Execution Version
AMENDED AND RESTATED TRUST AGREEMENT
between
HOMEAMERICAN CREDIT, INC.
AMERICAN BUSINESS MORTGAGE SERVICES, INC.
and
AMERICAN BUSINESS CREDIT, INC.
as Loan Depositors
ABFS CONSOLIDATED HOLDINGS, INC.
as IOS Depositor
and
WILMINGTON TRUST COMPANY
as Owner Trustee
Dated as of October 14, 2003
ABFS WAREHOUSE TRUST 2003-1
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS...............................................................................1
SECTION 1.1 Capitalized Terms................................................................1
SECTION 1.2 Other Definitional Provisions.....................................................6
ARTICLE II ORGANIZATION..............................................................................7
SECTION 2.1 Name..............................................................................7
SECTION 2.2 Office............................................................................7
SECTION 2.3 Purposes and Powers...............................................................7
SECTION 2.4 Appointment of Owner Trustee......................................................8
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate................................8
SECTION 2.6 Declaration of Trust..............................................................8
SECTION 2.7 Title to Trust Property...........................................................9
SECTION 2.8 Situs of Trust....................................................................9
SECTION 2.9 Representations, Warranties and Covenants of the Depositors.......................9
ARTICLE III TRUST CERTIFICATES AND TRANSFER OF INTERESTS.............................................10
SECTION 3.1 The Trust Certificates...........................................................10
SECTION 3.2 Execution, Authentication and Delivery of Trust Certificates.....................11
SECTION 3.3 Registration of Transfer and Exchange of Trust Certificates......................11
SECTION 3.4 Mutilated, Destroyed, Lost or Stolen Trust Certificates..........................12
SECTION 3.5 Persons Deemed Owners............................................................12
SECTION 3.6 Access to List of Owners' Names and Addresses....................................12
SECTION 3.7 Maintenance of Office or Agency..................................................13
SECTION 3.8 Restrictions on Transfer of Trust Certificates...................................13
ARTICLE IV ACTIONS BY OWNER TRUSTEE.................................................................16
SECTION 4.1 Prior Notice to Owners and Lender with Respect to Certain Matters; Covenants.....16
SECTION 4.2 Action by Owners with Respect to Certain Matters.................................19
SECTION 4.3 Restrictions on Owners' Power....................................................19
SECTION 4.4 Majority Control.................................................................19
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ARTICLE V CERTAIN DUTIES...........................................................................20
SECTION 5.1 Segregated Account...............................................................20
SECTION 5.2 Accounting of Trust Funds........................................................20
SECTION 5.3 Method of Payment................................................................21
SECTION 5.4 Reserved.........................................................................22
SECTION 5.5 Accounting and Reports...........................................................22
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE....................................................22
SECTION 6.1 General Authority................................................................22
SECTION 6.2 General Duties...................................................................22
SECTION 6.3 Action Upon Instruction..........................................................23
SECTION 6.4 No Duties........................................................................24
SECTION 6.5 No Action........................................................................24
SECTION 6.6 Restrictions.....................................................................24
ARTICLE VII CONCERNING THE OWNER TRUSTEE.............................................................25
SECTION 7.1 Acceptance of Trusts and Duties..................................................25
SECTION 7.2 Furnishing of Documents..........................................................26
SECTION 7.3 Representations and Warranties...................................................26
SECTION 7.4 Reliance; Advice of Counsel......................................................27
SECTION 7.5 Not Acting in Individual Capacity................................................27
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or Loans.........................27
SECTION 7.7 Licenses.........................................................................28
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE............................................................28
SECTION 8.1 Fees and Expenses................................................................28
SECTION 8.2 Indemnification..................................................................29
SECTION 8.3 Payments to the Owner Trustee....................................................29
SECTION 8.4 Limitation of Liability..........................................................29
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ARTICLE IX TERMINATION OF TRUST AGREEMENT...........................................................30
SECTION 9.1 Termination of Trust Agreement...................................................30
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES...................................31
SECTION 10.1 Eligibility Requirements for Owner Trustee.......................................31
SECTION 10.2 Resignation or Removal of Owner Trustee..........................................31
SECTION 10.3 Successor Owner Trustee..........................................................32
SECTION 10.4 Merger or Consolidation of Owner Trustee.........................................33
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee........................33
ARTICLE XI MISCELLANEOUS............................................................................34
SECTION 11.1 Supplements and Amendments.......................................................34
SECTION 11.2 No Legal Title to Owner Trust Estate in Owners...................................35
SECTION 11.3 Limitations on Rights of Others..................................................36
SECTION 11.4 Notices..........................................................................36
SECTION 11.5 Severability.....................................................................36
SECTION 11.6 Separate Counterparts............................................................37
SECTION 11.7 Successors and Assigns...........................................................37
SECTION 11.8 No Petition......................................................................37
SECTION 11.9 No Recourse......................................................................37
SECTION 11.10 Headings.........................................................................37
SECTION 11.11 GOVERNING LAW....................................................................37
EXHIBIT A Form of P Certificate
EXHIBIT B Form of R Certificate
EXHIBIT C Form of Certificate of Non-Foreign Status
Schedule 1 Certificate Holders
Schedule 2 IOS
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AMENDED AND RESTATED TRUST AGREEMENT
THIS AMENDED AND RESTATED TRUST AGREEMENT, dated as of October 14, 2003
(the "Agreement"), among HOMEAMERICAN CREDIT, INC., a Pennsylvania corporation
("HACI"), AMERICAN BUSINESS MORTGAGE SERVICES, INC., a New Jersey corporation
("ABMSI"), and AMERICAN BUSINESS CREDIT, INC., a Pennsylvania corporation
("ABCI"), as depositors (HACI, ABMSI and ABCI are collectively referred to
herein as the "Loan Depositors"), ABFS Consolidated Holdings, Inc., a Delaware
corporation (the "IOS Depositor"), and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as Owner Trustee (the "Owner Trustee").
WITNESSETH:
WHEREAS, American Business Financial Services, Inc., a Delaware
corporation which is an Affiliate of the Depositors ("ABFSI"), and Owner Trustee
are parties to that certain Trust Agreement dated as of September 26, 2003 (the
"Trust Agreement");
WHEREAS, ABFSI wishes to withdraw as a Depositor and ABFSI, the Loan
Depositors, the IOS Depositor and Owner Trustee desire to accomplish the matters
set forth herein and amend and restate the Trust Agreement as set forth herein:
In consideration of the mutual agreements and covenants herein
contained, ABFSI, the Loan Depositors, the IOS Depositor and the Owner Trustee
hereby agree for the benefit of each of them and the holders of the Trust
Certificates as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"2003-2 Trust" shall mean the Delaware statutory trust created by the
2003-2 Trust Agreement.
"2003-2 Trust Agreement" shall mean the Trust Agreement, dated as of
October __, 2003 between the Trust and Wilmington Trust Company.
"2003-1 Administration Agreement" shall mean the Administration
Agreement, dated as of October 14, 2003 between the Trust and the Administrator.
"Actual Losses" shall mean the aggregate amount of (a) unreimbursed
Lender Expenses, (b) unreimbursed Indemnified Liabilities, and (c) Potential
Actual Losses incurred and realized by the P Certificate Holder as of a Payment
Date as certified to the Owner Trustee and to the IOS Depositor by the P
Certificate Holder.
"Agreement" shall mean this Trust Agreement, as the same may be amended
and supplemented from time to time.
"Bankruptcy Action" shall have the meaning assigned to such term in
Section 4.1.
"Basic Documents" shall mean this Agreement, the 2003-1 Administration
Agreement, the 2003-2 Trust Agreement, the Initial Asset Purchase Agreement and
any APA Assignment (as defined in the Initial Asset Purchase Agreement), the
Bailee Agreement, the Irrevocable Payment Instruction Letter, the Loan
Agreement, the Servicing Agreement, the Clearwing Pledge Agreement, the
Custodial Agreement, the Fee Letter, the IOS Account Control Agreement, the
Subsequent Asset Purchase Agreement and any APA Assignment (as defined in the
Subsequent Asset Purchase Agreement) and any certificate, resolution or other
document in connection with the foregoing.
"Benefit Plan Investor" shall have the meaning assigned to such term in
Section 3.8(b).
"Capital Contributions" shall mean all amounts advanced or hereafter
advanced by Preferred Owner to Lender, whether as capital contributions, equity
investments, advances, or loans in an amount not to exceed $25,000,000
outstanding plus the Increase Option.
"Certificate of Trust" shall mean the Certificate of Trust for the
Trust filed on September 26, 2003 pursuant to Section 3810(a) of the Statutory
Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.3.
"Certificateholder" or "Holder" shall mean a Person in whose name a
Trust Certificate is registered.
"Clearwing Pledge Agreement" shall mean that certain Pledge and
Security Agreement dated as of October 14, 2003 by the Trust in favor of
Clearwing Capital, LLC.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder
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"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at ▇▇▇▇▇▇
Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Trust Administration, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, telephone
number: (▇▇▇) ▇▇▇-▇▇▇▇; or at such other address in the State of Delaware as the
Owner Trustee may designate by notice to the Owners and the Depositor, or the
principal corporate trust office of any successor Owner Trustee (the address
(which shall be in the State of Delaware) of which the successor owner trustee
will notify the Owners and the Depositors).
"Depositors" shall mean the Loan Depositors and the IOS Depositor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Fee Letter" shall have the meaning assigned to such term in the Loan
Agreement.
"Increase Option" shall mean an amount equal to 10% of the increase in
the Maximum Credit (as defined in the Loan Agreement) under the Loan Agreement
at any time after the Closing Date.
"Indemnified Party" shall have the meaning assigned to such term in
Section 8.2.
"Indemnified Liabilities" shall have the meaning assigned to such term
in the Loan Agreement.
"Initial Asset Purchase Agreement" shall mean the Asset Purchase
Agreement, dated as of October 14, 2003 among the Trust, American Business
Credit, Inc., HomeAmerican Credit, Inc., d/b/a Upland Mortgage, and American
Business Mortgage Services, Inc.
"IOS" shall mean the securities listed on Schedule 2.
"IOS Account" shall mean the Trust's account maintained at JPMorgan
Chase Bank bearing account number ▇▇▇▇▇▇▇▇.
"Lender" shall mean Chrysalis Warehouse Funding, LLC as Lender under
the Loan Agreement.
"Lender Expenses" shall have the meaning assigned to such term in the
Loan Agreement.
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"Loan Agreement" shall mean the Master Loan and Security Agreement
dated as of October 14, 2003 between the 2003-2 Trust and the Lender.
"Majority Certificateholders" shall mean, until the date that all
amounts owed to the Preferred Owner hereunder are paid in full and the Loan
Agreement is terminated, the Holders of more than 50% of the Preferred
Percentage Interest and, after such date, shall mean the Holders of more than
50% of the Residual Percentage Interest.
"Non-permitted Foreign Holder" shall have the meaning set forth in
Section 3.8.
"Non-U.S. Person" shall mean a person other than a "U.S. Person".
"Owner" shall mean each holder of a Trust Certificate.
"Owner Trust Estate" shall mean the contribution of $1.00 referred to
in Section 2.5, the Collateral (as defined in the Loan Agreement), the
Collateral (as defined in the Clearwing Pledge Agreement) the IOS, and the
Assets (as defined in the Initial Asset Purchase Agreement and any APA
Assignment).
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor owner trustee hereunder.
"P Certificate" shall mean a certificate substantially in the form
attached as Exhibit A hereto entitling the Holder thereof to a Preferred
Percentage Interest.
"Payment Date" shall mean the 19th day of every calendar month.
"Permitted Investments" shall mean (i) obligations of the United States
government, its agencies or independent departments; (ii) certificates of
deposit issued by a banking institution whose principal office is in New York,
New York or Wilmington, Delaware with assets in excess of $1 billion; or (iii)
an interest-bearing account of a banking institution whose principal office is
in New York, New York or Wilmington, Delaware with assets in excess of $1
billion.
"Potential Actual Losses" shall mean the aggregate amount of the
Capital Contributions made as of a Payment Date.
"Preferred Owner" shall mean a Holder of a P Certificate.
"Preferred Percentage Interest" shall mean a Preferred Owner's
proportionate interest (expressed as a percentage) in the distributions of the
Trust to which the Preferred Owners are entitled. The Preferred Percentage
Interests of the Preferred Owners are set forth on Schedule I to this Agreement,
as the same may be amended from time to time.
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"Prospective Owner" shall have the meaning set forth in Section 3.8(a).
"R Certificate" shall mean a certificate substantially in the form
attached as Exhibit B hereto representing an undivided beneficial interest in
the assets of the Trust entitling a Holder thereof to a Residual Percentage
Interest.
"Record Date" shall mean the first day of each month.
"Reserve Event" shall mean the earliest of (i) the commencement of an
Insolvency Proceeding with respect to the 2003-2 Trust or the Trust; (ii) the
stay of or injunction, or the commencement of any action seeking either such a
stay or injunction, prohibiting the enforcement of remedies available to the
Lender under the Loan Agreement or the Preferred Owner under the Clearwing
Pledge Agreement, or (iii) an Event of Default under the Clearwing Pledge
Agreement.
"Residual Owner" shall mean a Holder of a R Certificate.
"Residual Percentage Interest" shall mean a Residual Owner's
proportionate interest (expressed as a percentage) in the distributions of the
Trust to which Residual Owners are entitled. The Residual Percentage Interests
of the Residual Owners are set forth on Schedule I to this Agreement, as the
same may be amended from time to time.
"Servicer" shall mean American Business Credit, Inc.
"Servicing Agreement" shall mean the servicing agreement executed by
and between the 2003-2 Trust, Servicer, Countrywide Home Loans Servicing LP and
Lender.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Statutory Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from
time to time.
"Subservicer" shall mean either or both of American Business Mortgage
Services, Inc. and HomeAmerican Credit, Inc.
"Subsequent Asset Purchase Agreement" shall mean the Asset Purchase
Agreement dated as of October 14, 2003 between the Trust and the 2003-2 Trust.
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"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Certificates" shall mean the P Certificate and the R
Certificates.
"Trust Officer" shall mean any officer of the Owner Trustee who is
authorized to act for the Owner Trustee and whose name appears on a list of such
officers furnished by the Owner Trustee, as such list may be amended and
supplemented from time to time.
"U.S. Person" shall mean 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 or any state thereof of the District of Columbia
(except, in the case of a partnership, to the extent provided in regulations) or
an estate whose income is subject to United States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust. To the extent prescribed in regulations by the Secretary
of the Treasury, which have not yet been issued, a trust which was in existence
on August 20, 1996 (other than a trust treated as owned by the grantor under
subpart E of part I of subchapter J of chapter 1 of the Code), and which was
treated as a United States person on August 20, 1996 may elect to continue to be
treated as a United States person notwithstanding the previous sentence. The
term "United States" shall have the meaning set forth in Section 7701 of the
Code.
SECTION 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Loan Agreement.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
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other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(d) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The Trust created hereby shall be known as "ABFS
Warehouse Trust 2003-1", in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and ▇▇▇ and be sued.
SECTION 2.2 Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Owners and the
Depositors.
SECTION 2.3 Purposes and Powers. (a) The purpose of the Trust is to
engage in the following activities and the Trust shall have the power and
authority:
(i) to enter into the 2003-2 Trust Agreement;
(ii) to purchase, hold, assign, grant, transfer, pledge,
contribute, mortgage and convey the Owner Trust Estate pursuant to the
Basic Documents;
(iii) to enter into and perform its obligations under each of the
Basic Documents to which it is a party including, without limitation,
the purchase of certain assets time to time pursuant to the Initial
Asset Purchase Agreement from and the sale of such assets from time to
time to 2003-2 Trust pursuant to the Subsequent Asset Purchase
Agreement;
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(iv) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Owners;
(v) to issue the Trust Certificates pursuant to this Agreement;
and
(vi) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4 Appointment of Owner Trustee. The Depositors hereby appoint
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein and in the Statutory
Trust Statute.
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate. HACI,
ABMSI and ABCI, each hereby sells, assigns, transfers, conveys and sets over to
the Owner Trustee, as of the date hereof, the sum of $1.00. The IOS Depositor
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the IOS. The Owner Trustee hereby acknowledges receipt in
trust from the Depositors, as of the date hereof, of the foregoing
contributions, which shall constitute the initial Owner Trust Estate. To the
extent the contribution of the IOS is considered a sale of accounts, chattel
paper, payment intangibles or promissory notes, this contribution shall be
considered a sale in accordance with Article 9 of the applicable Uniform
Commercial Code and together with the contributions of HACI, ABMSI and ABCI,
shall constitute the initial Owner Trust Estate. To the extent the contributions
set forth herein are deemed not to be contributions or sales, each Depositor
hereby grants to the Trust (and to Clearwing Capital, LLC as a successor in
interest to the Trust) a security interest in all of such Depositor's right,
title and interest in, to and under the IOS, whether now existing or hereafter
created, to secure the Depositors' obligations under the Fee Letter and the
Trust's obligations under the P Certificate and this Agreement, and, solely in
that event, this Agreement shall constitute a security agreement under
applicable law, in which event Trust (and Clearwing Capital, LLC as a successor
in interest to the Trust) shall have all the rights and remedies of a secured
party under the Uniform Commercial Code and other applicable law. The Depositors
shall pay reasonable organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
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SECTION 2.6 Declaration of Trust.
(a) The Owner Trustee hereby declares that it will hold the Owner Trust
Estate in trust upon and subject to the conditions set forth herein for the use
and benefit of the Owners, subject to the obligations of the Trust under the
Basic Documents. It is the intention of the parties hereto that the Trust
constitute a statutory trust under the Statutory Trust Statute and that this
Agreement constitute the governing instrument of such statutory trust. It is the
intention of the parties hereto that, solely for Federal, state and local income
and franchise tax purposes, the Trust shall be treated as a partnership, with
the Residual Owners as its partners. The Trust shall not elect to be treated as
an association under Treasury Regulations ss.301.7701-3(a) for Federal income
tax purposes. The parties agree that the Trust will file or cause to be filed
annual or other necessary returns, reports and other forms consistent with the
characterization of the Trust described in this section for such tax purposes.
Effective as of the date hereof, the Owner Trustee shall have all rights, powers
and duties set forth herein and in the Statutory Trust Statute with respect to
accomplishing the purposes of the Trust. For purposes of the Statutory Trust
Statute (but not for income tax purposes), the P Certificateholder shall be a
"beneficial owner" of the Trust.
SECTION 2.7 Title to Trust Property.
(a) Legal title to all the Owner Trust Estate shall be vested at all
times in the Trust as a separate legal entity except where applicable law in any
jurisdiction requires title to any part of the Owner Trust Estate to be vested
in a trustee or trustees, in which case title shall be deemed to be vested in
the Owner Trustee and/or a separate trustee, as the case may be.
(b) The Owners shall not have legal title to any part of the Owner
Trust Estate. No transfer by operation of law or otherwise of any interest of
the Owners shall operate to terminate this Agreement or the trusts hereunder or
entitle any transferee to an accounting or to the transfer to it of any part of
the Owner Trust Estate.
SECTION 2.8 Situs of Trust. The Trust will be located in the State of
Delaware and administered in the State of Delaware or the State of Pennsylvania.
All bank accounts maintained by the Owner Trustee on behalf of the Trust shall
be located in the State of Delaware or the State of New York, except with
respect to accounts maintained by the Servicer or the Subservicer on behalf of
the Owner Trustee. The Trust shall not have any employees; provided, however,
that nothing herein shall restrict or prohibit the Owner Trustee from having
employees within or without the State of Delaware. Payments will be received by
the Trust only in Delaware or New York, and payments will be made by the Trust
only from Delaware or New York, except with respect to payments made by the
Servicer or the Subservicer on behalf of the Owner Trustee. The only office of
the Trust will be at the Corporate Trust Office in Delaware.
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SECTION 2.9 Representations, Warranties and Covenants of the
Depositors.
(a) The Depositors, jointly and severally, represent as follows:
(i) Each Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware,
with power and authority to own its properties and conduct its business
as such properties are currently owned and such business is presently
conducted.
(ii) Each Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; each Depositor has
full power and authority to transfer and assign the property to be
transferred and assigned to and deposited with the Trust by such
Depositor and each Depositor has duly authorized such transfer and
assignment and deposit to the Trust by all necessary corporate action;
and the execution, delivery and performance of this Agreement has been
duly authorized by each Depositor by all necessary corporate action.
(iii) The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under
the certificate of incorporation or by-laws of each Depositor, or any
indenture, agreement or other instrument to which each Depositor is a
party or by which it is bound; nor result in the creation or imposition
of any lien upon any of its properties pursuant to the terms of any
such indenture, agreement or other instrument (other than pursuant to
the Basic Documents); nor violate any law or any order, rule or
regulation applicable to the Depositor of any court or of any Federal
or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over either Depositor or its
properties.
(iv) No consent, license, approval or authorization or
registration or declaration with, any Person or with any governmental
authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the Basic
Documents, except for such as have been obtained, effected or made.
(v) Each Depositor has duly executed and delivered this
Agreement, and this Agreement constitutes the legal, valid and binding
obligation of each Depositor, enforceable against each Depositor, in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by the
application of equitable principles.
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(vi) The IOS Depositor has good and marketable title to and is
the sole owner of each IOS, free of any lien or any interest of any
other person.
(b) The Depositor and the IOS Depositor each covenants with the Owner
Trustee that during the continuance of this Agreement it will comply in all
respects with the provisions of its respective certificate of incorporation or
by-laws in effect from time to time.
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1 The Trust Certificates. The Trust shall issue P
Certificates and R Certificates. The Trust Certificates shall be executed on
behalf of the Trust by manual or facsimile signature of a Trust Officer of the
Owner Trustee. Trust Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall be valid and binding
obligations of the Trust, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the authentication and delivery
of such Trust Certificates or did not hold such offices at the date of
authentication and delivery of such Trust Certificates.
A transferee of a Trust Certificate shall become an Owner, and shall be
entitled to the rights and subject to the obligations of an Owner hereunder,
upon such transferee's acceptance of a Trust Certificate duly registered in such
transferee's name pursuant to Section 3.3. The Trust Certificates shall
represent the respective Percentage Interests indicated on Schedule I hereto, as
such Schedule may be amended to reflect any transfers made in accordance with
the terms of this Agreement.
SECTION 3.2 Execution, Authentication and Delivery of Trust
Certificates. The Owner Trustee is hereby directed, on the Closing Date, to
cause the Trust Certificates representing 100% of the Preferred Percentage
Interests and the Residual Percentage Interests of the Trust to be executed on
behalf of the Trust, authenticated and delivered, without further corporate
action by the Depositors, to the Owners set forth on Schedule I. No Trust
Certificate shall entitle its holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Trust
Certificate a certificate of authentication substantially in the form set forth
in Exhibits A and B, executed by the Owner Trustee or the Administrator, as the
Owner Trustee's authenticating agent, by manual or facsimile signature; such
authentication shall constitute conclusive evidence that such Trust Certificate
shall have been duly authenticated and delivered hereunder. All Trust
Certificates shall be dated the date of their authentication.
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SECTION 3.3 Registration of Transfer and Exchange of Trust
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.7 a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Trust Certificates and of
transfers and exchanges of Trust Certificates as herein provided. The Owner
Trustee shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate at
the office or agency maintained pursuant to Section 3.7, the Owner Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one new Trust Certificate with the same Preferred Percentage
Interest or Residual Percentage Interest, as applicable, dated the date of
authentication by the Owner Trustee or any authenticating agent provided that
prior to any such execution, authentication and delivery in connection with a
transfer, other than a transfer of all the transferee's Preferred Percentage
Interest or Residual Percentage Interest to a single Affiliate of the
transferee, the Owner Trustee shall have received an opinion of counsel, which
shall be an expense of the Trust, to the effect that the proposed transfer will
not cause the Trust to be characterized as an association, corporation,
partnership, trust or any other entity separate from the Owner Trustee for tax
purposes.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Owner or his attorney duly authorized in writing. In addition,
each Trust Certificate presented or surrendered for registration of transfer and
exchange must be accompanied by a letter from the Prospective Owner certifying
as to the representations set forth in Sections 3.8(a) and (b). Each Trust
Certificate surrendered for registration of transfer or exchange shall be
canceled and disposed of by the Owner Trustee in accordance with its customary
practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar 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 Trust Certificates.
SECTION 3.4 Mutilated, Destroyed, Lost or Stolen Trust Certificates. If
(a) any mutilated Trust Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate and (b)
there shall be delivered to the Certificate Registrar and the Owner Trustee such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Trust Certificate shall have been
acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust
shall execute and the Owner Trustee shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Trust
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Certificate, a new Trust Certificate of like tenor and denomination. In
connection with the issuance of any new Trust Certificate under this Section,
the Owner Trustee or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Trust Certificate issued pursuant to this
Section shall constitute conclusive evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Trust
Certificate shall be found at any time.
SECTION 3.5 Persons Deemed Owners. Prior to due presentation of a Trust
Certificate for registration of transfer, the Owner Trustee or the Certificate
Registrar may treat the Person in whose name any Trust Certificate shall be
registered in the Certificate Register as the owner of such Trust Certificate
for all purposes whatsoever, and neither the Owner Trustee nor the Certificate
Registrar shall be bound by any notice to the contrary.
SECTION 3.6 Access to List of Owners' Names and Addresses. The Owner
Trustee shall furnish or cause to be furnished to the Servicer, the Lender and
the Depositors, within 15 days after receipt by the Owner Trustee of a request
therefor from the Servicer, Lender or the Depositors in writing, a list, in such
form as the Servicer, the Lender or the Depositors may reasonably require, of
the names and addresses of the Owners as of the most recent Record Date. If a
Certificateholder applies in writing to the Owner Trustee, and such application
states that the applicant's desire to communicate with other Certificateholders
with respect to their rights under this Agreement or under the Trust
Certificates and such application is accompanied by a copy of the communication
that such applicant's propose to transmit, then the Owner Trustee shall, within
five Business Days after the receipt of such application, afford such applicant
access during normal business hours to the current list of Certificateholders.
Each Owner, by receiving and holding a Trust Certificate, shall be deemed to
have agreed not to hold the Depositors, the Certificate Registrar or the Owner
Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.7 Maintenance of Office or Agency. The Owner Trustee shall
maintain an office or offices or agency or agencies where Trust Certificates may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Owner Trustee in respect of the Trust Certificates and
the Basic Documents may be served. The Owner Trustee initially designates its
Corporate Trust Office as its principal corporate trust office for such
purposes. The Owner Trustee shall give prompt written notice to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 3.8 Restrictions on Transfer of Trust Certificates.
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(a) Each transferee of a Trust Certificate (each, a "Prospective
Owner"), other than the Depositors, shall represent and warrant, in writing, to
the Owner Trustee and the Certificate Registrar and any of their respective
successors that:
(i) Such Person is (A) a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), and is aware that the seller of the Trust
Certificate may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A and is
acquiring such Trust Certificate for its own account or for the account
of one or more qualified institutional buyers for whom it is authorized
to act, or (B) an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act (an "Institutional Accredited Investor") that is
acquiring such Trust Certificates for its own account, or for the
account of such an Institutional Accredited Investor, for investment
purposes and not with a view to, or for offer or sale in connection
with any distribution in violation of the Securities Act.
(ii) Such Person understands that the Trust Certificates have
not been and will not be registered under the Securities Act and may be
offered, sold or otherwise transferred only to a person whom the seller
reasonably believes is (A) a qualified institutional buyer or (B) an
Institutional Accredited Investor, and in accordance with any
applicable securities laws of any state of the United States.
(iii) Such Person understands that the Trust Certificates bear
a legend to the following effect:
"THE INTEREST IN THE TRUST REPRESENTED BY THIS TRUST
CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. THIS TRUST CERTIFICATE MAY BE
DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED
OF BY THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE ACT,
IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A
OR (II) AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE ACT IN A TRANSACTION THAT IS REGISTERED UNDER THE
ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS.
NO PERSON IS OBLIGATED TO REGISTER THIS TRUST CERTIFICATE
UNDER THE ACT OR ANY STATE SECURITIES LAWS."
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(iv) Such Person has neither acquired nor will it transfer the
Trust Certificate or cause the Trust Certificate to be marketed on or
through an "established securities market" within the meaning of
Section 7704(b)(1) of the Code, including, without limitation, an
over-the-counter-market or an interdealer quotation system that
regularly disseminates firm buy or sell quotations.
(v) Such Person either (A) is not, and will not become, a
partnership, S corporation or grantor trust for U.S. federal income tax
purposes, or (B) is such an entity, but none of the direct or indirect
beneficial owners of any of the interests in such transferee have
allowed or caused, or will allow or cause, fifty percent (50%) or more
of the value of such interests to be attributable to such transferee's
ownership of the Trust Certificate.
(vi) Such Person shall comply with the provisions of Section
3.8(b), as applicable, relating to the ERISA restrictions with respect
to the acceptance or acquisition of such Trust Certificate.
(b) Each Prospective Owner, other than the Depositors, shall either:
(viii) represent and warrant, in writing, to the Owner Trustee
and the Certificate Registrar and any of their respective successors
that the Prospective Owner is not (A) an "employee benefit plan" within
the meaning of Section 3(3) of ERISA, or (B) a "plan" within the
meaning of Section 4975(e)(1) of the Code or (C) an entity, including
an insurance company separate account or general account, whose
underlying assets include plan assets by reason of a plan's investment
in the entity (each, a "Benefit Plan Investor") and is not directly or
indirectly purchasing such Trust Certificate on behalf of, as
investment manager of, as named fiduciary of, as trustee of, or with
the assets of a Benefit Plan Investor; or
(ix) furnish to the Owner Trustee and the Certificate
Registrar and any of their respective successors an opinion of counsel
acceptable to such persons that the proposed transfer of the Trust
Certificate to such Prospective Owner will not cause any assets of the
Trust to be deemed "plan assets" within the meaning of United States
Department of Labor Regulation Section 2510.3-101.
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(c) By its acceptance of a Trust Certificate, each Prospective Owner
acknowledges that it is not a Non-permitted Foreign Holder and agrees to execute
a Certificate of Non-Foreign Status in the form of Exhibit C hereto and
acknowledges that no legal or beneficial interest in all or any portion of the
Trust Certificate may be transferred directly or indirectly to an individual,
corporation, partnership or other person who is a Non-U.S. Person, unless such
person holds the Trust Certificate in connection with the conduct of a trade or
business within the United States, as evidenced by a duly completed and
submitted Form 4224 or successor form, updated at the time or times and in the
manner specified by the Code (any such Non-U.S. Person who does not meet such
exception being referred to herein as a "Non-permitted Foreign Holder"), and any
such purported transfer shall be void and have no effect.
(d) The Owner Trustee shall not execute, and shall not countersign and
deliver, a Trust Certificate in connection with any transfer thereof unless the
transferor shall have provided to the Owner Trustee a certificate, signed by the
transferee, which certificate shall contain the consent of the transferee to any
amendments of this Agreement as may be required to effectuate further the
foregoing restrictions on transfer of the Trust Certificates to Non-permitted
Foreign Holders, and an agreement by the transferee that it will not transfer a
Trust Certificate without providing to the Owner Trustee a substantially
identical certificate, signed by the Prospective Owner to whom the Trust
Certificate is to be transferred.
(e) The Trust Certificates shall bear an additional legend referring to
the foregoing restrictions contained in this Section 3.8.
(f) No Residual Owner shall be permitted to transfer, directly or
indirectly, all or any portion of the R Certificate except to an Affiliate of
such transferor without the consent of the Majority Certificateholders and the
Lender.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 Prior Notice to Owners and Lender with Respect to Certain
Matters; Covenants.
(a) With respect to the following matters, the Owner Trustee shall not
take action without the written consent of Lender, and the Owners shall not
direct the Owner Trustee to take any action, unless at least 10 days (or such
lesser time as agreed to by Owners and Lender) before the taking of such action,
the Owner Trustee shall have notified the Owners and Lender in writing of the
proposed action and the Majority Certificateholders and the Lender shall have
affirmatively consented in writing or have provided alternative directions in
writing prior to the 10th day after such notice is given:
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(i) the initiation of any claim or lawsuit by the Trust
(except claims or lawsuits brought in connection with the collection of
the Mortgage Loans) and the compromise of any action, claim or lawsuit
brought by or against the Trust (except with respect to the
aforementioned claims or lawsuits for collection of the Mortgage
Loans);
(ii) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed
under the Statutory Trust Statute);
(iii) the amendment or other change to this Agreement or any
Basic Document in circumstances where the consent of any Owner is
required;
(iv) the amendment or other change to this Agreement or any
Basic Document in circumstances where the consent of any Owner is not
required and such amendment adversely affects in any material respect
the interest of any Owner who has not affirmatively consented thereto
in writing or the Lender;
(v) the appointment of a successor Certificate Registrar
pursuant to this Agreement, or the consent to the assignment by the
Certificate Registrar of its obligations under this Agreement;
(vi) the calling or waiver of any default of any Basic
Document;
(vii) except as provided in Article IX hereof, the
dissolution, termination or liquidation of the Trust in whole or in
part;
(viii) the merger or consolidation of the Trust with or into
any other entity, or the conveyance or transfer of all or substantially
all of the Trust's assets to any other entity;
(ix) cause the Trust to incur, assume or guaranty or otherwise
become contingently liable for any indebtedness other than as set forth
in the Basic Documents;
(x) the performance of any act that would violate any Basic
Document;
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(xi) the performance of any act which would make it impossible
to carry on the ordinary business of the Trust;
(xii) consent to a confession of a judgment against the Trust;
(xiii) the possession of Trust assets, or assignment of the
Trust's right to property, for other than a Trust purpose;
(xiv) cause the Trust to lend any funds to any entity;
(xv) change the Trust's purpose and powers from those set
forth in this Trust Agreement;
(xvi) engage in any business activity in which it is not
currently engaged other than as contemplated by the Basic Documents;
(xvii) form, or cause to be formed, any subsidiaries or own or
acquire any asset other than as contemplated by the Basic Documents;
and
(xviii) follow the directions or instructions of the
Depositors other than as contemplated by the Basic Documents.
(b) The Trust shall:
(i) maintain books and records separate from any other person
or entity;
(ii) maintain its bank accounts separate from any other person
or entity;
(iii) not commingle its assets with those of any other person
or entity;
(iv) conduct its own business in its own name;
(v) other than as contemplated by the Basic Documents, pay its
own liabilities and expenses only out of its own funds;
(vi) observe all formalities required under the Statutory
Trust Statute;
(vii) enter into transactions with any of its Affiliates or
the Depositors only if each such transaction is intrinsically fair,
commercially reasonable, and on the same terms as would be available in
an arm's length transaction with a person or entity that is not an
Affiliate;
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(viii) not guarantee or become obligated for the debts of any
other entity or person;
(ix) not hold out its credit as being available to satisfy the
obligation of any other person or entity;
(x) not acquire the obligations or securities of its
Affiliates or the Depositors except as contemplated by the Basic
Documents;
(xi) other than as contemplated by the Basic Documents, not
make loans to any other person or entity or buy or hold evidence of
indebtedness issued by any other person or entity;
(xii) other than as contemplated by the Basic Documents, not
pledge its assets for the benefit of any other person or entity;
(xiii) hold itself out as a separate entity from the Depositor
and the IOS Depositor and not conduct any business in the name of the
Depositor or the IOS Depositor;
(xiv) correct any known misunderstanding regarding its
separate identity; and
(xv) not identify itself as a division of any other person or
entity.
Until the obligations under the Loan Agreement are paid in full and the
Loan Agreement has been terminated, the Trust shall not amend this Section 4.1
without the prior written consent of the Lender.
The Owner Trustee shall not have the power, except upon the written
direction of the Majority Certificateholders acting with the prior written
consent of the Lender (which consent shall be obtained by the Owners), and to
the extent otherwise consistent with the Basic Documents, to (i) institute
proceedings to have the Trust declared or adjudicated bankrupt or insolvent,
(ii) consent to the institution of bankruptcy or insolvency proceedings against
the Trust, (iii) file a petition or consent to a petition seeking reorganization
or relief on behalf of the Trust under any applicable federal or state law
relating to bankruptcy, (iv) consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or any similar official) of the
Trust or a substantial portion of the property of the Trust, (v) make any
assignment for the benefit of the Trust's creditors, (vi) cause the Trust to
admit in writing its inability to pay its debts generally as they become due or
(vii) take any action, or cause the Trust to take any action, in furtherance of
any of the foregoing (any of the above, a "Bankruptcy Action"). Until the
Obligations under the Loan Agreement have been paid in full and the Loan
Agreement has been terminated, no Certificateholder shall have the power to
take, and shall not take, any Bankruptcy Action with respect to the Trust or the
Depositors or direct the Owner Trustee to take any Bankruptcy Action with
respect to the Trust or the Depositors.
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SECTION 4.2 Action by Owners with Respect to Certain Matters. The Owner
Trustee shall not have the power, except upon the direction of the Owners, to
(a) remove the Administrator under the 2003-1 Administration Agreement pursuant
to Section 8 thereof or (b) appoint a successor Administrator pursuant to
Section 8 of the 2003-1 Administration Agreement. The Owner Trustee shall take
the actions referred to in the preceding sentence only upon written instructions
signed by the Owners and consented to in a prior writing by the Lender (which
consent shall be obtained by the Owners).
SECTION 4.3 Restrictions on Owners' Power. The Owners shall not direct
the Owner Trustee to take or refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the Owner Trustee
under this Agreement or any of the Basic Documents or would be contrary to
Section 2.3 nor shall the Owner Trustee be obligated to follow any such
direction, if given.
SECTION 4.4 Majority Control. Except as expressly provided herein, any
consent, instruction or other action that is required of or may be taken by the
Owners under this Agreement may be given or taken only by the Majority
Certificateholders. Except as expressly provided herein, any written notice of
the Owners delivered pursuant to this Agreement shall be effective only if
signed by the Majority Certificateholders at the time of the delivery of such
notice.
ARTICLE V
CERTAIN DUTIES
SECTION 5.1 Segregated Account.
The Administrator shall establish the IOS Account for the monies of the
Trust. Pursuant to the IOS Account Control Agreement, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank shall
establish and maintain the IOS Account on behalf of the Trust. Any monies
received by the Trust or the Administrator on behalf of the Trust pursuant to
the Basic Documents or on account of the Owner Trust Estate shall be deposited
into the IOS Account. All distributions from the IOS Account shall be made by
the Administrator pursuant to the 2003-1 Administration Agreement and the IOS
Account Control Agreement in accordance with the priority set forth in Section
5.2 of this Agreement. To the extent the Owner Trustee receives any monies
pursuant to the Basic Documents (other than any fees, expenses or indemnities
paid to the Owner Trustee), such monies shall constitute Trust funds and the
Owner Trustee shall deposit such monies directly into the IOS Account on the
same Business Day. To the extent the same day deposit of such funds is
impractical, the Owner Trustee shall invest any amounts it holds in Permitted
Investments and shall instead deposit such funds (and all proceeds, dividends
and distributions thereof) into the IOS Account the next Business Day.
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SECTION 5.2 Accounting of Trust Funds.
(a) On each Payment Date, all cash holdings of the Trust shall be paid
by the Administrator in the following order of priority:
(i) First, pro rata to the payment of all amounts then due and
payable by the Trust (prior to acceleration under the Clearwing Pledge
Agreement) to the Preferred Owner under the Fee Letter or any other
Basic Document;
(ii) Second, pro rata to the payment of all amounts then due
and payable by the Trust (after acceleration under the Clearwing Pledge
Agreement) to the Preferred Owner under the Fee Letter or any other
Basic Document;
(iii) Third, any remaining amounts to the Preferred Owner in
an amount equal to the Actual Losses; and
(iv) Fourth, any remaining amounts to the Residual Owners pro
rata in accordance with Residual Percentage Interests.
If a Reserve Event has occurred and is continuing, all cash holdings
that otherwise would have been payable to the Residual Owner shall be held in
reserves by the Administrator in the IOS Account until (x) the Reserve Event has
been cured to the Lender's satisfaction or (y) an amount equal to the Potential
Actual Losses have been reserved. All Potential Actual Losses that have been
reserved for pursuant to the foregoing sentence shall be paid by the
Administrator to the Preferred Owner pursuant to clause(a)(iii) above to the
extent such Potential Actual Losses become Actual Losses.
(b) At least one Business Day prior to each Payment Date, the Owner
Trustee (acting through the Administrator) shall cause the Administrator to
deliver to each Certificateholder the statement of all amounts credited to the
IOS Account as of the close of business on the preceding Payment Date and the
proposed distributions from the IOS Account on the Payment Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to such Owner in accordance with this Section. The Owner
Trustee is hereby authorized and directed to retain from amounts otherwise
distributable to the Owners sufficient funds for the payment of any tax that is
legally owed by the Trust (but such authorization shall not prevent the Owner
Trustee from contesting any such tax in appropriate proceedings, and withholding
payment of such tax, if permitted by law, pending the outcome of such
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proceedings). The amount of any withholding tax imposed with respect to an Owner
shall be treated as cash distributed to such Owner at the time it is withheld by
the Trust and remitted to the appropriate taxing authority. In the event of any
claimed over withholding, Owners shall have no claim for recovery against the
Trust or other Owners. If the amount withheld was not withheld from actual
distributions, the Trust may, at its option, (i) require the Owner to reimburse
the Trust for such withholding (and each Owner agrees to reimburse the Trust
promptly following such request) or (ii) reduce any subsequent distributions by
the amount of such withholding. If there is a possibility that withholding tax
is payable with respect to a distribution (such as a distribution to a Non-U.S.
Person), the Owner Trustee may in its sole discretion withhold or cause to be
withheld such amounts in accordance with this paragraph (b). In the event that
an Owner wishes to apply for a refund of any such withholding tax, the Owner
Trustee shall reasonably cooperate with such owner in making such claim so long
as such Owner agrees to reimburse the Owner Trustee for any out-of-pocket
expenses incurred.
SECTION 5.3 Method of Payment. Subject to Section 3.8, distributions
required to be made to Owners on any Payment Date shall be made to each Owner of
record on the preceding Record Date either by wire transfer, in immediately
available funds, to the account of such Owner at a bank or other entity having
appropriate facilities therefor, if such Owner shall have provided to the
Certificate Registrar appropriate written instructions at least five (5)
Business Days prior to such Payment Date; or, if not, by check mailed to such
Owner at the address of such Owner appearing in the Certificate Register.
SECTION 5.4 Reserved.
SECTION 5.5 Accounting and Reports to the Certificateholder, Owners,
the Internal Revenue Service and Others. The Owner Trustee shall deliver or
cause to be delivered to the R Certificate Holder, as may be required by the
Code and applicable Treasury Regulations, or as may be requested by the R
Certificate Holder, such information, reports or statements as may be necessary
to enable the R Certificate Holder to prepare its federal and state income tax
returns. Any federal income tax return that needs to be filed on behalf of the
Trust, shall be prepared by the Administrator and signed in accordance with
applicable law.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver or cause to be executed and delivered the Trust
Certificates and each Basic Document to which the Trust is a party and each
certificate or other document attached as an exhibit to or contemplated by each
Basic Document to which the Trust is a party and any other agreement or
instrument described in Articles II and III, in each case, in such form as the
Majority Certificateholders shall approve, as evidenced conclusively by the
Owner Trustee's execution thereof. The Owner Trustee shall authenticate and
deliver, or cause to be authenticated and delivered, the Trust Certificates. In
addition to the foregoing, the Owner Trustee is authorized, but shall not be
obligated, to take all actions required of the Trust, pursuant to the Basic
Documents.
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SECTION 6.2 General Duties. It shall be the duty of the Owner Trustee:
(a) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Basic Documents
to which the Trust is a party and to administer the Trust in the interest of the
Owners, subject to the Basic Documents and in accordance with the provisions of
this Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed
to have discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Administrator, the Servicer or American Business
Financial Services, Inc. has agreed in the 2003-1 Administration Agreement or
this Agreement to perform any act or to discharge any duty of the Owner Trustee
or the Trust hereunder or under any Basic Document, and the Owner Trustee shall
not be held liable for the default or failure of the Administrator, the Servicer
or American Business Credit, Inc. to carry out its obligations under the 2003-1
Administration Agreement or this Agreement; and
(b) to obtain and preserve, the Trust's qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Loan Agreement, the Collateral,
the IOS and each other instrument and agreement included in the Trust Estate.
The parties hereto agree and acknowledge that this duty has been delegated to
the Administrator pursuant to the 2003-1 Administration Agreement and the Owner
Trustee shall have no liability for the Administrator's failure to carry out
such duties.
SECTION 6.3 Action Upon Instruction.
(a) Subject to Article IV and in accordance with the terms of the Basic
Documents, the Owners acting with the prior written consent of the Lender (which
consent shall be obtained by the Owners) may, by written instruction, direct the
Owner Trustee in the management of the Trust but only to the extent consistent
with the limited purpose of the Trust. Such direction may be exercised at any
time by written instruction of the Owners pursuant to Section 4.4 hereof, and
the Owner Trustee shall have no liability to any Person for acting in accordance
with such directions.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
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(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Basic Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Owners and the Lender
requesting instruction from the Owners as to the course of action to be adopted,
and to the extent the Owner Trustee acts in good faith in accordance with any
written instruction of the Owners as provided in Section 4.4 hereof, acting with
the prior written consent of the Lender (but only if such consent is required,
and, if required, obtained by the Owners), the Owner Trustee shall not be liable
on account of such action to any Person. If the Owner Trustee shall not have
received appropriate instruction within 10 days of receipt of such notice (or
within such shorter period of time as reasonably may be specified in such notice
or may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action, not inconsistent with this
Agreement or the Basic Documents, as it shall deem to be in the best interests
of the Owners, and shall have no liability to any Person for such action or
inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Basic Document or any such provision
is ambiguous as to its application, or is, or appears to be, in conflict with
any other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Owners and the Lender
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction,
accompanied by a written consent of the Lender, received, the Owner Trustee
shall not be liable, on account of such action or inaction, to any Person. If
the Owner Trustee shall not have received appropriate instruction within 10 days
of receipt of such notice (or within such shorter period of time as reasonably
may be specified in such notice or may be necessary under the circumstances) it
may, but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Basic Documents, as it shall deem to be
in the best interests of the Owners, and shall have no liability to any Person
for such action or inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement, the Basic
Documents or in Instructions. The Owner Trustee shall not have any duty or
obligation to manage, make any payment with respect to, register, record, sell,
dispose of, or otherwise deal with the Owner Trust Estate, or to otherwise take
or refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Trust is a party, except as expressly provided
by the terms of this Agreement, any Basic Document or in any document or written
instruction received by the Owner Trustee pursuant to Section 6.3; and no
implied duties or obligations shall be read into this Agreement or any Basic
Document against the Owner Trustee. The Owner Trustee shall have no
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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 prepare or file any
Securities and Exchange Commission filing for the Trust or to record this
Agreement or any Basic Document. The Owner Trustee nevertheless agrees that it
will, at its own cost and expense, promptly take all action as may be necessary
to discharge any liens on any part of the Owner Trust Estate that result from
actions by, or claims against, the Owner Trustee in its individual capacity that
are not related to the ownership or the administration of the Owner Trust
Estate.
SECTION 6.5 No Action Except Under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Basic Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for Federal income tax purposes. The
Owners shall not direct the Owner Trustee to take action that would violate the
provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1 Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement subject to the
Basic Documents. The Owner Trustee also agrees to disburse all moneys actually
received by it constituting part of the Owner Trust Estate upon the terms of the
Basic Documents and this Agreement. The Owner Trustee shall not be answerable or
accountable hereunder or under any Basic Document under any circumstances,
except (i) for its own willful misconduct or gross negligence or (ii) in the
case of the inaccuracy of any representation or warranty contained in Section
7.3 expressly made by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a responsible officer of the Owner Trustee;
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(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Administrator or the Owners;
(c) no provision of this Agreement or any Basic Document shall require
the Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or under
any Basic Document if the Owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents;
(e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Depositors or for the form, character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate or for or in respect of the validity
or sufficiency of the Basic Documents, other than the certificate of
authentication on the Trust Certificates, and the Owner Trustee shall in no
event assume or incur any liability, duty, or obligation to any Owner, other
than as expressly provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct
of the Administrator under any of the Basic Documents or otherwise and the Owner
Trustee shall have no obligation or liability to perform the obligations of the
Trust under this Agreement or the Basic Documents that are required to be
performed by the Administrator under this Agreement or the 2003-1 Administration
Agreement and shall not be liable for monitoring the performance of such
Persons;
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of any of
the Owners, unless such Owners have offered to the Owner Trustee security or
indemnity satisfactory to it in its reasonable discretion against the costs,
expenses and liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary act
enumerated in this Agreement or in any Basic Document shall not be construed as
a duty, and the Owner Trustee shall not be answerable for other than its gross
negligence or willful misconduct in the performance of any such act; and
(h) with respect to the Lender, the Owner Trustee undertakes to perform
or observe only such of the covenants and obligations of the Owner Trustee as
are expressly set forth in this Agreement and the Basic Documents, and no
implied covenants or obligations with respect to the Lender shall be read into
this Agreement or the Basic Documents against the Owner Trustee. The Owner
Trustee shall not be deemed to owe any fiduciary duty to the Lender, and shall
not be liable to the Lender for the failure of the Trust to perform its
obligations to the Lender other than as a result of the gross negligence or
willful misconduct of the Owner Trustee in the performance of its express
obligations under this Agreement.
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SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish to
the Owners and the Lender promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.3 Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Depositors, for the benefit of the Owners, that:
(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement.
(i) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(ii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee
or any judgment or order binding on it, or constitute any default under
its charter documents or by-laws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound.
SECTION 7.4 Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by a Responsible Officer, as to
such fact or matter and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
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(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or, at the expense of the
Trust, through its agents or attorneys pursuant to agreements entered into with
any of them, and the Owner Trustee shall not be liable for the conduct or
misconduct of such agents or attorneys if such agents or attorneys shall have
been selected by the Owner Trustee with reasonable care and (ii) may, at the
expense of the Trust, consult with counsel, accountants and other skilled
persons to be selected with reasonable care and employed by it. The Owner
Trustee shall not be liable for anything done, suffered or omitted in good faith
by it in accordance with the opinion or advice of any such counsel, accountants
or other such persons and not contrary to any Basic Document.
SECTION 7.5 Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created, Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or Loans.
The recitals contained herein and in the Trust Certificates (other than the
signature and countersignature of the Owner Trustee on the Trust Certificates)
shall be taken as the statements of the Depositors and the other
Certificateholders, and the Owner Trustee assumes no responsibility for the
correctness thereof. The Owner Trustee makes no representations as to the
validity or sufficiency of this Agreement, of any Basic Document or of the Trust
Certificates (other than the signature and countersignature of the Owner Trustee
on the Trust Certificates and as specified in Section 7.3) or of any Mortgage
Loans or related documents. The Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage Loan, or the perfection and priority of any
security interest created by any Mortgage Loan or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Owner
Trust Estate or its ability to generate the payments to be distributed to Owners
under this Agreement, including, without limitation: the existence, condition
and ownership of any Collateral; the existence and enforceability of any
insurance thereon; the existence and contents of any Mortgage Loan on any
computer or other record thereof, the validity of the assignment of any Mortgage
Loan to the Trust or of any intervening assignment; the completeness of any
Mortgage Loan; the performance or enforcement of any Mortgage Loan; the
compliance by the Depositors or the Servicer with any warranty or representation
made under any Basic Document or in any related document or the accuracy of any
such warranty or representation or any action of the Administrator, the
Depositors or the Servicer or any subservicer taken in the name of the Owner
Trustee.
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SECTION 7.7 Licenses. The Owner Trustee shall cause the Trust to use
its best efforts to obtain and maintain the effectiveness of any licenses
required in connection with this Agreement and the Basic Documents and the
transactions contemplated hereby and thereby until such time as the Trust shall
terminate in accordance with the terms hereof. The parties hereto agree and
acknowledge that this duty has been delegated to the Administrator pursuant to
the 2003-1 Administration Agreement and the Owner Trustee shall have no
liability for the Administrator's failure to carry out such duties.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1 Fees and Expenses. The Owner Trustee shall receive as
compensation for its services hereunder such fees as have been separately agreed
upon before the date hereof between the Depositors and the Owner Trustee, (which
fees shall be paid as provided in the Servicing Agreement). Except as provided
in Section 8.2 hereof, the Owner Trustee shall look solely to the Depositors for
reimbursement for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder unless and to the extent the Owner Trustee is reimbursed for such
expenses by the Trust or other Person.
SECTION 8.2 Indemnification. To the fullest extent permitted by
applicable law, the Depositors and ABFSI shall be jointly and severally liable
for, and shall indemnify the Owner Trustee, in its individual and trustee
capacities, and its successors, assigns, agents and servants (collectively, the
"Indemnified Parties") from and against, any and all liabilities, obligations,
losses, damages, taxes, claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable legal fees and expenses)
of any kind and nature whatsoever (collectively, "Expenses") which may at any
time be imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
other Basic Documents, the Owner Trust Estate, the administration of the Owner
Trust Estate or the action or inaction of the Owner Trustee hereunder, except
only that the Depositors and ABFSI shall not be liable for or required to
indemnify an Indemnified Party from and against Expenses arising or resulting
from such Indemnified Party's willful misfeasance, bad faith or gross negligence
in the performance of the duties, or by reason of reckless disregard of its
duties under the Basic Documents. The indemnities contained in this Section
shall survive the resignation or termination of the Owner Trustee or the
termination of this Agreement. In the event of any claim, action or proceeding
for which indemnity will be sought pursuant to this Section, the Owner Trustee's
choice of legal counsel shall be subject to the approval of the Depositors and
ABFSI, which approval shall not be unreasonably withheld.
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SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
SECTION 8.4 Limitation of Liability. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Trust or the Owner Trustee
or under this Agreement or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Trust or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Trust or the Owner Trustee or any successor or assign
of the Owner Trustee in its individual capacity, except as any such person may
have expressly agreed (it being understood that the Owner Trustee has no
obligations in its individual capacity). For all purposes of this Agreement in
the performance of any duties or obligations hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of this Agreement.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1 Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) shall terminate and the
Trust shall dissolve and terminate 180 days after payment in full of (i) all of
the Obligations under the Loan Agreement and the termination of the Loan
Agreement and (ii) all amounts required to be paid to the Preferred Owner under
the Fee Letter, all Actual Losses, and any other amounts due to the Preferred
Owner hereunder or under the Basic Documents. The bankruptcy, liquidation,
dissolution, death or incapacity of any Owner shall not (x) operate to terminate
this Agreement or the Trust, nor (y) entitle such Owner'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 all or any part of the Trust or Owner Trust
Estate nor (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) Except as provided in Section 9.1(a) above, neither the Depositors
nor any Owner shall be entitled to revoke or terminate the Trust.
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(c) Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Trust Certificates to
the Servicer for payment of the final distributions and cancellation, shall be
given by the Owner Trustee to the Certificateholders and the Lender mailed
within five Business Days of receipt by the Owner Trustee of notice of such
termination pursuant to Section 9.1(a) above, which notice received by and given
by the Owner Trustee shall state (i) the Payment Date upon or with respect to
which final payment of the Trust Certificates shall be made upon presentation
and surrender of the Trust Certificates at the office of the Certificate
Registrar therein designated, (ii) the amount of any such final payment and
(iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Trust Certificates at the office of the Certificate Registrar therein
designated. The Owner Trustee shall give such notice to the Certificate
Registrar (if other than the Owner Trustee) at the time such notice is given to
Certificateholders and the Lender. Upon presentation and surrender of the Trust
Certificates, the Servicer shall cause to be distributed to Certificateholders
amounts distributable on such Payment Date pursuant to Section 5.2 of this
Agreement.
In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Owner Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Trust
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Any funds remaining in the
Trust after exhaustion of such remedies shall be distributed by the Servicer to
the Certificateholders on a pro rata basis.
(d) Upon the winding up of the Trust and its termination, including the
making of reasonable provisions for the payment to creditors of the Trust in
accordance with Section 3808 of the Statutory Trust Statute, the Owner Trustee
shall, upon receipt of written direction of the Depositors, cause the
Certificate of Trust to be canceled by filing a certificate of cancellation with
the Secretary of State in accordance with the provisions of Section 3810 of the
Statutory Trust Statute. The Administrator shall be responsible for the
liquidation of the Owner Trust Estate and the winding up and dissolution of the
Trust.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Statutory Trust Statute; authorized to exercise corporate powers
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or state authorities; and having (or
having a parent which has) a long-term rating of at least "A" by Standard &
Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and ▇▇▇▇▇'▇ Investors
Service, Inc. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Administrator, the Owners and the Lender.
Upon receiving such notice of resignation, the Administrator with the prior
written consent of the Owners and the Lender, shall promptly appoint a successor
Owner Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the successor
Owner Trustee. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
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If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the authority
of the immediately preceding sentence, the Administrator shall, with the prior
written consent of the Owners and the Lender, promptly appoint a successor Owner
Trustee by written instrument in duplicate, one copy of which instrument shall
be delivered to the outgoing Owner Trustee so removed and one copy to the
successor Owner Trustee and payment of all fees owed to the outgoing Owner
Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to the Owners and the Lender.
SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Administrator and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Administrator and the predecessor Owner Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties, and obligations.
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No successor Owner Trustee shall accept appointment as provided in this
Section 10.3 unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1. Promptly following its appointment,
any successor Owner Trustee shall file an amendment to the Certificate of Trust
with the Secretary of State in accordance with the Statutory Trust Statute.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice of the successor of such Owner
Trustee to all Owners, the Servicer and the Lender. If the Administrator fails
to mail such notice within 10 days after acceptance of appointment by the
successor Owner Trustee, the successor Owner Trustee shall cause such notice to
be mailed at the expense of the Administrator.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any Person into
which the Owner Trustee may be merged or converted or with which it may be
consolidated or any Person resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such Person shall be eligible pursuant to Section 10.1, without the execution or
filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided further that
the Owner Trustee shall mail notice of such merger or consolidation to the
Lender.
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Collateral may at the time be located, and for
the purpose of performing certain duties and obligations of the Trust pursuant
to the Basic Documents, the Administrator and the Owner Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Owner Trustee to act as co-owner trustee,
jointly with the Owner Trustee, or a separate trustee or separate trustees, of
all or any part of the Owner Trust Estate, and to vest in such Person, in such
capacity, such title to the Trust, or any part thereof, and, subject to the
other provisions of this Section, such powers, duties, obligations, rights and
trusts as the Administrator and the Owner Trustee may consider necessary or
desirable. If the Administrator shall not have joined in such appointment within
25 days after the receipt by it of a request so to do, the Owner Trustee shall
have the power to make such appointment. No co-owner trustee or separate owner
trustee under this Agreement shall be required to meet the terms of eligibility
as a successor trustee pursuant to Section 10.1 and no notice of the appointment
of any co-trustee or separate owner trustee shall be required pursuant to
Section 10.3.
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Each separate owner trustee and co-owner trustee shall, to the extent
permitted by law, be appointed and act subject to the following provision and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate owner trustee or
co-owner trustee jointly (it being understood that such separate owner
trustee or co-owner trustee is not authorized to act separately without
the Owner Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed, the Owner 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 or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate owner trustee or co-owner trustee,
but solely at the direction of the Owner Trustee;
(ii) no owner trustee under this Agreement shall be personally
liable by reason of any act or omission of any other owner trustee or
co-owner trustee under this Agreement; and
(iii) the Administrator and the Owner Trustee acting jointly
may at any time accept the resignation of or remove any separate owner
trustee or co-owner trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to the separate owner trustees and co-owner
trustees, as if given to each of them. Every instrument appointing any separate
owner trustee or co-owner trustee, other than this Agreement, shall refer to
this Agreement and to the conditions of this Article. Each separate owner
trustee and co-owner trustee, upon its acceptance of appointment, shall be
vested with the estates specified in its instrument of appointment, either
jointly with the Owner 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 Owner Trustee. Each such instrument shall be
filed with the Owner Trustee and a copy thereof given to the Administrator.
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Any separate owner trustee or co-owner trustee may at any time appoint
the Owner Trustee as 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. If any separate owner
trustee or co-owner 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 Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Supplements and Amendments. This Agreement may be amended
by the Depositors and the Owner Trustee, without the consent of the Owners but
with the prior written consent of the Lender, to cure any ambiguity, to correct
or supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions in
this Agreement or of modifying in any manner the rights of the Lender or the
Owners provided, however, that such action shall not adversely affect in any
material respect the interests of any Owner or the Lender. An amendment
described above shall be deemed not to adversely affect in any material respect
the interests of any Owner or the Lender if an opinion of counsel acceptable to
the Lender in its sole discretion is obtained to such effect.
This Agreement may also be amended from time to time by the Depositors
and the Owner Trustee, with the prior written consent of the Lender and the
Majority Certificateholders, 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 Lender or the Owners; provided,
however, that no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
Mortgage Loans or distributions that shall be required to be made for the
benefit of the Certificateholders or (b) reduce the Percentage Interests
required to consent to any such amendment, in either case without the consent of
the Lender and in the case of clause (b) without the consent of the Holders of
all the outstanding Trust Certificates.
Prior to the execution of any amendment or consent pursuant to this
Section 11.1, the Person seeking such amendment or consent shall furnish written
notification of the substance of such amendment or consent to each
Certificateholder and the Lender.
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It shall not be necessary for the consent of Owners pursuant to this
Section 11.1 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of Owners
provided for in this Agreement or in any other Basic Document) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an opinion of counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent have
been met. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 11.2 No Legal Title to Owner Trust Estate in Owners. The Owners
shall not have legal title to any part of the Owner Trust Estate. The Owners
shall be entitled to receive distributions with respect to their undivided
beneficial ownership interest therein only in accordance with Articles V and IX.
No transfer, by operation of law or otherwise, of any right, title, or interest
of the Owners to and in their ownership interest in the Owner Trust Estate shall
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.
SECTION 11.3 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Depositors, the
Owners, the Administrator and, to the extent expressly provided herein and the
Lender, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 11.4 Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and (i) mailed by
certified mail, postage prepaid, return receipt requested or (ii) telecopied
(upon telephone confirmation of receipt thereof) with a copy delivered by
overnight courier, and shall be deemed given upon actual receipt by the intended
recipient (or telephone confirmation thereof in the case of notice by
facsimile), as follows: (i) if to the Owner Trustee, its Corporate Trust Office;
with copies to: American Business Credit, Inc., The ▇▇▇▇▇▇▇▇▇ Bldg., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and Blank Rome LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇; (ii) if to the
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Depositors, c/o American Business Financial Services, Inc., The ▇▇▇▇▇▇▇▇▇
Building, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy number (215)
940-3299, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; (iii) if to the IOS Depositor, c/o
American Business Financial Services, Inc., The ▇▇▇▇▇▇▇▇▇ Building, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; (iv) if to the Lender, Chrysalis Warehouse Funding, LLC c/o
Chrysalis Management Group, The Belgravia Building ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, telecopy
number: (▇▇▇) ▇▇▇-▇▇▇▇, as to each such party, at such other address, telecopy
number and telephone number as shall be designated by such party in a written
notice to each other party.
(b) Any notice required or permitted to be given to an Owner shall be
given by first-class mail, postage prepaid, at the address of such Owner as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Owner receives such notice.
SECTION 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositors, the Owner Trustee and their successors and each owner and its
successors and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by an Owner shall bind
the successors and assigns of such Owner.
SECTION 11.8 No Petition. The Owner Trustee, by entering into this
Agreement, each Owner, by accepting a Trust Certificate, hereby covenant and
agree that they will not at any time institute against the Depositors or the
Trust, or join in any institution against the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or law in
connection with any obligations relating to the Trust Certificates, this
Agreement or any of the Basic Documents.
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SECTION 11.9 No Recourse. Each Owner by accepting a Trust Certificate
acknowledges that such Owner's Trust Certificate represents a beneficial
interest in the Trust only and does not represent an interest in or an
obligation of the Depositors, the Administrator, the Owner Trustee or any
Affiliate thereof and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated in this Agreement,
the Trust Certificates or the Basic Documents.
SECTION 11.10 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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IN WITNESS OF, the parties hereto have caused this TRUST AGREEMENT to
be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
HOMEAMERICAN CREDIT, INC., as a Depositor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Executive Vice President
----------------------------------
AMERICAN BUSINESS MORTGAGE
SERVICES, INC., as a Depositor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Executive Vice President
----------------------------------
AMERICAN BUSINESS CREDIT, INC., as a Depositor
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: President
----------------------------------
ABFS CONSOLIDATED HOLDINGS,
INC., as IOS Depositor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Executive Vice President
----------------------------------
WILMINGTON TRUST COMPANY, as Owner Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Senior Financial Services Officer
----------------------------------
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AGREEMENT TO BE BOUND
The undersigned agrees to be bound by the provisions of Article VIII of this
Trust Agreement. Furthermore, the undersigned acknowledges that pursuant to this
Trust Agreement it shall no longer have any rights as a "Depositor" of the
Trust.
Dated: October 14, 2003
AMERICAN BUSINESS FINANCIAL
SERVICES, INC.:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: Chairman, Chief Executive Officer
and President
----------------------------------