notice of any breach of a representation or warranty, pursuant to
the Unaffiliated Seller's Agreement, the Servicer shall, or shall cause the
Unaffiliated Seller or an Originator to (a) promptly cure such breach in all
material respects, or (b) purchase such Mortgage Loan on the next succeeding
Servicer Remittance Date, by depositing an amount equal to the Loan Repurchase
Price into the Collection Account, or (c) remove such Mortgage Loan from the
Trust Fund (in which case it shall become a Deleted Mortgage Loan) and
substitute one or more Qualified Substitute Mortgage Loans; provided, that, such
substitution is effected not later than the date which is two years after the
Startup Day or at such later date, if the Trustee and the Certificate Insurer
receive an Opinion of Counsel to the effect set forth below in this Section. In
addition, pursuant to the Unaffiliated Seller's Agreement, the Unaffiliated
Seller and the related Originator shall be obligated to indemnify the Trustee,
the Certificateholders and the Certificate Insurer for any third party claims
arising out of a breach by the Unaffiliated Seller of representations or
warranties regarding the Mortgage Loans. Pursuant to the Unaffiliated Seller's
Agreement any such substitution shall be accompanied by payment by the
Unaffiliated Seller of the Substitution Adjustment, if any, to be deposited in
the Collection Account.
53
(b) As to any Deleted Mortgage Loan for which the Unaffiliated Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the Servicer shall
cause the Unaffiliated Seller or an Originator, as applicable, to effect such
substitution by delivering to the Collateral Agent on behalf of the Trustee a
certification in the form attached hereto as Exhibit H, executed by a Servicing
Officer and shall cause the Unaffiliated Seller or an Originator, as applicable,
to deliver the documents described in Sections 2.05(a)(i)-(vi) for such
Qualified Substitute Mortgage Loan or Loans to the Collateral Agent on behalf of
the Trustee.
(c) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Loans
after the date of such substitution. Monthly Payments received with respect to a
Qualified Substitute Mortgage Loan or Loans on or before the date of
substitution will be retained by the Unaffiliated Seller. The Trust Fund will
own all payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Unaffiliated Seller shall thereafter be entitled to retain
all amounts subsequently received in respect of such Deleted Mortgage Loan. The
Servicer shall give written notice to the Trustee and the Certificate Insurer
that such substitution has taken place and shall amend the Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of
this Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans. Upon such substitution, such Qualified Substitute Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects.
(d) It is understood and agreed that the obligations of the
Unaffiliated Seller and the related Originator set forth in Sections 2.06 and
3.05 of the Unaffiliated Seller's Agreement to, and the Servicer's obligation to
cause the Unaffiliated Seller and the Originator to cure, purchase or substitute
for a defective Mortgage Loan, or to indemnify as described in clause (a) above,
constitute the sole remedies of the Trustee, the Certificate Insurer and the
Certificateholders respecting a breach of the representations and warranties of
the Unaffiliated Seller and the Originators set forth in Sections 3.01, 3.02 and
3.03 of the Unaffiliated Seller's Agreement. The Trustee shall give prompt
written notice to the Certificate Insurer and the Rating Agencies of any
repurchase or substitution made pursuant to this Section 3.03 or Section
2.06(b).
(e) Upon discovery by the Servicer, the Trustee, the Certificate
Insurer or any Certificateholder that any Mortgage Loan does not constitute a
Qualified Mortgage, the party discovering such fact shall promptly (and in any
event within five (5) Business Days of the discovery) give written notice
thereof to the other parties. In connection therewith, pursuant to the
Unaffiliated Seller's Agreement, the Unaffiliated Seller shall be required to
repurchase or substitute a Qualified Substitute Mortgage Loan for the affected
Mortgage Loan within sixty (60) days of the earlier of such discovery by any of
the foregoing parties, or the Trustee's or the Unaffiliated Seller's receipt of
notice, in the same manner as it would a Mortgage Loan for a breach of
representation or warranty contained in Sections 3.01, 3.02 or 3.03 of the
Unaffiliated Seller's Agreement. The Trustee shall reconvey to the Unaffiliated
Seller the Mortgage Loan to be released pursuant hereto in the same manner, and
on the same terms and conditions, as it would a Mortgage Loan repurchased for
breach of a representation or warranty contained in Sections 3.01, 3.02 or 3.03
of the Unaffiliated Seller's Agreement.
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(f) Pursuant to Section 3.05(k) of the Unaffiliated Seller's Agreement
the Unaffiliated Seller and each of the Originators shall be jointly and
severally responsible for any repurchase, cure or substitution obligation of the
Unaffiliated Seller or any of the Originators under this Agreement or the
Unaffiliated Seller's Agreement.
Section 3.04 Representations, Warranties and Covenants of the
Collateral Agent. The Collateral Agent hereby represents, warrants and covenants
to the Trustee, the Servicer, the Certificate Insurer, the Certificateholders,
the Unaffiliated Seller and the Depositor that as of the date of this Agreement
or as of such date specifically provided herein:
(a) The Collateral Agent is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York;
(b) The Collateral Agent has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement; and
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Collateral Agent, all requisite corporate action having been
taken, and, assuming the due authorization, execution and delivery hereof by the
other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Collateral Agent, enforceable against the Collateral
Agent in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.04 shall survive delivery
of the respective Trustee's Mortgage Files to the Collateral Agent, on behalf of
the Trustee or to another custodian, as the case may be, and shall inure to the
benefit of the Trustee and the Certificate Insurer.
Section 3.05 Representations, Warranties and Covenants of the Trustee.
The Trustee hereby represents, warrants and covenants to the Collateral Agent,
the Servicer, the Certificate Insurer, the Certificateholders, the Unaffiliated
Seller and the Depositor that as of the date of this Agreement or as of such
date specifically provided herein:
(a) The Trustee is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of New York;
55
(b) The Trustee has the corporate power and authority to execute,
deliver and perform, and to enter into and consummate transactions contemplated
by this Agreement; and
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Trustee, all requisite corporate action having been taken, and,
assuming the due authorization, execution and delivery hereof by the other
parties hereto, constitutes or will constitute the legal, valid and binding
agreement of the Trustee, enforceable against the Trustee in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.05 shall survive delivery
of the respective Trustee's Mortgage Files to the Collateral Agent, on behalf of
the Trustee or to another custodian, as the case may be and shall inure to the
benefit of the Certificate Insurer.
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates. The Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates shall be substantially in the form annexed
hereto of Exhibit A and the Class A-IO, Class X and Class R Certificates shall
be substantially in the forms annexed hereto as Exhibits B, C and D,
respectively. All Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer and authenticated by
the manual or facsimile signature of an authorized officer. Certificates bearing
the signatures of individuals who were at the time of the execution of the
Certificates the authorized officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Certificates or did not hold such offices
at the date of such Certificates. All Certificates issued hereunder shall be
dated the date of their authentication.
Section 4.02 Registration of Transfer and Exchange of Certificates. (a)
The Trustee, as registrar, shall cause to be kept a register (the "Certificate
Register") in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and the
registration of transfer of Certificates. The Trustee is hereby appointed
registrar for the purpose of registering Certificates and transfers of
Certificates as herein provided. The Certificate Insurer shall be entitled to
inspect and copy the Certificate Register and the records of the Trustee
relating to the Certificates during normal business hours upon reasonable
notice.
(b) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
56
(c) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made to a Holder for any registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Certificates; any
other expenses in connection with such transfer or exchange shall be an expense
of the Trust.
(e) It is intended that the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates and the Class A-IO Certificates be registered so as to participate
in a global book-entry system with the Depository, as set forth herein. The
Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class
A-4 Certificates, Class A-5 Certificates and the Class A-IO Certificates shall,
except as otherwise provided in the next paragraph, be initially issued in the
form of a single fully registered Certificate with a denomination equal to the
Original Certificate Principal Balance or Class A-IO Notional Amount,
respectively. Upon initial issuance, the ownership of each such Class A-1
Certificate, Class A-2 Certificate, Class A-3 Certificate, Class A-4
Certificate, Class A-5 Certificate and Class A-IO Certificate shall be
registered in the Certificate Register in the name of Cede & Co., or any
successor thereto, as nominee for the Depository. The Depositor and the Trustee
are hereby authorized to execute and deliver the Representation Letter with the
Depository. With respect to the Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates, Class A-4 Certificates, Class A-5 Certificates and Class
A-IO Certificates registered in the Certificate Register in the name of Cede &
Co., as nominee of the Depository, the Depositor, the Unaffiliated Seller, the
Servicer, the Trustee and the Certificate Insurer shall have no responsibility
or obligation to Direct or Indirect Participants or beneficial owners for which
the Depository holds Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates, Class A-5 Certificates and Class A-IO
Certificates from time to time as a Depository. Without limiting the immediately
preceding sentence, the Depositor, the Unaffiliated Seller, the Servicer, the
Trustee and the Certificate Insurer shall have no responsibility or obligation
with respect to (i) the accuracy of the records of the Depository, Cede & Co.,
or any Direct or Indirect Participant with respect to any Ownership Interest,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a Certificateholder, of any notice with respect to the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates, Class A-5 Certificates and Class A-IO Certificates or (iii) the
payment to any Direct or Indirect Participant or any other Person, other than a
Certificateholder, of any amount with respect to any distribution of principal
or interest on the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates, Class A-5 Certificates or Class A-IO
Certificates. No Person other than a Certificateholder shall receive a
certificate evidencing such Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates, Class A-4 Certificates, Class A-5 Certificates or Class
A-IO Certificate. Upon delivery by the Depository to the Trustee of written
notice to the effect that the Depository has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions hereof with
respect to the payment of interest by the mailing of checks or drafts to the
Certificateholders appearing as Certificateholders at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
57
(f) In the event that (i) the Depository or the Servicer advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class
A-4 Certificates, Class A-5 Certificates or Class A-IO Certificates and the
Servicer or the Depository is unable to locate a qualified successor or (ii) the
Trustee at its sole option elects to terminate the book-entry system through the
Depository, the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates, Class A-5 Certificates and Class A-IO
Certificates shall no longer be restricted to being registered in the
Certificate Register in the name of Cede & Co. (or a successor nominee) as
nominee of the Depository. At that time, the Servicer may determine that the
Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class
A-4 Certificates, Class A-5 Certificates and Class A-IO Certificates shall be
registered in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable to the Servicer, or such
depository's agent or designee but, if the Servicer does not select such
alternative global book-entry system, then the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates and Class A-IO Certificates may be registered in whatever name or
names Certificateholders transferring Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates and Class A-IO Certificates shall designate, in accordance with the
provisions hereof; provided, however, that any such reregistration shall be at
the expense of the Servicer.
(g) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A-1 Certificate, Class A-2 Certificate, Class A-3
Certificate, Class A-4 Certificate, Class A-5 Certificates or Class A-IO
Certificate is registered in the name of Cede & Co., as nominee of the
Depository, all distributions of principal or interest on such Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates, Class A-5 Certificates or Class A-IO Certificates, as the case may
be, and all notices with respect to such Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates or Class A-IO Certificates, as the case may be, shall be made and
given, respectively, in the manner provided in the Representation Letter.
(h) No transfer, sale, pledge or other disposition of any Class R or
Class X Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "1933 Act") and effective registration or qualification under applicable
state securities laws or "Blue Sky" laws, or is made in a transaction that does
not require such registration or qualification. In the event that a transfer of
a Certificate is to be made in reliance upon an exemption from the 1933 Act, the
Trustee or the Certificate Registrar shall require, in order to assure
compliance with the 1933 Act, that the Certificateholder desiring to effect such
disposition and such Certificateholder's prospective transferee each certify to
the Trustee or the Certificate Registrar in writing the facts surrounding such
disposition substantially in the form of Exhibit K hereto (with respect to a
transfer made pursuant to Rule 144A promulgated under the ▇▇▇▇ ▇▇▇) and may,
unless such transfer occurs more than three years after the Closing Date or is
made pursuant to Rule 144A promulgated under the 1933 Act, require an Opinion of
Counsel satisfactory to the Trustee or Certificate Registrar as the case may be,
that such transfer may be made pursuant to an exemption from the 1933 Act, which
Opinion of Counsel shall be at the expense of the Certificateholder. None of the
Servicer, the Depositor, the Unaffiliated Seller or the Trustee is obligated
under this Agreement to register Certificates under the 1933 Act, as amended or
any other securities law or to take any action not otherwise required under this
Agreement to permit the transfer of the Class R or Class X Certificates without
such registration or qualification. Every Certificate presented or surrendered
for registration of transfer or exchange shall be accompanied by a written
instrument of transfer substantially in the form of Exhibit L hereto, or such
other endorsement or written instrument of transfer as is satisfactory to the
Trustee, duly executed by the Holder thereof or his attorney duly authorized in
writing, together with wiring instructions, if applicable, in the form of
Exhibit P.
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(i) Any such Certificateholder desiring to effect such transfer shall,
and does hereby agree to, indemnify the Trustee, the Depositor, the Unaffiliated
Seller, the Servicer and the Certificate Insurer against any liability that may
result if the transfer is not exempt or is not made in accordance with such
applicable federal and state laws. Promptly after receipt by an indemnified
party under this paragraph of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this paragraph. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to appoint counsel reasonably satisfactory to such indemnified party to
represent the indemnified party in such action; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such action
and approval by the indemnified party of such counsel, the indemnifying party
will not be liable to such indemnified party under this paragraph for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso of the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel for any indemnified party),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. Under no circumstances shall the indemnified party enter
into a settlement agreement with respect to any lawsuit, claim or other
proceeding without the prior written consent of the indemnifying party.
(j) Subject to the restrictions set forth in this Agreement, upon
surrender for registration of transfer of any Certificate at the office or
agency of the Trustee located in New York, New York, the Trustee shall execute,
authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and Percentage Interest and
dated the date of authentication by the Trustee. At the option of the
Certificateholders, Certificates may be exchanged for other Certificates of
Authorized Denominations of a like aggregate Percentage Interest, upon surrender
of the Certificates to be exchanged at such office. Whenever any Certificates
are so surrendered for exchange, the Trustee shall execute, authenticate and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. No service charge shall be made for any transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be cancelled and destroyed by the
Trustee in accordance with the Trustee's standard procedures.
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(k) No transfer of a Class A-1 Certificate, Class A-2 Certificate,
Class A-3 Certificate, Class A-4 Certificate, Class A-5 Certificate or Class
A-IO Certificate shall be made to the Unaffiliated Seller or, to the actual
knowledge of a Responsible Officer of the Trustee, to any of the Unaffiliated
Seller's Affiliates, successors or assigns.
(l) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Servicer or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under clause (viii) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and a
United States Person and shall promptly notify the Trustee of
any change or impending change in its status as either a
United States Person or a Permitted Transferee.
(ii) In connection with any proposed Transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall require
delivery to it of, and shall not register the Transfer of any
Class R Certificate until its receipt of, an affidavit and
agreement (a "Transfer Affidavit and Agreement") attached
hereto as Exhibit I from the proposed Transferee, in form and
substance satisfactory to the Trustee, representing and
warranting, among other things, that such Transferee is a
Permitted Transferee, that it is not acquiring its Ownership
Interest in the Class R Certificate that is the subject of the
proposed Transfer as a nominee, trustee or agent for any
Person that is not a Permitted Transferee, that as long as it
retains its Ownership Interest in a Class R Certificate, it
will endeavor to remain a Permitted Transferee, and that it
has reviewed the provisions of this Section 4.02(l) and agrees
to be bound by them.
(iii) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (ii) above, if
a Responsible Officer of the Trustee has actual knowledge that
the proposed Transferee is not a Permitted Transferee, no
Transfer of an Ownership Interest in a Class R Certificate to
such proposed Transferee shall be effected.
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(iv) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (x) to require a Transfer
Affidavit and Agreement from any other Person to whom such
Person attempts to transfer its Ownership Interest in a Class
R Certificate and (y) not to transfer its Ownership Interest
unless it provides a certificate (attached hereto as Exhibit
J) to the Trustee stating that, among other things, it has no
actual knowledge that such other Person is not a Permitted
Transferee.
(v) Each Person holding or acquiring an Ownership Interest in a
Class R Certificate, by purchasing an Ownership Interest in
such Certificate, agrees to give the Trustee written notice
that it is a "pass-through interest holder" within the meaning
of temporary Treasury regulation Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring an Ownership Interest in a Class R
Certificate, if it is, or is holding an Ownership Interest in
a Class R Certificate on behalf of, a "pass-through interest
holder".
(vi) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer
Affidavit and Agreement and all of such other documents as
shall have been reasonably required by the Trustee as a
condition to such registration. In addition, no Transfer of a
Class R Certificate shall be made unless the Trustee shall
have received a representation letter from the Transferee of
such Certificate to the effect that such Transferee is a
United States Person and is not a "disqualified organization"
(as defined in Section 860E(e)(5) of the Code).
(vii) Any attempted or purported transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of
this Section 4.02 shall be absolutely null and void and shall
vest no rights in the purported transferee. If any purported
transferee shall become a Holder of a Class R Certificate in
violation of the provisions of this Section 4.02, then the
last preceding Permitted Transferee shall be restored to all
rights as Holder thereof retroactive to the date of
registration of transfer of such Class R Certificate. The
Trustee shall notify the Servicer upon receipt of written
notice or discovery by a Responsible Officer that the
registration of transfer of a Class R Certificate was not in
fact permitted by this Section 4.02. Knowledge shall not be
imputed to the Trustee with respect to an impermissible
transfer in the absence of such a written notice or discovery
by a Responsible Officer. The Trustee shall be under no
liability to any Person for any registration of transfer of a
Class R Certificate that is in fact not permitted by this
Section 4.02 or for making any payments due on such
Certificate to the Holder thereof or taking any other action
with respect to such Holder under the provisions of this
Agreement so long as the transfer was registered after receipt
of the related Transfer Affidavit and Agreement. The Trustee
shall be entitled, but not obligated to, recover from any
Holder of a Class R Certificate that was in fact not a
Permitted Transferee at the time it became a Holder or, at
such subsequent time as it became other than a Permitted
Transferee, all payments made on such Class R Certificate at
and after either such time. Any such payments so recovered by
the Trustee shall be paid and delivered by the Trustee to the
last preceding Holder of such Certificate.
(viii) If any purported transferee shall become a Holder of a Class R
Certificate in violation of the restrictions in this Section
4.02, then the Servicer or its designee shall have the right,
without notice to the Holder or any prior Holder of such Class
R Certificate, to sell such Class R Certificate to a purchaser
selected by the Servicer or its designee on such reasonable
terms as the Servicer or its designee may choose. Such
purchaser may be the Servicer itself or any Affiliate of the
Servicer. The proceeds of such sale, net of commissions,
expenses and taxes due, if any, will be remitted by the
Servicer to the last preceding purported transferee of such
Class R Certificate, except that in the event that the
Servicer determines that the Holder or any prior Holder of
such Class R Certificate may be liable for any amount due
under this Section 4.02 or any other provision of this
Agreement, the Servicer may withhold a corresponding amount
from such remittance as security for such claim. The terms and
conditions of any sale under this clause (viii) shall be
determined in the sole discretion of the Servicer or its
designee, and it shall not be liable to any Person having an
Ownership Interest in a Class R Certificate as a result of its
exercise of such discretion.
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(m) The provisions of Section 4.02(l) may be modified, added to or
eliminated, provided that there shall have been delivered to the Trustee and the
Certificate Insurer an Opinion of Counsel to the effect that such modification
of, addition to or elimination of such provisions will not cause any of the
REMICs included in the Trust Fund to cease to qualify as a REMIC and will not
cause (x) any of the REMICs included in the Trust Fund to be subject to an
entity-level tax caused by the Transfer of any Ownership Interest in a Class R
Certificate to a Person that is not a Permitted Transferee or (y) a Person other
than the prospective transferee to be subject to a REMIC-related tax caused by
the Transfer of an Ownership Interest in a Class R Certificate to a Person that
is not a Permitted Transferee.
(n) The Trustee and the Servicer shall require the prospective
transferee of any Class R or Class X Certificate to certify (in the form of
Exhibit M hereto) that it is not a pension or benefit plan or individual
retirement arrangement that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or to Section 4975 of the Code (a
"Plan") or an entity whose underlying assets are deemed to be assets of a Plan
by reason of such plan's or arrangement's investment in the entity, as
determined under U.S. Department of Labor Regulations 29 C.F.R. ss. 2510.3-101
or otherwise.
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Servicer, the Certificate Insurer
and the Trustee such security or indemnity as may reasonably be required by each
of them to save each of them harmless, then, in the absence of notice to the
Servicer and the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and Percentage Interest, but bearing a number not
contemporaneously outstanding. Upon the issuance of any new Certificate under
this Section 4.03, the Servicer and the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and their fees and expenses connected therewith. Any duplicate
Certificate issued pursuant to this Section 4.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Certificate shall be
found at any time.
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Section 4.04 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer and subject to the provisions of
Section 4.02 and Article X, the Servicer, the Depositor, the Unaffiliated
Seller, the Certificate Insurer and the Trustee may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving remittances pursuant to Section 6.05 and for all other
purposes whatsoever, and the Servicer, the Depositor, the Unaffiliated Seller,
the Certificate Insurer and the Trustee shall not be affected by notice to the
contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 REMIC Matters; The Servicer. (a) The parties intend that
the Trust Fund formed hereunder shall, except for the Capitalized Interest
Account, the Supplemental Interest Payment Account and the Pre-Funding Account,
constitute, and that the affairs of the Trust Fund shall be conducted and this
Agreement shall be construed so as to qualify the Trust Fund as, three separate
"real estate mortgage investment conduits" as defined in and in accordance with
the REMIC Provisions. In furtherance of such intention, the Servicer covenants
and agrees that it shall, to the extent permitted by applicable law, act as
agent (and the Servicer is hereby appointed to act as agent) on behalf of the
Trust Fund and that in such capacity it shall: (a) prepare and file, or cause to
be prepared and filed, all required federal, state and local tax returns for
each REMIC using a calendar year as the taxable year for the Trust Fund when and
as required by the REMIC Provisions and other applicable federal, state and
local income tax laws; (b) maintain or cause the maintenance of the books of
each REMIC on the accrual method of accounting; (c) make elections, on behalf of
each REMIC, to be treated as a REMIC on the federal tax return of the Trust Fund
for its first taxable year, in accordance with the REMIC Provisions; provided,
however, that such election shall not be made with respect to the Capitalized
Interest Account, the Supplemental Interest Payment Account, and the Pre-Funding
Account and shall specifically exclude the Capitalized Interest Account, the
Supplemental Interest Payment Account, and the Pre-Funding Account from the
assets for which a REMIC election is made; (d) prepare and forward, or cause to
be prepared and forwarded, to the Certificateholders all information reports as
and when required to be provided to them in accordance with the REMIC
Provisions; (e) conduct the affairs of each REMIC at all times that any
Certificates are outstanding so as to maintain the status thereof as a REMIC
under the REMIC Provisions; and (f) not knowingly or intentionally take any
action or omit to take any action that would cause the termination of the REMIC
status of any REMIC created hereunder.
(b) The Capitalized Interest Account is an "outside reserve fund"
within the meaning of Treasury Regulations Section 1.860G-2(h) and is not an
asset of the REMIC. The Unaffiliated Seller is the owner of the Capitalized
Interest Account for purposes of Treasury Regulations Section 1.860G-2(h). For
all federal income tax purposes, amounts transferred by the REMIC to the
Capitalized Interest Account, if any, will be treated as amounts distributed by
the REMIC to the Unaffiliated Seller.
(c) In the event that any income tax (including any tax with regard to
"prohibited transactions" of any REMIC created hereunder as defined in Section
860F of the Code) is imposed on the Trust Fund, such tax shall be charged
against amounts otherwise distributable to the Holders of the Class R or Class X
Certificates on a pro rata basis to the extent hereinafter provided. In the
event that any such tax shall be due and owing at a time when amounts otherwise
distributable to the Holders of the Class R or Class X Certificates are not
available, the Servicer shall pay such tax from its own funds. In such event,
and upon receipt of written instruction from the Servicer, the Trustee is hereby
authorized to retain from amounts otherwise distributable to the Holders of the
Class R and Class X Certificates on any Distribution Date sufficient funds to
reimburse the Servicer for the payment of such tax (but such obligation shall
not prevent the Trustee or any other appropriate Person from contesting any such
tax in appropriate proceedings and shall prevent the Trustee from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings).
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(d) The Servicer shall service and administer the Mortgage Loans in
accordance with the Accepted Servicing Practices and shall have full power and
authority to do any and all things not inconsistent therewith in connection with
such servicing and administration which it may deem necessary or desirable in
order to maximize collections on the Mortgage Loans, subject to the limitations
set forth in this Agreement. The Trustee shall furnish the Servicer with any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder. Without
limiting the generality of the foregoing, the Servicer shall continue, and is
hereby authorized and empowered by the Trustee, to execute and deliver, on
behalf of itself, the Certificateholders and the Trustee or any of them, any and
all instruments of satisfaction or cancellation, or of partial or full release
or discharge and all other comparable instruments, and to effect such
modifications, waivers, indulgences and other like matters as are in its
judgment necessary or desirable, with respect to the Mortgage Loans and the
Mortgaged Properties and the servicing and administration thereof in order to
maximize collections on the Mortgage Loans subject to the limitations set forth
in this Agreement. The Servicer shall notify the Trustee of any such waiver,
release, discharge, modification, indulgence or other such matter by delivering
to the Trustee an Officer's Certificate certifying that such agreement is in
compliance with this Section 5.01(b) together with the original copy of any
written agreement or other document executed in connection therewith, all of
which written agreements or documents shall, for all purposes, be considered a
part of the related Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Notwithstanding anything in this
Agreement to the contrary, the Servicer shall not permit any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate,
reduce or increase the principal balance, change the lien priority, the original
LTV or change the final maturity date on or of such Mortgage Loan unless (i) the
Mortgagor is in default with respect to the Mortgage Loan or such default is, in
the judgment of the Servicer, imminent and (ii) the Certificate Insurer consents
to such modifications in writing; provided, however, that the Servicer shall be
permitted to extend the final maturity date on a Mortgage Loan by 180 days or
less without the consent of the Certificate Insurer, so long as such final
maturity date (as so extended) is not later than the latest of (i) the Class A-1
Final Scheduled Maturity Date, (ii) the Class A-2 Final Scheduled Maturity Date,
(iii) the Class A-3 Final Scheduled Maturity Date, (iv) the Class A-4 Final
Scheduled Maturity Date and (v) the Class A-5 Final Scheduled Maturity Date.
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(e) The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Trustee under this Agreement
is intended by the parties to be that of an independent contractor and not that
of a joint venturer, partner or agent.
Section 5.02 Collection of Certain Mortgage Loan Payments; Collection
Account. (a) The Servicer shall make its reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow the Accepted Servicing Practices. Consistent with the foregoing, the
Servicer may in its discretion waive any assumption fees or other fees which may
be collected in the ordinary course of servicing such Mortgage Loans.
(b) The Servicer shall establish and maintain in the name of the
Trustee the Collection Account, in trust for the benefit of the
Certificateholders and the Certificate Insurer. The Collection Account shall be
established and maintained as an Eligible Account.
(c) The Servicer shall deposit in the Collection Account any amounts
representing Monthly Payments on the Mortgage Loans due and accrued or to be
applied as of a date after the Cut-Off Date, and thereafter, on each Business
Day (except as otherwise permitted herein), the following payments and
collections received or made by it (other than in respect of principal collected
and interest due and accrued on the Mortgage Loans on or before the Cut-Off
Date):
(i) Payments of interest on the Mortgage Loans;
(ii) Payments of principal of the Mortgage Loans;
(iii) The Loan Repurchase Price of Mortgage Loans repurchased
pursuant to Sections 2.06, 3.03, 5.05, 5.15 or otherwise
hereunder;
(iv) The Substitution Adjustment received in connection with
Mortgage Loans for which Qualified Substitute Mortgage Loans
are received pursuant to Sections 2.06 and 3.03;
(v) All Liquidation Proceeds; and
(vi) All Insurance Proceeds (including, for this purpose, any
amounts required to be deposited by the Servicer pursuant to
the last sentence of Section 5.04).
It is understood that the Servicer need not deposit amounts
representing fees, prepayment premiums, late payment charges or extension or
other administrative charges payable by Mortgagors, or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items.
(d) The Trustee shall invest any funds in the Collection Account in
Permitted Investments as directed in writing by the Servicer, which shall mature
not later than the Business Day next preceding the Servicer Remittance Date next
following the date of such investment (except that any investment held by the
Trustee may mature on such Servicer Remittance Date) and shall not be sold or
disposed of prior to its maturity. All net income and gain realized from any
such investment shall be for the benefit of the Servicer and shall be subject to
its withdrawal or order on a Distribution Date. The Servicer shall deposit from
its own funds the amount of any loss, to the extent not offset by investment
income or earnings, in the Collection Account upon the realization of such loss.
In the event that the Servicer fails to provide written investment instructions,
the Trustee shall invest such funds pursuant to clause (v) of the definition of
Permitted Investments.
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Section 5.03 Permitted Withdrawals from the Collection Account. The
Trustee shall make withdrawals from the Collection Account, on any Distribution
Date, for the following purposes:
(a) to reimburse the Servicer for Liquidation Expenses theretofore
incurred in respect of any Mortgage Loan in an amount not to exceed the amount
of the sum of the related Insurance Proceeds and Liquidation Proceeds deposited
in the Collection Account pursuant to Section 5.02(c)(v)-(vi);
(b) to reimburse the Servicer for amounts expended by it pursuant to
Section 5.04 in good faith in connection with the restoration of damaged
property, in an amount not to exceed the amount of the related Insurance
Proceeds and Liquidation Proceeds (net of withdrawals pursuant to clause (a)
above) and amounts representing proceeds of other insurance policies covering
the property subject to the related Mortgage deposited in the Collection Account
pursuant to Section 5.02(c)(v)-(vi);
(c) to pay to the Unaffiliated Seller amounts received in respect of
any Deleted Mortgage Loan purchased or substituted for by the Unaffiliated
Seller to the extent that the distribution to the Certificateholders of any such
amounts on the Distribution Date upon which the proceeds of such purchase are
distributed to the Certificateholders would make the total amount distributed in
respect of any such Mortgage Loan on such Distribution Date greater than the
Loan Repurchase Price or the Substitution Adjustment therefor;
(d) to reimburse the Servicer for unreimbursed Servicing Advances,
without interest, with respect to the Mortgage Loans for which it has made a
Servicing Advance, from subsequent collections with respect to interest on such
Mortgage Loans and from Liquidation Proceeds, Insurance Proceeds and/or the Loan
Repurchase Price or Substitution Adjustment of or relating to such Mortgage
Loans;
(e) to reimburse the Servicer for any Periodic Advances, such
reimbursement to be made from any collections in respect of the related Mortgage
Loan with respect to which such Periodic Advance was made;
(f) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction;
(g) to withdraw any funds deposited in the Collection Account that were
not required to be deposited therein;
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(h) to pay the Servicer Servicing Compensation pursuant to Section 5.08
hereof to the extent not retained or paid; and
(i) to remit funds to the Distribution Account pursuant to Section
6.01(c) hereof.
The Servicer shall keep and maintain a separate accounting for
each Mortgage Loan for the purpose of accounting for withdrawals from the
Collection Account pursuant to subclause (a).
Section 5.04 Hazard Insurance Policies; Property Protection Expenses.
(a) The Servicer shall cause to be maintained for each Mortgage Loan a hazard
insurance policy with extended coverage which contains a standard mortgagee's
clause with an appropriate endorsement in an amount equal to the lesser of (a)
the maximum insurable value of the related Mortgaged Property or (b) the sum of
the Principal Balance of such Mortgage Loan plus the outstanding balance of any
mortgage loan senior to such Mortgage Loan, but in no event shall such amount be
less than is necessary to prevent the Mortgagor from becoming a coinsurer
thereunder. The Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements which are a part of such
property or (ii) the combined Principal Balance of such Mortgage Loan and the
principal balance of any mortgage loan senior to such Mortgage Loan at the time
of such foreclosure plus accrued interest and the good-faith estimate of the
Servicer of related Liquidation Expenses to be incurred in connection therewith.
Amounts collected by the Servicer under any such policies shall be deposited in
the Collection Account to the extent that they constitute Liquidation Proceeds
or Insurance Proceeds. Each hazard insurance policy shall contain a standard
mortgage clause naming the Originator, its successors and assigns, as mortgagee.
Subject to Section 5.04(c), the Servicer shall be under no obligation to require
that any Mortgagor maintain earthquake or flood or other additional insurance
and shall be under no obligation itself to maintain any such additional
insurance on property acquired in respect of a Mortgage Loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance.
(b) If the Servicer shall obtain and maintain a blanket policy issued
by an insurer acceptable to the Rating Agencies and the Certificate Insurer
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in Section
5.04(a), it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with Section 5.04(a), and there shall have been a loss which would
have been covered by such policy, deposit in the Collection Account the amount
not otherwise payable under the blanket policy because of such deductible
clause.
(c) If the Mortgaged Property or REO Property is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area (and if the flood insurance policy referenced herein has been made
available), the Servicer will cause to be maintained flood insurance in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the Principal Balance of the related Mortgage Loan and the balance of the
related first lien, if any, (ii) the maximum insurable value of the related
Mortgaged Property, and (iii) the maximum amount of such insurance available for
the related Mortgaged Property under the national flood insurance program
(assuming that the area in which such Mortgaged Property is located is
participating in such program).
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Section 5.05 Assumption and Modification Agreements. In any case in
which a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall exercise its right to accelerate the maturity of the related
Mortgage Loan and require that the Principal Balance thereof be paid in full on
or prior to such conveyance by the Mortgagor under any "due-on-sale" clause
applicable thereto. If such "due-on-sale" clause, by its terms, is not operable
or the Servicer is prevented, as provided in the last paragraph of this Section
5.05, from enforcing any such clause, the Servicer is authorized, subject to the
consent of the Certificate Insurer, to take or enter into an assumption and
modification agreement from or with the Person to whom such property has been or
is about to be conveyed, pursuant to which such Person becomes liable under the
Mortgage Note and the Mortgagor remains liable thereon or, if the Servicer in
its reasonable judgment finds it appropriate, is released from liability
thereon. The Servicer shall notify the Trustee, the Certificate Insurer and the
Collateral Agent that any assumption and modification agreement has been
completed by delivering to the Trustee and the Certificate Insurer an Officer's
Certificate certifying that such agreement is in compliance with this Section
5.05 together with the original copy of such assumption and modification
agreement. Any such assumption and modification agreement shall, for all
purposes, be considered a part of the related Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. In
connection with any such agreement, the then current Mortgage Interest Rate
thereon shall not be increased or decreased. Any fee collected by the Servicer
for entering into any such agreement will be retained by the Servicer as
additional servicing compensation. At its sole election, the Servicer may
purchase from the Trust Fund any Mortgage Loan that has been assumed in
accordance with this Section 5.05 within one month after the date of such
assumption at a price equal to the greater of (i) the fair market value of such
Mortgage Loan (as determined by the Servicer in its good faith judgment) and
(ii) the Loan Repurchase Price. Such amount, if any, shall be deposited into the
Collection Account in the Due Period in which such repurchase is made.
Notwithstanding the foregoing paragraph of this Section 5.05
or any other provision of this Agreement, the Servicer shall not be deemed to be
in default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Mortgage Loan, or transfer of any Mortgaged Property
without the assumption thereof, by operation of law or any assumption or
transfer which the Servicer reasonably believes it may be restricted by law from
preventing for any reason whatsoever.
Section 5.06 Realization Upon Defaulted Mortgage Loans. (a) The
Servicer shall foreclose upon or otherwise comparably convert to ownership
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 5.02(a). Prior to
conducting any sale in a foreclosure proceeding or accepting a deed-in-lieu of
foreclosure with respect to any Mortgaged Property, the Servicer shall cause an
environmental review to be performed, in accordance with Accepted Servicing
Practices on the Mortgaged Property by a company such as Equifax, Inc. or
Toxicheck. If such review reveals that the Mortgaged Property has on it, under
it or is near hazardous or toxic material or waste or reveals any other
environmental problem, the Servicer shall not foreclose or accept a deed-in-lieu
of foreclosure without the prior written consent of the Certificate Insurer,
such consent not to be unreasonably withheld, conditioned or delayed. In
connection with such foreclosure or other conversion, the Servicer shall follow
such practices (including, in the case of any default on a related senior
mortgage loan, the advancing of funds to correct such default) and procedures
which are consistent with Accepted Servicing Practices as it shall deem
necessary or advisable and as shall be normal and usual in its general first and
second mortgage loan servicing activities. The foregoing is subject to the
proviso that the Servicer shall not be required to expend its own funds in
connection with any foreclosure or towards the correction of any default on a
related senior mortgage loan or restoration of any property unless, in the
reasonable judgment of the Servicer, such expenses will be recoverable from
Liquidation Proceeds.
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(b) In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee on behalf of
Certificateholders and the Certificate Insurer. With respect to any REO
Property, the Servicer either itself or through an agent selected by the
Servicer shall manage, conserve, protect and operate such REO Property in the
same manner and to such extent as is customary in the locality where such REO
Property is located. Any net income generated from the REO Property and the
proceeds from a sale of any REO Property shall be deposited in the Collection
Account. Any expenses incurred by the Servicer pursuant to its obligations with
respect to any REO Property shall constitute Servicing Advances. In the event
that the Trust Fund acquires any Mortgaged Property as aforesaid or otherwise in
connection with a default or imminent default on a Mortgage Loan, the Trust Fund
shall: (i) dispose of such Mortgaged Property prior to the end of the third
taxable year after its acquisition by the Trust Fund or (ii) request more than
60 days prior to the date on which such 3 year period would otherwise expire, an
extension of the 3 year period, provided, however, in the event the Servicer
shall have furnished the Trustee and the Certificate Insurer with an Opinion of
Counsel to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to the third taxable year after its acquisition will not
result in the imposition of taxes on "prohibited transactions" of the Trust Fund
as defined in Section 860F of the Code or cause the Trust Fund to fail to
qualify as a REMIC at any time that any Certificates are outstanding, such
disposition or extension shall not be required.
(c) Any Insurance Proceeds or Liquidation Proceeds received with
respect to a Mortgage Loan or REO Property (other than received in connection
with a purchase by the Servicer of all the Mortgage Loans and REO Properties in
the Trust Fund pursuant to Section 8.01(b)) will be applied in the following
order of priority, in each case to the extent of available funds: first, to pay
the Servicer any accrued and unpaid Servicing Fees relating to such Mortgage
Loan; second, to reimburse the Servicer or any Subservicer for any related
unreimbursed Servicing Advances, and any related unreimbursed Periodic Advances
theretofore funded by the Servicer or any Subservicer from its own funds, in
each case, with respect to the related Mortgage Loan; third, to accrued and
unpaid interest on the Mortgage Loan, at the Mortgage Loan Rate (or at such
lesser rate as may be in effect for such Mortgage Loan pursuant to application
of the Civil Relief Act) on the Principal Balance of such Mortgage Loan, to the
date such Mortgage Loan is determined to be a Liquidated Mortgage Loan if it is
a Liquidated Mortgage Loan, or to the Due Date in the Due Period prior to the
Distribution Date on which such amounts are to be distributed if such
determination has not yet been made, minus any unpaid Servicing Fees with
respect to such Mortgage Loan; fourth, to the extent of the Principal Balance of
the Mortgage Loan outstanding immediately prior to the receipt of such proceeds,
as a recovery of principal of the related Mortgage Loan; and fifth, to any
prepayment or late payment charges or penalty interest payable in connection
with the receipt of such proceeds and to all other fees and charges due and
payable with respect to such Mortgage Loan. The amount of any gross Insurance
Proceeds and Liquidation Proceeds received with respect to any Mortgage Loan or
REO Property minus the amount of any unreimbursed Servicing Advances,
unreimbursed Periodic Advances or unpaid Servicing Fees, in each case, with
respect to the related Mortgage Loan, are the "Net Recovery Proceeds" with
respect to such Mortgage Loan or REO Property.
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Section 5.07 Trustee to Cooperate. Upon the payment in full of the
Principal Balance of any Mortgage Loan, the Servicer will notify the Trustee by
a certification (which certification shall include a statement to the effect
that all amounts received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 5.02 have been so
deposited) of a Servicing Officer. Upon any such payment in full, the Servicer
is authorized to execute, pursuant to the authorization contained in Section
5.01, an instrument of satisfaction regarding the related Mortgage, which
instrument of satisfaction shall be recorded by the Servicer if required by
applicable law and be delivered to the Person entitled thereto, it being
understood and agreed that no expenses incurred in connection with such
instrument of satisfaction shall be reimbursed from the Collection Account. From
time to time and as appropriate for the servicing or foreclosure of any Mortgage
Loan, the Collateral Agent on behalf of the Trustee shall, upon request of the
Servicer and delivery to the Trustee of a trust receipt signed by a Servicing
Officer, release the related Mortgage File to the Servicer and shall execute
such documents as shall be necessary for the prosecution of any such
proceedings. Such trust receipt shall obligate the Servicer to return the
Mortgage File to the Collateral Agent on behalf of the Trustee when the need
therefor by the Servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
similar to that hereinabove specified, the trust receipt shall be released by
the Collateral Agent on behalf of the Trustee to the Servicer.
Section 5.08 Servicing Compensation; Payment of Certain Expenses by
Servicer. On each Distribution Date, the Servicer shall be entitled to receive,
and the Trustee shall pay in the event such servicing compensation is not
retained by the Servicer, out of collections on the Mortgage Loans for the Due
Period, as servicing compensation for such Due Period, an amount (the "Monthly
Servicing Fee") equal to the product of one-twelfth of the Servicing Fee.
Additional servicing compensation in the form of assumption fees, late payment
charges or extension and other administrative charges shall be retained by the
Servicer. The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of all fees and
expenses of the Subservicer and payment of the Trustee Fee to the extent that
monies in the Collection Account are insufficient therefor, as provided in
Section 9.05 hereof, and all other fees and expenses not expressly stated
hereunder to be payable by or from another source) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
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Section 5.09 Annual Statement as to Compliance. (a) The Servicer will
deliver to the Trustee, the Rating Agencies, the Certificate Insurer and each
Certificateholder, on or before April 30 of each year, beginning April 30, 2003,
an Officer's Certificate of the Servicer stating that (a) a review of the
activities of the Servicer during the preceding calendar year and of its
performance under this Agreement has been made under such Officer's supervision
and (b) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its material obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
Section 5.10 Annual Independent Public Accountants' Servicing Report.
On or before April 30 of each year, beginning April 30, 2003, the Servicer at
its expense shall cause a firm of independent public accountants that is a
member of the American Institute of Certified Public Accountants (who may also
render other services to the Servicer) to furnish a report to the Trustee, the
Rating Agencies, the Certificate Insurer and each Certificateholder to the
effect that such firm has examined certain documents and records relating to the
servicing of mortgage loans under pooling and servicing agreements (including
this Agreement) substantially similar to this Agreement, and that such
examination, which has been conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers (to the extent that the
procedures in such audit guide are applicable to the servicing obligations set
forth in such agreements), has disclosed no items of noncompliance with the
provisions of this Agreement which, in the opinion of such firm, are material,
except for such items of noncompliance as shall be set forth in such report.
Section 5.11 Access to Certain Documentation. Each of the Servicer, the
Depositor and the Unaffiliated Seller shall permit the designated agents or
representatives of each Certificateholder, the Certificate Insurer and the
Trustee (i) to examine and make copies of and abstracts from all books, records
and documents (including computer tapes and disks) in the possession or under
the control of the Servicer, the Depositor or the Unaffiliated Seller relating
to the Mortgage Loans and (ii) to visit the offices and properties of the
Servicer and of the Unaffiliated Seller for the purpose of examining such
materials and to discuss matters relating to the Mortgage Loans and the
Servicer's, the Depositor's and the Unaffiliated Seller's performance under this
Agreement with any of the officers or employees of the Servicer, the Depositor
and the Unaffiliated Seller having knowledge thereof and with the independent
public accountants of the Servicer (and by this provision the Servicer and the
Unaffiliated Seller each authorize their respective accountants to discuss their
respective finances and affairs), all at such reasonable times, as often as may
be reasonably requested and without charge to such Certificateholder, the
Certificate Insurer or the Trustee.
Section 5.12 Maintenance of Fidelity Bond. The Servicer shall during
the term of its service as servicer maintain in force a fidelity bond and errors
and omissions insurance in respect of its officers, employees or agents. Such
bond and insurance shall comply with the requirements from time to time of the
FNMA for Persons performing servicing for mortgage loans purchased by such
association.
Section 5.13 The Subservicers. The parties acknowledge that the
Servicer intends to appoint the Subservicers as the Servicer's agents for the
purpose of servicing on the Servicer's behalf such of the Mortgage Loans as were
originated by such subservicer. The Servicer agrees to cause the Subservicers to
service such Mortgage Loans in a manner consistent with the Accepted Servicing
Practices set forth in this Agreement, and agrees that receipt by the
Subservicers of any and all amounts which by the terms hereof are required to be
deposited in the Collection Account shall constitute receipt thereof by the
Servicer for all purposes hereof as of the date so received by the Subservicers.
Notwithstanding such designation of the Subservicers, the Servicer agrees that
it is, and it shall remain, fully obligated under the terms hereof as Servicer
with respect to all such Mortgage Loans, and nothing herein shall relieve or
release the Servicer from its obligations to the other parties hereto to service
such Mortgage Loans in the manner provided in this Agreement.
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Section 5.14 Reports to the Trustee; Collection Account Statements. Not
later than fifteen (15) days after each Distribution Date, the Servicer shall
provide to the Trustee and the Certificate Insurer a statement, certified by a
Servicing Officer, setting forth the status of the Collection Account as of the
close of business on the related Distribution Date, stating that all
distributions required by this Agreement to be made by the Servicer on behalf of
the Trustee have been made (or if any required distribution has not been made by
the Servicer, specifying the nature and status thereof) and showing, for the
period covered by such statement, the aggregate of deposits into and withdrawals
from the Collection Account for each category of deposit specified in Section
5.02 and each category of withdrawal specified in Section 5.03 and the aggregate
of deposits into the Collection Account as specified in Section 6.01(c). Such
statement shall also state the aggregate unpaid principal balance of all the
Mortgage Loans as of the close of business on the last day of the month
preceding the month in which such Distribution Date occurs. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon
request.
Section 5.15 Optional Purchase of Defaulted Mortgage Loans. (a) The
Unaffiliated Seller, in its sole discretion, shall have the right to elect (by
written notice sent to the Trustee and the Certificate Insurer), but shall not
be obligated, to purchase for its own account from the Trust Fund any Mortgage
Loan which is one hundred and eighty (180) days or more Delinquent in the manner
and at the price specified in Section 2.06(c). The purchase price for any
Mortgage Loan purchased hereunder shall be deposited in the Collection Account
and the Trustee, upon receipt of such deposit, shall release or cause to be
released to the Unaffiliated Seller the related Trustee's Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Unaffiliated Seller, in each case without recourse, as shall be necessary to
vest in the Unaffiliated Seller any Mortgage Loan released pursuant hereto and
the Unaffiliated Seller shall succeed to all the Trustee's right, title and
interest in and to such Mortgage Loan and all security and documents related
thereto. Such assignment shall be an assignment outright and not for security.
The Unaffiliated Seller shall thereupon own such Mortgage Loan, and all security
and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
(b) If the Unaffiliated Seller shall have repurchased Mortgage Loans
under this Section 5.15 in an aggregate principal amount equal to 2.00% of the
Maximum Pool Principal Balance, the Unaffiliated Seller may not thereafter
exercise its right under this Section 5.15 to purchase any Mortgage Loan without
the prior written consent of the Certificate Insurer. Any request by the
Unaffiliated Seller to the Certificate Insurer for consent to repurchase
Mortgage Loans that are not the most Delinquent shall be accompanied by a
description of the Mortgage Loans that have been Delinquent longer than the
Mortgage Loan or Mortgage Loans the Unaffiliated Seller proposes to repurchase.
If the Certificate Insurer fails to respond to such request within ten (10)
Business Days after receipt thereof, the Unaffiliated Seller shall be deemed to
have been granted consent to repurchase the Mortgage Loan or Mortgage Loans
proposed to be repurchased. Notice to the Certificate Insurer shall be delivered
in accordance with the terms of the Insurance and Indemnity Agreement.
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Section 5.16 Reports to be Provided by the Servicer. (a) In connection
with the transfer of the Certificates, the Trustee on behalf of any
Certificateholder may request that the Servicer make available to any
prospective Certificateholder annual financial statements of the Servicer for
one or more of the most recently completed five fiscal years for which such
statements are available, which request shall not be unreasonably denied or
unreasonably delayed. Such annual financial statements also shall be made
available to the Certificate Insurer upon request.
(b) The Servicer also agrees to make available on a reasonable basis to
the Certificate Insurer or any prospective Certificateholder a knowledgeable
financial or accounting officer for the purpose of answering reasonable
questions respecting recent developments affecting the Servicer or the financial
statements of the Servicer and to permit the Certificate Insurer or any
prospective Certificateholder to inspect the Servicer's servicing facilities
during normal business hours for the purpose of satisfying the Certificate
Insurer or such prospective Certificateholder that the Servicer has the ability
to service the Mortgage Loans in accordance with this Agreement.
Section 5.17 Adjustment of Servicing Compensation in Respect of Prepaid
Mortgage Loans. The Monthly Servicing Fee that the Servicer shall be entitled to
receive with respect to all of the Mortgage Loans and each Distribution Date
shall be offset on such Distribution Date by an amount equal to the aggregate
Prepayment Interest Shortfall with respect to all Mortgage Loans which were
subjects of Principal Prepayments during the month preceding the month of such
Distribution Date. The amount of any offset against the Monthly Servicing Fee
with respect to any Distribution Date under this Section 5.17 shall be limited
to the Monthly Servicing Fee otherwise payable to the Servicer (without
adjustment on account of Prepayment Interest Shortfalls) with respect to such
Distribution Date, and the rights of the Certificateholders to the offset of the
aggregate Prepayment Interest Shortfalls shall not be cumulative.
Section 5.18 Periodic Advances; Special Advance. (a) If, on any
Servicer Remittance Date, the Servicer determines that any Monthly Payments due
on the Due Date immediately preceding such Servicer Remittance Date have not
been received as of the close of business on the Business Day preceding such
Servicer Remittance Date, the Servicer shall determine the amount of any
Periodic Advance required to be made with respect to the related Distribution
Date. The Servicer shall include in the amount to be deposited in the Collection
Account on such Servicer Remittance Date an amount equal to the Periodic
Advance, if any, which deposit may be made in whole or in part from funds in the
Collection Account being held for future distribution or withdrawal on or in
connection with Distribution Dates in subsequent months. Any funds being held
for future distribution to Certificateholders and so used shall be replaced by
the Servicer from its own funds by deposit in the Collection Account on or
before the Business Day preceding the next Servicer Remittance Date on which the
funds in the Collection Account shall be less than the amount necessary to pay
in full the Required Distribution with respect to such date be made on such
date; provided, that if such funds are not sufficient the Servicer will use its
own funds to the extent necessary to fulfill its replacement or advance
obligation.
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The Servicer shall designate on its records the specific
Mortgage Loans and related installments (or portions thereof) as to which such
Periodic Advance shall be deemed to have been made, such determination being
conclusive for purposes of withdrawals from the Collection Account pursuant to
Section 5.03.
(b) In addition to the Periodic Advances the Servicer shall make a
special advance (the "Special Advance") on the Servicer Remittance Date
occurring in April 2002, with respect to interest on Mortgage Loans not having
their first payment due until after March 2002. The Special Advance will be
deposited into the Interest Reserve Account and will be paid out of the Interest
Reserve Account, and will be equal to the lesser of (1) the difference of (i)
the sum of (a) the Class A-1 Interest Distribution Amount, (b) the Class A-2
Interest Distribution Amount (c) the Class A-3 Interest Distribution Amount, (d)
the Class A-4 Interest Distribution Amount, (e) the Class A-5 Interest
Distribution Amount and (f) the Class A-IO Interest Distribution Amount over
(ii) the sum of (x) the amount of interest collected for the first Due Period
and (y) the amount on deposit in the Interest Reserve Account immediately prior
to such Special Advance and (2) an amount equal to the amount of interest that
would have accrued on all such Mortgage Loans from the Cut-Off Date to its
corresponding scheduled payment date, assuming it had a payment date in March
2002. Any funds remaining in the Interest Reserve Account after the immediately
succeeding Distribution Date shall be remitted to the Servicer on such
Distribution Date. The Special Advance shall be made without regard to
recoverability, and shall not be reimbursable, except as set forth in the
preceding sentences. In no event shall the Trustee, as successor Servicer, be
liable for the payment of the Special Advance except to the extent of the amount
on deposit in the Interest Reserve Account.
Section 5.19 Indemnification; Third Party Claims. (a) The Servicer
agrees to indemnify and to hold each of the Depositor, the Trustee, the
Collateral Agent, the Unaffiliated Seller, the Certificate Insurer and each
Certificateholder harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Depositor, the Trustee, the Collateral Agent, the
Unaffiliated Seller, the Certificate Insurer and any Certificateholder may
sustain in any way related to the failure of the Servicer to perform its duties
and service the Mortgage Loans in compliance with the terms of this Agreement.
Each indemnified party and the Servicer shall immediately notify the other
indemnified parties if a claim is made by a third party with respect to this
Agreement, and the Servicer shall assume the defense of any such claim and pay
all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Depositor, the Servicer, the Trustee, the Unaffiliated Seller, the
Certificate Insurer and/or a Certificateholder in respect of such claim. The
obligations of the Servicer under this Section 5.19 arising prior to any
resignation or termination of the Servicer hereunder shall survive the
resignation or termination of the Servicer.
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(b) Upon receipt of written instruction from the Servicer, the Trustee
may, if necessary, reimburse the Servicer from amounts otherwise distributable
on the Class X and R Certificates for all amounts advanced by it pursuant to
Section 4.04 of the Unaffiliated Seller's Agreement, except when the claim
relates directly to the failure of the Servicer, if it is, or is an Affiliate
of, the Unaffiliated Seller, to perform its obligations to service and
administer the Mortgages in compliance with the terms of the Unaffiliated
Seller's Agreement, or the failure of the Unaffiliated Seller to perform its
duties in compliance with the terms of this Agreement.
(c) Upon receipt of written instruction from the Servicer, the Trustee
shall reimburse the Unaffiliated Seller from amounts otherwise distributable on
the Class X and R Certificates for all amounts advanced by the Unaffiliated
Seller pursuant to the second sentence of Section 4.04(a)(ii) of the
Unaffiliated Seller's Agreement except when the relevant claim relates directly
to the failure of the Unaffiliated Seller to perform its duties in compliance
with the terms of the Unaffiliated Seller's Agreement.
Section 5.20 Maintenance of Corporate Existence and Licenses; Merger or
Consolidation of the Servicer. (a) The Servicer will keep in full effect its
existence, rights and franchises as a corporation, will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction
necessary to protect the validity and enforceability of this Agreement or any of
the Mortgage Loans and to perform its duties under this Agreement and will
otherwise operate its business so as to cause the representations and warranties
under Section 3.01 to be true and correct at all times under this Agreement.
(b) Any Person into which the Servicer may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Servicer shall be a party, or any Person succeeding to the business of
the Servicer, shall be an established mortgage loan servicing institution that
has a net worth of at least $15,000,000 and is a Permitted Transferee, and in
all events shall be the successor of the Servicer without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding. The Servicer shall send notice
of any such merger or consolidation to the Trustee and the Certificate Insurer.
Section 5.21 Assignment of Agreement by Servicer; Servicer Not to
Resign. The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Unaffiliated Seller, the Certificate Insurer and the Trustee,
provided, however, in the event the Servicer is terminated pursuant to Section
7.01 hereof, the consent of the Unaffiliated Seller shall no longer be required,
or upon the determination that the Servicer's duties hereunder are no longer
permissible under applicable law and that such incapacity cannot be cured by the
Servicer without incurring, in the reasonable judgment of the Certificate
Insurer, unreasonable expense. Any such determination that the Servicer's duties
hereunder are no longer permissible under applicable law permitting the
resignation of the Servicer shall be evidenced by a written Opinion of Counsel
(who may be outside counsel for the Servicer) to such effect delivered to the
Trustee, the Unaffiliated Seller, the Depositor and the Certificate Insurer. No
such resignation shall become effective until the Trustee or a successor
appointed in accordance with the terms of this Agreement has assumed the
Servicer's responsibilities and obligations hereunder in accordance with Section
7.02. The Servicer shall provide the Trustee, the Rating Agencies and the
Certificate Insurer with 30 days prior written notice of its intention to resign
pursuant to this Section 5.21.
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Section 5.22 Periodic Filings with the Securities and Exchange
Commission; Additional Information. The Trustee shall prepare or cause to be
prepared for filing with the Commission (other than the initial Current Report
on Form 8-K to be filed by the Depositor in connection with the issuance of the
Certificates) any and all reports, statements and information respecting the
Trust and/or the Certificates required to be filed, and shall solicit any and
all proxies of the Certificateholders whenever such proxies are required to be
solicited, pursuant to the Securities Exchange Act of 1934, as amended. Unless
otherwise advised by the Depositor or the Servicer, the reports to be filed
shall consist only of the following: 8-K reports attaching the related Servicer
Remittance Report, to be filed in April through December of 2002, a Form 10-K to
be filed in January of 2003, and a Form 15D to be filed in January 2003. The
Depositor shall promptly file, and exercise its reasonable best efforts to
obtain a favorable response to, no-action requests with, or other appropriate
exemptive relief from, the Commission seeking the usual and customary exemption
from such reporting requirements granted to issuers of securities similar to the
Certificates if and to the extent the Depositor shall deem any such relief to be
necessary or appropriate. Fees and expenses incurred by the Trustee in
connection with the foregoing shall be reimbursed pursuant to Section 9.05 and
shall not be paid by the Trust.
The Servicer and the Depositor each agree to promptly furnish
to the Trustee, from time to time upon request, such further information,
reports and financial statements as the Trustee deems appropriate to prepare and
file all necessary reports with the Securities and Exchange Commission.
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01 Establishment of Accounts; Withdrawals from Accounts;
Deposits to the Distribution Account. (a) The Trustee shall establish and
maintain a Distribution Account which shall be titled "Distribution Account,
JPMorgan Chase Bank, as trustee for the registered holders of ABFS Mortgage Loan
Trust 2002-1, Mortgage Pass-Through Certificates, Series 2002-1", which account
shall be an Eligible Account held by the Trustee on behalf of the
Certificateholders and the Certificate Insurer. The Trustee shall establish and
maintain on behalf of the Certificateholders and the Certificate Insurer the
Interest Reserve Account which shall be titled "Interest Reserve Account, ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Bank, as trustee for the registered holders of ABFS Mortgage Loan
Trust 2002-1, Mortgage Pass-Through Certificates, Series 2002-1" which account
shall be an Eligible Account. The Trustee shall establish and maintain on behalf
of the Certificateholders and the Certificate Insurer the Pre-Funding Account
which shall be titled "Pre-Funding Account, JPMorgan Chase Bank, as trustee for
the registered holders of ABFS Mortgage Loan Trust 2002-1, Mortgage Pass-Through
Certificates, Series 2002-1", the Capitalized Interest Account which shall be
titled "Capitalized Interest Account, JPMorgan Chase Bank, as trustee for the
registered holders of ABFS Mortgage Loan Trust 2002-1, Mortgage Pass-Through
Certificates, Series 2002-1", each of which such Account shall be an Eligible
Account. Upon receipt of the proceeds of the sale of the Certificates, on the
Closing Date, the Trustee shall, upon the Unaffiliated Seller's direction, from
the proceeds of the sale of the Certificates, deposit, on behalf of the
Certificateholders in the Interest Reserve Account, an amount equal to
$598,511.57. Upon receipt of the proceeds of the sale of the Certificates, on
the Closing Date, the Trustee shall, upon the Unaffiliated Seller's direction,
from the proceeds of the sale of the Certificates, deposit, on behalf of the
Certificateholders (i) in the Pre-Funding Account, the Original Pre-Funded
Amount, and (ii) in the Capitalized Interest Account, an amount equal to $0.
Amounts on deposit in the Interest Reserve Account shall be invested by the
Trustee, at the direction of the Servicer in Permitted Investments. In the event
that the Servicer fails to provide written investment instructions, the Trustee
shall invest such funds pursuant to clause (v) 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.
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(b) The Servicer shall direct the Trustee in writing to invest the
funds in the Distribution Account only in Permitted Investments. Any such
Permitted Investment shall mature no later than one Business Day prior to the
Distribution Date. No Permitted Investment shall be sold or disposed of prior to
maturity. 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 investments shall be deposited in the
Distribution Account by the Servicer out of its own funds immediately as
realized.
(c) On each Servicer Remittance Date, the Servicer shall cause to be
deposited in the Distribution Account, from funds on deposit in the Collection
Account, (a) an amount equal to the Servicer Remittance Amount and (b) Net
Foreclosure Profits, if any with respect to the related Distribution Date, minus
any portion thereof payable to the Servicer pursuant to Section 5.03. On each
Servicer Remittance Date, the Servicer shall also deposit into the Distribution
Account any Periodic Advances with respect to the related Distribution Date
calculated in accordance with Section 5.18 and any amounts required to be
deposited in connection with a Subsequent Mortgage Loan pursuant to Section
2.03(f); on the Servicer Remittance Dates occurring on April 2002, and May 2002
the Servicer also will deposit the Special Advance.
(d) On the April 2002, May 2002 and June 2002 Distribution Dates, the
Trustee shall transfer from the Capitalized Interest Account to the Distribution
Account the Capitalized Interest Requirement, if any, for such Distribution
Date.
(e) On the Distribution Date following either the final Subsequent
Transfer Date or June 15, 2002 whichever date is earlier, any amounts remaining
in the Capitalized Interest Account, after taking into account the transfers in
respect of the Distribution Date described in clause (d) above, shall be paid to
the Unaffiliated Seller.
(f) On any Subsequent Transfer Date, the Unaffiliated Seller shall
instruct in writing the Trustee to withdraw from the Pre-Funding Account an
amount equal to 100% of the aggregate Principal Balances as of the related
Subsequent Cut-Off Date of the Subsequent Mortgage Loans sold to the Trust on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Unaffiliated Seller upon satisfaction of the conditions set forth in Section
2.03(b) and (c) hereof with respect to such transfer. The Trustee may
conclusively rely on such written instructions from the Unaffiliated Seller.
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(g) If the Pre-Funding Amount (exclusive of Pre-Funding Earnings) has
been reduced to $50,000 or less by March 30, 2002, by April 30, 2002, or May 31,
2002 then, on the April 2002, the May 2002 or June 2002 Distribution Dates,
respectively, after giving effect to any reductions in the Pre-Funding Amount on
such date, the Trustee shall withdraw from the Pre-Funding Account on such date
and deposit in the Distribution Account the amount on deposit in the Pre-Funding
Account other than any Pre-Funding Earnings and distribute such amount to the
Holders of the Class A Certificates, pro rata, as a separate payment of
principal, on the June 2002 Distribution Date.
(h) On the April 2002, the May 2002 and June 2002 Distribution Dates
the Trustee shall transfer from the Pre-Funding Account to the Distribution
Account the Pre-Funding Earnings, if any, applicable as of each such
Distribution Date.
Section 6.02 Permitted Withdrawals From the Distribution Account. The
Trustee shall withdraw or cause to be withdrawn funds from the Distribution
Account for the following purposes:
(a) to effect the distributions described in Section 6.05;
(b) to pay to the Unaffiliated Seller with respect to each Mortgage
Loan or property acquired in respect thereof that has been repurchased or
replaced pursuant to Section 2.05 or 3.03 or to pay to the Servicer with respect
to each Mortgage Loan or property acquired in respect thereof that has been
purchased, all amounts received thereon and not required to be distributed as of
the date on which the related repurchase or purchase price or Principal Balance
was determined;
(c) to pay the Servicer any interest earned on or investment income
earned with respect to funds in the Distribution Account;
(d) to return to the Collection Account any amount deposited in the
Distribution Account that was not required to be deposited therein; and
(e) to clear and terminate the Distribution Account upon termination of
the Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Distribution Account pursuant to each of subclauses (a)
through (e) listed above.
Section 6.03 Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of all money and
other property payable to or receivable by the Trustee pursuant to this
Agreement, including (a) all payments due on the Mortgage Loans in accordance
with the respective terms and conditions of such Mortgage Loans and required to
be paid over to the Trustee by the Servicer or by any Sub-Servicer and (b)
Insured Payments. The Trustee shall hold all such money and property received by
it, as part of the Trust Fund and shall apply it as provided in this Agreement.
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Section 6.04 The Certificate Insurance Policy. (a) Within two (2) days
of each Servicer Remittance Date and based solely on the Servicer's Remittance
Report delivered to the Trustee, the Trustee shall determine with respect to the
immediately following Distribution Date, the amount to be on deposit in the
Distribution Account on such Distribution Date as a result of (i) the Servicer's
remittance of the Servicer Remittance Amount on the related Servicer Remittance
Date and (ii) any transfers made from the Capitalized Interest Account and/or
the Pre-Funding Account relating to such Distribution Date pursuant to Section
6.01 hereof, excluding the amount of any Insured Payment and after giving effect
to the application of the amounts described in clauses (a)(i) and (a)(ii) of
Section 6.05 for the related Distribution Date. The amounts described above in
the preceding sentence with respect to the Distribution Date are the "Available
Funds".
(b) If on any Distribution Date there is a Deficiency Amount, the
Trustee shall complete a Notice in the form of Exhibit A to the Certificate
Insurance Policy and submit such notice to the Certificate Insurer no later than
12:00 noon New York, New York City time on the third Business Day preceding such
Distribution Date as a claim for an Insured Payment in an amount equal to such
Deficiency Amount.
(c) The Trustee shall establish a separate Eligible Account for the
benefit of Holders of the Certificates and the Certificate Insurer referred to
herein as the "Certificate Insurance Payment Account" over which the Trustee
shall have exclusive control and sole right of withdrawal. The Trustee shall
deposit upon receipt any amount paid under the Certificate Insurance Policy in
the Certificate Insurance Payment Account and distribute such amount only for
purposes of payment to the Class A Certificateholders of the Required
Distribution for which a claim was made and such amount may not be applied to
satisfy any costs, expenses or liabilities of the Servicer, the Trustee or the
Trust Fund. Amounts paid under the Certificate Insurance Policy, to the extent
needed to pay the Required Distribution shall be transferred to the Distribution
Account on the related Distribution Date and disbursed by the Trustee to the
Class A Certificateholders in accordance with Section 6.05. It shall not be
necessary for such payments to be made by checks or wire transfers separate from
the checks or wire transfers used to pay the Required Distribution with other
funds available to make such payment. However, the amount of any payment of
principal or of interest on the Certificates to be paid from funds transferred
from the Certificate Insurance Payment Account shall be noted as provided in
paragraph (d) below in the Certificate Register and in the statement to be
furnished to Holders of the Class A Certificates pursuant to Section 6.07. Funds
held in the Certificate Insurance Payment Account shall not be invested. Any
funds remaining in the Certificate Insurance Payment Account on the first
Business Day following a Distribution Date shall be returned to the Certificate
Insurer pursuant to the written instructions of the Certificate Insurer by the
end of such Business Day.
(d) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Certificate from moneys
received under the Certificate Insurance Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.
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(e) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Required Distribution has been voided in
whole or in part as a preference payment under applicable bankruptcy law, the
Trustee shall so notify the Certificate Insurer, shall comply with the
provisions of the Certificate Insurance Policy to obtain payment by the
Certificate Insurer of such voided Required Distribution, and shall, at the time
it provides notice to the Certificate Insurer, notify, by mail to the
Certificateholders of the affected Certificates that, in the event any
Certificateholder's Required Distribution is so recovered, such
Certificateholder will be entitled to payment pursuant to the Certificate
Insurance Policy, a copy of which shall be made available through the Trustee,
the Certificate Insurer or the Certificate Insurer's fiscal agent, if any, and
the Trustee shall furnish to the Certificate Insurer or its fiscal agent, if
any, its records evidencing the payments which have been made by the Trustee and
subsequently recovered from the Certificateholders, and dates on which such
payments were made.
(f) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Certificates.
Each Certificateholder, by its purchase of Certificates, the Servicer and the
Trustee agree that, the Certificate Insurer (so long as no Certificate Insurer
Default exists) may at any time during the continuation of any proceeding
relating to a Preference Claim direct all matters relating to such Preference
Claim, including, without limitation, (i) the direction of any appeal of any
order relating to such Preference Claim and (ii) the posting of any surety,
supersedeas or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the Certificate Insurer shall be subrogated to, and
each Certificateholder, the Servicer and the Trustee hereby delegate and assign
to the Certificate Insurer, to the fullest extent permitted by law, the rights
of the Servicer, the Trustee and each Certificateholder in the conduct of any
such Preference Claim, including, without limitation, all rights of any party to
any adversary proceeding or action with respect to any court order issued in
connection with any such Preference Claim.
(g) The Trustee shall, upon retirement of the Certificates, furnish to
the Certificate Insurer a notice of such retirement, and, upon retirement of the
Certificates and the expiration of the term of the Certificate Insurance Policy,
surrender the Certificate Insurance Policy to the Certificate Insurer for
cancellation.
Section 6.05 Distributions. (a) No later than 12:00 noon, New York, New
York time on the Servicer Remittance Date, the Servicer shall deliver to the
Trustee a report in computer-readable form containing such information as to
enable the Trustee to make the distribution pursuant to clause (i) through (xi)
below, and such other information as the Trustee shall reasonably require. With
respect to amounts held in the Distribution Account, on each Distribution Date,
the Trustee shall make the following allocations, disbursements and transfers in
the following order of priority, and each such allocation, transfer and
disbursement shall be treated as having occurred only after all preceding
allocations, transfers and disbursements have occurred:
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(i) to the Trustee, an amount equal to the Trustee's Fees then due
to it;
(ii) to the Certificate Insurer the Premium Amount for such
Distribution Date then due to it;
(iii) the Interest Distribution Amount for the Class A Certificates,
such amounts to be paid pro rata;
(iv) to the Supplemental Interest Payment Account, as a
distribution on the Class X Certificates, any Class A-IO
Available Funds Cap Current Shortfall Amount;
(v) the Reimbursement Amount owing to the Certificate Insurer;
(vi) the Principal Distribution Amount, which will be distributed
(i) to the holders of the Class A-1 Certificates, until the
aggregate Certificate Principal Balance of the Class A-1
Certificates is reduced to zero, then (ii) to the holders of
the Class A-2 Certificates, until the aggregate Certificate
Principal Balance of the Class A-2 Certificates is reduced to
zero, then (iii) to the holders of the Class A-3 Certificates,
until the aggregate Certificate Principal Balance of the Class
A-3 Certificates is reduced to zero, then (iv) to the holders
of the Class A-4 Certificates, until the aggregate Certificate
Principal Balance of the Class A-4 Certificates is reduced to
zero, and then (v) to the holders of the Class A-5
Certificates, until the aggregate Certificate Principal
Balance of the Class A-5 Certificates is reduced to zero;
(vii) the amount of any Net Mortgage Loan Interest Shortfalls for
the Class A Certificates;
(viii) to the Trustee, an amount equal to the outstanding expenses
due the Trustee pursuant to this Agreement and not otherwise
paid or reimbursed by the Servicer;
(ix) to the Servicer for reimbursement of any Nonrecoverable
Advances and nonrecoverable Servicing Advances;
(x) to the Supplemental Interest Payment Account, as a
distribution to the holders of the Class X Certificates the
sum of all amounts to which such Certificates are entitled
pursuant to Section 2.07(a)(i), notes (6) and (7) thereunder,
including any Class A-1 Available Funds Cap Carry-Forward
Amounts and, to the extent not duplicative, any
Over-collateralization Reduction Amounts; and
(xi) to the holders of the Class R Certificates, any further
remaining cashflow.
Notwithstanding the foregoing, the aggregate amounts distributed on all
Distribution Dates to the Holders of the Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-5 Certificates on account of principal shall not exceed the
Original Certificate Principal Balance for the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates, respectively.
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Section 6.06 Investment of Accounts. (a) So long as no Event of Default
shall have occurred and be continuing, and consistent with any requirements of
the Code, all or a portion of any Account other than the Certificate Insurance
Payment Account held by the Trustee shall be invested and reinvested by the
Trustee, as directed in writing by the Servicer, in one or more Permitted
Investments bearing interest or sold at a discount. If an Event of Default shall
have occurred and be continuing or if the Servicer does not provide investment
directions, the Trustee shall invest all Accounts in Permitted Investments
described in paragraph (v) of the definition of Permitted Investments. No such
investment in any Account shall mature later than the Business Day immediately
preceding the next Distribution Date.
(b) Subject to Section 6.01(b), if any amounts are needed for
disbursement from any Account held by the Trustee and sufficient uninvested
funds are not available to make such disbursement, the Trustee shall cause to be
sold or otherwise converted to cash a sufficient amount of the investments in
such Account. The Trustee shall not be, and the Servicer shall be, liable for
any investment loss or other charge resulting therefrom unless the Trustee's
failure to perform in accordance with this Section 6.06 is the cause of such
loss or charge.
(c) Subject to Section 9.01 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Permitted Investment included therein
(except to the extent that the Trustee is the obligor and has defaulted thereon
or as provided in subsection (b) of this Section 6.06).
(d) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in any Account (excluding the Certificate Insurance
Payment Account) shall be for the benefit of the Servicer as servicing
compensation (in addition to the Servicing Fee). The Servicer shall deposit in
the related Account the amount of any loss incurred in respect of any Permitted
Investment held therein which is in excess of the income and gain thereon
immediately upon realization of such loss, without any right to reimbursement
therefor from its own funds.
Section 6.07 Reports by the Trustee. (a) On each Distribution Date the
Trustee shall forward to each Holder, to the Certificate Insurer, to the
Underwriter, to the Depositor and to the Rating Agencies the report provided by
the Servicer pursuant to Section 6.05 (the "Servicer Remittance Report"),
setting forth information including, without limitation, the following
information:
(i) the amount of the distribution with respect to the Class ▇-▇,
▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class A-5, Class A-IO, Class
R and Class X Certificates;
(ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Prepayments
or other unscheduled recoveries of principal included therein
and separately identifying any Over-collateralization Increase
Amounts;
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(iii) the amount of such distributions allocable to interest and the
calculation thereof;
(iv) the Class A-1 Certificate Principal Balance as of such
Distribution Date, together with the principal amount of the
Class A-1 Certificates (based on a Certificate in an original
principal amount of $1,000) then outstanding, in each case
after giving effect to any payment of principal on such
Distribution Date;
(v) the Class A-2 Certificate Principal Balance as of such
Distribution Date, together with the principal amount of the
Class A-2 Certificates (based on a Certificate in an original
principal amount of $1,000) then outstanding, in each case
after giving effect to any payment of principal on such
Distribution Date;
(vi) the Class A-3 Certificate Principal Balance as of such
Distribution Date, together with the principal amount of the
Class A-3 Certificates (based on a Certificate in an original
principal amount of $1,000) then outstanding, in each case
after giving effect to any payment of principal on such
Distribution Date;
(vii) the Class A-4 Certificate Principal Balance as of such
Distribution Date, together with the principal amount of the
Class A-4 Certificates (based on a Certificate in an original
principal amount of $1,000) then outstanding, in each case
after giving effect to any payment of principal on such
Distribution Date;
(viii) the Class A-5 Certificate Principal Balance as of such
Distribution Date, together with the principal amount of the
Class A-5 Certificates (based on a Certificate in an original
principal amount of $1,000) then outstanding, in each case
after giving effect to any payment of principal on such
Distribution Date;
(ix) the Class A-IO Notional Amount then outstanding as of such
Distribution Date, after giving effect to any payment of
interest on such Distribution Date.
(x) the amount of any Insured Payment included in the amounts
distributed to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5 and Class A-IO Certificateholders on such
Distribution Date;
(xi) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in such distribution; and
(xii) the amounts, if any, of any Liquidated Loan Losses for
consumer purpose loans and for business purpose loans for the
related Due Period and cumulative Liquidated Loan Losses since
the Startup Date for consumer purpose loans and for business
purpose loans.
Items (i), (ii) and (iii) above shall, with respect to the Class A-1,
Class A-2, Class A-3, Class A-4, and Class A-5 Certificates, be presented on the
basis of a Certificate having a $1,000 denomination. In addition, by January 31
of each calendar year following any year during which the Certificates are
outstanding, the Trustee shall furnish a report to each Holder of record if so
requested in writing at any time during each calendar year as to the aggregate
of amounts reported pursuant to (i), (ii) and (iii) with respect to the
Certificates for such calendar year.
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(b) All distributions made to the Class A-1, the Class A-2, Class A-3,
Class A-4, Class A-5, Class A-IO, Class X and Class R Certificateholders as a
Class on each Distribution Date will be made on a pro rata basis among the
Certificateholders of each Class on the next preceding Record Date based on the
Percentage Interest represented by their respective Certificates, and shall be
made by wire transfer of immediately available funds to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if, in the case of a Class A-1, Class A-2, Class A-3, Class A-4 or
Class A-5 Certificateholder, such Certificateholder shall own of record
Certificates of the same Class which have denominations aggregating at least
$5,000,000 appearing in the Certificate Register and shall have provided
complete wiring instructions at least five Business Days prior to the Record
Date, and otherwise by check mailed to the address of such Certificateholder
appearing in the Certificate Register.
(c) In addition, the Servicer Remittance Report described in subsection
(a) above forwarded by the Trustee to each Holder, to the Certificate Insurer,
to the Underwriter, to the Servicer, to the Depositor and to the Rating Agencies
on each Distribution Date, shall include the following information with respect
to all Mortgage Loans as well as a break out as to (x) consumer purpose and (y)
business purpose Mortgage Loans as of the close of business on the last Business
Day of the prior calendar month (except as otherwise provided in clause (v)
below), which is hereby required to be prepared by the Servicer and furnished to
the Trustee for such purpose and to the Certificate Insurer on or prior to the
related Servicer Remittance Date:
(i) for the related Due Period, the total number of Mortgage Loans
and the aggregate Principal Balances thereof, together with
the number, aggregate principal balances of such Mortgage
Loans and the percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of the aggregate Principal
Balances of such Mortgage Loans to the aggregate Principal
Balance of all Mortgage Loans (A) 31-60 days Delinquent, (B)
61-90 days Delinquent and (C) 91 or more days Delinquent;
(ii) for the related Due Period, the number, aggregate Principal
Balances of all Mortgage Loans and percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of the
aggregate Principal Balances of such Mortgage Loans to the
aggregate Principal Balance of all Mortgage Loans in
foreclosure proceedings and the number, aggregate Principal
Balances of all Mortgage Loans and percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of any
such Mortgage Loans also included in any of the statistics
described in the foregoing clause (i);
(iii) for the related Due Period, the number, aggregate Principal
Balances of all Mortgage Loans and percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of the
aggregate Principal Balances of such Mortgage Loans to the
aggregate Principal Balance of all Mortgage Loans relating to
Mortgagors in bankruptcy proceedings and the number, aggregate
Principal Balances of all Mortgage Loans and percentage (based
on the aggregate Principal Balances of the Mortgage Loans) of
any such Mortgage Loans also included in any of the statistics
described in the foregoing clause (i);
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(iv) for the related Due Period, the number, aggregate Principal
Balances of all Mortgage Loans and percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of the
aggregate Principal Balances of such Mortgage Loans to the
aggregate Principal Balance of all Mortgage Loans relating to
REO Properties and the number, aggregate Principal Balances of
all Mortgage Loans and percentage (based on the aggregate
Principal Balances of the Mortgage Loans) of any such Mortgage
Loans also included in any of the statistics described in the
foregoing clause (i);
(v) the weighted average Mortgage Interest Rate as of the Due Date
occurring in the Due Period related to such Distribution Date;
(vi) the weighted average remaining term to stated maturity of all
Mortgage Loans;
(vii) the book value of any REO Property;
(viii) the Cumulative Loss Percentage for the related Due Period and
the aggregate Cumulative Loss Percentage since the Closing
Date;
(ix) the Delinquency Ratio, the Rolling Six Month Delinquency Rate
and the Twelve Month Loss Amount;
(x) the aggregate Principal Balance of the three largest Mortgage
Loans; and
(xi) the total number of Mortgage Loans and the Aggregate Principal
Balance.
Section 6.08 Additional Reports by Trustee. (a) The Trustee shall
report to the Depositor, the Servicer and the Certificate Insurer with respect
to the amount then held in each Account (including investment earnings accrued
or scheduled to accrue) held by the Trustee and the identity of the investments
included therein, as the Depositor, the Servicer or the Certificate Insurer may
from time to time request in writing.
(b) From time to time, at the request of the Certificate Insurer, the
Trustee shall report to the Certificate Insurer with respect to its actual
knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth in
any Unaffiliated Seller's Agreement or in Section 3.01 or 3.02 hereof. The
Trustee shall also provide the Certificate Insurer such other information as may
be reasonably requested by it.
Section 6.09 Compensating Interest. Not later than the Servicer
Remittance Date, the Servicer shall remit to the Trustee (without right or
reimbursement therefor) for deposit into the Distribution Account an amount
equal to the lesser of (a) the aggregate of the Prepayment Interest Shortfalls
for the related Distribution Date resulting from Principal Prepayments during
the related Due Period and (b) its aggregate Monthly Servicing Fees received in
the related Due Period and shall not have the right to reimbursement therefor
(the "Compensating Interest"); provided, however, that Compensating Interest
with respect to any Mortgage Loan and any Distribution Date shall not exceed the
Servicing Fees due in respect of such Mortgage Loan on such Distribution Date.
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Section 6.10 Effect of Payments by the Certificate Insurer;
Subrogation. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Certificates which is made with
moneys received pursuant to the terms of the Certificate Insurance Policy shall
not be considered payment of the Certificates from the Trust Fund. The
Depositor, the Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Certificate agrees, that without the need for any further action
on the part of the Certificate Insurer, the Depositor, the Servicer, the Trustee
or the Certificate Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Certificates to the Holders of such Certificates, the Certificate Insurer will
be fully subrogated to, and each Certificateholder, the Servicer and the Trustee
hereby delegate and assign to the Certificate Insurer, to the fullest extent
permitted by law, the rights of such Holders to receive such principal and
interest from the Trust Fund, including, without limitation, any amounts due to
the Certificateholders in respect of securities law violations arising from the
offer and sale of the Certificates, and (b) the Certificate Insurer shall be
paid such amounts from the sources and in the manner provided herein for the
payment of such amounts and as provided in the Insurance and Indemnity
Agreement. The Trustee and the Servicer shall cooperate in all respects with any
reasonable request by the Certificate Insurer for action to preserve or enforce
the Certificate Insurer's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Holders as otherwise set
forth herein.
Section 6.11 Additional Rights of Certificate Insurer. (a) Unless a
Certificate Insurer Default exists and is continuing, the Trustee, the Depositor
and the Servicer shall cooperate in all respects with any reasonable request by
the Certificate Insurer for action to preserve or enforce the Certificate
Insurer's rights or interests hereunder without limiting the rights or affecting
the interests of the Certificateholders as otherwise set forth herein.
(b) Unless a Certificate Insurer Default exists and is continuing, the
Certificate Insurer shall have the right to participate in, to direct the
enforcement or defense of, and, at the Certificate Insurer's sole option, to
institute or assume the defense of, any action, proceeding or investigation for
any remedy available to the Trustee with respect to any matter that could
adversely affect the Trust, the Trust Fund or the rights or obligations of the
Certificate Insurer hereunder, under the Unaffiliated Seller Agreement, under
the Insurance and Indemnity Agreement or under the Certificate Insurance Policy
or any other instrument, document or agreement relating to the foregoing
(collectively, the "Transaction Documents"), including (without limitation) any
insolvency or bankruptcy proceeding in respect of any Originator, the
Unaffiliated Seller, the Servicer, the Depositor or any Affiliate thereof
provided, that such participation or direction shall not be in conflict with any
rule of law or with the terms of this Agreement. Following written notice to the
Trustee, the Certificate Insurer shall have exclusive right to determine, in its
sole discretion, the actions necessary to preserve and protect the Trust and the
Trust Fund. The Certificate Insurer shall be entitled to reimbursement for all
out-of-pocket costs and expenses of the Certificate Insurer in connection with
such action, proceeding or investigation, including (without limitation)
reasonable attorneys' fees and any judgment or settlement entered into affecting
the Certificate Insurer or the Certificate Insurer's interests, all of which
shall be included in the Reimbursement Amount.
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(c) In connection with any such action, proceeding or investigation for
any remedy available to the Trustee with respect to any matter that could
adversely affect the Trust, the Trust Fund or the rights or obligations of the
Certificate Insurer hereunder or under the Certificate Insurance Policy or the
Transaction Documents, including (without limitation) any insolvency or
bankruptcy proceeding in respect of any Originator, the Unaffiliated Seller, the
Servicer, the Depositor, the Trust or any Affiliate thereof, the Trustee hereby
agrees to cooperate with, and (unless a Certificate Insurer Default exists and
is continuing) to take such action as reasonably directed by, the Certificate
Insurer, including (without limitation) entering into such agreements and
settlements as the Certificate Insurer shall direct, in its sole discretion,
without the consent of any Certificateholder. Notwithstanding any other
provision herein or in any of the other Transaction Documents, the Trustee shall
not be liable to the Certificate Insurer or any Certificateholder for any such
action that conforms to the direction of the Certificate Insurer.
(d) Any judgment or settlement entered against or affecting the Trust
or the Trust Fund in connection with any action, proceeding or investigation
shall be paid by the Trustee from the Trust Fund out of funds that would
otherwise be distributed to the Holders of the Class X or R Certificates.
(e) The Trustee hereby agrees to provide to the Certificate Insurer
prompt written notice of any action, proceeding or investigation that names the
Trust or the Trustee as a party or that could adversely affect the Trust, the
Trust Fund or the rights or obligations of the Certificate Insurer hereunder or
under the Certificate Insurance Policy or the Transaction Documents, including
(without limitation) any insolvency or bankruptcy proceeding in respect of any
Originator, the Unaffiliated Seller, the Servicer, the Depositor, the Trust or
any Affiliate thereof.
(f) Notwithstanding anything contained herein or in any of the other
Transaction Documents to the contrary (other than at any time during which a
Certificate Insurer Default exists or is continuing), the Trustee shall not,
without the Certificate Insurer's prior written consent or unless directed by
the Certificate Insurer, undertake or join any litigation or agree to any
settlement of any action, proceeding or investigation affecting the Trust, the
Trust Fund or the rights or obligations of the Certificate Insurer hereunder or
under the Certificate Insurance Policy or the Transaction Documents.
(g) Each Holder of a Certificate, by acceptance of its Certificate, and
the Trustee agree that Certificate Insurer shall have such rights as set forth
in this Section, which are in addition to any rights of the Certificate Insurer
pursuant to the other provisions of the Transaction Documents, that the rights
set forth in this Section may be exercised by the Certificate Insurer, in its
sole discretion, without the need for the consent or approval of any
Certificateholder or the Trustee, notwithstanding any other provision contained
herein or in any of the other Transaction Documents, and that nothing contained
in this Section shall be deemed to be an obligation of the Certificate Insurer
to exercise any of the rights provided for herein.
(h) The Trustee shall, upon reasonable prior written request, permit
any representative of the Certificate Insurer, during the Trustee's normal
business hours, to examine all books of accounts, records, reports and other
information of the Trustee relating to the Certificates and the Trust Fund
(including, without limitation, the Mortgage Files), to make copies and extracts
therefrom and to discuss the Trustee's performance of its duties with respect to
the Transaction Documents with the Responsible Officers of the Trustee.
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Section 6.12 Supplemental Interest Payment Account. (a) The parties
hereto do hereby create and establish a trust, the "ABFS Mortgage Loan
Supplemental Interest Trust 2002-1" (the "Supplemental Interest Trust"). The
Supplemental Interest Trust shall hold a trust account at the corporate trust
office of the Trustee; the "Supplemental Interest Payment Account" to be held by
the Trustee in its name on behalf of the Supplemental Interest Trust. None of
the assets of the Supplemental Interest Trust shall be considered assets of the
REMIC Trust, and any amounts transferred from the REMIC Trust to the
Supplemental Interest Trust shall be treated as distributions with respect to
the Class X Certificates.
(b) On each Distribution Date, the Trustee shall withdraw from the
Supplemental Interest Payment Account and pay to the owners of each Supplemental
Interest Right (which owners shall, in the absence of contrary instructions
received by the Trustee from the Holders of the Class A-IO Certificates, be the
Holders of the Class A-IO Certificates), pro rata based on the Class A-IO
Available Funds Cap Current Shortfall Amount due to the Class A-IO
Certificateholders for such Distribution Date.
(c) On each Distribution Date, after application of clause (b) above,
the Trustee shall withdraw from the Supplemental Interest Payment Account and
pay to the owners of each Supplemental Interest Right (which owners shall, in
the absence of contrary instructions received by the Trustee from the Holders of
the Class A-1 Certificates, be the Holders of the Class A-1 Certificates), pro
rata based on the Class A-1 Available Funds Cap Carry-Forward Amount due to the
Class A-1 Certificateholders for such Distribution Date.
(d) Any portion of the Supplemental Interest Payment Amount Available
remaining after application of clauses (b) and (c) above shall be distributed to
the owners of the Class X Certificates pro rata in accordance with their
Percentage Interests.
(e) The Trustee, on behalf of the Supplemental Interest Trust, shall
comply with all requirements of the Code and applicable state and local law with
respect to the withholding from any distributions made by it to any Person
entitled thereto of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
(f) Notwithstanding any other provision of this Section 6.12, the right
to receive the Class A-1 Available Funds Cap Carry-Forward Amount or Class A-IO
Available Funds Cap Current Shortfall Amount (each such right, the "Supplemental
Interest Right") shall be separately transferable from the Class A-1 or the
Class A-IO Certificates, respectively, subject to the restrictions on transfer
set forth in Article IV hereof.
ARTICLE VII
DEFAULT
Section 7.01 Events of Default. (a) In case one or more of the
following events (each an "Event of Default") shall occur and be continuing:
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(i) any failure by the Servicer to remit to the Trustee any
payment required to be made by the Servicer under the terms of this
Agreement which continues unremedied for one (1) Business Day after the
date upon which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer and the Certificate
Insurer by the Trustee or to the Servicer and the Trustee by the
Certificate Insurer or Certificateholders of Class A Certificates
evidencing Percentage Interests of at least 25%;
(ii) the failure by the Servicer to make any required
Servicing Advance which failure continues unremedied for a period of
thirty (30) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer by the Trustee or to the Servicer and the Trustee by any
Certificateholder or the Certificate Insurer;
(iii) any failure on the part of the Servicer duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of the Servicer contained in this Agreement, or
the failure of any representation and warranty made pursuant to Section
3.01 to be true and correct which continues unremedied for a period of
thirty (30) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer, as the case may be, by the Depositor or the Trustee or to
the Servicer and the Trustee by any Certificateholder or the
Certificate Insurer;
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any present
or future federal or state bankruptcy, insolvency or similar law or for
the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer and such decree
or order shall have remained in force, undischarged or unstayed for a
period of forty-five (45) days;
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer or of or relating to all or
substantially all of the Servicer's property;
(vi) the Servicer shall admit in writing its inability to pay
its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations;
(vii) the Certificate Insurer shall notify the Trustee of any
event of default under the Insurance and Indemnity Agreement;
(viii) if on any Distribution Date the Rolling Six Month
Delinquency Rate exceeds 12.50% of the aggregate outstanding Principal
Balance of the Mortgage Loans;
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(ix) if on any Distribution Date, the Twelve Month Loss Amount
exceeds 2.50% of the sum of the aggregate outstanding Principal Balance
of the Mortgage Loans as of the close of business on the first day of
the twelfth preceding calendar month (or, if later, the Cut-Off Date);
(x) if on any Distribution Date, the Net Worth to be less than
$30,000,000; or
(xi) any Change of Control shall occur.
Then, and in each and every such case, so long as such Event of Default
shall not have been remedied: (x) with respect solely to clause (i) above, if
such payment is in respect of Periodic Advances or Compensating Interest owing
by the Servicer and such payment is not made by 12:00 Noon, New York time on the
fourth Business Day prior to the applicable Distribution Date, the Trustee, upon
receipt of written notice or discovery by a Responsible Officer of such failure,
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer and to the Certificate Insurer and the Trustee may (with the
consent of the Certificate Insurer), and shall, at the direction of the
Certificate Insurer, terminate all of the rights and obligations of the Servicer
under this Agreement and the Trustee, or a successor servicer appointed in
accordance with Section 7.02, shall immediately make such Periodic Advance or
payment of Compensating Interest and assume, pursuant to Section 7.02 hereof,
the duties of a successor Servicer; (y) with respect to clause (xi) above, such
Event of Default shall be waived in the event the Servicer receives the consent
of the Certificate Insurer, such consent not to be unreasonably withheld; and
(z) with respect to any other Event of Default, the Trustee shall, at the
direction of the Certificate Insurer, by notice in writing to the Servicer and a
Responsible Officer of the Trustee, terminate all the rights and obligations of
the Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, as servicer. Upon receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Mortgage Loans or otherwise, shall, subject to Section 7.02,
pass to and be vested in the Trustee or such other Person as may be specified by
the Certificate Insurer and the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, at the expense of the Servicer, any and all documents and other
instruments and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including, but
not limited to, the transfer and endorsement or assignment of the Mortgage Loans
and related documents. The Servicer agrees to cooperate (and pay any related
costs and expenses) with the Trustee in effecting the termination of the
Servicer's responsibilities and rights hereunder and the transfer of such
responsibilities and rights to a successor Servicer, including, without
limitation, the transfer to the Trustee or its designee for administration by it
of all amounts which shall at the time be credited by the Servicer to the
Collection Account or thereafter received with respect to the Mortgage Loans.
The Trustee shall promptly notify the Certificate Insurer and the Rating
Agencies of the occurrence of an Event of Default.
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Section 7.02 Trustee to Act; Appointment of Successor. (a) On and after
the time the Servicer receives a notice of termination pursuant to Section 7.01,
or the Trustee receives the resignation of the Servicer evidenced by an Opinion
of Counsel pursuant to Section 5.21, the Trustee shall promptly notify the
Rating Agencies, except as otherwise provided in Section 7.01, the Trustee or
such other Person as may be specified by the Certificate Insurer shall be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof arising on or after
the date of succession; provided, however, that the Trustee shall not be liable
for any actions or the representations and warranties of any servicer prior to
it and including, without limitation, the obligations of the Servicer set forth
in Sections 2.06 and 3.03. The Trustee, as successor servicer, shall be
obligated to pay Compensating Interest pursuant to Section 6.09 in any event and
to make advances pursuant to Section 5.18 unless, and only to the extent the
Trustee determines reasonably and in good faith that such advances would not be
recoverable pursuant to Section 5.04, such determination to be evidenced by a
certification of a Responsible Officer of the Trustee delivered to the
Certificate Insurer.
(b) Notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act or if the Certificate
Insurer so requests in writing to the Trustee, appoint, pursuant to such
direction of the Certificate Insurer, or if no such direction is provided to the
Trustee, pursuant to the provisions set forth in paragraph (c) below, or
petition a court of competent jurisdiction to appoint, any established mortgage
loan servicing institution acceptable to the Certificate Insurer that has a net
worth of not less than $15,000,000 as the successor to the Servicer hereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Servicer hereunder.
(c) In the event the Trustee is the successor servicer, it shall be
entitled to the same Servicing Compensation (including the Servicing Fee as
adjusted pursuant to the definition thereof) and other funds pursuant to Section
5.08 hereof as the Servicer if the Servicer had continued to act as servicer
hereunder. In the event the Trustee is unable or unwilling to act as successor
servicer, the Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth above. Such public announcement shall specify that
the successor servicer shall be entitled to the full amount of the aggregate
Servicing Fees hereunder as servicing compensation, together with the other
Servicing Compensation. Within thirty days after any such public announcement,
the Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest qualifying bid. The Trustee shall deduct from any sum
received by the Trustee from the successor to the Servicer in respect of such
sale, transfer and assignment all costs and expenses of any public announcement
and of any sale, transfer and assignment of the servicing rights and
responsibilities hereunder and the amount of any unreimbursed Servicing Advances
and Periodic Advances owed to the Trustee. After such deductions, the remainder
of such sum shall be paid by the Trustee to the Servicer at the time of such
sale, transfer and assignment to the Servicer's successor.
(d) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
The Servicer agrees to cooperate with the Trustee and any successor servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
servicer, as applicable, at the Servicer's cost and expense, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor servicer, as applicable, all amounts that then have been or should
have been deposited in the Collection Account by the Servicer or that are
thereafter received with respect to the Mortgage Loans. Any collections received
by the Servicer after such removal or resignation shall be endorsed by it to the
Trustee and remitted directly to the Trustee or, at the direction of the
Trustee, to the successor servicer. Neither the Trustee nor any other successor
servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer hereunder. Notwithstanding anything to the
contrary herein, no appointment of a successor to the Servicer under this
Agreement shall be effective until the Certificate Insurer shall have consented
thereto, and written notice of such proposed appointment shall have been
provided by the Trustee to the Certificate Insurer and to each
Certificateholder. The Trustee shall not resign as servicer until a successor
servicer reasonably acceptable to the Certificate Insurer has been appointed or
until a successor servicer has been appointed in accordance with paragraph (c)
above. The Certificate Insurer shall have the right to remove the Trustee (or
any successor Servicer) as successor Servicer under this Section 7.02 without
cause, and the Trustee shall appoint such other successor Servicer as directed
by the Certificate Insurer.
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(e) Pending appointment of a successor to the Servicer hereunder, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as the
Certificate Insurer and such successor shall agree; provided, however, that
unless otherwise agreed by the Certificate Insurer, no such compensation shall
be in excess of that permitted the Servicer pursuant to Section 5.08, together
with other Servicing Compensation. The Servicer, the Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
Section 7.03 Waiver of Defaults. The Majority Certificateholders may,
on behalf of all Certificateholders, and subject to the consent of the
Certificate Insurer, waive any events permitting removal of the Servicer as
servicer pursuant to this Article VII; provided, however, that the Majority
Certificateholders may not waive a default in making a required distribution on
a Certificate without the consent of the holder of such Certificate. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived. Notice of any such waiver shall be given by the Trustee to
the Rating Agencies and the Certificate Insurer.
Section 7.04 Rights of the Certificate Insurer to Exercise Rights of
Class A Certificateholders. By accepting its Certificate, each Class A
Certificateholder agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall be deemed to be the Certificateholders for all
purposes (other than with respect to the receipt of payment on the Certificates)
and shall have the right to exercise all rights of the Class A
Certificateholders under this Agreement and under the Class A Certificates
without any further consent of the Class A Certificateholders, including,
without limitation:
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(a) the right to require the Unaffiliated Seller to repurchase Mortgage
Loans pursuant to Section 2.06 or 3.03 hereof to the extent set forth in such
Sections;
(b) the right to give notices of breach or to terminate the rights and
obligations of the Servicer as servicer pursuant to Section 7.01 hereof and to
consent to or direct waivers of Servicer defaults pursuant to Section 7.03
hereof;
(c) the right to direct the actions of the Trustee during the
continuance of an Event of Default pursuant to Sections 7.01 and 7.02 hereof;
(d) the right to institute proceedings against the Servicer pursuant to
Section 7.01 hereof;
(e) the right to direct the Trustee to investigate certain matters
pursuant to Section 9.02(a)(v) hereof;
(f) the right to remove the Trustee pursuant to Section 9.07 hereof;
(g) the right to direct foreclosures upon the failure of the Servicer
to do so in accordance with the provisions of Section 5.06 of this Agreement;
and
(h) any rights or remedies expressly given the Majority
Certificateholders.
In addition, each Certificateholder agrees that, subject to Section
10.02, unless a Certificate Insurer Default exists, the rights specifically
enumerated above may only be exercised by the Certificateholders with the prior
written consent of the Certificate Insurer.
Section 7.05 Trustee To Act Solely with Consent of the Certificate
Insurer. Unless a Certificate Insurer Default exists, the Trustee shall not,
without the Certificate Insurer's consent or unless directed by the Certificate
Insurer:
(a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 7.01 hereof;
(b) agree to any amendment pursuant to Section 10.03 hereof; or
(c) undertake any litigation.
The Certificate Insurer may, in writing and in its sole discretion
renounce all or any of its rights under Sections 7.04, 7.05 or 7.06 or any
requirement for the Certificate Insurer's consent for any period of time.
Section 7.06 Mortgage Loans, Trust Fund and Accounts Held for Benefit
of the Certificate Insurer. (a) The Trustee shall hold the Trust Fund and shall
cause the Collateral Agent on its behalf to hold the Mortgage Files for the
benefit of the Certificateholders and the Certificate Insurer and all references
in this Agreement and in the Certificates to the benefit of Holders of the
Certificates shall be deemed to include the Certificate Insurer. The Trustee
shall cooperate in all reasonable respects with any reasonable request by the
Certificate Insurer for action to preserve or enforce the Certificate Insurer's
rights or interests under this Agreement and the Certificates unless, as stated
in an Opinion of Counsel addressed to the Trustee and the Certificate Insurer,
such action is adverse to the interests of the Certificateholders or diminishes
the rights of the Certificateholders or imposes additional burdens or
restrictions on the Certificateholders.
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(b) The Servicer hereby acknowledges and agrees that it shall service
the Mortgage Loans for the benefit of the Certificateholders and for the benefit
of the Certificate Insurer, and all references in this Agreement to the benefit
of or actions on behalf of the Certificateholders shall be deemed to include the
Certificate Insurer.
Section 7.07 Certificate Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Certificates to the contrary, if a
Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of all of its rights under this
Agreement, the provisions of this Article VII and all other provisions of this
Agreement which (a) permit the Certificate Insurer to exercise rights of the
Certificateholders, (b) restrict the ability of the Certificateholders, the
Servicer or the Trustee to act without the consent or approval of the
Certificate Insurer, (c) provide that a particular act or thing must be
acceptable to the Certificate Insurer, (d) permit the Certificate Insurer to
direct (or otherwise to require) the actions of the Trustee, the Servicer or the
Certificateholders, (e) provide that any action or omission taken with the
consent, approval or authorization of the Certificate Insurer shall be
authorized hereunder or shall not subject the party taking or omitting to take
such action to any liability hereunder or (f) which have a similar effect, shall
be of no further force and effect and the Trustee shall administer the Trust
Fund and perform its obligations hereunder solely for the benefit of the Holders
of the Certificates. Nothing in the foregoing sentence, nor any action taken
pursuant thereto or in compliance therewith, shall be deemed to have released
the Certificate Insurer from any obligation or liability it may have to any
party or to the Certificateholders hereunder, under any other agreement,
instrument or document (including, without limitation, the Certificate Insurance
Policy) or under applicable law.
ARTICLE VIII
TERMINATION
Section 8.01 Termination. (a) Subject to Section 8.02, this Agreement
shall terminate upon notice to the Trustee of the later of the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or Periodic Advances of same by the Servicer), or the disposition
of all funds with respect to the last Mortgage Loan and the remittance of all
funds due hereunder and the payment of all Reimbursement Amounts, Premium
Amounts, Trustee Fees and other amounts due and payable to the Certificate
Insurer and the Trustee; provided, however, that in no event shall the Trust
established by this Agreement terminate later than: (i) twenty-one years after
the death of the last surviving lineal descendant of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, late
Ambassador of the United States to the Court of St. ▇▇▇▇▇, alive as of the date
hereof or (ii) the Distribution Date in December 2032.
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(b) In addition, subject to Section 8.02, Servicer may, at its option
and at its sole cost and expense, elect to cause this Agreement to be terminated
and all the Class A Certificates to be redeemed in whole, but not in part, on
the first Distribution Date after any Distribution Date on which the Aggregate
Principal Balance is equal to or less than 10% of the Maximum Pool Principal
Balance (the "Clean-Up Call Date") by purchasing, on such succeeding
Distribution Date, all of the outstanding Mortgage Loans and REO Properties at a
price equal to the sum of (i) 100% of the aggregate Principal Balance of each
outstanding Mortgage Loan and each REO Property and (ii) the greater of (1) the
Aggregate amount of accrued and unpaid interest on the Mortgage Loans through
the related Due Period and (2) 30 days' accrued interest thereon computed at a
rate equal to the related Mortgage Interest Rate, in each case net of the
Servicing Fee, (iii) any Reimbursement Amounts or Premium Amounts due to the
Certificate Insurer under this Agreement, and (iv) any Trustee Fees or other
amounts due to the Trustee hereunder (the "Termination Price"); provided, that,
in no event will the Termination Price be less than the sum of the Class A-1
Certificate Principal Balance, the Class A-2 Certificate Principal Balance,
Class A-3 Certificate Principal Balance, Class A-4 Certificate Principal Balance
and Class A-5 Certificate Principal Balance, plus all accrued and unpaid
interest on the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class A-5 and Class
A-IO Certificates plus all accrued and unpaid Premium Amounts, Reimbursement
Amounts and all amounts due the Trustee hereunder plus all unreimbursed Periodic
Advances and Servicing Advances. Any such purchase shall be accomplished by
deposit of the Termination Price into the Distribution Account. No such
termination is permitted without the prior written consent of the Certificate
Insurer if it would result in a draw on the Certificate Insurance Policy.
(c) If on any Distribution Date, the Servicer determines that there are
no outstanding Mortgage Loans and no other funds or assets in the Trust Fund
other than funds in the Distribution Account, the Servicer shall send a final
distribution notice promptly to each such Certificateholder and the Certificate
Insurer in accordance with paragraph (d) below.
(d) Notice of any termination, specifying the Distribution Date upon
which the Trust Fund will terminate and the Certificateholders shall surrender
their Certificates to the Trustee for payment of the final distribution and
cancellation, shall be given promptly by the Servicer by letter to
Certificateholders and the Certificate Insurer mailed during the month of such
final distribution before the Servicer Remittance Date in such month, specifying
(i) the Distribution Date upon which final payment of the Certificates will be
made upon presentation and surrender of Certificates at the office of the
Trustee therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified. The Servicer shall
give such notice to the Trustee therein specified. The Servicer shall give such
notice to the Trustee at the time such notice is given to Certificateholders.
The obligations of the Certificate Insurer hereunder shall terminate upon the
deposit by the Servicer with the Trustee of a sum sufficient to purchase all of
the Mortgage Loans and REO Properties as set forth above or when the Class A-1
Certificate Principal Balance, Class A-2 Certificate Principal Balance, Class
A-3 Certificate Principal Balance, Class A-4 Certificate Principal Balance and
the Class A-5 Certificate Principal Balance have been reduced to zero.
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(e) In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned written notice, the Servicer shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, all of the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within nine months after the second notice all the Certificates shall
not have been surrendered for cancellation, the Class R Certificateholders shall
be entitled to all unclaimed funds and other assets which remain subject hereto
and the Trustee upon transfer of such funds shall be discharged of any
responsibility for such funds and the Certificateholders shall look only to the
Class R Certificateholders for payment and not to the Certificate Insurer or the
Trustee. Such funds shall remain uninvested.
Section 8.02 Additional Termination Requirements. (a) In the event that
the Servicer exercises its purchase option as provided in Section 8.01, the
Trust Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee and the Certificate Insurer have been furnished
with an Opinion of Counsel to the effect that the failure of the Trust Fund to
comply with the requirements of this Section 8.02 will not (i) result in the
imposition of taxes on "prohibited transactions" of any REMIC created hereunder
as defined in Section 860F of the Code or (ii) cause any REMIC created hereunder
to fail to qualify as a REMIC at any time that any Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5 or Class A-IO Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date the
Servicer shall adopt and the Trustee shall sign, a plan of complete
liquidation of each REMIC created hereunder meeting the requirements of
a "Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder;
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date,
the Trustee shall sell all of the assets of the REMIC I to the Servicer
for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (A) to the Class A-1 Certificateholders, the
Class A-1 Certificate Principal Balance, plus one month's interest
thereon at the Class A-1 Pass-Through Rate, (B) to the Class A-2
Certificateholders, the Class A-2 Certificate Principal Balance, plus
one month's interest thereon at the Class A-2 Pass-Through Rate, (C) to
the Class A-3 Certificateholders, the Class A-3 Certificate Principal
Balance, plus one month's interest thereon at the Class A-3
Pass-Through Rate, (D) to the Class A-4 Certificateholders, the Class
A-4 Certificate Principal Balance, plus one month's interest thereon at
the Class A-4 Pass-Through Rate, (E) to the Class A-5
Certificateholders, the Class A-5 Certificate Principal Balance, plus
one month's interest thereon at the Class A-5 Pass-Through Rate, (F) to
the Certificate Insurer any amounts due the Certificate Insurer under
this Agreement or the Insurance and Indemnity Agreement and unpaid,
including all Reimbursement Amounts, and (G) to the Class X
Certificateholders, all cash on hand after such payment to the Class
▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4 and Class A-5 Certificateholders
(other than cash retained to meet claims) and the Trust Fund shall
terminate at such time; provided, however that any such payment will be
made after all outstanding fees, costs and expenses of the Trustee have
been paid in full.
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(b) By their acceptance of the Certificates, the Holders thereof hereby
agree to appoint the Servicer as their attorney in fact to: (i) adopt such a
plan of complete liquidation (and the Certificateholders hereby appoint the
Trustee as their attorney in fact to sign such plan) as appropriate or upon the
written request of the Certificate Insurer and (ii) to take such other action in
connection therewith as may be reasonably required to carry out such plan of
complete liquidation all in accordance with the terms hereof.
Section 8.03 Accounting Upon Termination of Servicer. Upon termination
of the Servicer, the Servicer shall, at its expense:
(a) deliver to its successor or, if none shall yet have been appointed,
to the Trustee, the funds in any Account;
(b) deliver to its successor or, if none shall yet have been appointed,
to the Collateral Agent on behalf of the Trustee all Mortgage Files and related
documents and statements held by it hereunder and a Mortgage Loan portfolio
computer tape;
(c) deliver to its successor or, if none shall yet have been appointed,
to the Trustee and, upon request, to the Certificateholders a full accounting of
all funds, including a statement showing the Monthly Payments collected by it
and a statement of monies held in trust by it for the payments or charges with
respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to its successor and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the "Servicer" under this
Agreement.
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of Trustee. (a) The Trustee, prior to the
occurrence of an Event of Default of which a Responsible Officer of the Trustee
shall have actual knowledge and after the curing of all Events of Default which
may have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge has occurred and
has not been cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
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(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement; provided, however,
that the Trustee shall not be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Servicer or the Unaffiliated Seller hereunder. If
any such instrument is found not to conform on its face to the requirements of
this Agreement, the Trustee will, at the expense of the Servicer notify the
Certificate Insurer of such instrument in the event the Trustee, after so
requesting, does not receive a satisfactorily corrected instrument.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge, and
after the curing of all such Events of Default which may have occurred,
the duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or other
officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with this Agreement or at the direction of the
Certificate Insurer, unless a Certificate Insurer Default shall have
occurred and be continuing, or with the consent of the Certificate
Insurer, unless a Certificate Insurer Default shall have occurred and
be continuing, the Majority Certificateholders, relating to the time,
method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement;
(iv) the Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Event of Default
(except an Event of Default with respect to the nonpayment of any
amount described in Section 7.01(a)), unless a Responsible Officer of
the Trustee shall have received written notice thereof. In the absence
of receipt of such notice, the Trustee may conclusively assume that
there is no default or Event of Default;
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(v) the Trustee shall not be required to expend or risk its
own funds or otherwise incur financial liability for the performance of
any of its duties hereunder or the exercise of any of its rights or
powers if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it and none of the provisions contained in
this Agreement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of
the Servicer under this Agreement except during such time, if any, as
the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement; and
(vi) subject to the other provisions of this Agreement (and
except in its capacity as successor Servicer) and without limiting the
generality of this Section, the Trustee shall have no duty (A) to see
to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance
of any such recording or filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (B) to see to any insurance,
(C) to see to the payment or discharge of any tax, assessment, or other
governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust, the
Trust Fund, the Certificateholders or the Mortgage Loans, (D) to
confirm or verify the contents of any reports or certificates of the
Servicer delivered to the Trustee pursuant to this Agreement believed
by the Trustee to be genuine and to have been signed or presented by
the proper party or parties.
(d) It is intended that the Trust Fund formed hereunder (other than the
Capitalized Interest Account, the Supplemental Interest Payment Account and the
Pre-funding Account) shall constitute, and that the affairs of the REMIC Trust
shall be conducted so as to qualify it as three separate REMICs as defined in
and in accordance with the REMIC Provisions. In furtherance of such intention,
the Unaffiliated Seller, as Class R Certificateholder, covenants and agrees that
it shall appoint the Servicer to act as agent (and the Servicer is hereby
appointed to act as agent) and as Tax Matters Person on behalf of each REMIC
created hereunder, and that in such capacities it shall:
(i) prepare, sign and file, or cause to be prepared and filed,
in a timely manner, a U.S. Real Estate Mortgage Investment Conduit
Income Tax Return (Form 1066) and any other Tax Return required to be
filed by each REMIC created hereunder, using a calendar year as the
taxable year for each REMIC created hereunder;
(ii) make, or cause to be made, an election, on behalf of each
REMIC created hereunder, to be treated as a REMIC on the federal tax
return of each REMIC created hereunder for its first taxable year;
(iii) prepare and forward, or cause to be prepared and
forwarded, to the Trustee, the Certificateholders and to the Internal
Revenue Service and any other relevant governmental taxing authority
all information returns or reports as and when required to be provided
to them in accordance with the REMIC Provisions;
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(iv) to the extent that the affairs of the Trust Fund are
within its control, conduct such affairs of the Trust Fund at all times
that any Certificates are outstanding so as to maintain the status of
each REMIC created hereunder as a REMIC under the REMIC Provisions and
any other applicable federal, state and local laws, including, without
limitation, information reports relating to "original issue discount,"
as defined in the Code, based upon the Prepayment Assumption and
calculated by using the issue price of the Certificates;
(v) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the REMIC status of
any REMIC created hereunder;
(vi) pay the amount of any and all federal, state, and local
taxes, including, without limitation, upon the Trustee or the
Certificateholders in connection with the Trust, the Trust Fund or the
Mortgage Loans, prohibited transaction taxes as defined in Section 860F
of the Code, other than any amount due as a result of a transfer or
attempted or purported transfer in violation of Section 4.02, imposed
on any REMIC created hereunder when and as the same shall be due and
payable (but such obligation shall not prevent the Unaffiliated Seller
or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Unaffiliated Seller
from withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings).
(vii) ensure that any such returns or reports filed on behalf
of any REMIC created hereunder by the Trustee are properly executed by
the appropriate person and submitted in a timely manner;
(viii) represent any REMIC created hereunder in any
administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative
adjustment as to any taxable year of any REMIC created hereunder, enter
into settlement agreements with any governmental taxing agency, extend
any statute of limitations relating to any item of any REMIC created
hereunder and otherwise act on behalf of each REMIC created hereunder
in relation to any tax matter involving any REMIC created hereunder;
(ix) as provided in Section 5.11 hereof, make available
information necessary for the computation of any tax imposed (1) on
transferors of residual interests to transferees that are not Permitted
Transferees or (2) on pass-through entities, any interest in which is
held by an entity which is not a Permitted Transferee. The Trustee
covenants and agrees that it will cooperate with the Servicer in the
foregoing matters and that it will sign, as Trustee, any and all Tax
Returns required to be filed by each REMIC created hereunder.
Notwithstanding the foregoing, at such time as the Trustee becomes the
successor Servicer, the holder of the largest percentage of the Class R
Certificates shall serve as Tax Matters Person until such time as an
entity is appointed to succeed the Trustee as Servicer;
(x) make available to the Internal Revenue Service and those
Persons specified by the REMIC Provisions all information necessary to
compute any tax imposed (A) as a result of the Transfer of an Ownership
Interest in a Class R Certificate to any Person who is not a Permitted
Transferee, including the information described in Treasury regulations
sections 1.860D-1(b)(5) and 1.860E-2(a)(5)with respect to the "excess
inclusions" of such Class R Certificate and (B) as a result of any
regulated investment company, real estate investment trust, common
trust fund, partnership, trust, estate or organization described in
Section 1381 of the Code that holds an Ownership Interest in a Class R
Certificate having as among its record holders at any time any Person
that is not a Permitted Transferee. Reasonable compensation for
providing such information may be accepted by the Trustee;
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(xi) pay out of its own funds, without any right of
reimbursement, any and all tax related expenses of each REMIC created
hereunder (including, but not limited to, tax return preparation and
filing expenses and any professional fees or expenses related to audits
or any administrative or judicial proceedings with respect to each
REMIC created hereunder that involve the Internal Revenue Service or
state tax authorities), other than the expense of obtaining any Opinion
of Counsel required pursuant to Sections 3.03, 5.10 and 8.02 and other
than taxes except as specified herein;
(xii) upon filing with the Internal Revenue Service, the
Trustee shall furnish to the Holders of the Class R Certificates the
Form 1066 and each Form 1066Q and the Unaffiliated Seller shall respond
promptly to written requests made not more frequently than quarterly by
any Holder of Class R Certificates with respect to the following
matters:
(A) the original projected principal and interest cash flows on
the Closing Date on the regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
(B) the projected remaining principal and interest cash flows as
of the end of any calendar quarter with respect to the regular
and residual interests created hereunder and the Mortgage
Loans, based on the Prepayment Assumption;
(C) the Prepayment Assumption and any interest rate assumptions
used in determining the projected principal and interest cash
flows described above;
(D) the original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to the
regular or residual interests created hereunder and with
respect to the Mortgage Loans, together with each constant
yield to maturity used in computing the same;
(E) the treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness
income of any REMIC created hereunder with respect to such
regular interests or bad debt deductions claimed with respect
to the Mortgage Loans;
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(F) the amount and timing of any non-interest expenses of any
REMIC created hereunder; and
(G) any taxes (including penalties and interest) imposed on any
REMIC created hereunder, including, without limitation, taxes
on "prohibited transactions," "contributions" or "net income
from foreclosure property" or state or local income or
franchise taxes; and
(xiii) make any other required reports in respect of interest payments in
respect of the Mortgage Loans and acquisitions and abandonments of
Mortgaged Property to the Internal Revenue Service and/or the
borrowers, as applicable.
(e) In the event that any tax is imposed on "prohibited transactions"
of any REMIC created hereunder as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of any REMIC created hereunder as
defined in Section 860G(c) of the Code, on any contribution to any REMIC created
hereunder after the Startup Day pursuant to Section 860G(d) of the Code, or any
other tax is imposed, such tax shall be paid by (i) the Trustee, if such tax
arises out of or results from a breach by the Trustee of any of its obligations
under this Agreement, (ii) the Servicer, if such tax arises out of or results
from a breach by the Servicer of any of its obligations under this Agreement, or
otherwise (iii) the holders of the Class R Certificates in proportion to their
Percentage Interests. To the extent such tax is chargeable against the holders
of the Class R Certificates, notwithstanding anything to the contrary contained
herein, the Trustee is hereby authorized to retain from amounts otherwise
distributable to the Holders of the Class R Certificates on any Distribution
Date sufficient funds to for the payment of such tax.
Section 9.02 Certain Matters Affecting the Trustee. (a) Except as
otherwise provided in Section 9.01:
(i) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
Opinion of Counsel, advice of counsel, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) the Trustee may consult with counsel and any Opinion of
Counsel or written advice of counsel shall be full and complete
authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such
Opinion of Counsel or advice of counsel;
(iii) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend by litigation hereunder or in relation hereto at the
request, order or direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders or the Certificate Insurer, as
applicable, shall have offered to the Trustee reasonable security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which may be incurred therein by the Trustee or thereby;
nothing contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge (which
has not been cured), to exercise such of the rights and powers vested
in it by this Agreement, and to use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;
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(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in
writing to do so by the Certificate Insurer or the Majority
Certificateholders; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the Trustee
may require reasonable indemnity satisfactory to the Trustee against
such cost, expense or liability as a condition to taking any such
action. The reasonable expense of every such examination shall be paid
by the Servicer or, if paid by the Trustee, shall be repaid by the
Servicer upon demand from the Servicer's own funds;
(vi) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act;
(vii) the Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the
powers granted hereunder; and
(viii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, attorneys or custodians and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such
agent, attorney or custodian appointed by the Trustee with due care.
(b) Following the Startup Day, the Trustee shall not knowingly accept
any contribution of assets to the Trust Fund, unless the Trustee and the
Certificate Insurer shall have received an Opinion of Counsel (at the expense of
the Servicer) to the effect that the inclusion of such assets in the Trust Fund
will not cause any REMIC created hereunder to fail to qualify as a REMIC at any
time that any Certificates are outstanding or subject any REMIC created
hereunder to any tax under the REMIC Provisions or other applicable provisions
of federal, state and local law or ordinances. The Trustee agrees to indemnify
the Trust Fund, the Certificate Insurer and the Servicer for any taxes and
costs, including any attorney's fees, imposed or incurred by the Trust Fund or
the Servicer as a result of the breach of the Trustee's covenants set forth
within this subsection (b).
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Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans. The
recitals, representations, warranties and covenants contained herein or in the
Certificates (other than the certificate of authentication on the Certificates)
shall be taken as the statements, representations, warranties and covenants of
the Unaffiliated Seller or the Servicer as the case may be, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Depositor of any of the Certificates or the proceeds
of the Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Collection Account by the Servicer. The Trustee shall not be responsible for the
legality or validity of the Agreement or the validity, priority, perfection or
sufficiency of the security for the Certificates issued or intended to be issued
hereunder. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgor of Certificates
with the same rights it would have if it were not Trustee, and may otherwise
deal with the parties hereto.
Section 9.05 Trustee's Fees and Expenses; Indemnity. (a) The Trustee
acknowledges that in consideration of the services rendered by the Trustee in
the execution of the trust hereby created and in the exercise and performance of
any of the powers and duties hereunder it is entitled to receive the Trustee's
Fee in accordance with the provision of Section 6.05(a) (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
any express trust). Additionally, the Trustee hereby covenants, for the benefit
of the Depositor and the Certificate Insurer, that the Trustee has arranged
separately with the Servicer for the payment or reimbursement to the Trustee of
all of the Trustee's expenses in connection with this Agreement, including,
without limitation, all reasonable out of pocket expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ). Notwithstanding any other provision of this Agreement to the
contrary, the Servicer covenants and agrees to indemnify the Trustee and its
officers, directors, employees and agents from, and hold it harmless against,
any and all losses, liabilities, damages, claims or expenses incurred in
connection with any legal action relating to this Agreement, the Certificates or
incurred in connection with the administration of the Trust, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence of the Trustee in the performance of its duties hereunder or by
reason of the Trustee's reckless disregard of obligations and duties hereunder.
For the avoidance of doubt, the parties hereto acknowledge that it is the intent
of the parties that the Depositor and the Certificate Insurer shall not pay any
of the Trustee's fees and expenses in connection with this transaction.
(b) The Trust Fund, the Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Servicer and held harmless
against any loss, liability, claim, damage or expense arising out of, or imposed
upon the Trust or the Trustee through the Servicer's acts or omissions in
violation of this Agreement, other than any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence of the Trustee in the
performance of its duties hereunder or by reason of the Trustee's reckless
disregard of obligations and duties hereunder. The Servicer shall immediately
notify the Trustee, the Servicer, the Depositor, the Certificate Insurer and all
Certificateholders if a claim is made by a third party with respect to this
Agreement, and the Servicer shall assume (with the consent of the Certificate
Insurer) the defense of any such claim and advance all expenses in connection
therewith, including reasonable counsel fees, and promptly advance funds to pay,
discharge and satisfy any judgment or decree which may be entered against the
Servicer, the Depositor, the Trustee, the Certificate Insurer and/or any
Certificateholder in respect of such claim. The obligations of the Servicer
under this Section 9.05 arising prior to any resignation or termination of the
Servicer hereunder shall survive the resignation or removal of the Trustee,
termination of the Servicer and payment of the Certificates, and shall extend to
any co-trustee or separate trustee appointed pursuant to this Article IX.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Trustee be liable for special, indirect or consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action.
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Section 9.06 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a banking entity (a) organized and doing
business under the laws of any state or the United States of America subject to
supervision or examination by federal or state authority, (b) authorized under
such laws to exercise corporate trust powers, including taking title to the
Trust Fund assets on behalf of the Certificateholders, (c) be a wholly owned
subsidiary of a bank holding company having a combined capital and surplus of at
least $50,000,000, (d) whose long-term deposits, if any, shall be rated at least
BBB- by S&P and Baa3 by ▇▇▇▇▇'▇ (except as provided herein) or such lower
long-term deposit rating as may be approved in writing by the Certificate
Insurer, and (e) reasonably acceptable to the Certificate Insurer as evidenced
in writing. If such banking entity publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of determining an entity's combined
capital and surplus for clause (c) of this Section, the amount set forth in its
most recent report of condition so published shall be deemed to be its combined
capital and surplus. In case at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.07.
Section 9.07 Resignation and Removal of the Trustee. (a) The Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Servicer, the Certificate Insurer and the
Depositor. Upon receiving such notice of resignation, the Certificate Insurer
may promptly appoint a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the resigning Trustee and to the
successor trustee. A copy of such instrument shall be delivered to the
Depositor, the Certificateholders, the Certificate Insurer and the Unaffiliated
Seller by the Servicer. Unless a successor trustee shall have been so appointed
and shall have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Servicer or the Certificate Insurer, or if at any time
the Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or the Trustee shall breach any of its obligations hereunder in any
material respect then the Servicer (with the consent of the Certificate Insurer)
or the Certificate Insurer may remove the Trustee and the Servicer shall, at the
direction of the Certificate Insurer, and the Certificate Insurer may, within
thirty (30) days after such removal, appoint, a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor trustee. A copy of such instrument shall be
delivered to the Depositor, the Certificateholders, the Certificate Insurer and
the Unaffiliated Seller by the Servicer.
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(c) If the Trustee fails to perform in accordance with the terms of
this Agreement, the Majority Certificateholders (with the consent of the
Certificate Insurer) or the Certificate Insurer may remove the Trustee and
appoint a successor trustee by written instrument or instruments, in triplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Servicer, one complete set to
the Trustee and the Certificate Insurer so removed and one complete set to the
successor Trustee so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 9.08.
Section 9.08 Successor Trustee. Any successor trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the
Depositor, the Certificate Insurer, the Unaffiliated Seller, the Servicer and to
its predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and related documents and statements held by it
hereunder, and the Servicer and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations. No successor trustee shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee shall be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register and to the Rating Agencies. If the Servicer fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Servicer.
Section 9.09 Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated or
any corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or national banking association succeeding to the business of the
trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 9.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
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Section 9.10 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
9.10 and the consent of the Certificate Insurer, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 9.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 9.08 hereof.
(b) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co-trustee, provided
that the Trustee appointed such separate trustee or co-trustee with due care. If
any separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
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Section 9.11 Tax Returns. The Servicer, upon request, will promptly
furnish the Trustee with all such information as may be reasonably required in
connection with the Trustee's preparation of all Tax Returns of the Trust Fund
or for the purpose of the Trustee responding to reasonable requests for
information made by Certificateholders in connection with tax matters and, upon
request within five (5) Business Days after its receipt thereof, the Servicer
shall (a) sign on behalf of the Trust Fund any Tax Return that the Servicer is
required to sign pursuant to applicable federal, state or local tax laws, and
(b) cause such Tax Return to be returned to the Trustee for filing and for
distribution to Certificateholders if required.
Section 9.12 Retirement of Certificates. The Trustee shall, upon the
retirement of the Certificates pursuant hereto or otherwise, furnish to the
Certificate Insurer a notice of such retirement, and, upon retirement of the
Certificates and the expiration of the term of the Certificate Insurance Policy,
shall surrender the Certificate Insurance Policy to the Certificate Insurer for
cancellation.
Section 9.13 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, any such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been recovered.
Section 9.14 Suits for Enforcement. In case an Event of Default or
other default by the Servicer hereunder shall occur and be continuing, the
Trustee, in its discretion, but subject to Section 9.01 and Section 7.01, as
applicable, may proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee or the
Certificateholders.
ARTICLE X
THE COLLATERAL AGENT
Section 10.01 Duties of the Collateral Agent. (a) The Collateral Agent,
prior to the occurrence of an Event of Default of which a Responsible Officer
shall have actual knowledge and after the curing of all Events of Default which
may have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default of which a
Responsible Officer shall have actual knowledge has occurred and has not been
cured or waived, the Collateral Agent shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
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(b) The Collateral Agent, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Collateral Agent which are specifically required to
be furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform on their face to the requirements of this
Agreement; provided, however, that the Collateral Agent shall not be responsible
for the accuracy or content of any resolution, certificate, statement, opinion,
report, document, order or other instrument furnished by any Person hereunder.
If any such instrument is found not to conform on its face to the requirements
of this Agreement, the Collateral Agent shall note it as such on the Initial
Certification or Final Certification delivered pursuant to Section 2.06(b).
(c) No provision of this Agreement shall be construed to relieve the
Collateral Agent from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default of which a
Responsible Officer shall have actual knowledge, and after the curing
of all such Events of Default which may have occurred, the duties and
obligations of the Collateral Agent shall be determined solely by the
express provisions of this Agreement, the Collateral Agent shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Collateral
Agent and, in the absence of bad faith on the part of the Collateral
Agent, the Collateral Agent may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Collateral Agent and
conforming to the requirements of this Agreement;
(ii) the Collateral Agent shall not be personally liable for
an error of judgment made in good faith by a Responsible Officer or
other officers of the Collateral Agent, unless it shall be proved that
the Collateral Agent was negligent in ascertaining the pertinent facts;
(iii) the Collateral Agent shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with this Agreement or at the direction of the
Certificate Insurer or the Trustee or with the consent of the
Certificate Insurer or the Trustee;
(iv) the Collateral Agent shall not be required to expend or
risk its own funds or otherwise incur financial liability for the
performance of any of its duties hereunder or the exercise of any of
its rights or powers if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it and none of the provisions
contained in this Agreement shall in any event require the Collateral
Agent to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer or the Trustee under this
Agreement; and
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(v) subject to the other provisions of this Agreement and
without limiting the generality of this Section 10.01, the Collateral
Agent shall have no duty (A) to see to any recording, filing, or
depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security
interest, or to see to the maintenance of any such recording or filing
or depositing or to any rerecording, refiling or redepositing of any
thereof, (B) to see to any insurance, (C) to see to the payment or
discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or
levied against, any part of the Trust, the Trust Fund, the
Certificateholders or the Mortgage Loans, (D) to confirm or verify the
contents of any reports or certificates of any Person delivered to the
Collateral Agent pursuant to this Agreement believed by the Collateral
Agent to be genuine and to have been signed or presented by the proper
party or parties.
Section 10.02 Certain Matters Affecting the Collateral Agent. Except as
otherwise provided in Section 10.01 hereof:
(a) the Collateral Agent may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate, Opinion of
Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) the Collateral Agent may consult with counsel and any Opinion of
Counsel or written advice of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such Opinion of
Counsel or advice of such counsel;
(c) the Collateral Agent shall be under no obligation to exercise any
of the powers vested in it by this Agreement or to institute, conduct or defend
by litigation hereunder or in relation hereto at the request, order or direction
of the Certificate Insurer or any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders or the Certificate
Insurer, as applicable, shall have offered to the Trustee reasonable security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which may be incurred therein by the Collateral Agent or thereby;
nothing contained herein shall, however, relieve the Collateral Agent of the
obligation, upon the occurrence of an Event of Default of which a Responsible
Officer shall have actual knowledge (which has not been cured), to exercise such
of the rights and powers vested in it by this Agreement, and to use the same
degree of care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own affairs;
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(d) the Collateral Agent shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(e) the Collateral Agent shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the Certificate
Insurer or the majority of Certificate Holders; provided, however, that if the
payment within a reasonable time to the Collateral Agent of the costs, expenses
or liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Collateral Agent, not reasonably assured to the
Collateral Agent by the security afforded to it by the terms of this Agreement,
the Collateral Agent may require reasonable indemnity reasonably satisfactory to
the Collateral Agent against such cost, expense or liability as a condition to
taking any such action. The reasonable expense of every such examination shall
be paid by the Servicer or, if paid by the Collateral Agent, shall be repaid by
the Servicer upon demand from the Servicer's own funds;
(f) the right of the Collateral Agent to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Collateral Agent shall not be answerable for anything other than its negligence
or willful misconduct in the performance of such act;
(g) the Collateral Agent may execute any of the powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys.
Section 10.03 Collateral Agent Not Liable for Certificates or Mortgage
Loans. The recitals contained herein shall be taken as the statements of the
Trust and the Servicer, as the case may be, and the Collateral Agent assumes no
responsibility for their correctness. The Collateral Agent makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document. The Collateral Agent shall not be accountable
for the use or application of any funds paid to the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account by the
Servicer. The Collateral Agent shall not be responsible for the legality or
validity of the Agreement or the validity, priority, perfection or sufficiency
of the security for the Certificates issued or intended to be issued under this
Agreement.
Section 10.04 Collateral Agent May Own Certificates. The Collateral
Agent in its individual or any other capacity may become the owner or pledgor of
Certificates with the same rights it would have if it were not Collateral Agent,
and may otherwise deal with the parties hereto.
Section 10.05 Collateral Agent's Fees and Expenses; Indemnity. (a) The
Collateral Agent acknowledges that in consideration of the performance of its
duties hereunder it is entitled to receive its fees and expenses from the
Servicer, as separately agreed between the Servicer and the Collateral Agent.
The Depositor, the Trustee and the Certificate Insurer shall not pay any of the
Collateral Agent fees and expenses in connection with this transaction. The
Collateral Agent shall not be entitled to compensation for any expense,
disbursement or advance as may arise from its negligence or bad faith.
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(b) The Collateral Agent and any director, officer, employee or agent
of the Collateral Agent shall be indemnified by first, the Trust and, second,
the Servicer and held harmless against any loss, liability, claim, damage or
reasonable expense incurred in connection with this Agreement other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence of the Collateral Agent in the performance of its duties hereunder
or by reason of the Collateral Agent's reckless disregard of obligations and
duties hereunder. The obligations of the Servicer under this Section 10.05
arising prior to any resignation or termination of the Servicer hereunder shall
survive termination of the Servicer and payment of the Certificates.
Section 10.06 Eligibility Requirements for Collateral Agent. The
Collateral Agent hereunder shall at all times be a banking entity (a) organized
and doing business under the laws of any state or the United States of America
subject to supervision or examination by federal or state authority, (b)
authorized under such laws to exercise corporate trust powers, including taking
title to the Trust Fund on behalf of the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, (c) be a wholly owned subsidiary
of a bank holding company having a combined capital and surplus of at least
$50,000,000, (d) whose long-term deposits, if any, shall be rated at least BBB-
by S&P and Baa3 by ▇▇▇▇▇'▇ (except as provided herein) or such lower long-term
deposit rating as may be approved in writing by the Certificate Insurer, and (e)
reasonably acceptable to the Certificate Insurer as evidenced in writing. If
such banking entity publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of determining an entity's combined capital and
surplus for clause (c) of this Section 10.06, the amount set forth in its most
recent report of condition so published shall be deemed to be its combined
capital and surplus. In case at any time the Collateral Agent shall cease to be
eligible in accordance with the provisions of this Section 10.06, the Collateral
Agent shall resign immediately in the manner and with the effect specified in
Section 10.07.
Section 10.07 Resignation and Removal of the Collateral Agent. (a) The
Collateral Agent may at any time resign and be discharged from the trusts hereby
created by giving thirty (30) days' written notice thereof to the Trustee, the
Servicer, and the Certificate Insurer.
(b) If at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of Section 10.06 and shall fail to resign after
written request therefor by the Trustee, the Servicer or the Certificate
Insurer, or if at any time the Collateral Agent shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Collateral Agent or of its property shall be appointed, or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Trustee or the Servicer, with the consent of the Certificate Insurer, or the
Certificate Insurer may remove the Collateral Agent.
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(c) If the Collateral Agent fails to perform in accordance with the
terms of this Agreement, the Trustee, the Servicer or the Majority
Certificateholders, with the consent of the Certificate Insurer, or the
Certificate Insurer may remove the Collateral Agent.
(d) Upon removal or receipt of notice of resignation of the Collateral
Agent, the Trustee shall either (i) take possession of the Trustee's Mortgage
Files and assume the duties of the Collateral Agent hereunder or (ii) appoint a
successor Collateral Agent pursuant to Section 9.08. If the Trustee shall assume
the duties of the Collateral Agent hereunder, it shall notify the Trust, the
Depositor, the Servicer and Certificate Insurer in writing.
Section 10.08 Successor Collateral Agent. Upon the resignation or
removal of the Collateral Agent, the Trustee may appoint a successor Collateral
Agent, with the written approval of the Certificate Insurer; provided, however,
that the successor Collateral Agent so appointed shall in no event be the
Unaffiliated Seller, the Depositor or the Servicer or any Person known to a
Responsible Officer of the Trustee to be an Affiliate of the Unaffiliated
Seller, the Depositor or the Servicer and shall be approved by the Certificate
Insurer. The Trustee or such custodian, as the case may be, shall assume the
duties of the Collateral Agent hereunder. Any successor Collateral Agent
appointed as provided in this Section 10.08 shall execute, acknowledge and
deliver to the Trust, the Depositor, the Certificate Insurer, the Servicer, the
Trustee and to its predecessor Collateral Agent an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Collateral Agent shall become effective and such successor
Collateral Agent, without any further act, deed or conveyance, shall become
fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as Collateral
Agent herein. The predecessor Collateral Agent shall deliver to the successor
Collateral Agent all of the Trustee's Mortgage Files and related documents and
statements held by it hereunder, and the Servicer and the predecessor Collateral
Agent shall execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor Collateral Agent all such rights, powers, duties and obligations.
The cost of any such transfer to the successor Collateral Agent shall be for the
account of the Collateral Agent in the event of the resignation of the
Collateral Agent, and shall be for the account of the Servicer in the event of
the removal of the Collateral Agent. No successor Collateral Agent shall accept
appointment as provided in this Section 10.08 unless at the time of such
acceptance such successor Collateral Agent shall be eligible under the
provisions of Section 10.06. Upon acceptance of appointment by a successor
Collateral Agent as provided in this Section 10.08, the Servicer shall mail
notice of the succession of such Collateral Agent hereunder to all
Certificateholders at their addresses as shown in the Certificate Register and
to the Rating Agencies. If the Servicer fails to mail such notice within ten
(10) days after acceptance of appointment by the successor Collateral Agent, the
successor Collateral Agent shall cause such notice to be mailed at the expense
of the Servicer.
Section 10.09 Merger or Consolidation of Collateral Agent. Any Person
into which the Collateral Agent may be merged or converted or with which it may
be consolidated or any corporation or national banking association resulting
from any merger, conversion or consolidation to which the Collateral Agent shall
be a party, or any corporation or national banking association succeeding to the
business of the Collateral Agent, shall be the successor of the Collateral Agent
hereunder; provided, that, such corporation or national banking association
shall be eligible under the provisions of Section 10.06, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Limitation on Liability of the Depositor and the
Servicer. None of the Depositor, the Servicer or any of the directors, officers,
employees or agents of the Depositor the Servicer shall be under any liability
to the Trust, the Certificateholders or the Certificate Insurer for any action
taken, or for refraining from the taking of any action, in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor or the Servicer or any such Person
against any breach of warranties, representations, covenants or agreements made
herein, or against any specific liability imposed on each such party pursuant to
this Agreement or against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations or duties hereunder.
The Depositor or the Servicer and any director, officer, employee or agent of
the Depositor or the Servicer may rely in good faith on any document of any kind
which, prima facie, is properly executed and submitted by any appropriate Person
respecting any matters arising hereunder.
Section 11.02 Acts of Certificateholders. (a) Except as otherwise
specifically provided herein, and subject to Section 7.04 hereof, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders if the Majority
Certificateholders or the Certificate Insurer agrees to take such action or give
such consent or approval.
(b) The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(c) No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
(d) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel (which
shall be an expense of the Trust) stating that the execution of such amendment
is authorized and permitted by this Agreement. The Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's own
rights, duties or immunities under this Agreement.
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Section 11.03 Amendment. (a) This Agreement may be amended from time to
time by the Servicer, the Depositor and the Trustee by written agreement, upon
the prior written consent of the Certificate Insurer, without notice to or
consent of the Certificateholders to cure any ambiguity, to correct or
supplement any provisions herein, to comply with any changes in the Code, or to
make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement or effect a significant change in the permitted activities of the
Trust; provided, however, that such action shall not, as evidenced by an Opinion
of Counsel, at the expense of the party requesting the change, delivered to the
Trustee, adversely affect in any material respect the interests of any
Certificateholder; and provided further, that no such amendment shall (x) reduce
in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, or change the rights or
obligations of any other party hereto without the consent of such party, or (y)
amend or alter Section 2.01(b) hereof. The Trustee shall give prompt written
notice to the Rating Agencies of any amendment made pursuant to this Section
11.03 or pursuant to Section 6.09 of the Unaffiliated Seller's Agreement.
(b) This Agreement may be amended from time to time by the Servicer,
the Depositor and the Trustee with the consent of the Certificate Insurer, the
Majority Certificateholders and the Holders of the majority of the Percentage
Interest in the Class R Certificates for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Holders; provided, however, that
no such amendment shall be made unless the Trustee and the Certificate Insurer
receives an Opinion of Counsel, at the expense of the party requesting the
change, that such change (i) will not adversely affect the status of any REMIC
created hereunder as a REMIC, (ii) will not cause a tax to be imposed on any
REMIC created hereunder and (iii) such change will not effect a significant
change in the permitted activities of the Trust; and provided, further, that no
such amendment shall reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans which are required to be distributed on any
Class of Certificates without the consent of the Holders of such Class of
Certificates or reduce the percentage for the Holders of which are required to
consent to any such amendment without the consent of the Holders of 100% of such
Class of Certificates affected thereby.
(c) It shall not be necessary for the consent of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
Section 11.04 Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer at the direction of the Majority
Certificateholders or the Certificate Insurer.
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Section 11.05 Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 11.06 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Servicer, American Business Credit, Inc.,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (ii) in the case of the Unaffiliated
Seller, ABFS 2002-1, Inc., Balapointe Office Centre, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (iii) in the
case of the Trustee, JPMorgan Chase Bank, Institutional Trust Services, ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: Structured Finance
Services, ABFS 2002-1, (iv) in the case of the Certificateholders, as set forth
in the Certificate Register, (v) in the case of ▇▇▇▇▇'▇ Investors Service, Inc.,
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: Home Equity Monitoring
Group, (vi) in the case of Standard & Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: Residential Mortgage Surveillance Group, (vii) in the
case of the Certificate Insurer, Ambac Assurance Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Risk Management - Consumer
Asset-Backed Securities, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ (in each case in which notice
or other communication to the Certificate Insurer refers to an Event of Default,
a claim on the Certificate Insurance Policy or with respect to which failure on
the part of the Certificate Insurer to respond shall be deemed to constitute
consent or acceptance, then a copy of such notice or other communication should
also be sent to the attention of the General Counsel and shall be marked to
indicate "URGENT MATERIAL ENCLOSED") and (viii) in the case of the Depositor or
the Underwriter, Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc. or Bear ▇▇▇▇▇▇▇ &
Co. Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Chief Counsel. Any such notices shall be deemed to be effective with respect to
any party hereto upon the receipt of such notice by such party, except that
notices to the Certificateholders shall be effective upon mailing or personal
delivery.
Section 11.07 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 11.08 No Partnership. Nothing herein contained shall be deemed
or construed to create a co-partnership or joint venture between the parties
hereto and the services of the Servicer shall be rendered as an independent
contractor and not as agent for the Certificateholders.
Section 11.09 Counterparts. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
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Section 11.10 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Servicer, the Depositor, the Trustee and the
Certificateholders and their respective successors and permitted assigns.
Section 11.11 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
Section 11.12 The Certificate Insurer Default. Any right conferred to
the Certificate Insurer shall be suspended during any period in which a
Certificate Insurer Default exists. At such time as the Certificates are no
longer outstanding hereunder, the Certificate Insurance Policy has terminated in
accordance with its terms and no amounts owed to the Certificate Insurer
hereunder and no Reimbursement Amounts remain unpaid, the Certificate Insurer's
rights hereunder shall terminate.
Section 11.13 Third Party Beneficiary. The parties agree that each of
the Unaffiliated Seller and the Certificate Insurer is intended and shall have
all rights of a third-party beneficiary of this Agreement.
Section 11.14 [RESERVED].
Section 11.15 Appointment of Tax Matters Person. The Holders of the
Class R Certificates hereby appoint the Servicer to act, as their agent, as the
Tax Matters Person for each REMIC created hereunder for all purposes of the
Code. The Tax Matters Person will perform, or cause to be performed, such duties
and take, or cause to be taken, such actions as are required to be performed or
taken by the Tax Matters Person under the code. The Holders of the Class R
Certificates may hereafter appoint a different entity as their agent, or may
appoint one of the Class R Certificateholders to be the Tax Matters Person.
Section 11.16 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.
(b) THE SERVICER AND THE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH IN SECTION 10.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS,
POSTAGE PREPAID. THE DEPOSITOR, THE SERVICER AND THE TRUSTEE EACH HEREBY WAIVE
ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE DEPOSITOR, THE SERVICER OR THE TRUSTEE TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS
TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
117
(c) THE DEPOSITOR, THE SERVICER AND THE TRUSTEE EACH HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
[Remainder of Page Intentionally Left Blank]
118
IN WITNESS WHEREOF, the Servicer, the Trustee, Collateral
Agent and the Depositor have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first above
written.
BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES, INC.,
as Depositor
By:
-----------------------------------------
Name:
Title:
AMERICAN BUSINESS CREDIT, INC., as Servicer
By:
-----------------------------------------
Name:
Title:
JPMORGAN CHASE BANK,
as Trustee and Collateral Agent
By:
-----------------------------------------
Name:
Title:
[Signature Page to Pooling and Servicing Agreement]