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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 28, 1999
SUPERIOR BANK FSB (as seller and servicer under the Sale and Servicing
Agreement, dated as of September 1, 1999, providing for the issuance of AFC
Mortgage Loan Asset Backed Notes, Series 1999-3)
Superior Bank FSB
(Exact name of registrant as specified in its charter)
United States 333-83597 36-1414142
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
One Lincoln Centre
Oakbrook Terrace, Illinois 60181
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (630) 916-4000
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Item 2. Acquisition or Disposition of Assets
Description of the Notes, Group 1 and Group 2
On September 28, 1999 a single series of notes, entitled AFC Mortgage Loan
Asset Backed Notes, Series 1999-3 (the "Notes") were issued pursuant to an
indenture (the "Indenture"), dated as of September 1, 1999, between AFC Trust
Series 1999-3, as issuer (the "Issuer") and LaSalle Bank National Association,
as indenture trustee (the "Indenture Trustee"). The Issuer was formed pursuant
to a trust agreement (the "Trust Agreement"), dated as of September 1, 1999,
between Superior Bank FSB, as depositor, and Wilmington Trust Company, as owner
trustee. The Notes consist of two classes identified as Class 1A and Class 2A.
The Notes are secured by the trust estate comprised of Group 1 and Group 2 (the
"Trust Estate"), consisting primarily of first and second liens on single-family
properties, multifamily properties, commercial properties and mixed residential
and commercial properties (the "Mortgage Loans") with an aggregate principal
balance of $331,262,502.03 as of September 1, 1999 (the "Cut-off Date") and an
aggregate amount of $124,483,356.98 deposited on the Closing Date in the Group 1
Pre-Funding Account and an aggregate amount of $78,031,772.75 deposited on the
Closing Date in the Group 2 Pre-Funding Account. The Mortgage Loans were
acquired by the Issuer pursuant to a sale and servicing agreement ( the "Sale
and Servicing Agreement"), dated as of September 1, 1999, among Superior Bank
FSB, as seller and servicer, the Issuer and the Indenture Trustee. The Notes
were sold to Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill") and
J.P. Morgan Securities Inc. ("J.P. Morgan"), pursuant to an underwriting
agreement dated September 20, 1999 among Superior Bank FSB, Merrill and J.P.
Morgan.
The Notes evidence, in the aggregate, $515,000,000 principal amount as of
the Cut-off Date. The Class 1A Notes will be entitled to payments of interest
accrued on the outstanding Class 1A Note Principal Balance at a variable
pass-through rate. The Class 2A Notes will be entitled to payments of interest
accrued on the outstanding Class 2A Note Principal Balance at a variable
pass-through rate. In addition, on each Payment Date, each class of Notes will
be entitled to distributions allocable to principal which will, as more fully
described in the Indenture, include the principal portion of all scheduled and
unscheduled payments received on the Mortgage Loans during an Accrual Period.
Credit support in respect of certain losses realized on the Mortgage Loans
will be covered by a note insurance policy (the "Note Insurance Policy"),
attached hereto as Exhibit 4.1, issued by Financial Guaranty Insurance Company
(the "Note Insurer") and, if the related Payment Date is prior to the Cross-over
Date, Excess Spread received by the Servicer. The Note Insurance Policy will
irrevocably and unconditionally guaranty payment on each Payment Date to the
Holders of the Notes of the related Class A Remittance Amount. If the related
Payment Date is prior to the Cross-Over Date with respect to a particular Group,
Holders of the Notes will have a right to 100% of the related Excess Spread to
fund the amount by which the related Class A Remittance Amount with respect to
each Class of Notes exceeds the related Available Remittance Amount for such
Payment Date. To the extent available, the Net Excess Spread and Excess
Principal with respect to a Group will
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then be applied to cover any Available Funds Shortfall with respect to the other
Group. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Sale and Servicing Agreement.
Items 3 through 6 and Item 8 are not included because they are not
applicable.
Item 7. Financial Statements and Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits
4.1 Note Insurance Policy, dated September 28, 1999, issued by Financial
Guaranty Insurance Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUPERIOR BANK FSB
By: /s/ William C. Bracken
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Name: William C. Bracken
Title: Senior Vice President
and Chief Financial Officer
Dated: September 28, 1999
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EXHIBIT TABLE
4.1 Note Insurance Policy, dated September 28, 1999, issued by Financial
Guaranty Insurance Company.
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EXHIBIT 4.1
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Financial Guaranty Insurance Company
115 Broadway
New York, New York 10006
(212) 312-3000
(800) 352-0001
SURETY BOND
Issuer: AFC Trust Series 1999-3 Policy Number: 99010727
Control Number: 0010001
Insured Obligations:
$515,000,000 in principal amount
of AFC Mortgage Loan Asset Backed
Notes, Series 1999-3, Class 1A and
2A Notes (the "Notes")
Trustee: LaSalle Bank National Association, as Indenture Trustee
Financial Guaranty Insurance Company ("Financial Guaranty"), a New York stock
insurance company, in consideration of its receipt of the Deposit Premium and
subject to the terms of this Surety Bond, hereby unconditionally and irrevocably
agrees to pay each Insured Payment to the Indenture Trustee named above or its
successor, as indenture trustee for the Holders of the Notes, to the extent set
forth in the Indenture and the Sale and Servicing Agreement.
Financial Guaranty will make an Insured Payment (other than that portion of an
Insured Payment constituting a Preference Amount) out of its own funds by 2:00
p.m. (New York City Time) in immediately available funds to the Indenture
Trustee on the later of (i) the Business Day next following the day on which
Financial Guaranty shall have received Notice that an Insured Payment is due and
(ii) the Payment Date on which the Insured Payment is payable to Noteholders
pursuant to the Indenture and the Sale and Servicing Agreement, for disbursement
to such Noteholders in the same manner as other payments with respect to the
Notes are required to be made. Any Notice received by Financial Guaranty after
2:00 p.m. New York City time on a given Business Day or on any day that is not a
Business Day shall be deemed to have been received by Financial Guaranty on the
next succeeding Business Day.
Upon such payment, Financial Guaranty shall be fully subrogated to the rights of
the Noteholders to receive the amount so paid. Financial Guaranty's obligations
hereunder with respect to each Payment Date shall be discharged to the extent
funds consisting of the Insured Payment are received by the Indenture Trustee on
behalf of the Noteholders for payment to such Noteholders, as provided in the
Indenture and the Sale and Servicing Agreement and herein, whether or not such
funds are properly applied by the Indenture Trustee.
Form 9109
Page 1 of 4
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If the payment of any portion or all of any amount that is insured hereunder is
voided pursuant to a final order of a court exercising proper jurisdiction in an
insolvency proceeding to the effect that the Indenture Trustee or a Noteholder,
as the case may be, is required to return any such payment or portion thereof
prior to the expiration date of this Surety Bond because such payment was voided
under the U. S. Bankruptcy Code, with respect to which order the appeal period
has expired without an appeal having been filed (a "Final Order"), and, as a
result, the Indenture Trustee or any Noteholder is required to return such
voided payment, or any portion of such voided payment made in respect of the
Notes (a "Preference Amount"), Financial Guaranty will pay on the guarantee
described in the first paragraph hereof, an amount equal to each such Preference
Amount, on the second Business Day following receipt by Financial Guaranty of
(x) a certified copy of the Final Order, (y) an assignment, in form reasonably
satisfactory to Financial Guaranty, irrevocably assigning to Financial Guaranty
all rights and claims of the Indenture Trustee and/or such Noteholder relating
to or arising under such Preference Amount and appointing Financial Guaranty as
the agent of the Indenture Trustee and/or such Noteholder in respect of such
Preference Amount, and (z) a Notice appropriately completed and executed by the
Indenture Trustee or such Noteholder, as the case may be. Such payment shall be
made to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Final Order and not to the Indenture Trustee or Noteholder directly
(unless a Noteholder has previously paid such amount to such receiver,
conservator, debtor-in-possession or trustee named in such Final Order in which
case payment shall be made to the Indenture Trustee for distribution to the
Noteholder upon proof of such payment reasonably satisfactory to Financial
Guaranty). Notwithstanding the foregoing, in no event shall Financial Guaranty
be (i) required to make any payment under this Surety Bond in respect of any
Preference Amount to the extent such Preference Amount is comprised of amounts
previously paid by Financial Guaranty hereunder, or (ii) obligated to make any
payment in respect of any Preference Amount, which payment represents a payment
of the principal amount of the Notes, prior to the time Financial Guaranty
otherwise would have been required to make a payment in respect of such
principal.
Financial Guaranty shall make payments due in respect of Preference Amounts
prior to 2:00 p.m. New York city time on the second Business Day following
Financial Guaranty's receipt of the documents required under clauses (x) through
(z) of the preceding paragraph. Any such documents received by Financial
Guaranty after 2:00 p.m. New York City time on a given Business Day or on any
day that is not a Business Day shall be deemed to have been received by
Financial Guaranty on the next succeeding Business Day. All payments made by
Financial Guaranty hereunder in respect of Preference Amounts will be made with
Financial Guaranty's own funds.
This Surety Bond is non-cancelable for any reason, including nonpayment of any
premium. The premium on this Surety Bond is not refundable for any reason,
including the payment of the Notes prior to their respective maturities. This
Surety Bond shall expire and terminate without any action on the part of
Financial Guaranty or any other Person on the date that is one year and one day
following the date on which the Notes shall have been paid in full.
The Deposit Premium shall be due and payable on the date hereof, and a monthly
premium shall be due and payable as provided in the Sale and Servicing
Agreement.
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Financial Guaranty Insurance Company
115 Broadway
New York, New York 10006
(212) 312-3000
(800) 352-0001
SURETY BOND
This Surety Bond is subject to and shall be governed by the laws of the State of
New York. The proper venue for any action or proceeding on this Surety Bond
shall be the County of New York, State of New York. The insurance provided by
this Surety Bond is not covered by the New York Property/Casualty Insurance
Security Fund (New York Insurance Code, Article 76).
Capitalized terms used and not defined herein shall have the respective meanings
set forth in the Sale and Servicing Agreement. "Notice" means a written notice
in the form of Exhibit A to this Surety Bond by registered or certified mail or
telephonic or telegraphic notice, subsequently confirmed by written notice
delivered via telecopy, telex or hand delivery from the Indenture Trustee to
Financial Guaranty specifying the information set forth therein. "Noteholder"
means, as to a particular Note, the person, other than the Issuer, the Servicer,
any Subservicer or the Seller who, on the applicable Payment Date is entitled
under the terms of such Note to payment thereof. "Sale and Servicing Agreement"
means the Sale and Servicing Agreement by and between AFC Trust Series 1999-3,
as Issuer, Superior Bank FSB, as Seller and Servicer, and LaSalle Bank National
Association, as Indenture Trustee, dated as of September 1, 1999. "Indenture"
means the Indenture by and between the Issuer and LaSalle Bank National
Association, as Indenture Trustee, dated as of September 1, 1999.
In the event that payments under any Note are accelerated, nothing herein
contained shall obligate Financial Guaranty to make any payment of principal or
interest on such Notes on an accelerated basis, unless such acceleration of
payment by Financial Guaranty is at the sole option of Financial Guaranty; it
being understood that a payment shortfall in respect of the redemption of the
Notes by reason of the purchase by the Servicer pursuant to Section 11.01 of the
Sale and Servicing Agreement does not constitute acceleration for the purposes
hereof.
IN WITNESS WHEREOF, Financial Guaranty has caused this Surety Bond to be affixed
with its corporate seal and to be signed by its duly authorized officer in
facsimile to become effective and binding upon Financial Guaranty by virtue of
the countersignature of its duly authorized representative.
/s/ Ann Stern /s/ A. Edward Turi III
President Authorized Representative
Effective Date: September 28, 1999
Form 9109
Page 3 of 4
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EXHIBIT A
NOTICE
To: Financial Guaranty Insurance Company
115 Broadway
New York, New York 10006
(212) 312-3000
Attention: General Counsel
Telephone: (212) 312-3000
Telecopier: (212) 312-3220
Re: AFC Trust Series 1999-3,
AFC Mortgage Loan Asset Backed
Notes, Series 1999-3
Policy No. 99010727
Determination Date: ___________________________
Payment Date: __________________________
We refer to that certain Sale and Servicing Agreement dated as of September 1,
1999, by and between AFC Trust Series 1999-3, as Issuer, Superior Bank FSB, as
Seller and Servicer, and LaSalle Bank National Association, as Indenture Trustee
(the "Sale and Servicing Agreement"), relating to the above referenced Notes.
All capitalized terms not otherwise defined herein or in the Surety Bond shall
have the same respective meanings assigned to such terms in the Sale and
Servicing Agreement.
(a) As of the Determination Date and based upon the Servicer's Certificate for
such Determination Date, the Indenture Trustee has determined under the Sale and
Servicing Agreement that in respect of the Payment Date set forth above:
(i) The Class A Interest Remittance Amount with respect to the related
Class of Class A Certificates with respect to Group [1][2] due and owing is
$____________;
(ii) The Class A Principal Remittance Amount with respect to the related
Class of Class A Certificates with respect to Group [1][2], due and owing is
$______________;
(iii) The Available Remittance Amount (minus the amount withdrawable from
the Group [1][2] Note Distribution Account to pay the Note Insurer pursuant to
Section 6.02(i) of the Agreement and as reduced by any portion thereof that has
been deposited in the Group [1][2] Note Distribution Account but may not be
withdrawn therefrom pursuant to an order of a United States bankruptcy court of
competent jurisdiction imposing a stay pursuant to Section 362 of the United
States Bankruptcy Code) is $_______________;
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(iv) The lesser of (1) the sum of the (a) Excess Spread to be deposited
into the Group [1][2] Note Distribution Account pursuant to Section 5.04(i) of
the Agreement, (b) the Net Excess Spread from the other Group and (c) the Excess
Principal from the other Group and (2) the Subordinated Amount with respect to
the related Group, is $_______________;
(v) The aggregate amount of unreimbursed Insured Payments (including any
portion constituting Preference Amounts), together with the aggregate portion of
the items described in clauses (i) and (ii) above that represents interest
accrued in respect of Insured Payments in accordance with the definition of
Class A Carry-Forward Amount in the Agreement, is $_______________;
(vi) The additional portion of the Amount Available constituting Excess
Spread available to pay the Class A Interest Remittance Amount with respect to
all related Classes of Class A Notes pursuant to Sections 6.06(c)(A)(Y)(i) with
respect to Group 1 and Section 6.06(c)(B)(Y)(i) with respect to Group 2 is
$_______________; and
(vii) The aggregate amount to be withdrawn from the Group [1][2] Reserve
Account and deposited into the Group [1][2] Note Distribution Account pursuant
to Section 6.14 of the Agreement is $_______________.
(i) On the maturity date for the Class A Notes, to the extent not otherwise
covered in clauses (i) through (vi) above, any remaining unpaid principal or
interest on the Class A Notes.
Please be advised that the amounts described in clauses (i), (ii) and
(viii) above collectively exceed the amounts described in clauses [prior to the
Cross-Over Date, (iii), (iv) (v)] [on or after the Cross-Over Date, clauses
(iii), (v), (vi)] and (vii) above by $_______________.
Accordingly, pursuant to the Sale and Servicing Agreement, this statement
constitutes a notice for payment of an Insured Payment in the amount of
$_______________ under the Surety Bond.
[Attached hereto is a copy of the Final Order in connection with a Preference
Amount in the amount set forth therein, together with an assignment of rights
and appointment of agent.]
(b) No payment claimed hereunder is in excess of the amount payable under the
Surety Bond. The amount requested in this Notice should be paid to: [Payment
Instructions]
Any person who knowingly and with intent to defraud any insurance company or
other person files an application for insurance or statement of claim containing
any materially false information or conceals for the purpose of misleading,
information concerning any fact material thereto, commits a fraudulent insurance
act, which is a crime, and shall also be subject to a civil penalty not to
exceed Five Thousand Dollars ($5,000.00) and the stated value of the claim for
each such violation.
<PAGE>
IN WITNESS WHEREOF, the Indenture Trustee has executed and delivered this
Notice this _____ day of ______________________.
,
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as Indenture Trustee
By:
--------------------------------
Title:
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