<PAGE>
================================================================================
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 29, 1998
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 333-61939 13-3526694
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
One New York Plaza 10292
New York, New York (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code: (212) 778-1000
No Change
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
Description of the Certificates and the Mortgage Loans
Prudential Securities Secured Financing Corporation registered
issuances of up to $750,000,000 principal amount of Mortgage Pass-Through
Certificates on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Act"), by the Registration Statements
on Form S-3 (Registration File No. 333-61939) (as amended, the "Registration
Statement"). Pursuant to the Registration Statement, ABFS Mortgage Loan Trust
1998-3 (the "Trust") issued approximately $140,062,235.50 in aggregate principal
amount of its Mortgage Pass-Through Certificates, Series 1998-3 (the
"Certificates"), on September 29, 1998. This Current Report on Form 8-K is being
filed to satisfy an undertaking to file copies of certain agreements executed in
connection with the issuance of the Certificates, the forms of which were filed
as Exhibits to the Registration Statement.
The Certificates were issued pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") attached hereto as
Exhibit 4.1, dated as of September 1, 1998, between Prudential Securities
Secured Financing Corporation, American Business Credit, Inc., in its capacity
as servicer (the "Servicer"), and The Chase Manhattan Bank, in its capacity as
trustee (the "Trustee"). The Certificates consist of four classes of senior
Certificates, the Class A-1 Certificates (the "Class A-1 Certificates"), the
Class A-2 Certificates (the "Class A-2 Certificates"), the Class A-3
Certificates (the "Class A-3 Certificates"), and the Class A-4 Certificates (the
"Class A-4 Certificates", and, collectively with the Class A-1 Certificates, the
Class A-2 Certificates, and the Class A-3 Certificates, the "Class A
Certificates") and one class of subordinated Certificates (the "Class R
Certificates"). Only the Class A Certificates were offered. The Certificates
initially evidenced, in the aggregate, 100% of the undivided beneficial
ownership interests in the Trust.
The assets of the Trust consist primarily of fixed-rate,
closed-end, conventional, monthly pay, generally fully amortizing, business and
consumer purpose residential home equity loans (the "Mortgage Loans") secured by
first or second lien mortgages or deeds of trust (the "Mortgages") on real
properties (the "Mortgage Properties"). The Mortgaged Properties securing the
Mortgage Loans consist primarily of single family residences (which may be
detached, part of a two-to four-family dwelling, a condominium unit or a unit in
a planned unit development).
Interest distributions on the Class A Certificates are based
on the Certificate Principal Balance thereof and the then applicable
Pass-Through Rate thereof. The Pass-Through Rate for the Class A-1 Certificates
is adjustable. The Pass-Through Rates for the Class A-1 Certificates, the Class
A-2 Certificates, and the Class A-3 Certificates are 6.400%, 6.020% and 6.295%
per annum, respectively.
The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, and the Class A-4 Certificates have original Certificate
Principal Balances of $43,100,000, $30,000,000, $105,100,000, and $19,800,000
respectively.
As of the Closing Date, the Mortgage Loans possessed the
characteristics described in the Prospectus dated September 4, 1998 and the
Prospectus Supplement dated September 14, 1998 filed pursuant to Rule 424(b) (5)
of the Act on September 30, 1998.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
-------------------------------------------------------------------
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated September 14, 1998, between Prudential
Securities Secured Financing Corporation and Prudential Securities
Incorporated.
1.2 Indemnification Agreement, dated as of September 14, 1998, among Prudential
Securities Secured Financing Corporation, Prudential Securities
Incorporated, American Business Credit, Inc., HomeAmerican Credit, Inc.
d/b/a Upland Mortgage, New Jersey Mortgage and Investment Corp., ABFS
1998-3, Inc., and Financial Security Assurance Inc.
4.1 Pooling and Servicing Agreement, dated as of September 1, 1998, between
Prudential Securities Secured Financing Corporation, American Business
Credit, Inc., as servicer, and The Chase Manhattan Bank, as trustee.
4.2 Unaffiliated Seller's Agreement, dated as of September 1, 1998, among
American Business Credit, Inc., Home American Credit, Inc. d/b/a/ Upland
Mortgage, New Jersey Mortgage and Investment Corp., Prudential Securities
Secured Financing Corporation, and ABFS 1998-3, Inc.
10.1 Financial Guaranty Insurance Policy, dated September 29, 1998.
23.1 Consent of PricewaterhouseCoopers, L.L.P. regarding financial statements
of the Financial Security Assurance Inc. and their report.
3
<PAGE>
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 hereunto duly authorized.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
As Depositor and on behalf
of ABFS Mortgage Loan Trust
1998-3
Registrant
By: /s/ Evan Mitnick
----------------------------
Name: Evan Mitnick
Title: Vice President
Dated: October 7, 1998
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- ------------
1.1 Underwriting Agreement, dated September 14, 1998,
between Prudential Securities Secured Financing
Corporation and Prudential Securities Incorporated.
1.2 Indemnification Agreement, dated September 14, 1998,
among Prudential Securities Secured Financing
Corporation, Prudential Securities Incorporated,
American Business Credit, Inc., HomeAmerican Credit,
Inc. d/b/a Upland Mortgage, New Jersey Mortgage and
Investment Corp., ABFS 1998-3, Inc., and Financial
Security Assurance Inc.
4.1 Pooling and Servicing Agreement, dated as of
September 1, 1998, between Prudential Securities
Secured Financing Corporation, American Business
Credit, Inc., as servicer, and The Chase Manhattan
Bank, as trustee.
4.2 Unaffiliated Seller's Agreement, dated as of
September 1, 1998, among American Business Credit,
Inc., Home American Credit, Inc. d/b/a/ Upland
Mortgage, New Jersey Mortgage and Investment Corp.,
Prudential Securities Secured Financing Corporation,
and ABFS 1998-3, Inc.
10.1 Financial Guaranty Insurance Policy, dated September
29, 1998.
23.1 Consent of PricewaterhouseCoopers, L.L.P. regarding
financial statements of the Financial Security
Assurance Inc. and their report.
<PAGE>
EXHIBIT 1.1
ABFS MORTGAGE LOAN TRUST 1998-3
MORTGAGE LOAN PASS-THROUGH CERTIFICATES
SERIES 1998-3
UNDERWRITING AGREEMENT
<PAGE>
EXHIBIT 1.1
UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza
New York, New York 10292
September 14, 1998
Ladies and Gentlemen:
Prudential Securities Secured Financing Corporation (the
"Depositor") proposes, subject to the terms and conditions stated herein and in
the attached Underwriting Agreement Standard Provisions, dated September 14,
1998 (the "Standard Provisions"), between the Depositor and Prudential
Securities Incorporated, to issue and sell to you (the "Underwriter") the
Securities specified in Schedule I hereto (the "Offered Securities"). The
Depositor agrees that each of the provisions of the Standard Provisions is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this
Underwriting Agreement. Each reference to the "Representative" herein and in the
provisions of the Standard Provisions so incorporated by reference shall be
deemed to refer to you. Unless otherwise defined herein, terms defined in the
Standard Provisions are used herein as therein defined. The Prospectus
Supplement and the accompanying Prospectus relating to the Offered Securities
(together, the "Prospectus") are incorporated by reference herein.
Subject to the terms and conditions set forth herein and in
the Standard Provisions incorporated herein by reference, the Depositor agrees
to issue and sell to the Underwriter, and the Underwriter agrees to purchase
from the Depositor, at the time and place and at the purchase price to the
Underwriter and in the manner set forth in Schedule I hereto, the entire
original principal balance of the Offered Securities.
[Remainder of Page Intentionally Left Blank]
2
<PAGE>
If the foregoing is in accordance with your understanding,
please sign and return to us two counterparts hereof, and upon acceptance hereof
by you, this letter and such acceptance hereof, including the provisions of the
Standard Provisions incorporated herein by reference, shall constitute a binding
agreement between the Underwriter and the Depositor.
Yours truly,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:_______________________________________
Name:
Title:
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By:_______________________________
Name:
Title:
[Signature Page to Underwriting Agreement]
<PAGE>
SCHEDULE I
Title of Offered Securities: ABFS Mortgage Loan Trust 1998-3, Mortgage
Loan Pass-Through Certificates, Series
1998-3, Class A-1, Class A-2, Class A-3 and
Class A-4.
Terms of Offered Securities: The Offered Securities shall have the terms
set forth in the Prospectus and shall
conform in all material respects to the
descriptions thereof contained therein, and
shall be issued pursuant to a Pooling and
Servicing Agreement to be dated as of
September 1, 1998 among the Depositor,
American Business Credit, Inc., as servicer,
and The Chase Manhattan Bank, as trustee.
Purchase Price: The purchase price for the Offered
Securities shall be 99.65%, 99.65%, 99.65%
and 99.65% of the aggregate principal
balance of the Class A-1, Class A-2, Class
A-3, and Class A-4 Certificates,
respectively, as of the Closing Date, plus
accrued interest at the rate of 6.400%,
6.020% and 6.295% per annum, on the
aggregate principal balance of the Class
A-1, Class A-2 and Class A-3 Certificates,
respectively, from September 1, 1998 to, but
not including, September 29, 1998.
Specified funds for payment of Federal Funds (immediately available funds).
Purchase Price:
Required Ratings: Aaa by Moody's Investors Service, Inc.
AAA by Standard & Poor's Ratings Services
Closing Date: On or about September 29, 1998 at 10:00 A.M.
eastern standard time or at such other time
as the Depositor and the Underwriter shall
agree.
Closing Location: Offices of American Business Credit, Inc.,
Balapointe Office Centre, 111 Presidential
Boulevard, Suite 215, Bala Cynwyd,
Pennsylvania 19004.
Name and address of Representative: Designated Representative: Prudential
Securities Incorporated.
Address for Notices, etc.: One New York Plaza
New York, New York 10292
Attn: Len Blum
<PAGE>
STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
September 14, 1998
From time to time, Prudential Securities Secured Financing
Corporation, a Delaware corporation (the "Depositor") may enter into one or more
underwriting agreements (each, an "Underwriting Agreement") that provide for the
sale of designated securities to the several underwriters named therein (such
underwriters constituting the "Underwriters" with respect to such Underwriting
Agreement and the securities specified therein). The several underwriters named
in an Underwriting Agreement will be represented by one or more representatives
as named in such Underwriting Agreement (collectively, the "Representative").
The term "Representative" also refers to a single firm acting as sole
representative of the Underwriters and to Underwriters who act without any firm
being designated as their representative. The standard provisions set forth
herein (the "Standard Provisions") may be incorporated by reference in any
Underwriting Agreement. This Agreement shall not be construed as an obligation
of the Depositor to sell any securities or as an obligation of any of the
Underwriters to purchase such securities. The obligation of the Depositor to
sell any securities and the obligation of any of the Underwriters to purchase
any of the securities shall be evidenced by the Underwriting Agreement with
respect to the securities specified therein. An Underwriting Agreement shall be
in the form of an executed writing (which may be in counterparts), and may be
evidenced by an exchange of telegraphic communications or any other rapid
transmission device designed to produce a written record of the communications
transmitted. The obligations of the underwriters under this Agreement and each
Underwriting Agreement shall be several and not joint. Unless otherwise defined
herein, the terms defined in the Underwriting Agreement are used herein as
defined in the Prospectus referred to below.
1. The Offered Securities. The Depositor proposes to sell
pursuant to the applicable Underwriting Agreement to the several Underwriters
named therein home equity loan certificates (the "Securities") representing
beneficial ownership interests in a trust, the trust property of which consists
of two pools of home equity loans (the "Mortgage Loans") and certain related
property. The Securities will be issued pursuant to a pooling and servicing
agreement (the "Pooling and Servicing Agreement") by and among the Depositor,
American Business Credit, Inc., as Servicer (the "Servicer") and The Chase
Manhattan Bank, as trustee (the "Trustee").
The terms and rights of any particular issuance of Securities
shall be as specified in the Underwriting Agreement relating thereto and in or
pursuant to the Pooling and Servicing Agreement identified in such Underwriting
Agreement. The Securities which are the subject of any particular Underwriting
Agreement into which this Agreement is incorporated are herein referred to as
the "Offered Securities."
The Depositor has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-61939), including a prospectus relating to the Securities under the
Securities Act of 1933, as amended (the "1933 Act"). The term "Registration
Statement" means such registration statement as amended to the date of the
Underwriting Agreement. The term "Base Prospectus" means the prospectus included
in the Registration Statement. The term "Prospectus" means the Base Prospectus
together with the prospectus supplement specifically relating to the Offered
Securities, as first filed with the Commission pursuant to Rule 424. The term
"Preliminary Prospectus" means a preliminary
<PAGE>
prospectus supplement specifically relating to the Offered Securities together
with the Base Prospectus.
2. Offering by the Underwriters. Upon the execution of the
Underwriting Agreement applicable to any Offered Securities and the
authorization by the Representative of the release of such Offered Securities,
the several Underwriters propose to offer for sale to the public the Offered
Securities at the prices and upon the terms set forth in the Prospectus.
3. Purchase, Sale and Delivery of the Offered Securities.
Unless otherwise specified in the Underwriting Agreement, payment for the
Offered Securities shall be made by certified or official bank check or checks
payable to the order of the Depositor in immediately available or next day
funds, at the time and place set forth in the Underwriting Agreement, upon
delivery to the Representative for the respective accounts of the several
Underwriters of the Offered Securities registered in definitive form and in such
names and in such denominations as the Representative shall request in writing
not less than five full business days prior to the date of delivery. The time
and date of such payment and delivery with respect to the Offered Securities are
herein referred to as the "Closing Date".
4. Conditions of the Underwriters' Obligations. The respective
obligations of the several Underwriters pursuant to the Underwriting Agreement
shall be subject, in the discretion of the Representative, to the accuracy in
all material respects of the representations and warranties of the Depositor
contained herein as of the date of the Underwriting Agreement and as of the
Closing Date as if made on and as of the Closing Date, to the accuracy in all
material respects of the statements of the officers of the Depositor and the
Servicer made in any certificates pursuant to the provisions hereof and of the
Underwriting Agreement, to the performance by the Depositor of its covenants and
agreements contained herein and to the following additional conditions
precedent:
(a) All actions required to be taken and all filings required
to be made by or on behalf of the Depositor under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act") prior to
the sale of the Offered Securities shall have been duly taken or made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall be in effect; (ii) no proceedings for such
purpose shall be pending before or threatened by the Commission, or by
any authority administering any state securities or "Blue Sky" laws;
(iii) any requests for additional information on the part of the
Commission shall have been complied with to the Representative's
reasonable satisfaction; (iv) since the respective dates as of which
information is given in the Registration Statement and the Prospectus
except as otherwise stated therein, there shall have been no material
adverse change in the condition, financial or otherwise, earnings,
affairs, regulatory situation or business prospects of the Depositor;
(v) there are no material actions, suits or proceedings pending before
any court or governmental agency, authority or body or threatened,
affecting the Depositor or the transactions contemplated by the
Underwriting Agreement; (vi) the Depositor is not in violation of its
charter or its by-laws or in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which
2
<PAGE>
it or its properties may be bound, which violations or defaults
separately or in the aggregate would have a material adverse effect on
the Depositor; and (vii) the Representative shall have received, on the
Closing Date a certificate, dated the Closing Date and signed by an
executive officer of the Depositor, to the foregoing effect.
(c) Subsequent to the execution of the Underwriting Agreement,
there shall not have occurred any of the following: (i) if at or prior
to the Closing Date, trading in securities on the New York Stock
Exchange shall have been suspended or any material limitation in
trading in securities generally shall have been established on such
exchange, or a banking moratorium shall have been declared by New York
or United States authorities; (ii) if at or prior to the Closing Date,
there shall have been an outbreak or escalation of hostilities between
the United States and any foreign power, or of any other insurrection
or armed conflict involving the United States which results in the
declaration of a national emergency or war, and, in the reasonable
opinion of the Representative, makes it impracticable or inadvisable to
offer or sell the Offered Securities; or (iii) if at or prior to the
Closing Date, a general moratorium on commercial banking activities in
New York shall have been declared by either federal or New York State
authorities.
(d) The Representative shall have received, on the Closing Date, a
certificate dated the Closing Date and signed by an executive officer
of the Depositor to the effect that attached thereto is a true and
correct copy of the letter from each nationally recognized statistical
rating organization (as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the 1933 Act) that rated the Offered
Securities and confirming that, unless otherwise specified in the
Underwriting Agreement, the Offered Securities have been rated in the
highest rating categories by each such organization and that each such
rating has not been rescinded since the date of the applicable letter.
(e) The Representative shall have received, on the Closing Date,
an opinion of Dewey Ballantine, special counsel for the Depositor,
dated the Closing Date, in form and substance satisfactory to the
Representative and containing opinions substantially to the effect set
forth in Exhibit A hereto.
(f) The Representative shall have received, on the Closing Date,
an opinion of counsel for the Servicer, dated the Closing Date, in form
and substance satisfactory to the Representative and counsel for the
Underwriters and containing opinions substantially to the effect set
forth in Exhibit B hereto.
(g) The Representative shall have received, on the Closing Date,
an opinion of counsel for the Trustee, dated the Closing Date, in form
and substance satisfactory to the Representative and counsel for the
Underwriters and containing opinions substantially to the effect set
forth in Exhibit C hereto.
(h) The Representative shall have received, on the Closing Date,
an opinion of Dewey Ballantine, counsel for the Underwriters, dated the
Closing Date, with respect to the incorporation of the Depositor, the
validity of the Offered Securities, the Registration Statement, the
Prospectus and other related matters as the Underwriters may reasonably
3
<PAGE>
require, and the Depositor shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(i) The Representative shall have received, on or prior to the
date of first use of the prospectus supplement relating to the Offered
Securities, and on the Closing Date if requested by the Representative,
letters of independent accountants of the Depositor in the form and
reflecting the performance of the procedures previously requested by
the Representative.
(j) The Depositor shall have furnished or caused to be furnished
to the Representative on the Closing Date a certificate of an executive
officer of the Depositor satisfactory to the Representative as to the
accuracy of the representations and warranties of the Depositor herein
at and as of such Closing Date as if made as of such date, as to the
performance by the Depositor of all of its obligations hereunder to be
performed at or prior to such Closing Date, and as to such other
matters as the Representative may reasonably request;
(k) The Servicer shall have furnished or caused to be furnished to
the Representative on the Closing Date a certificate of officers of
such Servicer in form and substance reasonably satisfactory to the
Representative;
(l) The Certificate Insurance Policy shall have been duly executed
and issued at or prior to the Closing Date and shall conform in all
material respects to the description thereof in the Prospectus
Supplement.
(m) The Representative shall have received, on the Closing Date,
an opinion of counsel to Financial Security Assurance Inc. (the
"Certificate Insurer"), dated the Closing Date, in form and substance
satisfactory to the Representative and counsel for the Underwriters and
containing opinions substantially to the effect set forth in Exhibit D
hereto.
(n) On or prior to the Closing Date there shall not have occurred
any downgrading, nor shall any notice have been given of (i) any
intended or potential downgrading or (ii) any review or possible change
in rating the direction of which has not been indicated, in the rating
accorded the Certificate Insurer's claims paying ability by any
"nationally recognized statistical rating organization," as such term
is defined for purposes of the 1933 Act.
(o) There has not occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, since June 30,
1998, of the Certificate Insurer, that is in the Representative's
judgment material and adverse and that makes it in the Representative's
judgment impracticable to market the Offered Securities on the terms
and in the manner contemplated in the Prospectus.
(p) The Representative shall have been furnished such further
information, certificates, documents and opinions as the Representative
may reasonably request.
4
<PAGE>
5. Covenants of the Depositor. In further consideration of the
agreements of the Underwriters contained in the Underwriting Agreement, the
Depositor covenants as follows:
(a) To furnish the Representative, without charge, copies of the
Registration Statement and any amendments thereto including exhibits
and as many copies of the Prospectus and any supplements and amendments
thereto as the Representative may from time to time reasonably request.
(b) Immediately following the execution of the Underwriting
Agreement, the Depositor will prepare a prospectus supplement setting
forth the principal amount, notional amount or stated amount, as
applicable, of Offered Securities covered thereby, the price at which
the Offered Securities are to be purchased by the Underwriters from the
Depositor, either the initial public offering price or prices or the
method by which the price or prices at which the Offered Securities are
to be sold will be determined, the selling concessions and
reallowances, if any, any delayed delivery arrangements, and such other
information as the Representative and the Depositor deem appropriate in
connection with the offering of the Offered Securities, but the
Depositor will not file any amendment to the Registration Statement or
any supplement to the Prospectus of which the Representative shall not
previously have been advised and furnished with a copy a reasonable
time prior to the proposed filing or to which the Representative shall
have reasonably objected. The Depositor will use its best efforts to
cause any amendment to the Registration Statement to become effective
as promptly as possible. During the time when a Prospectus is required
to be delivered under the 1933 Act, the Depositor will comply so far as
it is able with all requirements imposed upon it by the 1933 Act and
the rules and regulations thereunder to the extent necessary to permit
the continuance of sales or of dealings in the Offered Securities in
accordance with the provisions hereof and of the Prospectus, and the
Depositor will prepare and file with the Commission, promptly upon
request by the Representative, any amendments to the Registration
Statement or supplements to the Prospectus which may be necessary or
advisable in connection with the distribution of the Offered Securities
by the Underwriters, and will use its best efforts to cause the same to
become effective as promptly as possible. The Depositor will advise the
Representative, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement or any amended
Registration Statement has become effective or any supplement to the
Prospectus or any amended Prospectus has been filed. The Depositor will
advise the Representative, promptly after it receives notice or obtains
knowledge thereof, of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any preliminary Prospectus or the
Prospectus, or the suspension of the qualification of the Offered
Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceeding for any such purpose, or of
any request made by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional
information, and the Depositor will use its best efforts to prevent the
issuance of any such stop order or any order suspending any such
qualification, and if any such order is issued, to obtain the lifting
thereof as promptly as possible.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the 1933 Act, any event
occurs as a result of which the Prospectus as
5
<PAGE>
then amended or supplemented would include any untrue statement of a
material fact, or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it
is necessary for any other reason to amend or supplement the Prospectus
to comply with the 1933 Act, to promptly notify the Representative
thereof and upon their request to prepare and file with the Commission,
at the Depositor's own expense, an amendment or supplement which will
correct such statement or omission or any amendment which will effect
such compliance.
(d) During the period when a prospectus is required by law to be
delivered in connection with the sale of the Offered Securities
pursuant to the Underwriting Agreement, the Depositor will file, on a
timely and complete basis, all documents that are required to be filed
by the Depositor with the Commission pursuant to Sections 13, 14, or
15(d) of the 1934 Act.
(e) To qualify the Offered Securities for offer and sale under the
securities or "Blue Sky" laws of such jurisdictions as the
Representative shall reasonably request and to pay all expenses
(including fees and disbursements of counsel) in connection with such
qualification of the eligibility of the Offered Securities for
investment under the laws of such jurisdictions as the Representative
may designate provided that in connection therewith the Depositor shall
not be required to qualify to do business or to file a general consent
to service of process in any jurisdiction.
(f) To make generally available to the Depositor's security
holders, as soon as practicable, but in any event not later than
eighteen months after the date on which the filing of the Prospectus,
as amended or supplemented, pursuant to Rule 424 under the 1933 Act
first occurs, an earnings statement of the Depositor covering a
twelve-month period beginning after the date of the Underwriting
Agreement, which shall satisfy the provisions of Section 11(a) of the
1933 Act and the applicable rules and regulations of the Commission
thereunder (including, at the option of the Depositor, Rule 158).
(g) For so long as any of the Offered Securities remain
outstanding, to furnish to the Representative upon request in writing
copies of such financial statements and other periodic and special
reports as the Depositor may from time to time distribute generally to
its creditors or the holders of the Offered Securities and to furnish
to the Representative copies of each annual or other report the
Depositor shall be required to file with the Commission.
(h) For so long as any of the Offered Securities remain
outstanding, the Depositor will, or will cause the Servicer to, furnish
to the Representative, as soon as available, a copy of (i) the annual
statement of compliance delivered by the Servicer to the Trustee under
the applicable Pooling and Servicing Agreement, (ii) the annual
independent public accountants' servicing report furnished to the
Trustee pursuant to the applicable Pooling and Servicing Agreement,
(iii) each report regarding the Offered Securities mailed to the
holders of such Securities, and (iv) from time to time, such other
information concerning such Securities as the Representative may
reasonably request.
6
<PAGE>
6. Representations and Warranties of the Depositor. The Depositor
represents and warrants to, and agrees with, each Underwriter, as of the date of
the Underwriting Agreement, as follows:
(a) The Registration Statement including a prospectus relating to
the Securities and the offering thereof from time to time in accordance
with Rule 415 under the 1933 Act has been filed with the Commission and
such Registration Statement, as amended to the date of the Underwriting
Agreement, has become effective. No stop order suspending the
effectiveness of such Registration Statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission. A prospectus supplement specifically relating to the
Offered Securities will be filed with the Commission pursuant to Rule
424 under the 1933 Act; provided, however, that a supplement to the
Prospectus prepared pursuant to Section 5(b) hereof shall be deemed to
have supplemented the Basic Prospectus only with respect to the Offered
Securities to which it relates. The conditions to the use of a
registration statement on Form S-3 under the 1933 Act, as set forth in
the General Instructions on Form S-3, and the conditions of Rule 415
under the 1933 Act, have been satisfied with respect to the Depositor
and the Registration Statement. There are no contracts or documents of
the Depositor that are required to be filed as exhibits to the
Registration Statement pursuant to the 1933 Act or the rules and
regulations thereunder that have not been so filed.
(b) On the effective date of the Registration Statement, the
Registration Statement and the Basic Prospectus conformed in all
material respects to the requirements of the 1933 Act and the rules and
regulations thereunder, and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; on
the date of the Underwriting Agreement and as of the Closing Date, the
Registration Statement and the Prospectus conform, and as amended or
supplemented, if applicable, will conform in all material respects to
the requirements of the 1933 Act and the rules and regulations
thereunder, and on the date of the Underwriting Agreement and as of the
Closing Date, neither of such documents includes any untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and neither of such documents as amended or supplemented,
if applicable, will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that the foregoing does not apply to statements or omissions
in any of such documents based upon written information furnished to
the Depositor by any Underwriter specifically for use therein.
(c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise
stated therein, there has been no material adverse change in the
condition, financial or otherwise, earnings, affairs, regulatory
situation or business prospects of the Depositor, whether or not
arising in the ordinary course of the business of the Depositor.
(d) The Depositor has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware.
7
<PAGE>
(e) The Depositor has all requisite power and authority
(corporate and other) and all requisite authorizations, approvals,
orders, licenses, certificates and permits of and from all government
or regulatory officials and bodies to own its properties, to conduct
its business as described in the Registration Statement and the
Prospectus and to execute, deliver and perform this Agreement, the
Underwriting Agreement, the Pooling and Servicing Agreement and, if
applicable, the Custodial Agreement, except such as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution by the Underwriter of the Offered Securities; all such
authorizations, approvals, orders, licenses, certificates are in full
force and effect and contain no unduly burdensome provisions; and,
except as set forth or contemplated in the Registration Statement or
the Prospectus, there are no legal or governmental proceedings pending
or, to the best knowledge of the Depositor, threatened that would
result in a material modification, suspension or revocation thereof.
(f) The Offered Securities have been duly authorized, and when the
Offered Securities are issued and delivered pursuant to the
Underwriting Agreement, the Offered Securities will have been duly
executed, issued and delivered and will be entitled to the benefits
provided by the applicable Pooling and Servicing Agreement, subject, as
to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting the
rights of creditors generally, and to general principles of equity
(regardless of whether the entitlement to such benefits is considered
in a proceeding in equity or at law), and will conform in substance to
the description thereof contained in the Registration Statement and the
Prospectus, and will in all material respects be in the form
contemplated by the Pooling and Servicing Agreement.
(g) The execution and delivery by the Depositor of this Agreement,
the Underwriting Agreement and the Pooling and Servicing Agreement are
within the corporate power of the Depositor and none of the execution
and delivery by the Depositor of this Agreement, the Underwriting
Agreement and the Pooling and Servicing Agreement, the consummation by
the Depositor of the transactions therein contemplated, or the
compliance by the Depositor with the provisions thereof, will conflict
with or result in a breach of, or constitute a default under, the
charter or the by-laws of the Depositor or any of the provisions of any
law, governmental rule, regulation, judgment, decree or order binding
on the Depositor or its properties, or any of the provisions of any
indenture, mortgage, contract or other instrument to which the
Depositor is a party or by which it is bound, or will result in the
creation or imposition of a lien, charge or encumbrance upon any of its
property pursuant to the terms of any such indenture, mortgage,
contract or other instrument, except such as have been obtained under
the 1933 Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Offered Securities by the Underwriters.
(h) The Underwriting Agreement has been, and at the Closing Date
the Pooling and Servicing Agreement will have been, duly authorized,
executed and delivered by the Depositor.
8
<PAGE>
(i) At the Closing Date, each of the Underwriting Agreement and
the Pooling and Servicing Agreement will constitute a legal, valid and
binding obligation of the Depositor, enforceable against the Depositor,
in accordance with its terms, subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting the rights of creditors generally,
and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law).
(j) No filing or registration with, notice to, or consent,
approval, non-disapproval, authorization or order or other action of,
any court or governmental authority or agency is required for the
consummation by the Depositor of the transactions contemplated by the
Underwriting Agreement or the Pooling and Servicing Agreement, except
such as have been obtained and except such as may be required under the
1933 Act, the rules and regulations thereunder, or state securities or
"Blue Sky" laws, in connection with the purchase and distribution of
the Offered Securities by the Underwriters.
(k) The Depositor owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease, own or license, as the case may be,
and to operate, its properties and to carry on its business as
presently conducted and has received no notice of proceedings relating
to the revocation of any such license, permit, consent, order or
approval, which singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially adversely
affect the conduct of the business, results of operations, net worth or
condition (financial or otherwise) of the Depositor.
(l) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending to which the
Depositor is a party or of which any property of the Depositor is the
subject which, if determined adversely to the Depositor would
individually or in the aggregate have a material adverse effect on the
condition (financial or otherwise), earnings, affairs, or business or
business prospects of the Depositor and, to the best of the Depositor's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(m) Each of the Offered Securities will, when issued, be a
"mortgage related security" as such term is defined in Section 3(a)(41)
of the 1934 Act.
(n) At the Closing Date or any Subsequent Transfer Date, as the
case may be, each of the Mortgage Loans which is a subject of the
Pooling and Servicing Agreement and all such Mortgage Loans in the
aggregate will meet the criteria for selection described in the
Prospectus, and at the Closing Date or any Subsequent Transfer Date, as
the case may be, the representations and warranties made by the
Depositor in such Pooling and Servicing Agreement will be true and
correct as of such date.
(o) At the time of execution and delivery of the Pooling and
Servicing Agreement and on any Subsequent Transfer Date, as the case
may be, the Depositor will have good and marketable title to the
Mortgage Loans being transferred to the Trustee pursuant to the Pooling
and Servicing Agreement, free and clear of any lien, mortgage, pledge,
charge,
9
<PAGE>
encumbrance, adverse claim or other security interest (collectively,
"Liens"), and will not have assigned to any person any of its right,
title or interest in such Mortgage Loans or in such Pooling and
Servicing Agreement or the Offered Securities being issued pursuant
thereto, the Depositor will have the power and authority to transfer
such Mortgage Loans to the Trustee and to transfer the Offered
Securities to each of the Underwriters, and upon execution and delivery
to the Trustee of the Pooling and Servicing Agreement and delivery to
each of the Underwriters of the Offered Securities, and on any
Subsequent Transfer Date, as the case may be, the Trustee will have
good and marketable title to the Mortgage Loans and each of the
Underwriters will have good and marketable title to the Offered
Securities, in each case free and clear of any Liens.
(p) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the
Trust Fund (as defined in the Pooling and Servicing Agreement) is not
required to be registered under the Investment Company Act of 1940, as
amended.
(q) Any taxes, fees and other governmental charges in connection
with the execution, delivery and issuance of the Underwriting
Agreement, this Agreement, the Pooling and Servicing Agreement and the
Offered Securities have been or will be paid at or prior to the
Closing Date.
7. Indemnification and Contribution. (a) The Depositor agrees to
indemnify and hold harmless each Underwriter (including Prudential Securities
Incorporated acting in its capacity as Representative and as one of the
Underwriters), and each person, if any, who controls any Underwriter within the
meaning of the 1933 Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Depositor will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with (1) written
information furnished to the Depositor by any Underwriter through the
Representative specifically for use therein or (2) information regarding the
Mortgage Loans except to the extent that the Depositor has been indemnified by
the Servicer. This indemnity agreement will be in addition to any liability
which the Depositor may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Depositor, each of the Depositor's directors, each of the Depositor's officers
who signed the Registration Statement and each person, if any, who controls the
Depositor, within the meaning of the 1933 Act, against
10
<PAGE>
any losses, claims, damages or liabilities to which the Depositor, or any such
director, officer or controlling person may become subject, under the 1933 Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or any other prospectus relating to the Offered Securities,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statements or alleged untrue statements or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Depositor by any Underwriter through the
Representative specifically for use therein; and each Underwriter will reimburse
any legal or other expenses reasonably incurred by the Depositor or any such
director, officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have. The Depositor acknowledges that the statements set forth under
the caption "PLAN OF DISTRIBUTION" in the Prospectus Supplement constitute the
only information furnished to the Depositor by or on behalf of any Underwriter
for use in the Registration Statement, any Preliminary Prospectus or the
Prospectus, and each of the several Underwriters represents and warrants that
such statements are correct as to it.
(c) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 7 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect thereof);
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties are
entitled, there shall be considered the relative benefits received by the
Depositor on the one hand, and the Underwriters on the other, from the offering
of the Offered Securities (taking into account the portion of the proceeds of
the offering realized by each), the Depositor's and the Underwriters' relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Depositor and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity for such
purpose). No Underwriter or person controlling such Underwriter shall be
obligated to make contribution hereunder which in the aggregate exceeds the
total underwriting fee of the Offered Securities purchased by such Underwriter
under the Underwriting Agreement, less the aggregate amount of any damages which
such Underwriter and its controlling persons have otherwise been required to pay
in respect of the same or any substantially similar claim. The Underwriters'
obligation to contribute hereunder are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 7, each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such Underwriter, and
each director of the Depositor, each officer of the Depositor who signed the
Registration Statement, and each person, if
11
<PAGE>
any, who controls the Depositor within the meaning of Section 15 of the 1933
Act, shall have the same rights to contribution as the Depositor.
(d) The parties hereto agree that the first sentence of Section 5
of the Indemnification Agreement (the "Indemnification Agreement") dated as of
the Closing Date among the Certificate Insurer, the Servicer, the Depositor and
the Underwriter shall not be construed as limiting the Depositor's right to
enforce its rights under Section 7 of this Agreement. The parties further agree
that, as between the parties hereto, to the extent that the provisions of
Section 5 of the Indemnification Agreement conflict with Section 7 hereof, the
provisions of Section 7 hereof shall govern.
8. Survival of Certain Representations and Obligations. The
respective representations, warranties, agreements, covenants, indemnities and
other statements of the Depositor, its officers and the several Underwriters set
forth in, or made pursuant to, the Underwriting Agreement shall remain in full
force and effect, regardless of any investigation, or statement as to the result
thereof, made by or on behalf of any Underwriter, the Depositor, or any of the
officers or directors or any controlling person of any of the foregoing, and
shall survive the delivery of and payment for the Offered Securities.
9. Termination. (a) The Underwriting Agreement may be terminated
by the Depositor by notice to the Representative in the event that a stop order
suspending the effectiveness of the Registration Statement shall have been
issued or proceedings for that purpose shall have been instituted or threatened.
(b) The Underwriting Agreement may be terminated by the
Representative by notice to the Depositor in the event that the Depositor shall
have failed, refused or been unable to perform all obligations and satisfy all
conditions to be performed or satisfied hereunder by the Depositor at or prior
to the Closing Date.
(c) Termination of the Underwriting Agreement pursuant to this
Section 9 shall be without liability of any party to any other party other than
as provided in Sections 7 and 11 hereof.
10. Default of Underwriters. If any Underwriter or Underwriters
defaults or default in their obligation to purchase Offered Securities which it
or they have agreed to purchase under the Underwriting Agreement and the
aggregate principal amount of the Offered Securities which such defaulting
Underwriter or Underwriters agreed but failed to purchase is ten percent or less
of the aggregate principal amount, notional amount or stated amount, as
applicable, of the Offered Securities to be sold under the Underwriting
Agreement, as the case may be, the other Underwriters shall be obligated
severally in proportion to their respective commitments under the Underwriting
Agreement to purchase the Offered Securities which such defaulting Underwriter
or Underwriters agreed but failed to purchase. If any Underwriter or
Underwriters so defaults or default and the aggregate principal amount of the
Offered Securities with respect to which such default or defaults occurs or
occur is more than ten percent of the aggregate principal amount, notional
amount or stated amount, as applicable, of Offered Securities to be sold under
the Underwriting agreement, as the case may be, and arrangements satisfactory to
the Representative and the Depositor for the purchase of such Offered Securities
by other persons (who may include
12
<PAGE>
one or more of the non-defaulting Underwriters including the Representative) are
not made within 36 hours after any such default, the Underwriting Agreement will
terminate without liability on the part of any non-defaulting Underwriters or
the Depositor except for the expenses to be paid or reimbursed by the Depositor
pursuant to Section 11 hereof. As used in the Underwriting Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10. Nothing herein shall relieve a defaulting Underwriter from liability
for its default.
11. Expenses. The Depositor agrees with the several Underwriters
that:
(a) whether or not the transactions contemplated in the
Underwriting Agreement are consummated or the Underwriting Agreement is
terminated, the Depositor will pay all fees and expenses incident to
the performance of its obligations under the Underwriting Agreement,
including, but not limited to, (i) the Commission's registration fee,
(ii) the expenses of printing and distributing the Underwriting
Agreement and any related underwriting documents, the Registration
Statement, any Preliminary Prospectus, the Prospectus, any amendments
or supplements to the Registration Statement or the Prospectus, and any
Blue Sky memorandum or legal investment survey and any supplements
thereto, (iii) fees and expenses of rating agencies, accountants and
counsel for the Depositor, (iv) the expenses referred to in Section
5(e) hereof, and (v) all miscellaneous expenses referred to in Item 30
of the Registration Statement;
(b) all out-of-pocket expenses, including counsel fees,
disbursements and expenses, reasonably incurred by the Underwriters in
connection with investigating, preparing to market and marketing the
Offered Securities and proposing to purchase and purchasing the Offered
Securities under the Underwriting Agreement will be borne and paid by
the Depositor if the Underwriting Agreement is terminated by the
Depositor pursuant to Section 9(a) hereof or by the Representative on
account of the failure, refusal or inability on the part of the
Depositor to perform all obligations and satisfy all conditions on the
part of the Depositor to be performed or satisfied hereunder; and
(c) the Depositor will pay the cost of preparing the certificates
for the Offered Securities.
Except as otherwise provided in this Section 11, the Underwriters
agree to pay all of their expenses in connection with investigating, preparing
to market and marketing the Offered Securities and proposing to purchase and
purchasing the Offered Securities under the Underwriting Agreement, including
the fees and expenses of their counsel and any advertising expenses incurred by
them in making offers and sales of the Offered Securities.
12. Notices. All communications under the Underwriting Agreement
shall be in writing and, if sent to the Underwriters, shall be mailed, delivered
or telegraphed and confirmed to the Representative at the address and to the
attention of the person specified in the Underwriting Agreement, and, if sent to
the Depositor, shall be mailed, delivered or telegraphed and confirmed to
Prudential Securities Secured Financing Corporation, One New York Plaza, New
York, New York 10292, Attention: Managing Director-Asset Finance Group;
provided, however, that any notice to any Underwriter pursuant to the
Underwriting Agreement shall be mailed, delivered or telegraphed and confirmed
to such Underwriter at the address furnished by it.
13
<PAGE>
13. Representative of Underwriters. Any Representative identified
in the Underwriting Agreement will act for the Underwriters of the Offered
Securities and any action taken by the Representative under the Underwriting
Agreement will be binding upon all of such Underwriters.
14. Successors. The Underwriting Agreement shall inure to the
benefit of and shall be binding upon the several Underwriters and the Depositor
and their respective successors and legal representatives, and nothing expressed
or mentioned herein or in the Underwriting Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of the Underwriting Agreement, or any provisions herein
contained, the Underwriting Agreement and all conditions and provisions hereof
being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the
representations and warranties of the Depositor contained herein or in the
Underwriting Agreement shall also be for the benefit of any person or persons
who controls or control any Underwriter within the meaning of Section 15 of the
1933 Act, and (ii) the indemnities by the several Underwriters shall also be for
the benefit of the directors of the Depositor, the officers of the Depositor who
have signed the Registration Statement and any person or persons who control the
Depositor within the meaning of Section 15 of the 1933 Act. No purchaser of the
Offered Securities from any Underwriter shall be deemed a successor because of
such purchase. This Agreement and each Underwriting Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15. Time of the Essence. Time shall be of the essence of each
Underwriting Agreement.
14
<PAGE>
16. Governing Law. This Agreement and each Underwriting Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
[Signature Page Follows]
15
<PAGE>
If the foregoing is in accordance with your understanding, please
sign and return two counterparts hereof.
Yours truly,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:_____________________________________
Name:
Title:
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By:________________________________
Name:
Title: Vice President
[Signature Page to Underwriting Agreement Standard Provisions]
<PAGE>
Exhibit A
Opinions of Dewey Ballantine,
special counsel for the Depositor
(1) Each of the Documents constitutes the valid, legal and
binding agreement of the Depositor, and is enforceable against the Depositor in
accordance with its terms.
(2) The Certificates, assuming the due execution by the
Trustee and due authentication by the Trustee and payment therefor pursuant to
the Underwriting Agreement, are validly issued and outstanding and are entitled
to the benefits of the Pooling and Servicing Agreement.
(3) No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority or court
is required under federal laws or the laws of the State of New York for the
execution, delivery and performance of the Documents or the offer, issuance,
sale or delivery of the Certificates or the consummation of any other
transaction contemplated thereby by the Depositor, except such which have been
obtained.
(4) The Registration Statement and the Prospectus (other than
the financial and statistical data included therein, as to which we are not
called upon to express any opinion), at the time the Registration Statement
became effective, as of the date of execution of the Underwriting Agreement and
as of the date hereof comply as to form in all material respects with the
requirements of the 1933 Act and the rules and regulations thereunder, and the
Exchange Act and the rules and regulations thereunder, and we do not know of any
amendment to the Registration Statement required to be filed, or of any
contracts, indentures or other documents of a character required to be filed as
an exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus, which has not been filed or described
as required.
(5) Neither the qualification of the Pooling and Servicing
Agreement under the Trust Indenture Act of 1939, as amended, nor the
registration of the Trust Fund created by the Pooling and Servicing Agreement
under the Investment Company Act of 1940 is required.
(6) The statements in the Prospectus Supplement set forth
under the caption "DESCRIPTION OF THE CERTIFICATES," to the extent such
statements purport to summarize certain provisions of the Certificates or of the
Pooling and Servicing Agreement or of the Unaffiliated Seller's Agreement, are
fair and accurate in all material respects.
<PAGE>
Exhibit B
Opinions of Counsel to
the Servicer
----------------------
(1) The Servicer has been duly organized and is validly
existing as a corporation in good standing under the federal laws of the United
States and is duly qualified to transact business in the State of Pennsylvania.
(2) The Servicer has the requisite power and authority to
execute and deliver, engage in the transactions contemplated by, and perform and
observe the conditions of, the Pooling and Servicing Agreement and the
Unaffiliated Seller's Agreement dated as of the Closing Date (the "Unaffiliated
Seller's Agreement") between the Servicer, Upland, NJMIC, the Seller and the
Depositor, together referred to hereinafter as the "Servicer Agreements".
(3) The Servicer Agreements have been duly and validly
authorized, executed and delivered by the Servicer, all requisite corporate
action having been taken with respect thereto, and each constitutes the valid,
legal and binding agreement of the Servicer, and are enforceable against the
Servicer in accordance with their respective terms.
(4) Neither the transfer of the Mortgage Loans to the
Depositor, nor the execution, delivery or performance by the Servicer of the
Servicer Agreements (A) conflicts or will conflict with or results or will
result in a breach of, or constitutes or will constitute a default under or
violates or will violate, (i) any term or provision of the Articles of
Incorporation or By-laws of the Servicer; (ii) any term or provision of any
material agreement, contract, instrument or indenture, to which the Servicer or
any of its subsidiaries is a party or is bound; or (iii) any order, judgment,
writ, injunction or decree of any court or governmental agency or body or other
tribunal having jurisdiction over the Servicer or any of its properties; or (B)
results in, or will result in the creation or imposition of any lien, charge or
encumbrance upon the Trust Fund or upon the Certificates, except as otherwise
contemplated by the Pooling and Servicing Agreement.
(5) The endorsement and delivery of each Mortgage Note, and
the preparation, delivery and recording of an Assignment of Mortgage with
respect to each Mortgage is sufficient fully to transfer to the Depositor and
its assignees all right, title and interest of the Servicer in the Mortgage Note
and Mortgage, as noteholder and mortgagee or assignee thereof.
(6) No consent, approval, authorization or order of,
registration or qualification of or with or notice to, any court, governmental
agency or body or other tribunal is required under the laws of New York or
Pennsylvania, for the execution, delivery and performance of the Servicer
Agreements or the consummation of any other transaction contemplated thereby by
the Servicer, except such which have been obtained.
(7) There are no legal or governmental suits, proceedings or
investigations pending or, to such counsel's knowledge, threatened against the
Servicer before any court,
<PAGE>
governmental agency or body or other tribunal (A) which, if determined adversely
to the Servicer, would individually or in the aggregate have a material adverse
effect on (i) the consolidated financial position, business prospects,
stockholders' equity or results of operations of the Servicer; (ii) the
Servicer's ability to perform its obligations under, or the validity or
enforceability of, the Servicer Agreements; (iii) any Mortgage Note or Mortgaged
Property, or the title of any Mortgagor to any Mortgaged Property; or (B) which
have not otherwise been disclosed in the Registration Statement and to the best
of such counsel's knowledge, no such proceedings or investigations are
threatened or contemplated by governmental authorities or threatened by others.
<PAGE>
Exhibit C
Opinions of Counsel to
the Trustee
----------------------
(1) The Trustee is a New York banking corporation duly
organized, validly existing and in good standing under the laws of the New York
and has the power and authority to enter into and to take all actions required
of it under the Pooling and Servicing Agreement.
(2) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Trustee and the Pooling and Servicing
Agreement constitutes the legal, valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its terms, except as
enforceability thereof may be limited by (A) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally, as such laws would apply in the event of a bankruptcy,
insolvency or reorganization or similar occurrence affecting the Trustee, and
(B) general principles of equity regardless of whether such enforcement is
sought in a proceeding at law or in equity.
(3) No consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of the
Trustee in connection with its execution and delivery of the Pooling and
Servicing Agreement or the performance of its obligations thereunder.
(4) The Certificates have been duly executed, authenticated
and delivered by the Trustee.
(5) The execution and delivery of, and performance by the
Trustee of its obligations under, the Pooling and Servicing Agreement do not
conflict with or result in a violation of any statute or regulation applicable
to the Trustee, or the charter or bylaws of the Trustee, or to the best
knowledge of such counsel, any governmental authority having jurisdiction over
the Trustee or the terms of any indenture or other agreement or instrument to
which the Trustee is a party or by which it is bound.
<PAGE>
Exhibit 1.2
-----------------------------------------------------------
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
ABFS 1998-3, INC.
AMERICAN BUSINESS CREDIT, INC.
HOME AMERICAN CREDIT, INC. D/B/A UPLAND MORTGAGE
NEW JERSEY MORTGAGE AND INVESTMENT CORP.
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
and
PRUDENTIAL SECURITIES INCORPORATED
Dated as of September 14, 1998
ABFS Mortgage Loan Trust 1998-3
Mortgage Pass-Through Certificates, Series 1998-3
$198,000,000 Class A-1, Class A-2, Class A-3 and Class A-4
Certificates
-----------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions.......................................................................... 1
Section 2. Representations, Warranties and Agreements of Financial Security..................... 3
Section 3. Representations, Warranties and Agreements of the Underwriter........................ 5
Section 4. Indemnification...................................................................... 6
Section 5. Indemnification Procedures........................................................... 6
Section 6. Contribution......................................................................... 7
Section 7. Miscellaneous........................................................................ 8
</TABLE>
EXHIBIT
Exhibit A Opinion of General Counsel
<PAGE>
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of September 14, 1998, among
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), PRUDENTIAL SECURITIES
SECURED FINANCING CORPORATION (the "Depositor"), AMERICAN BUSINESS CREDIT, INC.
(the "Company"), ABFS 1998-3, INC. (the "Seller"), HOME AMERICAN CREDIT, INC.,
D/B/A UPLAND MORTGAGE ("Upland"), NEW JERSEY MORTGAGE AND INVESTMENT CORP.
("NJMIC" and, together with Upland, the "Originators") and PRUDENTIAL SECURITIES
INCORPORATED (the "Underwriter"):
Section 1. Definitions.
For purposes of this Agreement, the following terms shall have the
meanings provided below:
"Agreement" means this Indemnification Agreement, as amended from
time to time.
"Company Party" means any of the Company, its parent, subsidiaries
and affiliates and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Securities Act) of any of the
foregoing.
"Depositor Party" means any of the Depositor, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Financial Security Agreements" means this Agreement and the
Insurance Agreement.
"Financial Security Information" has the meaning provided in Section
2(g) hereof.
"Financial Security Party" means any of Financial Security, its
parent, subsidiaries and affiliates, and any shareholder, director, officer,
employee, agent or "controlling person" (as such term is used in the Securities
Act) of any of the foregoing.
"Indemnified Party" means any party entitled to any indemnification
pursuant to Section 4 hereof.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 4 hereof.
"Insurance Agreement" means the Insurance and Indemnity Agreement,
dated as of September 1, 1998, by and among Financial Security, the Depositor,
the Company, the Originators and the Seller.
<PAGE>
"Losses" means (a) any actual out-of-pocket damages incurred by the
party entitled to indemnification or contribution hereunder, (b) any actual
out-of-pocket costs or actual expenses reasonably incurred by such party,
including reasonable fees or expenses of its counsel and other expenses incurred
in connection with investigating or defending any claim, action or other
proceeding which entitle such party to be indemnified hereunder (subject to the
limitations set forth in Section 5 hereof), to the extent not paid, satisfied or
reimbursed from funds provided by any other Person other than an affiliate of
such party (provided that the foregoing shall not create or imply any obligation
to pursue recourse against any such other Person), plus (c) interest on the
amount paid by the party entitled to indemnification or contribution from the
date of such payment to the date of payment by the party who is obligated to
indemnify or contribute hereunder at the statutory rate applicable to judgments
for breach of contract.
"Offering Circular" means the Prospectus dated September 4, 1998,
including the Prospectus Supplement thereto, dated September 14, 1998, relating
to the Securities.
"Offering Document" means the Offering Circular and any amendments
or supplements thereto and any other material or documents delivered by the
Underwriter to any Person in connection with the offer or sale of the
Securities.
"Originator Party" means any of the Originators, their parents,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization or other organization or entity
(whether governmental or private).
"Policy" means the financial guaranty insurance policy delivered by
Financial Security with respect to the Securities.
"Securities" means the Class A-1, Class A-2, Class A-3 and Class A-4
Certificates issued pursuant to a Pooling and Servicing Agreement, dated as of
September 1, 1998, by and among, the Depositor, the Company and The Chase
Manhattan Bank, as trustee.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Seller Party" means any of the Seller, its parent, subsidiaries and
affiliates, and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Securities Act) of any of the
foregoing.
"Underwriting Agreement" means the Underwriting Agreement, dated as
of September 14, 1998, between the Depositor and the Underwriter in respect of
the Securities.
2
<PAGE>
"Underwriter Information" has the meaning provided in Section 3(c)
hereof.
"Underwriter Party" means any of the Underwriter, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.
Section 2. Representations, Warranties and Agreements of Financial
Security.
Financial Security represents, warrants and agrees, as of the date
hereof and as of the Closing Date, as follows:
(a) Organization, Etc. Financial Security is a stock insurance
company duly organized, validly existing and authorized to transact financial
guaranty insurance business under the laws of the State of New York.
(b) Authorization, Etc. The Policy and the Financial Security
Agreements have been duly authorized, executed and delivered by Financial
Security.
(c) Validity. Etc. The Policy and the Financial Security Agreements
constitute valid and binding obligations of Financial Security, enforceable
against Financial Security in accordance with their terms, subject, as to the
enforcement of remedies, to bankruptcy, insolvency, reorganization,
rehabilitation, moratorium and other similar laws affecting the enforceability
of creditors' rights generally applicable in the event of the bankruptcy or
insolvency of Financial Security and to the application of general principles of
equity and subject, in the case of this Agreement, to principles of public
policy limiting the right to enforce the indemnification provisions contained
herein.
(d) Exemption From Registration. The Policy is exempt from
registration under the Securities Act.
(e) No Conflicts. Neither the execution or delivery by Financial
Security of the Policy or the Financial Security Agreements, nor the performance
by Financial Security of its obligations thereunder, will conflict with any
provision of the certificate of incorporation or the bylaws of Financial
Security or result in a breach of, or constitute a default under, any material
agreement or other instrument to which Financial Security is a party or by which
any of its property is bound, nor violate any judgment, order or decree
applicable to Financial Security of any governmental or regulatory body,
administrative agency, court or arbitrator having jurisdiction over Financial
Security (except that, in the published opinion of the Securities and Exchange
Commission, the indemnification provisions of this Agreement, insofar as they
relate to indemnification for liabilities arising under the Securities Act, are
against public policy as expressed in the Securities Act and are therefore
unenforceable).
3
<PAGE>
(f) Financial Information. The consolidated balance sheets of
Financial Security as of December 31, 1997 and the related consolidated
statements of income, changes in shareholder's equity and cash flows for the
fiscal year then ended, furnished by Financial Security for use in the Offering
Circular, fairly present in all material respects the financial condition of
Financial Security as of such dates and for such periods in accordance with
generally accepted accounting principles consistently applied (subject as to
interim statements to normal year-end adjustments) and, since the date of the
most current interim consolidated balance sheet referred to above there has been
no change in the financial condition of Financial Security which would
materially and adversely affect its ability to perform its obligations under the
Policy.
(g) Financial Security Information. The information in the Offering
Circular set forth under the caption "The Certificate Insurer" (as revised from
time to time in accordance with the provisions hereof, the "Financial Security
Information") is limited and does not purport to provide the scope of disclosure
required to be included in a prospectus with respect to a registrant in
connection with the offer and sale of securities of such registrant registered
under the Securities Act. Within such limited scope of disclosure, however, as
of the date of the Offering Circular and as of the date hereof, the Financial
Security Information does not contain any untrue statement of a material fact,
or omit to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
(h) Additional Information. Financial Security will furnish to the
Underwriter, the Company, the Seller or the Depositor, upon request of the
Underwriter, the Company, the Seller or the Depositor, as the case may be,
copies of Financial Security's most recent financial statements (annual or
interim, as the case may be) which fairly present in all material respects the
financial condition of Financial Security as of the dates and for the periods
indicated, in accordance with generally accepted accounting principles
consistently applied except as noted therein (subject, as to interim statements,
to normal year-end adjustments); provided, however, that, if the Underwriter,
the Company, the Seller or the Depositor shall require a manually signed report
or consent of Financial Security's auditors in connection with such financial
statements, such report or consent shall be at the expense of the Underwriter,
the Company, the Seller or the Depositor, as the case may be. In addition, if
the delivery of an Offering Circular relating to the Securities is required at
any time prior to the expiration of nine months after the time of issue of the
Offering Circular in connection with the offering or sale of the Securities, the
Depositor or the Underwriter will notify Financial Security of such requirement
to deliver an Offering Circular and Financial Security will promptly provide the
Underwriter and the Depositor with any revisions to the Financial Security
Information that are, in the judgment of Financial Security, necessary to
prepare an amended Offering Circular or a supplement to the Offering Circular
which will correct such statement or omission.
(i) Opinion of Counsel. Financial Security will furnish to the
Seller, the Originators, the Depositor, the Underwriter and the Company on the
closing date for the sale of the Securities an opinion of its Associate General
Counsel, to the effect set forth in Exhibit A attached hereto, dated such
closing date and addressed to the Seller, the Originator the Depositor, the
Underwriter and the Company.
4
<PAGE>
(j) Consents and Reports of Independent Accountants. Financial
Security will furnish to the Underwriter, the Company and the Depositor, upon
request, as comfort from its independent accountants in respect of its financial
condition, (i) at the expense of the Person specified in the Insurance
Agreement, a copy of the Offering Circular, including either a manually signed
consent or a manually signed report of Financial Security's independent
accountants and (ii) the quarterly review letter by Financial Security's
independent accountants in respect of the most recent interim financial
statements of Financial Security.
Nothing in this Agreement shall be construed as a representation or
warranty by Financial Security concerning the rating of its insurance financial
strength by Standard & Poor's Ratings Group or of its insurer financial strength
by Moody's Investors Service, Inc. or any other rating agency (collectively, the
"Rating Agencies"). The Rating Agencies, in assigning such ratings, take into
account facts and assumptions not described in the Offering Circular and the
facts and assumptions which are considered by the Rating Agencies, and the
ratings issued thereby, are subject to change over time.
Section 3. Representations, Warranties and Agreements of the
Underwriter.
The Underwriter represents, warrants and agrees, as of the date
hereof and as of the Closing Date, as follows:
(a) Compliance With Laws. The Underwriter will comply in all
material respects with all legal requirements in connection with offers and
sales of the Securities and make such offers and sales in the manner provided in
the Offering Circular.
(b) Offering Document. The Underwriter will not use, or distribute
to other broker-dealers for use, any Offering Document in connection with the
offer and sale of the Securities unless such Offering Document includes such
information as has been furnished by Financial Security for inclusion therein
and the information therein concerning Financial Security has been approved by
Financial Security in writing. Financial Security hereby consents to the
information in respect of Financial Security included in the Offering Circular.
Each Offering Document will include the following statement: "The Policy is not
covered by the property/casualty insurance security fund specified in Article 76
of the New York Insurance Law."
(c) Underwriting Information. The following information constitutes
the only information furnished by the Underwriter (the "Underwriter
Information"): (i) the statements set forth in the last two paragraphs on the
front cover page of the Offering Circular regarding market making; (ii) the
statements set forth under the heading "Plan of Distribution"; and (iii) the
statements set forth in materials delivered by the Underwriter to the Depositor
within the meaning of the no-action letter dated May 20, 1994 issued by the
Division of Corporation Finance of the Securities Exchange Commission (the
"Commission") to Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co.
Incorporated and Kidder Structured Asset Corporation and the no-action letter
dated May 27, 1994 issued by the Division of Corporation Finance of the
Commission to the Public Securities Association and filed by the Sponsor with
the Commission in the Current Report or Reports on Form 8-K (the "Form 8-K").
The Underwriter confirms that such statements (to such extent) are correct.
5
<PAGE>
Section 4. Indemnification.
(a) Financial Security agrees, upon the terms and subject to the
conditions provided herein, to indemnify, defend and hold harmless each
Depositor Party, each Company Party, each Seller Party, each Originator Party
and each Underwriter Party against (i) any and all Losses incurred by them with
respect to the offer and sale of the Securities and resulting from Financial
Security's breach of any of its representations, warranties or agreements set
forth in Section 2 hereof and (ii) any and all Losses to which any Depositor
Party, Company Party, Seller Party, Originator Party or Underwriter Party may
become subject, under the Securities Act or otherwise, insofar as such Losses
arise out of or result from an untrue statement of a material fact contained in
any Offering Document or the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or omission was made in the Financial Security Information included therein in
accordance with the provisions hereof.
(b) The Underwriter agrees, upon the terms and subject to the
conditions provided herein, to indemnify, defend and hold harmless each
Financial Security Party against (i) any and all Losses incurred by them with
respect to the offer and sale of the Securities and resulting from the
Underwriter's breach of any of its representations, warranties or agreements set
forth in Section 3 hereof and (ii) any and all Losses to which any Financial
Security Party may become subject, under the Securities Act or otherwise,
insofar as such Losses arise out of or result from an untrue statement of a
material fact contained in any Offering Document or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or omission was made in the Underwriter
Information included therein.
(c) Upon the incurrence of any Losses for which a party is entitled
to indemnification hereunder, the Indemnifying Party shall reimburse the
Indemnified Party promptly upon establishment by the Indemnified Party to the
Indemnifying Party of the Losses incurred.
6
<PAGE>
Section 5. Indemnification Procedures.
Except as provided below in Section 6 with respect to contribution
or in Section 7(e), the indemnification provided herein by an Indemnifying Party
shall be the exclusive remedy of any and all Indemnified Parties for the breach
of a representation, warranty or agreement hereunder by an Indemnifying Party;
provided, however, that each Indemnified Party shall be entitled to pursue any
other remedy at law or in equity for any such breach so long as the damages
sought to be recovered shall not exceed the Losses incurred thereby resulting
from such breach. In the event that any action or regulatory proceeding shall be
commenced or claim asserted which may entitle an Indemnified Party to be
indemnified under this Agreement, such party shall give the Indemnifying Party
written or telegraphic notice of such action or claim reasonably promptly after
receipt of written notice thereof. The Indemnifying Party shall be entitled to
participate in and, upon notice to the Indemnified Party, assume the defense of
any such action or claim in reasonable cooperation with, and with the reasonable
cooperation of, the Indemnified Party. The Indemnified Party will have the right
to employ its own counsel in any such action in addition to the counsel of the
Indemnifying Party, but the fees and expenses of such counsel will be at the
expense of such Indemnified Party, unless (a) the employment of counsel by the
Indemnified Party at its expense has been authorized in writing by the
Indemnifying Party, (b) the Indemnifying Party has not in fact employed counsel
to assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action, or (c) the named parties to any such
action or proceeding (including any impleaded parties) include both the
Indemnifying Party and one or more Indemnified Parties, and the Indemnified
Parties shall have been advised by counsel that there may be one or more legal
defenses available to them which are different from or additional to those
available to the Indemnifying Party (it being understood, however, that the
Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for all Depositor Parties, one such
firm for all Underwriter Parties, one such firm for all Company Parties, one
such firm for all Seller Parties, one such firm for all Originator Parties and
one such firm for all Financial Security Parties, as the case may be, which firm
shall be designated in writing by the Depositor in respect of the Depositor
Parties, by the Underwriter in respect of the Underwriter Parties, by the
Company in respect of the Company Parties, by the Seller in respect of the
Seller Parties, by the Originators in respect of the Originator Parties and by
Financial Security in respect of the Financial Security Parties), in each of
which cases the fees and expenses of counsel will be at the expense of the
Indemnifying Party and all such fees and expenses will be reimbursed promptly as
they are incurred. The Indemnifying Party shall not be liable for any settlement
of any such claim or action unless the Indemnifying Party shall have consented
thereto or be in default in its obligations hereunder. Any failure by an
Indemnified Party to comply with the provisions of this Section shall relieve
the Indemnifying Party of liability only if such failure is prejudicial to the
position of the Indemnifying Party and then only to the extent of such
prejudice.
Section 6. Contribution.
(a) To provide for just and equitable contribution if the
indemnification provided by any Indemnifying Party is determined to be
unavailable for any Indemnified Party (other than due to application of this
Section), each Indemnifying Party shall contribute to the Losses arising from
any breach of any of its representations, warranties or agreements contained in
this Agreement in such proportion as is appropriate to reflect (i) the benefits
received by such Indemnifying Party relative to the benefits received by the
Indemnified Party or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Indemnifying Party on the one hand and the Indemnified Party on the
other in connection with such Loss; provided, however, that an Indemnifying
Party shall in no event be required to contribute to all Indemnified Parties an
aggregate amount in excess of the Losses incurred by such Indemnified Parties
resulting from the breach of representations, warranties or agreements contained
in this Agreement.
7
<PAGE>
(b) The relative fault of each Indemnifying Party, on the one hand,
and of each Indemnified Party, on the other, shall be determined by reference
to, among other things, whether the breach of, or alleged breach of, any
representations, warranties or agreements contained in this Agreement relates to
information supplied by, or action within the control of, the Indemnifying Party
or the Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such breach.
(c) The parties agree that Financial Security shall be solely
responsible for the Financial Security Information, the Underwriter shall be
solely responsible for the Underwriter Information and that, as and to the
extent provided in the Insurance Agreement, the balance of the Offering Document
shall be the responsibility of the Company, the Originators, the Seller and the
Depositor.
(d) Notwithstanding anything in this Section 6 to the contrary, the
Underwriter shall not be required to contribute an amount greater than the
excess, if any, of (x) the purchase prices paid by investors to the Underwriter
for the Certificates over (y) the purchase price paid by the Underwriter for the
Certificates.
(e) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11 (f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation,
(f) Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution to the
contributor of the Losses incurred.
(g) The provisions relating to contribution set forth in this
Section 6 do not limit the rights of any party to indemnification under Section
4.
Section 7. Miscellaneous.
(a) Notices. All notices and other communications provided for under
this Agreement shall be delivered to the address set forth below or to such
other address as shall be designated by the recipient in a written notice to the
other party or parties hereto.
If to Financial Security: Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
8
<PAGE>
Re: ABFS Mortgage Loan Trust 1998-3
Mortgage Pass-Through Certificates,
Series 1998-3
If to the Depositor: Prudential Securities Secured Financing
Corporation
One New York Plaza
New York, New York 10292
Attention: Managing Director,
Asset-Backed Finance Group
If to the Company: American Business Credit, Inc.
BalaPointe Office Centre
111 Presidential Boulevard
Suite 215
Bala Cynwyd, PA 19004
Attention: Jeffrey Ruben, Esq.
If to the Underwriter: Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Attention: Managing Director,
Asset-Backed Finance Group
If to the Seller: ABFS 1998-3, Inc.
BalaPointe Office Centre
111 Presidential Boulevard
Suite 215
Bala Cynwyd, PA 19004
Attention: Jeffrey Ruben, Esq.
If to the Originators: Home American Credit, Inc.
D/B/A Upland Mortgage
BalaPointe Office Centre
111 Presidential Boulevard
Suite 215
Bala Cynwyd, PA 19004
Attention: Jeffrey Ruben, Esq.
New Jersey Mortgage and Investment
Corporation
BalaPointe Office Center
111 Presidential Boulevard
Suite 215
Bala Cynwyd, PA 19004
Attention: Jeffrey Ruben, Esq.
9
<PAGE>
(b) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
(c) Assignments. This Agreement may not be assigned by any party
without the express written consent of each other party. Any assignment made in
violation of this Agreement shall be null and void.
(d) Amendments. Amendments to this Agreement shall be in writing
signed by each party hereto.
(e) Survival, Etc. The indemnity and contribution agreements
contained in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Indemnifying
Party, (ii) the issuance of the Securities or (iii) any termination of this
Agreement or the Policy. The indemnification provided in this Agreement will be
in addition to any liability which the parties may otherwise have and shall in
no way limit any obligations of the Company, the Depositor, the Seller, the
Originators or the Underwriter under the Underwriting Agreement or the Insurance
Agreement, as applicable.
(f) Counterparts. This Agreement may be executed in counterparts by
the parties hereto, and all such counterparts shall constitute one and the same
instrument.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first above written.
FINANCIAL SECURITY ASSURANCE INC.
By ________________________________
Name:
Title:
ABFS 1998-3, INC.
By ________________________________
Name:
Title:
AMERICAN BUSINESS CREDIT, INC.
By ________________________________
Name:
Title:
HOME AMERICAN CREDIT, INC.
D/B/A UPLAND MORTGAGE
By ________________________________
Name:
Title:
NEW JERSEY MORTGAGE AND
INVESTMENT CORP.
By ________________________________
Name:
Title:
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By ________________________________
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By ________________________________
Name:
Title:
11
<PAGE>
EXHIBIT A
OPINION OF GENERAL COUNSEL
Based upon the foregoing, I am of the opinion that:
1. Financial Security is a stock insurance company duly organized,
validly existing and authorized to transact financial guaranty insurance
business under the laws of the State of New York.
2. The Policy and the Agreements have been duly authorized, executed
and delivered by Financial Security.
3. The Policy and the Agreements constitute valid and binding
obligations of Financial Security, enforceable against Financial Security in
accordance with their terms, subject, as to the enforcement of remedies, to
bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other
similar laws affecting the enforceability of creditors' rights generally
applicable in the event of the bankruptcy or insolvency of Financial Security
and to the application of general principles of equity and subject, in the case
of the Indemnification Agreement, to principles of public policy limiting the
right to enforce the indemnification provisions contained therein insofar as
they relate to indemnification for liabilities arising under applicable
securities laws.
4. The Policy is exempt from registration under the Securities Act
of 1933, as amended (the "Act").
5. Neither the execution or delivery by Financial Security of the
Policy or the Agreements, nor the performance by Financial Security of its
obligations thereunder, will conflict with any provision of the certificate of
incorporation or the by-laws of Financial Security or, to the best of my
knowledge, result in a breach of, or constitute a default under, any agreement
or other instrument to which Financial Security is a party or by which it or any
of its property is bound or, to the best of my knowledge, violate any judgment,
order or decree applicable to Financial Security of any governmental or
regulatory body, administrative agency, court or arbitrator having jurisdiction
over Financial Security (except that, in the published opinion of the Securities
and Exchange Commission, the indemnification provisions of the Indemnification
Agreement, insofar as they relate to indemnification for liabilities arising
under the Act, are against public policy as expressed in the Act and are
therefore unenforceable).
In addition, please be advised that I have reviewed the description
of Financial Security under the caption "The Certificate Insurer" in the
Prospectus Supplement dated September 14, 1998 (the "Offering Document") of the
Depositor with respect to the Securities. The information provided in the
Offering Document with respect to Financial Security is limited and does not
purport to provide the scope of disclosure required to be included in a
prospectus with respect to a registrant under the Act in connection with a
public offering and sale of securities of such registrant. Within such limited
scope of disclosure, however, there has not come to my attention any information
which would cause me to believe that the description of Financial Security
referred to above, as of the date of the Offering Document or as of the date of
this opinion, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (except that I express no opinion with respect to any financial
statements or other financial information contained or referred to therein).
<PAGE>
Exhibit 4.1
================================================================================
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1998
by and among
Prudential Securities Secured Financing Corporation
(Depositor)
and
American Business Credit, Inc.
(Servicer)
and
The Chase Manhattan Bank
(Trustee)
ABFS Mortgage Loan Trust 1998-3
Mortgage Pass-Through Certificates,
Series 1998-3
Class A-1, Class A-2, Class A-3,
Class A-4
and Class R
================================================================================
<PAGE>
Exhibit 4.1
POOLING AND SERVICING AGREEMENT, relating to ABFS MORTGAGE
LOAN TRUST 1998-3, dated as of September 1, 1998 (this "Agreement"), by and
among PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware
corporation, in its capacity as depositor (the "Depositor"), AMERICAN BUSINESS
CREDIT, INC., a Pennsylvania corporation, in its capacity as servicer (the
"Servicer"), and THE CHASE MANHATTAN BANK, a New York banking corporation, in
its capacity as trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish a trust which
provides for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the trust estate;
WHEREAS, The Chase Manhattan Bank is willing to serve in the
capacity of Trustee hereunder; and
WHEREAS, Financial Security Assurance Inc. (the "Certificate
Insurer") is intended to be a third party beneficiary of this Agreement and is
hereby recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Depositor, the Servicer and the Trustee
hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.01 Certain Defined Terms. Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings.
ACCEPTED SERVICING PRACTICES: The Servicer's normal servicing
practices, which in general will conform to the mortgage servicing practices of
prudent mortgage lending institutions which service for their own account
mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Mortgaged Properties are located.
ACCOUNT: Any of the Collection Account, the Certificate
Account, the Capitalized Interest Account, the Certificate Insurance Payment
Account or the Pre-Funding Account.
ACCRUAL PERIOD: With respect to the Group I Certificates and
any Distribution Date, the prior calendar month; with respect to the Group II
Certificates and any Distribution Date, the period from and including the prior
Distribution Date (or, in the case of the first Distribution Date, from and
including the Startup Day) to and including the day immediately preceding such
Distribution Date.
ADDITION NOTICE: A written notice from the Unaffiliated Seller
to the Trustee, the Rating Agencies and the Certificate Insurer that the
Unaffiliated Seller desires to make a Subsequent Transfer.
<PAGE>
ADJUSTED PASS-THROUGH RATE: With respect to any Distribution
Date, the percentage equal to (i) the Weighted Average Group I Pass-Through Rate
plus (ii) the Premium Percentage.
ADMINISTRATIVE COSTS: With respect to any Distribution Date,
the sum of the Trustee Fee, the Premium Amount and the Servicing Fee for such
Distribution Date.
AFFILIATE: With respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
AGREEMENT: This Pooling and Servicing Agreement, including the
Exhibits hereto, and all amendments hereof and supplements hereto.
APPRAISED VALUE: As to any Mortgaged Property and time
referred to herein, the appraised value of the Mortgaged Property based upon the
appraisal made by or on behalf of the related Originator at the time referred to
herein or, in the case of a Mortgage Loan that is a purchase money mortgage
loan, the sales price of the Mortgaged Property, if such sales price is less
than such appraised value.
ASSIGNMENT OF MORTGAGE: With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage to the Trustee
for the benefit of the Certificateholders.
AUTHORIZED DENOMINATIONS: Each Class of the Class A
Certificates is issuable only in the minimum Percentage Interest corresponding
to a minimum denomination of $1,000 or integral multiples of $1,000 in excess
thereof; provided, however, that one Certificate of each Class is issuable in a
denomination equal to any such multiple plus an additional amount such that the
aggregate denomination of all Class A Certificates of such Class shall be equal
to the applicable Original Certificate Principal Balance.
AVAILABLE FUNDS: As defined in Section 6.04(a).
AVAILABLE FUNDS SHORTFALL: With respect to any Distribution
Date and any Group, an amount equal to the excess of the Insured Distribution
Amount for such Distribution Date and for such Group over the Available Funds
for such Distribution Date and such Group available for distribution in respect
of such Insured Distribution Amount.
BUSINESS DAY: Any day other than (a) a Saturday or Sunday, or
(b) a day on which banking institutions in the States of Pennsylvania, New York
or New Jersey are authorized or obligated by law or executive order to be
closed.
2
<PAGE>
BUSINESS PURPOSE PROPERTY: Any mixed-use property, commercial
property, or four or more unit multifamily property.
CAPITALIZED INTEREST ACCOUNT: The Capitalized Interest Account
established in accordance with Section 6.01(a) hereof and maintained by the
Trustee.
CAPITALIZED INTEREST REQUIREMENT: With respect to the
Distribution Dates occurring in October 1998, and November 1998, (A) the product
of (i) one-twelfth of the Adjusted Pass-Through Rate as calculated as of such
Distribution Date and (ii) the Pre-Funded Amount as of the first day of the
related Due Period, minus (B) 30 days' interest, at the related Mortgage
Interest Rate, on the Subsequent Mortgage Loans transferred to the Trust during
the related Due Period which had a Due Date after the related Subsequent Cut-Off
Date during the related Due Period, minus (C) the amount of any Pre-Funding
Earnings earned from the last Distribution Date (or the Closing Date with
respect to the October 1998 Distribution Date). In no event will the Capitalized
Interest Requirement be less than zero.
CERCLA: The Comprehensive Environmental Response, Compensation
and Liability Act of 1980.
CERTIFICATE: Any Class A-1 Certificate, Class A-2 Certificate,
Class A-3 Certificate, Class A-4 Certificate or Class R Certificate executed by
the Trustee on behalf of the Trust Fund and authenticated by the Trustee.
CERTIFICATE ACCOUNT: The Certificate Account established in
accordance with Section 6.01(a) hereof and maintained by the Trustee.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Certificate registered in the name of the Servicer or any
Subservicer or the Unaffiliated Seller, or any Affiliate of any of them, shall
be deemed not to be outstanding and the undivided Percentage Interest evidenced
thereby shall not be taken into account in determining whether the requisite
percentage of Certificates necessary to effect any such consent, waiver, request
or demand has been obtained. For purposes of any consent, waiver, request or
demand of Certificateholders pursuant to this Agreement, upon the Trustee's
request, the Servicer and the Unaffiliated Seller shall provide to the Trustee a
notice identifying any of their respective Affiliates or the Affiliates of any
Subservicer that is a Certificateholder as of the date(s) specified by the
Trustee in such request. Any Certificates on which payments are made under the
Certificate Insurance Policy shall be deemed to be outstanding and held by the
Certificate Insurer to the extent of such payment.
CERTIFICATE INSURANCE PAYMENT ACCOUNT: The Certificate
Insurance Payment Account established in accordance with Section 6.04(c) hereof
and maintained by the Trustee.
CERTIFICATE INSURANCE POLICY: The Financial Guaranty Insurance
Policy No. 50723-N, and all endorsements thereto dated the Closing Date, issued
by the Certificate Insurer for the benefit of the Certificateholders.
3
<PAGE>
CERTIFICATE INSURER: Financial Security Assurance Inc., a
monoline stock insurance company organized and created under the laws of the
State of New York, and any successors thereto.
CERTIFICATE INSURER DEFAULT: The existence and continuance of
any of the following:
(a) the Certificate Insurer shall have failed to make a
required payment when due under the Certificate Insurance Policy;
(b) the Certificate Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the benefit
of its creditors or (iii) had an order for relief entered against it under the
United States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department
of Insurance or any other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a custodian,
trustee, agent, or receiver for the Certificate Insurer or for all or any
material portion of its property or (ii) authorizing the taking of possession by
a custodian, trustee, agent, or receiver of the Certificate Insurer or of all or
any material portion of its property.
CERTIFICATE PRINCIPAL BALANCE: As to any particular Class A
Certificate and date of determination, the product of the Percentage Interest
evidenced thereby and the applicable Class A Certificate Principal Balance of
all Certificates of the same Class as of such date. The Class R Certificates do
not have a "Certificate Principal Balance".
CERTIFICATE REGISTER: As described in Section 4.02.
CIVIL RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act
of 1940, as amended.
CIVIL RELIEF ACT INTEREST SHORTFALL: With respect to any
Distribution Date, for any Mortgage Loan as to which there has been a reduction
in the amount of interest collectible thereon for the most recently ended Due
Period as a result of the application of the Civil Relief Act, the amount, if
any, by which (a) interest collectible on such Mortgage Loan during the most
recently ended calendar month is less than (b) the sum of one month's interest
on the Principal Balance of such Mortgage Loan, calculated at a rate equal to
the Mortgage Interest Rate.
CLASS: Each class of Certificates designated as the Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates or the Class R Certificates.
CLASS A CERTIFICATE: Any one of the Class A-1 Certificates,
any one of the Class A-2 Certificates, any one of the Class A-3 Certificates and
any one of the Class A-4 Certificates, as the case may be.
4
<PAGE>
CLASS A-1 CARRY-FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-1 Formula
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the Class A-1 Distribution Amount on such immediately preceding
Distribution Date and (b) 30 days' interest on the amount described in clause
(a) calculated at an interest rate equal to the Class A-1 Pass-Through Rate
applicable to such Distribution Date.
CLASS A-1 CERTIFICATE: Any Certificate designated as a "Class
A-1 Certificate" on the face thereof, in the form of Exhibit A-1 hereto. The
Class A-1 Certificates shall be issued with an initial aggregate Certificate
Principal Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-1 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-1
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates for such Class.
CLASS A-1 CERTIFICATE TERMINATION DATE: The Distribution Date
on which the Class A-1 Certificate Principal Balance is reduced to zero.
CLASS A-1 CURRENT INTEREST: With respect to the Class A-1
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-1 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-1 Certificate Principal
Balance as of such Distribution Date (and prior to making any distributions on
such Distribution Date).
CLASS A-1 DISTRIBUTION AMOUNT: With respect to the Class A-1
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-1 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be the sum of (i) the pro
rata portion of any moneys released from the Pre-Funding Account as a prepayment
of principal on the Class A-1 Certificates pursuant to Section 6.01(g) hereof,
and (ii) the lesser of (x) the Class A-1 Formula Distribution Amount for such
Distribution Date and (y) the amount (including any applicable portion of any
Insured Payment) available for distribution on account of the Class A-1
Certificates for such Distribution Date.
CLASS A-1 FINAL SCHEDULED MATURITY DATE: The November 25, 2009
Distribution Date.
CLASS A-1 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-1 Certificates for any Distribution Date, the sum of the Class A-1
Interest Distribution Amount and the Class A-1 Principal Distribution Amount.
CLASS A-1 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-1 Certificates for any Distribution Date an amount equal to (a) the
related Class A-1 Current Interest, minus (b) the pro rata portion of any
Mortgage Loan Interest Shortfalls allocable to the Class A-1 Certificates, on
the basis of accrued interest thereon, plus (c) any Class A-1 Carry-Forward
Amount, minus (d) any amounts paid by the Certificate Insurer in respect of such
Class A-1 Carry-Forward Amount, in each case as of such Distribution Date.
CLASS A-1 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to 6.400%.
5
<PAGE>
CLASS A-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-1 Certificates for any Distribution Date, the lesser of (x) the Group I
Principal Distribution Amount for such Distribution Date, and (y) the Class A-1
Certificate Principal Balance as of such Distribution Date.
On the Class A-1 Certificate Termination Date, any excess of
(a) the amount described in clause (x) of the preceding paragraph over (b) the
amount described in clause (y) of the preceding paragraph shall be distributed
as principal with respect to the Class A-2 Certificates, as elsewhere provided
herein.
CLASS A-2 CARRY-FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-2 Formula
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the Class A-2 Distribution Amount on such immediately preceding
Distribution Date and (b) 30 days' interest on the amount described in clause
(a), calculated at an interest rate equal to the Class A-2 Pass-Through Rate
applicable to such Distribution Date.
CLASS A-2 CERTIFICATE: Any Certificate designated as a "Class
A-2 Certificate" on the face thereof, in the form of Exhibit A-2 hereto. The
Class A-2 Certificates shall be issued with an initial aggregate Certificate
Principal Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-2 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-2
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates for such Class.
CLASS A-2 CERTIFICATE TERMINATION DATE: The Distribution Date
on which the Class A-2 Certificate Principal Balance is reduced to zero.
CLASS A-2 CURRENT INTEREST: With respect to the Class A-2
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-2 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-2 Certificate Principal
Balance as of such Distribution Date (and prior to making any distributions on
such Distribution Date).
CLASS A-2 DISTRIBUTION AMOUNT: With respect to the Class A-2
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-2 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be the sum of (i) the pro
rata portion of any moneys released from the Pre-Funding Account as a prepayment
of principal on the Class A-2 Certificates pursuant to Section 6.01(g) hereof,
and (ii) the lesser of (x) the Class A-2 Formula Distribution Amount for such
Distribution Date and (y) the amount (including any applicable portion of any
Insured Payment) available for distribution on account of the Class A-2
Certificates for such Distribution Date.
CLASS A-2 FINAL SCHEDULED MATURITY DATE: The July 25, 2014
Distribution Date.
CLASS A-2 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-2 Certificates for any Distribution Date, the sum of the Class A-2
Interest Distribution Amount and the Class A-2 Principal Distribution Amount.
6
<PAGE>
CLASS A-2 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-2 Certificates for any Distribution Date an amount equal to (a) the
related Class A-2 Current Interest, minus (b) the pro rata portion of any
Mortgage Loan Interest Shortfalls allocable to the Class A-2 Certificates, on
the basis of accrued interest thereon, plus (c) any Class A-2 Carry-Forward
Amount, minus (d) any amounts paid by the Certificate Insurer in respect of such
Class A-2 Carry-Forward Amount, in each case as of such Distribution Date.
CLASS A-2 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to 6.020%.
CLASS A-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-2 Certificates for any Distribution Date prior to the Class A-1
Certificate Termination Date, zero.
On the Class A-1 Certificate Termination Date, the lesser of
(i) the excess of (x) the Group I Principal Distribution Amount as of the Class
A-1 Certificate Termination Date over (y) the Class A-1 Certificate Principal
Balance on the Class A-1 Certificate Termination Date before making
distributions on such date and (ii) the Class A-2 Certificate Principal Balance.
With respect to the Class A-2 Certificates for any
Distribution Date following the Class A-1 Certificate Termination Date, the
lesser of (x) the Group I Principal Distribution Amount for such Distribution
Date and (y) the Class A-2 Certificate Principal Balance as of such Distribution
Date. On the Class A-2 Certificate Termination Date any remaining portion of the
Group I Principal Distribution Amount shall be distributed with respect to the
Class A-3 Certificates.
CLASS A-3 CARRY-FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-3 Formula
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the Class A-3 Distribution Amount on such immediately preceding
Distribution Date and (b) 30 days' interest on the amount described in clause
(a), calculated at an interest rate equal to the Class A-3 Pass-Through Rate
applicable to such Distribution Date.
CLASS A-3 CERTIFICATE: Any Certificate designated as a "Class
A-3 Certificate" on the face thereof, in the form of Exhibit A-3 hereto. The
Class A-3 Certificates shall be issued with an initial aggregate Certificate
Principal Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-3 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-3
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates for such Class.
CLASS A-3 CERTIFICATE TERMINATION DATE: The Distribution Date
on which the Class A-3 Certificate Principal Balance is reduced to zero.
CLASS A-3 CURRENT INTEREST: With respect to the Class A-3
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-3 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-3 Certificate Principal
Balance as of such Distribution Date (and prior to making any distributions on
such Distribution Date).
7
<PAGE>
CLASS A-3 DISTRIBUTION AMOUNT: With respect to the Class A-3
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-3 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be the sum of (i) the pro
rata portion of any moneys released from the Pre-Funding Account as a prepayment
of principal on the Class A-3 Certificates pursuant to Section 6.01(g) hereof
and (ii) the lesser of (x) the Class A-3 Formula Distribution Amount for such
Distribution Date and (y) the amount (including any applicable portion of any
Insured Payment) available for distribution on account of the Class A-3
Certificates for such Distribution Date.
CLASS A-3 FINAL SCHEDULED MATURITY DATE: The January 25, 2030
Distribution Date.
CLASS A-3 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-3 Certificates for any Distribution Date, the sum of the Class A-3
Interest Distribution Amount and the Class A-3 Principal Distribution Amount.
CLASS A-3 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-3 Certificates for any Distribution Date an amount equal to (a) the
related Class A-3 Current Interest, minus (b) the pro rata portion of any
Mortgage Loan Interest Shortfalls allocable to the Class A-3 Certificates, on
the basis of accrued interest thereon, plus (c) any Class A-3 Carry-Forward
Amount, minus (d) any amounts paid by the Certificate Insurer in respect of such
Class A-3 Carry-Forward Amount, in each case as of such Distribution Date.
CLASS A-3 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to 6.295%. On any Distribution Date after the
Clean-Up Call Date, the Class A-3 Pass-Through Rate will be equal to the rate
set forth above plus 0.50% per annum.
CLASS A-3 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-3 Certificates for any Distribution Date prior to the Class A-2
Certificate Termination Date, zero.
On the Class A-2 Certificate Termination Date, the lesser of
(i) the excess of (x) the Group I Principal Distribution Amount as of the Class
A-2 Certificate Termination Date over (y) the Class A-2 Certificate Principal
Balance on the Class A-2 Certificate Termination Date before making
distributions on such date and (ii) the Class A-3 Certificate Principal Balance.
With respect to the Class A-3 Certificates for any
Distribution Date following the Class A-2 Certificate Termination Date, the
lesser of (x) the Group I Principal Distribution Amount as of such Distribution
Date and (y) the Class A-3 Certificate Principal Balance as of such Distribution
Date.
CLASS A-4 AVAILABLE FUNDS CAP CARRY-FORWARD AMOUNT: With
respect to the Class A-4 Certificates and any Distribution Date, the excess of
(x) the Class A-4 Current Interest calculated at the Class A-4 Formula
Pass-Through Rate over (y) the Class A-4 Current interest calculated at the
Class A-4 Available Funds Cap Rate, in each case as of such Distribution Date.
CLASS A-4 AVAILABLE FUNDS CAP RATE: A per annum rate equal to
the Net Weighted Average Mortgage Interest Rate with respect to the Mortgage
Loan Group II less 0.75%.
8
<PAGE>
CLASS A-4 CARRY-FORWARD AMOUNT: As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Class A-4 Formula
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the Class A-4 Distribution Amount on such immediately preceding
Distribution Date and (b) 30 days' interest on the amount described in clause
(a), calculated at an interest rate equal to the Class A-4 Pass-Through Rate
applicable to such Distribution Date.
CLASS A-4 CERTIFICATE: Any Certificate designated as a "Class
A-4 Certificate" on the face thereof, in the form of Exhibit A-4 hereto. The
Class A-4 Certificates shall be issued with an initial aggregate Certificate
Principal Balance equal to the Original Certificate Principal Balance therefor.
CLASS A-4 CERTIFICATE PRINCIPAL BALANCE: As of any time of
determination, the Original Certificate Principal Balance of the Class A-4
Certificates less any amounts actually distributed with respect to principal
thereon on all prior Distribution Dates for such Class.
CLASS A-4 CERTIFICATE TERMINATION DATE: The Distribution Date
on which the Class A-4 Certificate Principal Balance is reduced to zero.
CLASS A-4 CLEAN-UP CALL DATE: The first Distribution Date
after the Class A-4 Certificate Principal Balance is less than or equal to 10%
of the Original Certificate Principal Balance of the Class A-4 Certificates.
CLASS A-4 CURRENT INTEREST: With respect to the Class A-4
Certificates for any Distribution Date and the related Accrual Period, the
interest accrued at the Class A-4 Pass-Through Rate applicable to such
Distribution Date and such Accrual Period on the Class A-4 Certificate Principal
Balance as of such Distribution Date (and prior to making any distributions on
such Distribution Date).
CLASS A-4 DISTRIBUTION AMOUNT: With respect to the Class A-4
Certificates for any Distribution Date, the amount to be distributed to the
Holders of the Class A-4 Certificates on such Distribution Date, applied first
to interest and then to principal, which amount shall be the lesser of (x) the
Class A-4 Formula Distribution Amount for such Distribution Date and (y) the
amount (including any applicable portion of any Insured Payment) available for
distribution on account of the Class A-4 Certificates for such Distribution
Date.
CLASS A-4 FINAL SCHEDULED MATURITY DATE: The October 25, 2029
Distribution Date.
CLASS A-4 FORMULA DISTRIBUTION AMOUNT: With respect to the
Class A-4 Certificates for any Distribution Date, the sum of the Class A-4
Interest Distribution Amount and the Class A-4 Principal Distribution Amount.
CLASS A-4 FORMULA PASS-THROUGH RATE: A per annum rate equal to
LIBOR plus 0.30%. On any Distribution Date after the Clean-Up Call Date, the
Class A-4 Formula Pass-Through Rate will be equal to LIBOR plus 0.60% per annum.
CLASS A-4 INTEREST DISTRIBUTION AMOUNT: With respect to the
Class A-4 Certificates for any Distribution Date an amount equal to (a) the
related Class A-4 Current Interest, minus
9
<PAGE>
(b) the pro rata portion of any Mortgage Loan Interest Shortfalls allocable to
the Class A-4 Certificates, on the basis of accrued interest thereon, plus (c)
any Class A-4 Carry-Forward Amount, minus (d) any amounts paid by the
Certificate Insurer in respect of such Class A-4 Carry-Forward Amount, in each
case as of such Distribution Date.
CLASS A-4 PASS-THROUGH RATE: With respect to any Distribution
Date, the per annum rate equal to the lesser of (i) Class A-4 Formula
Pass-Through Rate and (ii) the Class A-4 Available Funds Cap Rate.
CLASS A-4 PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Class A-4 Certificates for any Distribution Date, the lesser of (x) the Group II
Principal Distribution Amount as of such Distribution Date and (y) the Class A-4
Certificate Principal Balance as of such Distribution Date.
CLASS R CERTIFICATE: Any Certificate denominated as a Class R
Certificate and subordinate to the Class A Certificates in right of payment to
the extent set forth herein, which Certificate shall be in the form of Exhibit B
hereto.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLEAN-UP CALL DATE: As defined in Section 8.01(b).
CLOSING DATE: September 29, 1998.
CODE: The Internal Revenue Code of 1986, as amended.
COLLECTION ACCOUNT: The Eligible Account established and
maintained by the Servicer pursuant to Section 5.02(b).
COMBINED LOAN-TO-VALUE RATIO or CLTV: As to any Mortgage Loan
at any time, the fraction, expressed as a percentage, the numerator of which is
the sum of (i) the Principal Balance thereof at such time and (ii) if such
Mortgage Loan is subject to a second mortgage, the unpaid principal balance of
any related first mortgage loan or loans, if any, as of such time, and the
denominator of which is the Appraised Value of any related Mortgaged Property or
Properties as of the date of the appraisal used by or on behalf of the
Unaffiliated Seller to underwrite such Mortgage Loan.
COMMISSION: The Securities and Exchange Commission.
COMPENSATING INTEREST: As defined in Section 6.09 hereof.
CROSSOVER AMOUNT: With respect to any Payment Date and either
Group, an amount, not less than zero, equal to the lesser of (i) the excess, if
any, of (A) the sum of (x) the amounts specified in clause (a)(ii) of the
definition of the Principal Distribution Amount for such Group and (y) the
amounts specified in clauses (b)(i)-(vi) (and with respect to Group I, clause
(vii) and clauses (vi-vii) for Group II) of the definition of the Principal
Distribution Amount for such Group and (z) the aggregate amount of Liquidated
Loan Losses incurred in respect of such Group during the immediately preceding
Due Period over (B) the Available Funds for such Group and (ii) the excess, if
any, of (A) the Available
10
<PAGE>
Funds for the other Group over (B) the sum of (x) the amounts specified in
clause (a)(ii) of the definition of Principal Distribution Amount for such other
Group and (y) the amounts specified in clauses (b)(i)-(vi) (and with respect to
Group I, clause (vii) and clauses (vi-vii) for Group II) of the definition of
the Principal Distribution Amount for such other Group and (z) the aggregate
amount of Liquidated Loan Losses incurred in respect of such other Group during
the immediately preceding Due Period.
CUMULATIVE LOSS PERCENTAGE: As of any date of determination
thereof, the aggregate of all Liquidated Loan Losses since the Startup Date as a
percentage of the sum of (i) the aggregate Principal Balance of the Initial
Mortgage Loans as of the Initial Cut-Off Date and (ii) the aggregate Principal
Balance of any Subsequent Mortgage Loans transferred to the Trust as of the
related Subsequent Cut-Off Date.
CUMULATIVE LOSS TEST: The Cumulative Loss Test for each period
indicated below is satisfied if the Cumulative Loss Percentage for such period
does not exceed the percentage set out for such period below:
Period Cumulative Loss Percentage
-------------------------------- --------------------------
1st - 24th Distribution Date 1.00%
25th - 36th Distribution Date 1.50%
37th - 48th Distribution Date 1.75%
49th - 60th Distribution Date
and thereafter 2.00%
CURTAILMENT: With respect to a Mortgage Loan, any payment of
principal received during a Due Period as part of a payment that is in excess of
the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
delinquency.
CUSTODIAN: As defined in Section 2.04(c).
CUT-OFF DATE: With respect to the Initial Mortgage Loans, the
Initial Cut-Off Date, and with respect to the Subsequent Mortgage Loans, the
Subsequent Cut-Off Date.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the United States Bankruptcy Code,
except such a reduction that constitutes a Deficient Valuation or a permanent
forgiveness of principal.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the United
States Bankruptcy Code.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced by or to be
replaced by a Qualified Substitute Mortgage Loan.
11
<PAGE>
DELINQUENCY RATIO: With respect to any Distribution Date, the
percentage equivalent of a fraction (a) the numerator of which equals the
aggregate Principal Balances of all Mortgage Loans that are 60 or more days
Delinquent, in foreclosure or converted to REO Property as of the last day of
such Due Period and (b) the denominator of which is the aggregate Principal
Balance of the Mortgage Loans as of the last day of such Due Period.
DELINQUENT: A Mortgage Loan is "delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
DEPOSITOR: Prudential Securities Secured Financing
Corporation, a Delaware corporation, and any successor thereto.
DEPOSITORY: The Depository Trust Company, 55 Water Street, New
York, New York 10041 and any successor Depository hereafter named.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial
institution for which the Depository holds Class A Certificates from time to
time as a securities depositary.
DISTRIBUTION DATE: The 25th day of any month or if such 25th
day is not a Business Day, the first Business Day immediately following,
commencing on October 26, 1998.
DUE DATE: With respect to each Mortgage Loan and any
Distribution Date, the day of the calendar month preceding the calendar month in
which such Distribution Date occurs on which the Monthly Payment for such
Mortgage Loan was due.
DUE PERIOD: With respect to each Distribution Date, the
calendar month preceding the related Distribution Date.
ELIGIBLE ACCOUNT: Either (A) an account or accounts maintained
with an institution (which may include the Trustee, provided such institution
otherwise meets these requirements) whose deposits are insured by the FDIC, the
unsecured and uncollateralized debt obligations of which institution shall be
rated AA or better by S&P and Aa2 or better by Moody's and in the highest short
term rating category by S&P and Moody's, and which is (i) a federal savings and
loan association duly organized, validly existing and in good standing under the
federal banking laws, (ii) an institution (including the Trustee) duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, or (v) approved in writing by the
Certificate Insurer and the Rating Agencies or (B) a trust account or accounts
maintained with the trust department of a federal or state chartered depository
institution or trust company (which may include the Trustee, provided that the
Trustee otherwise meets these requirements), having capital and surplus of not
less than $50,000,000, acting in its fiduciary capacity.
12
<PAGE>
ERISA: As defined in Section 4.02(m) hereof.
EVENT OF DEFAULT: As described in Section 7.01.
EXCESS OVERCOLLATERALIZED AMOUNT: With respect to a Mortgage
Loan Group and any Distribution Date, the excess, if any, of (x) the
Overcollateralized Amount for such Group that would apply on such Distribution
Date after taking into account the payment of the related Group I or Group II
Distribution Amount on such Distribution Date (except for any distributions of
related Overcollateralization Reduction Amounts for such Group on such
Distribution Date) over (y) the related Specified Overcollateralized Amount for
such Group for such Distribution Date; provided, however, that the Excess
Overcollateralized Amount for the period beginning with the Distribution Date as
to which clause (b)(i)(y)(A) of "Specified Overcollateralized Amount" applies
(the "Trigger Date") and ending on the Distribution Date occurring in the month
six months subsequent to the Trigger Date (inclusive) shall be limited to the
amount obtained using the following formula.
n
-
6 X E.S.A.
----------
Where "n" is equal to the number of Distribution Dates that
have occurred since the Trigger Date and "E.S.A." is equal to the amount of
Excess Overcollateralized Amount that would otherwise be obtained for such
Distribution Date without regard to the provisions of this proviso.
FDIC: The Federal Deposit Insurance Corporation, and any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, and any
successor thereto.
FNMA: The Federal National Mortgage Association, and any
successor thereto.
FORECLOSURE PROFITS: As to any Distribution Date, the excess,
if any, of (i) Net Liquidation Proceeds in respect of each Mortgage Loan that
became a Liquidated Mortgage Loan during the related Due Period over (ii) the
sum of the unpaid principal balance of each such Liquidated Mortgage Loan plus
accrued and unpaid interest at the applicable Mortgage Interest Rate on the
unpaid principal balance thereof from the Due Date to which interest was last
paid by the Mortgagor (or, in the case of a Liquidated Mortgage Loan that had
been an REO Mortgage Loan, from the Due Date to which interest was last deemed
to have been paid pursuant to Section 5.06 to the first day of the month
following the month in which such Mortgage Loan became a Liquidated Mortgage
Loan).
GAAP: Generally accepted accounting principles, consistently
applied.
GROUP: Group I and Group II.
GROUP I: The Group I Certificates and Mortgage Loan Group I.
GROUP I CERTIFICATE PRINCIPAL BALANCE: The sum of the Class
A-1 Certificate Principal Balance, the Class A-2 Certificate Principal Balance
and the Class A-3 Certificate Principal Balance.
13
<PAGE>
GROUP I CERTIFICATES: The Class A-1 Certificates, the Class
A-2 Certificates and the Class A-3 Certificates.
GROUP I DISTRIBUTION AMOUNT: The sum of the Class A-1
Distribution Amount, the Class A-2 Distribution Amount and the Class A-3
Distribution Amount.
GROUP I INTEREST DISTRIBUTION AMOUNT: The sum of the Class A-1
Interest Distribution Amount, the Class A-2 Interest Distribution Amount and the
Class A-3 Interest Distribution Amount.
GROUP I PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Group I Certificates for any Distribution Date, the lesser of:
(a) the excess of (i) the sum, as of such Distribution Date,
of (A) the Available Funds for Group I and (B) any Insured Payment relating to
Group I plus if the Certificate Insurer shall so elect in its sole discretion,
an amount of principal (including Liquidated Loan Losses) that would have been
payable pursuant to clauses (b)(i)-(viii) below if sufficient funds were made
available to the Trustee in accordance with the terms of the Certificate
Insurance Policy and (C) the Crossover Amount for such Group over (ii) the sum
of (w) the Group I Interest Distribution Amount, (x) the Trustee Fees allocable
to Group I and (y) the amount due to the Certificate Insurer on such
Distribution Date pursuant to Section 6.05(a)(ii)(a); and
(b) the sum, without duplication, of:
(i) all principal in respect of the Mortgage Loans in
Mortgage Loan Group I actually collected during the related
Due Period,
(ii) the Principal Balance of each Mortgage Loan in
Mortgage Loan Group I that either was repurchased by the
Unaffiliated Seller or by the Depositor or purchased by the
Servicer on the related Servicer Distribution Date, to the
extent such Principal Balance is actually received by the
Trustee,
(iii) any Substitution Adjustments delivered by the
Depositor on the related Servicer Distribution Date in
connection with a substitution of a Mortgage Loan in Mortgage
Loan Group I, to the extent such Substitution Adjustments are
actually received by the Trustee,
(iv) the Net Liquidation Proceeds actually collected by
the Servicer of all Mortgage Loans in Mortgage Loan Group I
during the related Due Period (to the extent such Net
Liquidation Proceeds relate to principal),
(v) with respect to the October 26, 1998, the November 25,
1998 or the December 28, 1998 Distribution Dates, moneys
released from the Pre-Funding Account, if any, (to the extent
such funds are less than 1% of the Pool Principal Balance on
September 30, 1998, October 31, 1998 or November 30, 1998,
respectively),
14
<PAGE>
(vi) the amount of any Overcollateralization Deficit for
Group I for such Distribution Date,
(vii) the proceeds received by the Trustee for the
termination of the Trust Fund relating to Mortgage Loan Group
I (to the extent such proceeds relate to principal),
(viii) the amount of any Overcollateralization Increase
Amount for Group I and such Distribution Date, and
(ix) if the Certificate Insurer shall so elect in its sole
discretion, an amount of principal (including Liquidated Loan
Losses) that would have been payable pursuant to clauses
(i)-(viii) above if sufficient funds were made available to
the Trustee in accordance with the terms of the Certificate
Insurance Policy,
minus
-----
(x) the amount of any Overcollateralization Reduction
Amount for Group I and such Distribution Date.
GROUP II: The Group II Certificates and Mortgage Loan
Group II.
GROUP II CERTIFICATE PRINCIPAL BALANCE: The Class A-4
Certificate Principal Balance.
GROUP II CERTIFICATES: The Class A-4 Certificates.
GROUP II DISTRIBUTION AMOUNT: The Class A-4 Distribution
Amount.
GROUP II INTEREST DISTRIBUTION AMOUNT: The Class A-4 Interest
Distribution Amount.
GROUP II PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Group II Certificates for any Distribution Date, the lesser of:
(a) the excess of (i) the sum, as of such Distribution Date,
of (A) the Available Funds for Group II and (B) any Insured Payment relating to
Group II plus if the Certificate Insurer shall so elect in its sole discretion,
an amount of principal (including Liquidated Loan Losses) that would have been
payable pursuant to clauses (b)(i)-(viii) below if sufficient funds were made
available to the Trustee in accordance with the terms of the Certificate
Insurance Policy and (C) the Crossover Amount for such Group over (ii) the sum
of (w) the Group II Interest Distribution Amount, (x) the Trustee Fees allocable
to Group II and (y) the amount due to the Certificate Insurer on such
Distribution Date pursuant to Section 6.05(a)(ii)(b); and
(b) the sum, without duplication, of:
15
<PAGE>
(i) all principal in respect of the Mortgage Loans in
Mortgage Loan Group II actually collected during the related
Due Period,
(ii) the Principal Balance of each Mortgage Loan in
Mortgage Loan Group II that either was repurchased by the
Unaffiliated Seller or by the Depositor or purchased by the
Servicer on the related Servicer Distribution Date, to the
extent such Principal Balance is actually received by the
Trustee,
(iii) any Substitution Adjustments delivered by the
Depositor on the related Servicer Distribution Date in
connection with a substitution of a Mortgage Loan in Mortgage
Loan Group II, to the extent such Substitution Adjustments are
actually received by the Trustee,
(iv) the Net Liquidation Proceeds actually collected by
the Servicer of all Mortgage Loans in Mortgage Loan Group II
during the related Due Period (to the extent such Net
Liquidation Proceeds relate to principal),
(v) the amount of any Overcollateralization Deficit for
Group II for such Distribution Date,
(vi) the proceeds received by the Trustee upon the
exercise by the Servicer of the optional clean-up call
pursuant to Section 8.05 hereof (to the extent such proceeds
relate to principal),
(vii) the proceeds received by the Trustee for the
termination of the Trust Fund relating to Mortgage Loan Group
II (to the extent such proceeds relate to principal),
(viii) the amount of any Overcollateralization Increase
Amount for Group II and such Distribution Date, and
(ix) if the Certificate Insurer shall so elect in its sole
discretion, an amount of principal (including Liquidated Loan
Losses) that would have been payable pursuant to clauses
(i)-(viii) above if sufficient funds were made available to
the Trustee in accordance with the terms of the Certificate
Insurance Policy,
minus
-----
(x) the amount of any Overcollateralization Reduction
Amount for Group II and such Distribution Date.
I & I PAYMENTS: Payments due and owing under the Insurance and
Indemnity Agreement other than pursuant to Section 3.02(b) of such Agreement.
INDIRECT PARTICIPANT: Any financial institution for whom any
Direct Participant holds an interest in a Class A Certificate.
16
<PAGE>
INITIAL CUT-OFF DATE: The close of business on August 31, 1998
(or with respect to any Initial Mortgage Loan originated or otherwise acquired
by an Originator after August 31, 1998, the date of origination or acquisition
of such Initial Mortgage Loan).
INITIAL MORTGAGE LOANS: The Mortgage Loans delivered by the
Depositor on the Startup Date.
INITIAL OVERCOLLATERALIZED AMOUNT: With respect to any Group,
an amount equal to 1.00% of the Maximum Collateral Amount for such Group.
INSURANCE AND INDEMNITY AGREEMENT: The Insurance and Indemnity
Agreement dated as of September 1, 1998 among the Certificate Insurer, the
Depositor, the Servicer, the Unaffiliated Seller, HomeAmerican Credit, Inc.,
d/b/a Upland Mortgage and New Jersey Mortgage Investment Corp. as such agreement
may be amended or supplemented in accordance with the provisions thereof.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to
any insurance policy covering a Mortgage Loan to the extent such proceeds are
not applied to the restoration of the related Mortgaged Property or released to
the related Mortgagor in accordance with Accepted Servicing Practices.
"Insurance Proceeds" do not include "Insured Payments."
INSURED DISTRIBUTION AMOUNT: With respect to any Distribution
Date and Group I, the sum of (a) the Group I Interest Distribution Amount with
respect to such Distribution Date, (b) the Overcollateralization Deficit for
Group I, if any, as of such Distribution Date and (c) (i) on the Class A-1 Final
Scheduled Maturity Date, the Class A-1 Certificate Principal Balance, (ii) on
the Class A-2 Final Scheduled Maturity Date, the Class A-2 Certificate Principal
Balance and (iii) on the Class A-3 Final Scheduled Maturity Date, the Class A-3
Certificate Principal Balance.
With respect to any Distribution Date and Group II, the sum of
(a) the Group II Interest Distribution Amount with respect to such Distribution
Date, (b) the Overcollateralization Deficit for Group II, if any, as of such
Distribution Date and (c) on the Class A-4 Final Scheduled Maturity Date, the
Class A-4 Certificate Principal Balance.
INSURED PAYMENT: With respect to any Distribution Date and any
Group, the Available Funds Shortfall for such Group.
INTEREST DETERMINATION DATE: With respect to any Accrual
Period for the Group II Certificates, the second London Business Day preceding
the first day of such Accrual Period; provided, however, that with respect to
the October 1998 Distribution Date, the Interest Determination Date shall be the
second London Business Day preceding the Closing Date.
LATE PAYMENT RATE: Has the meaning ascribed thereto in the
Insurance and Indemnity Agreement.
LIBOR: With respect to any Accrual Period for the Group II
Certificates, the rate determined by the Trustee on the related Interest
Determination Date on the basis of the offered rates of
17
<PAGE>
the Reference Banks for one-month U.S. dollar deposits, as such rates appear on
Telerate Page 3750, as of 11:00 a.m. (London time) on such Interest
Determination Date. On each Interest Determination Date, LIBOR for the related
Accrual Period will be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period for the Group II Certificates shall be the arithmetic
mean of such offered quotations (rounded upwards if necessary to the
nearest whole multiple of 1/16%).
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period Group II Certificates shall be the higher of (i) LIBOR
as determined on the previous Interest Determination Date and (ii) the
Reserve Interest Rate.
LIQUIDATED LOAN LOSS: With respect to any Distribution Date,
the aggregate of the amount of losses with respect to each Mortgage Loan which
became a Liquidated Mortgage Loan prior to the Due Date preceding such
Distribution Date, equal to the excess of (i) the unpaid principal balance of
each such Liquidated Mortgage Loan, plus accrued interest thereon in accordance
with the amortization schedule at the time applicable thereto at the applicable
Mortgage Interest Rate from the Due Date as to which interest was last paid with
respect thereto through the last day of the month in which such Mortgage Loan
became a Liquidated Mortgage Loan, over (ii) Net Liquidation Proceeds with
respect to such Liquidated Mortgage Loan.
LIQUIDATED MORTGAGE LOAN: A Mortgage Loan with respect to
which the related Mortgaged Property has been acquired, liquidated or foreclosed
and with respect to which the Servicer determines that all Liquidation Proceeds
which it expects to recover have been recovered.
LIQUIDATION EXPENSES: Expenses incurred by the Servicer in
connection with the liquidation of any defaulted Mortgage Loan or property
acquired in respect thereof (including, without limitation, legal fees and
expenses, committee or referee fees, and, if applicable, brokerage commissions
and conveyance taxes), any unreimbursed amount expended by the Servicer pursuant
to Sections 5.04 and 5.06 respecting the related Mortgage Loan and any
unreimbursed expenditures for real property taxes or for property restoration or
preservation of the related Mortgaged Property. Liquidation Expenses shall not
include any previously incurred expenses in respect of an REO Mortgage Loan
which have been netted against related REO Proceeds.
LIQUIDATION PROCEEDS: The amount (other than Insurance
Proceeds) received by the Servicer in connection with (i) the taking of all or a
part of Mortgaged Property by exercise of the power of eminent domain or
condemnation, (ii) the liquidation of a defaulted Mortgage Loan through a
trustee's sale, foreclosure sale, REO Disposition or otherwise or (iii) the
liquidation of any other security for such Mortgage Loan, including, without
limitation, pledged equipment, inventory and working capital and assignments of
rights and interests made by the related mortgagor.
LOAN REPURCHASE PRICE: As defined in Section 2.06(b).
LONDON BUSINESS DAY: A day on which banks are open for dealing
in foreign currency and exchange in London and New York City.
18
<PAGE>
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A
Certificates evidencing Percentage Interests in excess of 51% in the aggregate.
MAXIMUM COLLATERAL AMOUNT: With respect to Group I, the
Original Pool Principal Balance of Mortgage Loan Group I plus the Original
Pre-Funded Amount and with respect to Group II, the Original Pool Principal
Balance of Mortgage Loan Group II.
MONTHLY PAYMENT: As to any Mortgage Loan (including any REO
Mortgage Loan) and any Due Date, the payment of principal and interest due
thereon as specified for such Due Date in the related amortization schedule at
the time applicable thereto (after adjustment for any Curtailments and Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than Deficient
Valuations or similar proceeding or any moratorium or similar waiver or grace
period).
MONTHLY SERVICING FEE: As defined in Section 5.08 hereof.
MOODY'S: Moody's Investors Service, Inc., a corporation
organized and existing under Delaware law, or any successor thereto and if such
corporation no longer for any reason performs the services of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized rating agency designated by the Certificate Insurer.
MORTGAGE: The mortgage, deed of trust or other instrument
creating a first or second lien on the Mortgaged Property.
MORTGAGED PROPERTY: The underlying property or properties
securing a Mortgage Loan, consisting of a fee simple estate in one or more
parcels of land.
MORTGAGE FILE: As described in Exhibit C.
MORTGAGE INTEREST RATE: As to any Mortgage Loan, the per annum
fixed rate at which interest accrues on the unpaid principal balance thereof.
MORTGAGE LOAN GROUP: Mortgage Loan Group I and Mortgage Loan
Group II.
MORTGAGE LOAN GROUP I: Those Mortgage Loans listed on the
Mortgage Loan Schedule as being designated to Mortgage Loan Group I.
MORTGAGE LOAN GROUP II: Those Mortgage Loans listed on the
Mortgage Loan Schedule as being designated to Mortgage Loan Group II.
MORTGAGE LOAN INTEREST SHORTFALL: With respect to any
Distribution Date, as to any Mortgage Loan, the sum of (a) any Prepayment
Interest Shortfall for which no payment of Compensating Interest is paid and (b)
any Civil Relief Act Interest Shortfall in respect of such Mortgage Loan for
such Distribution Date.
19
<PAGE>
MORTGAGE LOANS: The Initial Mortgage Loans and the Subsequent
Mortgage Loans, together with any Qualified Replacement Mortgages substituted
therefor in accordance with this Agreement, as from time to time are held as a
part of the Trust Fund, the Initial Mortgage Loans originally so held being
identified in the initial Mortgage Loan Schedule. When used in respect of any
Distribution Date, the term Mortgage Loans shall mean all Mortgage Loans
(including those in respect of which the Trustee has acquired the related
Mortgaged Property) which have not been repaid in full prior to the related Due
Period, did not become Liquidated Mortgage Loans prior to such related Due
Period or were not repurchased or replaced by the Unaffiliated Seller prior to
such related Due Period.
MORTGAGE LOAN SCHEDULE: The initial schedule of Initial
Mortgage Loans as of the Initial Cut-Off Date as attached hereto as Schedule I,
which will be deemed to be modified automatically upon any replacement, sale,
substitution, liquidation, transfer or addition of any Mortgage Loan, including
the addition of a Subsequent Mortgage Loan, pursuant to the terms hereof. The
initial Mortgage Loan Schedule sets forth as to each Initial Mortgage Loan, and
any subsequent Mortgage Loan Schedule provided in connection with the Subsequent
Mortgage Loans will set forth as to each Subsequent Mortgage Loan: (i) its
identifying number and the name of the related Mortgagor; (ii) the billing
address for the related Mortgaged Property including the state and zip code;
(iii) its date of origination; (iv) the original number of months to stated
maturity; (v) the original stated maturity; (vi) the original Principal Balance;
(vii) its Cut-Off Date Balance; (viii) the Mortgage Interest Rate; (ix) the
scheduled monthly payment of principal and interest and (x) a Mortgage Loan
Group designation.
MORTGAGE NOTE: The original, executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
MORTGAGE PORTFOLIO PERFORMANCE TEST: The Mortgage Portfolio
Performance Test is satisfied for any date of determination thereof if either
(a) (i) the Rolling Six Month Delinquency Rate is less than or equal to 11.00%,
(ii) the Overcollateralization Loss Test is satisfied and (iii) if the Twelve
Month Loss Amount is not greater than or equal to 1.25% of the Pool Principal
Balance as of the first day of the twelfth preceding calendar month or (b) the
Certificate Insurer, by notice to each of the parties hereto in accordance with
Section 10.06, expressly waives compliance with the foregoing tests for such
Distribution Date.
MORTGAGOR: The obligor on a Mortgage Note.
NET FORECLOSURE PROFITS: As to any Distribution Date, the
excess, if any, of (i) the aggregate Foreclosure Profits with respect to such
Distribution Date over (ii) Liquidated Loan Losses with respect to such
Distribution Date.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances made by the Servicer. For all purposes of this Agreement, Net
Liquidation Proceeds shall be allocated first to accrued and unpaid interest on
the related Mortgage Loan and then to the unpaid principal balance thereof.
NET MONTHLY EXCESS CASHFLOW: With respect to any Distribution
Date and any Group, the excess of (x) the Available Funds for such Group then on
deposit in the Certificate Account over (y) the sum of (i) related Group
Distribution Amount, calculated for this purpose without regard to any
Overcollateralization Increase Amount for such Group or portion thereof included
therein,
20
<PAGE>
(ii) the amounts due to the Certificate Insurer on such Distribution Date
pursuant to Section 6.05(a)(ii)(a) or Section 6.05(a)(ii)(b), as applicable, and
(iii) the Trustee Fees allocable to such Group.
NET REO PROCEEDS: As to any REO Mortgage Loan, REO Proceeds
net of any related expenses of the Servicer.
NET WEIGHTED AVERAGE MORTGAGE INTEREST RATE: With respect to
any Due Period, the weighted average Mortgage Interest Rates (weighted by
Principal Balances) of the Mortgage Loans, calculated at the opening of business
on the first day of such Due Period, less the rate at which the Servicing Fee is
then calculated, less the rate at which the Trustee Fee is then calculated and
less the Premium Percentage.
NONRECOVERABLE ADVANCES: With respect to any Mortgage Loan,
(a) any Periodic Advance previously made and not reimbursed from late
collections pursuant to Section 5.04, or (b) a Periodic Advance proposed to be
made in respect of a Mortgage Loan or REO Property either of which, in the good
faith business judgment of the Servicer, as evidenced by an Officer's
Certificate delivered to the Certificate Insurer and the Trustee no later than
the Business Day following such determination, would not ultimately be
recoverable pursuant to Sections 5.04 and Section 6.04.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of
the Board, the President or a Vice President and the Treasurer, the Secretary or
one of the Assistant Treasurers or Assistant Secretaries of the Unaffiliated
Seller and/or the Servicer, or the Depositor, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may,
without limitation, be counsel for the Unaffiliated Seller, the Servicer, the
Trustee, a Certificateholder or a Certificateholder's prospective transferee or
the Certificate Insurer (including except as otherwise provided herein, in-house
counsel) reasonably acceptable to each addressee of such opinion and experienced
in matters relating to the subject of such opinion; except that any opinion of
counsel relating to (a) the qualification of the REMIC Trust as a REMIC or (b)
compliance with the REMIC Provisions must be an opinion of counsel who (i) is in
fact independent of the Unaffiliated Seller, the Servicer and the Trustee, (ii)
does not have any direct financial interest or any material indirect financial
interest in the Unaffiliated Seller or the Servicer or the Trustee or in an
Affiliate thereof, (iii) is not connected with the Unaffiliated Seller or the
Servicer or the Trustee as an officer, employee, director or person performing
similar functions and (iv) is reasonably acceptable to the Certificate Insurer.
ORIGINAL CERTIFICATE PRINCIPAL BALANCE: As of the Startup Day
and as to the Class A-1 Certificates, $43,100,000; the Class A-2 Certificates,
$30,000,000; the Class A-3 Certificates, $105,100,000; and the Class A-4
Certificates, $19,800,000.
The Class R Certificates do not have an Original Certificate Principal Balance.
ORIGINAL POOL PRINCIPAL BALANCE: The Pool Principal Balance as
of the Initial Cut-Off Date, which amount is equal to $139,904,460.46. The
Original Pool Principal Balance for Mortgage Loan Group I is equal to
$119,904,460.46 and the Original Pool Principal Balance for Mortgage Loan Group
II is equal to $20,000,000.00.
21
<PAGE>
ORIGINAL PRE-FUNDED AMOUNT: With respect to Mortgage Loan
Group I, $60,095,539.54.
ORIGINATORS: American Business Credit, Inc., HomeAmerican
Credit, Inc., d/b/a Upland Mortgage and New Jersey Mortgage Investment Corp.
OVERCOLLATERALIZATION DEFICIENCY AMOUNT: With respect to any
Distribution Date and any Group, the difference, if greater than zero, between
(a) the Specified Overcollateralized Amount for such Group applicable to such
Distribution Date and (b) the Overcollateralized Amount for such Group
applicable to such Distribution Date prior to taking into account the payment of
any related Overcollateralization Increase Amount for such Group on such
Distribution Date.
OVERCOLLATERALIZATION DEFICIT: As of any Distribution Date and
any Group, the amount, if any, by which (a) the Certificate Principal Balance
for such Group, after taking into account the payment of the related Principal
Distribution Amount for such Group (except for any amount in respect of the
Overcollateralization Deficit of such Group) on such date exceeds (b) the sum of
(i) the aggregate Principal Balance of the Mortgage Loans in the related
Mortgage Loan Group determined as of the end of the immediately preceding Due
Period and (ii) with respect to Group I only, the amount, if any, on deposit in
the Pre-Funding Account as of the close of business on the last day of the
immediately preceding Due Period.
OVERCOLLATERALIZATION INCREASE AMOUNT: With respect to any
Distribution Date and any Group, the lesser of:
(a) the Overcollateralization Deficiency Amount for such Group
as of such Distribution Date (after taking into account the payment of the
Principal Distribution Amount for such Group on such Distribution Date (except
for any Overcollateralization Increase Amount for such Group)); and
(b) (i) with respect to the first Distribution Date, zero,
(ii) with respect to each Distribution Date from the second
Distribution Date to the earliest to occur of (x) the Distribution Date
on which the Overcollateralized Amount first equals or exceeds 5% of
the Maximum Collateral Amount, (y) the Step Down Date or (z) the date
on which the Mortgage Portfolio Performance Test first has not been
met, the sum of 80% of the amount of Net Monthly Excess Cashflow for
such Group on such Distribution Date plus 80% of the Remaining Excess
Cashflow from the other Group on such Distribution Date, and
(iii) with respect to any other Distribution Date, the sum
of 100% of the amount of Net Monthly Excess Cashflow on such
Distribution Date plus the Remaining Excess Cashflow from the other
Group on such Distribution Date.
OVERCOLLATERALIZATION LOSS TEST: The Overcollateralization
Loss Test for any period set out below is satisfied if the Cumulative Loss
Percentage for such period does not exceed the percentage set out for such
period below:
22
<PAGE>
Period Cumulative Loss Percentage
----------------------------------------- ---------------------------
1st - 12th Distribution Date 0.75%
13th - 24th Distribution Date 1.25%
25th - 36th Distribution Date 1.75%
37th - 48th Distribution Date 2.00%
49th - 60th Distribution Date
and thereafter 2.50%
OVERCOLLATERALIZATION REDUCTION AMOUNT: With respect to a
Mortgage Loan Group and any Distribution Date, an amount equal to the lesser of
(a) the Excess Overcollateralized Amount for such Group for such Distribution
Date and (b) the Principal Remittance Amount for such Group for the prior Due
Period.
OVERCOLLATERALIZED AMOUNT: As of any Distribution Date and any
Group, the difference, if any, between (a) the sum of (i) the aggregate
Principal Balances of the Mortgage Loans in the related Mortgage Loan Group as
of the close of business on the last day of the related Due Period and (ii) with
respect to Group I only, the amount on deposit in the Pre-Funding Account as of
the close of business on the last day of the immediately preceding Due Period
and (b) the Certificate Principal Balance of such Group as of such Distribution
Date (after taking into account the payment of the Principal Distribution Amount
on such Distribution Date except for any portion thereof related to an Insured
Payment); provided, however, that such amount shall not be less than zero.
OVERFUNDED INTEREST AMOUNT: With respect to each Subsequent
Transfer Date occurring in September 1998, the excess of (i) the amount on
deposit in the Capitalized Interest Account, over (ii) three-months' interest
calculated at the Adjusted Pass-Through Rate on the amount on deposit in the
Pre-Funding Account (net of any Pre-Funding Earnings) immediately following such
Subsequent Transfer Date (disregarding any amount applied from the Pre-Funding
Account to a Subsequent Mortgage Loan that does not have a Due Date in September
1998).
With respect to each Subsequent Transfer Date occurring in October 1998, the
excess of (i) the amount on deposit in the Capitalized Interest Account, over
(ii) two-month's interest calculated at the Adjusted Pass-Through Rate on the
amount on deposit in the Pre-Funding Account (net of any Pre-Funding Earnings)
immediately following such Subsequent Transfer Date (disregarding any amount
applied from the Pre-Funding Account to a Subsequent Mortgage Loan that does not
have a Due Date in October 1998).
With respect to each Subsequent Transfer Date occurring in November 1998, the
excess of (i) the amount on deposit in the Capitalized Interest Account, over
(ii) one-month's interest calculated at the Adjusted Pass-Through Rate on the
amount on deposit in the Pre-Funding Account (net of any Pre-Funding Earnings)
immediately following such Subsequent Transfer Date (disregarding any amount
applied from the Pre-Funding Account to a Subsequent Mortgage Loan that does not
have a Due Date in November 1998).
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as
to which (a) the related Mortgagor represented an intent to occupy as such
Mortgagor's primary, secondary or vacation residence at the origination of the
Mortgage Loan, and (b) the Unaffiliated Seller has no actual knowledge that such
Residential Dwelling is not so occupied.
23
<PAGE>
OWNERSHIP INTEREST: As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
PERCENTAGE INTEREST: With respect to a Class A Certificate of
any Class, the portion evidenced by such Certificate, expressed as a percentage
rounded to four decimal places, equal to a fraction the numerator of which is
the denomination represented by such Certificate and the denominator of which is
the Original Certificate Principal Balance of such Class. With respect to a
Class R Certificate, the portion evidenced thereby as stated on the face of such
Certificate.
PERIODIC ADVANCE: The aggregate of the advances required to be
made by the Servicer on any Servicer Distribution Date pursuant to Section 5.18
hereof, the amount of any such advances being equal to the sum of:
(a) with respect to each Mortgage Loan that was Delinquent as
of the close of business on the last day of the Due Period preceding
the related Servicer Distribution Date, the product of (i) the
Principal Balance of such Mortgage Loan and (ii) one-twelfth of the
Mortgage Interest Rate for such Mortgage Loan net of the Servicing Fee,
and
(b) with respect to each REO Property which was acquired
during or prior to the related Due Period and as to which an REO
Disposition did not occur during the related Due Period, an amount
equal to the excess, if any, of (i) interest on the Principal Balance
of such REO Mortgage Loan at the Mortgage Interest Rate for such REO
Mortgage Loan net of the Servicing Fee, for the most recently ended Due
Period over (ii) the net income from the REO Property transferred to
the Certificate Account for such Distribution Date;
provided, however, that in each such case such advance has not been determined
by the Servicer to be a Nonrecoverable Advance.
PERMITTED INVESTMENTS: As used herein, Permitted Investments
shall include the following:
(i) obligations of, or guaranteed as to principal and interest
by, the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than three months from the date of acquisition thereof,
provided that the unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated in one of the two highest rating categories by
the Rating Agencies;
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, in the case of bankers' acceptances, shall in no event have
an original maturity of more than 365 days) of any U.S. depository institution
or trust company, incorporated under the laws of the United States or any state;
provided, that the debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated in one of the two
highest rating categories by the Rating Agencies;
24
<PAGE>
(iv) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been rated in
the highest short-term rating category by the Rating Agencies;
(v) the VISTA U.S. Government Money Market Fund, the VISTA
Prime Money Market Fund and the VISTA Treasury Plus Fund, so long as any such
fund is rated in the highest rating category by Moody's or S&P;
provided, that, each such Permitted Investment shall be a "permitted investment"
within the meaning of Section 860G(a)(5) of the Code and that no instrument
described hereunder shall evidence either the right to receive (x) only interest
with respect to the obligations underlying such instrument or (y) both principal
and interest payments derived from obligations underlying such instrument and
the interest and principal payments with respect to such instrument provided a
yield to maturity at par greater than 120% of the yield to maturity at par of
the underlying obligations; and provided, further, that no instrument described
hereunder may be purchased at a price greater than par if such instrument may be
prepaid or called at a price less than its purchase price prior to stated
maturity.
PERMITTED TRANSFEREE: Any Person other than (a) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (b) a foreign government, International
Organization or any agency or instrumentality of either of the foregoing, (c) an
organization (except certain farmers' cooperatives described in Section 521 of
the Code) which is exempt from tax imposed by Chapter I of the Code (including
the tax imposed by Section 511 of the Code on unrelated business taxable income)
on any excess inclusions (as defined in Section 860E(c)(1) of the Code) with
respect to any Class R Certificate, (d) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code and (e) any other
Person so designated by the Trustee based upon an Opinion of Counsel to the
Trustee and the Certificate Insurer that the transfer of an Ownership Interest
in a Class R Certificate to such Person may cause either (i) the REMIC Trust to
fail to qualify as a REMIC at any time that the Class A Certificates are
outstanding or (ii) the Trust Fund or any Person having an Ownership Interest in
any Class of Certificates, other than such Person, to incur a liability for any
federal tax imposed under the Code that would not otherwise be imposed but for
the Transfer of an Ownership Interest in a Class R Certificate to such Person.
The terms "United States," "State" and "International Organization" shall have
the meanings set forth in Section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of FHLMC, a majority of
its board of directors is not selected by such governmental unit.
PERSON: Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
PLAN: As defined in Section 4.02(m).
POOL CUMULATIVE LOAN LOSSES: With respect to any period, the
sum of all Liquidated Loan Losses which occurred during such period.
POOL PRINCIPAL BALANCE: With respect to any Mortgage Loan
Group, the aggregate Principal Balances of the Mortgage Loans in such Mortgage
Loan Group as of any date of determination.
25
<PAGE>
PREFERENCE AMOUNT: Any amounts distributed in respect of the
Class A Certificates which are recovered from any Holder of a Class A
Certificate as a voidable preference by a trustee in bankruptcy pursuant to the
United States Bankruptcy Code or other similar law in accordance with a final,
nonappealable order of a court having competent jurisdiction and which have not
theretofore been repaid to such Holder.
PREFERENCE CLAIM: As defined in Section 6.04(f).
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in
accordance with Section 6.01(a) hereof and maintained by the Trustee.
PRE-FUNDING AMOUNT: With respect to any date, the amount on
deposit in the Pre-Funding Account.
PRE-FUNDING EARNINGS: The actual investment earnings realized
on amounts deposited in the Pre-Funding Account.
PRE-FUNDING PERIOD: The period commencing on the Startup Date
and ending on the earliest to occur of (i) the date on which the amount on
deposit in the Pre-Funding Account (exclusive of any investment earnings) is
less than $100,000, (ii) the date on which any Servicer Default occurs and (iii)
November 30, 1998.
PREMIUM AMOUNT: The product of the Premium Percentage and the
Class A Certificate Principal Balance for the related Distribution Date.
PREMIUM PERCENTAGE: The rate at which the "Premium" is
determined as described in the letter dated September 29, 1998 between the
Servicer and the Certificate Insurer.
PREMIUM SUPPLEMENT EVENT: Means any Event of Default hereunder
or an "Event of Default" as defined in the Insurance and Indemnity Agreement.
PREPAYMENT ASSUMPTION: A constant prepayment rate of 25% HEP,
used solely for determining the accrual of original issue discount and market
discount on the Certificates for federal income tax purposes.
PREPAYMENT INTEREST SHORTFALL: With respect to any
Distribution Date, for each Mortgage Loan that was the subject during the
related Due Period of a Principal Prepayment, an amount equal to the excess, if
any, of (a) 30 days' interest on the Principal Balance of such Mortgage Loan at
a per annum rate equal to (i) the Mortgage Interest Rate (or at such lower rate
as may be in effect for such Mortgage Loan pursuant to application of the Civil
Relief Act, any Deficient Valuation and/or any Debt Service Reduction) minus
(ii) the rate at which the Servicing Fee is calculated over (b) the amount of
interest actually remitted by the Mortgagor in connection with such Principal
Prepayment less the Servicing Fee for such Mortgage Loan in such month.
PRINCIPAL BALANCE: As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination after giving effect
26
<PAGE>
to prepayments received prior to the end of the related Due Period and Deficient
Valuations incurred prior to such Due Date. The Principal Balance of a Mortgage
Loan which becomes a Liquidated Mortgage Loan on or prior to such Due Date shall
be zero.
PRINCIPAL PREPAYMENT: Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date.
PRINCIPAL REMITTANCE AMOUNT: As of any Distribution Date, with
respect to a Mortgage Loan Group the sum, without duplication of the amounts
specified in clauses (b)(i) through (b)(iv) and (b)(vii) of the definition of
the Group I Principal Distribution Amount with respect to Mortgage Loan Group I
and Group II Principal Distribution Amount, with respect to Mortgage Loan Group
II.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated
September 14, 1998 relating to the Class A Certificates filed with the
Commission in connection with the Registration Statement heretofore filed or to
be filed with the Commission pursuant to Rule 424(b)(2) or 424(b)(5).
QUALIFIED APPRAISER: An appraiser, duly appointed by the
Unaffiliated Seller, who had no interest, direct or indirect, in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of the Mortgage Loan, and such
appraiser and the appraisal made by such appraiser both satisfy the requirements
of Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
QUALIFIED MORTGAGE: "Qualified Mortgage" shall have the
meaning set forth from time to time in the definition thereof at Section
860G(a)(3) of the Code (or any successor statute thereto).
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or
mortgage loans substituted for a Deleted Mortgage Loan pursuant to Section
2.06(c) or 3.03 hereof, which (a) has or have an interest rate at least equal to
those applicable to the Deleted Mortgage Loan, (b) relates or relate to a
detached one-family residence or to the same type of Residential Dwelling or
Business Purpose Property, or any combination thereof, as the Deleted Mortgage
Loan and in each case has or have the same or a better lien priority as the
Deleted Mortgage Loan and has the same occupancy status or is an Owner Occupied
Mortgaged Property, (c) matures or mature no later than (and not more than one
year earlier than) the Deleted Mortgage Loan, (d) has or have a Combined
Loan-to-Value Ratio or Combined Loan-to-Value Ratios at the time of such
substitution no higher than the Combined Loan-to-Value Ratio of the Deleted
Mortgage Loan, (e) has or have a principal balance or principal balances (after
application of all payments received on or prior to the date of substitution)
not substantially less and not more than the Principal Balance of the Deleted
Mortgage Loan as of such date, (f) satisfies or satisfy the criteria set forth
from time to time in the definition of "qualified replacement mortgage" at
Section 860G(a)(4) of the Code (or any successor statute thereto), and (g)
complies or comply as of the date of substitution with each representation and
warranty set forth in Sections 3.01 and 3.02 of the Unaffiliated Seller's
Agreement.
RATING AGENCY: S&P or Moody's.
27
<PAGE>
RECORD DATE: With respect to the Group I Certificates, the
last Business Day of the month immediately preceding a month in which a
Distribution Date occurs, and with respect to the Group II Certificates, the
Business Day immediately preceding the related Distribution Date.
REFERENCE BANKS: Citibank, Barclay's Bank PLC, The Bank of
Tokyo-Mitsubishi and National Westminster Bank PLC; provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Unaffiliated Seller which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the control
of or under common control with the Unaffiliated Seller or any affiliate
thereof, (iii) whose quotations appear on the Telerate Page 3750 on the relevant
Interest Determination Date and (iv) which have been designated as such by the
Trustee.
REIMBURSEMENT AMOUNT: As of any Distribution Date, the sum of
(a)(i) all Insured Payments previously received by the Trustee and all
Preference Amounts previously paid by the Certificate Insurer and in each case
not previously repaid to the Certificate Insurer pursuant to Sections
6.05(a)(ii) hereof plus (ii) interest accrued on each such Insured Payment and
Preference Amounts not previously repaid calculated at the Late Payment Rate
from the date the Trustee received the related Insured Payment or Preference
Amounts were paid by the Certificate Insurer and (b)(i) any amounts then due and
owing to the Certificate Insurer under the Insurance and Indemnity Agreement
(excluding the Premium Amount due on such Distribution Date), as certified to
the Trustee by the Certificate Insurer plus (ii) interest on such amounts at the
rate specified in the Insurance and Indemnity Agreement. The Certificate Insurer
shall notify the Trustee and the Depositor of the amount of any Reimbursement
Amount.
REMAINING EXCESS CASHFLOW: As of any Distribution Date and any
Group, the Net Monthly Excess Cashflow with respect to such Group remaining
after the Overcollateralized Amount for such Group (after application of the Net
Monthly Excess Cashflow for such Group) is equal to or greater than the
Specified Overcollateralized Amount for such Group.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC PROVISIONS: Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter I of the Code, and related
provisions, and temporary and final regulations promulgated thereunder and
published rulings, notices and announcements, as the foregoing may be in effect
from time to time.
REMIC TRUST: The segregated Pool of assets consisting of the
Trust Fund. The Pre-Funding Account and the Capitalized Interest Account shall
not be part of the REMIC Trust.
REO DISPOSITION: The final sale by the Servicer of a Mortgaged
Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure.
REO MORTGAGE LOAN: Any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the related Mortgage
Note is discharged and the related Mortgaged Property is held as part of the
Trust Fund.
28
<PAGE>
REO PROCEEDS: Proceeds received in respect of any REO Mortgage
Loan (including, without limitation, proceeds from the rental of the related
Mortgaged Property).
REO PROPERTY: A Mortgaged Property acquired by the Servicer in
the name of the Trustee on behalf of the Certificateholders through foreclosure
or deed-in-lieu of foreclosure.
REPRESENTATION LETTER: Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A
Certificates registered in the Certificate Register under the nominee name of
the Depository.
REQUEST FOR RELEASE: A request for release in substantially
the form attached as Exhibit H hereto.
RESERVE INTEREST RATE: With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the one-month U.S. dollar lending rates which three New
York City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which three
New York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
RESIDENTIAL DWELLING: A one- to four-family dwelling, a unit
in a planned unit development, a unit in a condominium development, a townhouse
or a manufactured housing unit which is non-mobile.
RESPONSIBLE OFFICER: When used with respect to the Trustee,
any officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Second Vice President, Senior Trust Officer, Trust
Officer, Assistant Trust Officer, any Assistant Secretary, any trust officer or
any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject. When used
with respect to the Unaffiliated Seller or the Servicer, the President or any
Vice President, Assistant Vice President, or any Secretary or Assistant
Secretary.
ROLLING SIX MONTH DELINQUENCY RATE: For any Distribution Date,
the fraction, expressed as a percentage, equal to the average of the Delinquency
Ratio for each of the six (1, 2, 3, 4 or 5 in the case of the first six
Distribution Dates, as the case may be) immediately preceding Due Periods.
S&P: Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc. or any successor thereto and if such corporation no
longer for any reason performs the services of a securities rating agency, "S&P"
shall be deemed to refer to any other nationally recognized statistical rating
organization designated by the Certificate Insurer.
SERVICER: American Business Credit, Inc., a Pennsylvania
corporation, or any successor appointed as herein provided.
29
<PAGE>
SERVICER DISTRIBUTION DATE: With respect to any Distribution
Date, the 20th day of the month in which such Distribution Date occurs, or if
such 20th day is not a Business Day, the Business Day preceding such 20th day.
SERVICER EXTENSION NOTICE: Has the meaning set forth in
Section 8.04 hereof.
SERVICER REMITTANCE AMOUNT: With respect to any Servicer
Distribution Date, an amount equal to the sum of (i) all collections of
principal and interest on the Mortgage Loans (including Principal Prepayments,
Net REO Proceeds and Net Liquidation Proceeds, if any) collected by the Servicer
during the related Due Period, (ii) all Periodic Advances made by the Servicer
with respect to interest payments due to be received on the Mortgage Loans on
the related Due Date and (iii) any other amounts required to be placed in the
Collection Account by the Servicer pursuant to this Agreement but excluding the
following:
(a) amounts received on particular Mortgage Loans as late
payments of interest and respecting which the Servicer has previously made an
unreimbursed Periodic Advance;
(b) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(c) that portion of Liquidation Proceeds and REO Proceeds to
the extent of any unpaid Servicing Fee;
(d) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(e) all amounts in respect of late fees, assumption fees,
prepayment fees and similar fees;
(f) certain other amounts which are reimbursable to the
Servicer, as provided in this Pooling and Servicing Agreement; and
(g) Net Foreclosure Profits.
SERVICING ADVANCES: All reasonable and customary
"out-of-pocket" costs and expenses incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, (d) compliance with the
obligations under Section 5.22, all of which reasonable and customary
out-of-pocket costs and expenses are reimbursable to the Servicer to the extent
provided in Sections 5.03 and 5.22.
SERVICING COMPENSATION: The Servicing Fee and other amounts to
which the Servicer is entitled pursuant to Section 5.08.
30
<PAGE>
SERVICING FEE: As to each Mortgage Loan, the annual fee
payable to the Servicer, which is calculated as an amount equal to the product
of (a) 0.50% per annum, and (b) the Principal Balance thereof. Such fee shall be
calculated and payable monthly only from the amounts received in respect of
interest on such Mortgage Loan and shall be computed on the basis of the same
principal amount and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The Servicing Fee includes any servicing
fees owed or payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee and the Certificateholders by the Servicer, as such list may from
time to time be amended.
SPECIAL ADVANCE: As defined in Section 5.18(b) hereof.
SPECIFIED OVERCOLLATERALIZED AMOUNT: Means with respect to any
Distribution Date and any Group:
(a) With respect to a Distribution Date occurring on or
prior to the Stepdown Date and after the Stepdown Date, if the
Unaffiliated Seller has given five days written notice of its election
not to "step down" as in described in clause (b) below to the Trustee
and the Certificate Insurer, the amount which is equal to 5.00% of the
Maximum Collateral Amount for such Group;
(b) With respect to a Distribution Date after the Stepdown
Date unless the Unaffiliated Seller has given five days written notice
of its election not to "step down" as in described in this clause to
the Trustee and the Certificate Insurer, (i) if the Stepdown
Requirement is satisfied, the lesser of (x) the amount equal to 5.00%
of the Maximum Collateral Amount for such Group and (y) the greater of
(A) the amount equal to 10.00% of the then outstanding aggregate
Principal Balance of the Mortgage Loans in the related Mortgage Loan
Group or (B) 0.50% of the Maximum Collateral Amount for such Group or
(ii) if the Stepdown Requirement is not satisfied, the amount which is
equal to 5.00% of the Maximum Collateral Amount for such Group;
provided, however, that if on any Distribution Date, the Mortgage Portfolio
Performance Test is not satisfied, then the Specified Overcollateralized Amount
will be unlimited during the period that such Mortgage Portfolio Performance
Test is not satisfied.
STARTUP DAY: The day designated as such pursuant to Section
2.07(b) hereof.
STEP DOWN DATE: The Distribution Date occurring in March 2001.
STEP DOWN REQUIREMENT: The Stepdown Requirement is satisfied
for any date of determination thereof if as of such date of determination either
(i) (x) the Rolling Six Month Delinquency Rate is less than 9.75%, (y) the
Cumulative Loss Test is satisfied and (z) the Twelve Month Loss Amount is not
greater than or equal to 0.75% of the Pool Principal Balance as of the first day
of the twelfth preceding calendar month or (ii) the Certificate Insurer, by
notice to each of the parties hereto in accordance with Section 10.06, expressly
waives compliance with the foregoing tests for such Distribution Date.
31
<PAGE>
SUBSEQUENT CUT-OFF DATE: As to any Subsequent Mortgage Loans,
the date specified in the Addition Notice delivered in connection therewith,
which date shall be the close of business on the last day of the month
immediately preceding the month in which such Subsequent Mortgage Loans will be
conveyed to the Trust.
SUBSEQUENT MORTGAGE LOANS: The Mortgage Loans hereafter
transferred and assigned to the Trust pursuant to Section 2.03.
SUBSEQUENT TRANSFER: The transfer and assignment by the
Depositor to the Trust of the Subsequent Mortgage Loans pursuant to the terms
hereof.
SUBSEQUENT TRANSFER DATE: The Business Day on which a
Subsequent Transfer occurs.
SUBSERVICERS: HomeAmerican Credit, Inc., d/b/a Upland
Mortgage, a Pennsylvania corporation, or its successor in interest and New
Jersey Mortgage Investment Corp., a New Jersey corporation, or its successor in
interest.
SUBSERVICING AGREEMENT: The agreement between the Servicer and
the Subservicers relating to subservicing and/or administration of certain
Mortgage Loans as provided in Section 5.13, a copy of which shall be delivered,
along with any modifications thereto, to the Trustee and the Certificate
Insurer.
SUBSTITUTION ADJUSTMENT: As to any date on which a
substitution occurs pursuant to Sections 2.06 or 3.03, the amount (if any) by
which the aggregate principal balances (after application of principal payments
received on or before the date of substitution) of any Qualified Substitute
Mortgage Loans as of the date of substitution, are less than the aggregate of
the Principal Balances of the related Deleted Mortgage Loans together with 30
days' interest thereon at the Mortgage Interest Rate.
TAX MATTERS PERSON: The Person or Persons appointed pursuant
to Section 10.15 from time to time to act as the "tax matters person" (within
the meaning of the REMIC Provisions) of the REMIC Trust.
TAX RETURN: The federal income tax return on Internal Revenue
Service Form 1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax
Return," including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to its classification as a REMIC
under the REMIC Provisions, together with any and all other information reports
or returns that may be required to be furnished to the Certificateholders or
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provision of federal, state or local tax laws.
TELERATE PAGE 3750: The display designated as Telerate Page
3750 on the Telerate Service (or such other page as may replace the Telerate
page on that service for the purpose of displaying London interbank offered
rates of major banks).
32
<PAGE>
TRANSFER: Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
TRANSFER AFFIDAVIT AND AGREEMENT: As defined in Section
4.02(k)(ii).
TRANSFEREE: Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
TRANSFEROR: Any Person who is disposing by Transfer any
Ownership Interest in a Certificate.
TRUST: ABFS Mortgage Loan Trust 1998-3, the trust created
hereunder.
TRUSTEE: The Chase Manhattan Bank, a New York banking
corporation, or its successor-in-interest, or any successor trustee appointed as
herein provided.
TRUSTEE FEE: As to any Distribution Date, the fee payable to
the Trustee in respect of its services as Trustee that accrues at a monthly rate
equal to one-twelfth of 0.02% on the Principal Balance of each Mortgage Loan as
of the immediately preceding Due Date.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the
Trustee or its designated agent pursuant to Section 2.05.
TRUSTEE'S REMITTANCE REPORT: As defined in Section 6.07.
TRUST FUND: The segregated Pool of assets subject hereto,
constituting the trust created hereby and to be administered hereunder,
consisting of: (i) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all collections thereon and proceeds thereof; (ii) any REO Property, together
with all collections thereon and proceeds thereof; (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof; any other
security for such Mortgage Loan, including, without limitation, pledged
equipment, inventory and working capital and assignments of rights and interests
made by the related mortgagor; (v) the Certificate Insurance Policy; (vi) the
rights and remedies of the Trustee against any Person making any representation
or warranty to the Trustee hereunder, to the extent provided herein; and (vii)
each Account and such assets that are deposited therein from time to time and
any investments thereof, together with any and all income, proceeds and payments
with respect thereto.
TWELVE MONTH LOSS AMOUNT: With respect to any Distribution
Date, an amount equal to the aggregate of all Liquidated Loan Losses on the
Mortgage Loans which became Liquidated Mortgage Loans during the 12 preceding
Due Periods.
UNAFFILIATED SELLER: ABFS 1998-3, Inc.
UNAFFILIATED SELLER'S AGREEMENT: The Unaffiliated Seller's
Agreement, dated as of the date hereof, among the Unaffiliated Seller, the
Originators and the Depositor relating to
33
<PAGE>
the sale of the Mortgage Loans from the Originators to the Unaffiliated Seller
and from the Unaffiliated Seller to the Depositor.
UNDERWRITER: Prudential Securities Incorporated.
UNDERWRITING GUIDELINES: The underwriting guidelines of the
Originators, a copy of which is attached as an exhibit to the Unaffiliated
Seller's Agreement.
UNITED STATES PERSON: A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States or a trust if a court within the United States can exercise
primary jurisdiction over its administration and at least one United States
fiduciary has the authority to control all substantial decisions of the trust.
WEIGHTED AVERAGE GROUP I PASS-THROUGH RATE: The weighted
average (weighted by the related Certificate Principal Balance) of the Class A-1
Pass-Through Rate, the Class A-2 Pass-Through Rate and the Class A-3
Pass-Through Rate.
Section 1.02 Provisions of General Application. (a) All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
(b) The terms defined in this Article include the plural as
well as the singular.
(c) The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole. All references to
Articles and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Any reference to statutes are to be construed as including
all statutory provisions consolidating, amending or replacing the statute to
which reference is made and all regulations promulgated pursuant to such
statutes.
(e) All calculations of interest (other than with respect to
the Mortgage Loans and the Class A-1 Certificates) provided for herein shall be
made on the basis of a 360-day year consisting of twelve 30-day months. All
calculations of interest with respect to the Class A-1 Certificates shall be on
an actual/360 basis. All calculations of interest with respect to any Mortgage
Loan provided for herein shall be made in accordance with the terms of the
related Note and Mortgage or, if such documents do not specify the basis upon
which interest accrues thereon, on the basis of a 360-day year consisting of
twelve 30-day months, to the extent permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the
date such payment is actually received by the Servicer, provided, however, that
for purposes of calculating distributions on the Certificates prepayments with
respect to any Mortgage Loan are deemed to be received on the date they are
applied in accordance with customary servicing practices consistent with the
terms of the related Note and Mortgage to reduce the outstanding principal
balance of such Mortgage Loan on which interest accrues.
34
<PAGE>
Section 1.03 Business Day Certificate. On the Closing Date
(with respect to the calendar year 1998) and thereafter, within 15 days prior to
the end of each calendar year while this Agreement remains in effect (with
respect to the succeeding calendar years), the Servicer shall provide to the
Trustee and the Depositor a certificate of a Servicing Officer specifying the
days on which banking institutions in the State of Pennsylvania are authorized
or obligated by law, executive order or governmental decree to be closed.
ARTICLE II
ESTABLISHMENT OF THE TRUST
--------------------------
SALE AND CONVEYANCE OF THE TRUST FUND
-------------------------------------
Section 2.01 Establishment of the Trust. The Depositor does
hereby establish, pursuant to the further provisions of this Agreement and the
laws of the State of New York, an express trust to be known, for convenience, as
"ABFS Mortgage Loan Trust 1998-3" and does hereby appoint The Chase Manhattan
Bank as Trustee in accordance with the provisions of this Agreement. Each
Mortgage Loan Group shall constitute a sub-trust of the Trust.
Section 2.02 Purchase and Sale of Initial Mortgage Loans. The
Depositor does hereby sell, transfer, assign, set over and convey to the Trustee
without recourse but subject to the terms and provisions of this Agreement, all
of the right, title and interest of the Depositor in and to the Initial Mortgage
Loans, including the outstanding principal of and interest due on such Initial
Mortgage Loans, and all other assets included or to be included in the Trust
Fund for the benefit of the Certificateholders and the Certificate Insurer. In
connection with such transfer and assignment, and pursuant to Section 2.07 of
the Unaffiliated Seller's Agreement, the Depositor does hereby also irrevocably
transfer, assign, set over and otherwise convey to the Trustee all of its rights
under the Unaffiliated Seller's Agreement, including, without limitation, its
right to exercise the remedies created by Sections 2.05 and 3.05 of the
Unaffiliated Seller's Agreement for defective documentation and for breaches of
representations and warranties, agreements and covenants of the Unaffiliated
Seller and the Originators contained in Sections 3.01, 3.02 and 3.03 of the
Unaffiliated Seller's Agreement.
Section 2.03 Purchase and Sale of Subsequent Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth in paragraph (b)
below, in consideration of the Trustee's delivery on the related Subsequent
Transfer Dates to or upon the order of the Depositor of all or a portion of the
balance of funds in the Pre-Funding Account, the Depositor shall on any
Subsequent Transfer Date sell, transfer, assign, set over and convey to the
Trustee without recourse but subject to terms and provisions of this Agreement,
all of the right, title and interest of the Depositor in and to the Subsequent
Mortgage Loans, including the outstanding principal of and interest due on such
Subsequent Mortgage Loans, and all other assets included or to be included in
the Trust Fund for the benefit of the Certificateholders and the Certificate
Insurer. In connection with such transfer and assignment, and pursuant to
Section 2.07 of the Unaffiliated Seller's Agreement, the Depositor does hereby
also irrevocably transfer, assign, set over and otherwise convey to the Trustee
all of its rights under the Unaffiliated Seller's Agreement, including, without
limitation, its right to exercise the remedies created by Sections 2.05 and 3.05
of the Unaffiliated Seller's Agreement for defective documentation and for
breaches of representations and warranties, agreements and covenants of the
Unaffiliated Seller contained in Sections 3.01, 3.02 and 3.03 of the
Unaffiliated Seller's Agreement.
35
<PAGE>
The amount released from the Pre-Funding Account with respect
to a transfer of Subsequent Mortgage Loans shall be one-hundred percent (100%)
of the aggregate principal balances as of the related Subsequent Cut-Off Date of
the Subsequent Mortgage Loans so transferred.
(b) The Subsequent Mortgage Loans and the other property and
rights related thereto described in paragraph (a) above shall be transferred by
the Depositor to the Trust only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Unaffiliated Seller shall have provided the Trustee, the
Rating Agencies and the Certificate Insurer with a timely Addition
Notice, which shall include a Mortgage Loan Schedule, listing the
Subsequent Mortgage Loans and shall have provided any other
information reasonably requested by any of the foregoing with
respect to the Subsequent Mortgage Loans;
(ii) the Unaffiliated Seller shall have deposited in the
Collection Account all collections of (x) principal in respect of
the Subsequent Mortgage Loans received after the related Subsequent
Cut-Off Date and (y) interest due on the Subsequent Mortgage Loans
after the related Subsequent Cut-Off Date;
(iii) as of each Subsequent Transfer Date, the Depositor was not
insolvent nor will be made insolvent by such transfer nor is the
Depositor aware of any pending insolvency;
(iv) such addition will not result in a material adverse tax
consequence to the Trust or the Holders of the Certificates;
(v) the Pre-Funding Period shall not have terminated;
(vi) the Unaffiliated Seller shall have delivered to the Trustee
an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and that the
Subsequent Mortgage Loans comply with the provisions of this Section
2.03 and each complies with the terms of the Unaffiliated Seller's
Agreement, including each of the representations and warranties made
with respect thereto;
(vii) there shall have been delivered to the Certificate
Insurer, the Rating Agencies and the Trustee, Independent Opinions
of Counsel with respect to the transfer of the Subsequent Mortgage
Loans substantially in the form of the Opinions of Counsel delivered
to the Certificate Insurer and the Trustee on the Startup Date
(bankruptcy, corporate and tax opinions); and
(viii) the Originators, the Unaffiliated Seller and the
Depositor shall have delivered to the Trustee an executed copy of a
subsequent transfer agreement, substantially in the form of Exhibit
L hereto.
(c) The obligation of the Trust to purchase the Subsequent
Mortgage Loans on a Subsequent Transfer Date is subject to the following
requirements: (i) such Subsequent Mortgage Loan may not be 30 or more days
contractually delinquent as of the related Subsequent Cut-Off Date; (ii) the
original term to maturity of such Subsequent Mortgage Loan may not exceed 360
months; (iii) such Subsequent Mortgage Loan must have a Mortgage Interest Rate
of at least 7.50%; (iv) the purchase of the Subsequent Mortgage Loans is
consented to by the Certificate Insurer and the Rating Agencies; (v) the
Principal Balance of any such Subsequent Mortgage Loan may not exceed
$225,000.00; (vi) no more than 10.70% of such Subsequent Mortgage Loans may be
second liens; (vii) no such Subsequent Mortgage Loan shall have a CLTV of more
than (a) for consumer purpose loans, 90%, and (b) for business purpose loans,
80%; (viii) no more than 31% of such Subsequent Mortgage Loans may be Balloon
Loans; (ix) no
36
<PAGE>
more than 4.50% of such Subsequent Mortgage Loans may be secured by mixed-use
properties, commercial properties, or five or more unit multifamily properties;
and (x) following the purchase of such Subsequent Mortgage Loans by the Trust,
the Mortgage Loans (including the Subsequent Mortgage Loans) (a) will have a
weighted average Mortgage Interest Rate, (I) for consumer purpose loans, of at
least 11.10% and (II) for business purpose loans, of at least 16%; and (b) will
have a weighted average CLTV of not more than (I) for consumer purpose loans,
76.50%, and (II) for business purpose loans, 63%. The combined original
principal balance of loans secured by first and second lien mortgages is no
greater than $227,150.00 for each mortgaged property.
(d) In connection with the transfer and assignment of the
Subsequent Mortgage Loans, the Depositor shall satisfy the document delivery
requirements set forth in Section 2.05.
(e) On each Subsequent Transfer Date upon written instruction
from the Unaffiliated Seller, the Trustee shall withdraw from the Capitalized
Interest Account and pay to the Unaffiliated Seller on such Subsequent Transfer
Date the Overfunded Interest Amount for such Subsequent Transfer Date, as
calculated by the Trustee with the cooperation of the Unaffiliated Seller and
subject to the approval of the Certificate Insurer.
(f) For any Subsequent Mortgage Loan that has a first Due Date
that occurs later than the last day of the Due Period following the Due Period
in which the Subsequent Mortgage Loan was sold to the Trust, on each applicable
Servicer Distribution Date, the Servicer will deposit into the Certificate
Account 30 days' interest at the Mortgage Interest Rate, net of the Servicing
Fee, for each month after the month in which the Subsequent Transfer occurs
until, but not including, the month in which first Due Date occurs.
Section 2.04 Possession of Mortgage Files; Access to Mortgage
Files. (a) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage and the contents of the related Mortgage File related to each
Mortgage Loan is vested in the Trustee for the benefit of the Certificateholders
and the Certificate Insurer.
(b) Pursuant to Section 2.05 of the Unaffiliated Seller's
Agreement, the Depositor has delivered or caused to be delivered the Trustee's
Mortgage File related to each Mortgage Loan to the Trustee.
The Trustee will be the custodian or may enter into a
custodial agreement pursuant to which the Trustee will appoint a custodian (a
"Custodian") to hold the Mortgage Files in trust for the benefit of all present
and future Certificateholders and the Certificate Insurer; provided, however,
that the custodian so appointed shall in no event be the Depositor or the
Servicer or any Person known to a Responsible Officer of the Trustee to be an
Affiliate of the Depositor or the Servicer and shall be approved by the
Certificate Insurer.
The Custodian shall afford the Depositor, the Certificate
Insurer and the Servicer reasonable access to all records and documentation
regarding the Mortgage Loans relating to this Agreement, such access being
afforded at customary charges, upon reasonable request and during normal
business hours at the offices of the Custodian.
Section 2.05 Delivery of Mortgage Loan Documents. (a) In
connection with the transfer and assignment of the Mortgage Loans, the Depositor
does hereby with respect to the Initial Mortgage Loans, and will on or before
the Subsequent Transfer Date with respect to Subsequent
37
<PAGE>
Mortgage Loans, deliver or cause to be delivered to the Trustee the following
documents or instruments with respect to each Mortgage Loan so transferred or
assigned:
(i) the original Mortgage Note, endorsed without recourse in
blank by the related Originator, including all intervening
endorsements showing a complete chain of endorsement;
(ii) the related Mortgage with evidence of recording indicated
thereon or a copy thereof certified by the applicable recording
office;
(iii) the recorded mortgage assignment, or copy thereof
certified by the applicable recording office, if any, showing a
complete chain of assignment from the originator of the related
Mortgage Loan to the related Originator (which assignment may, at
such Originator's option, be combined with the assignment referred
to in subpart (iv) hereof);
(iv) a mortgage assignment in recordable form (which, if
acceptable for recording in the relevant jurisdiction, may be
included in a blanket assignment or assignments) of each Mortgage
from the related Originator to the Trustee;
(v) originals of all assumption, modification and substitution
agreements in those instances where the terms or provisions of a
Mortgage or Mortgage Note have been modified or such Mortgage or
Mortgage Note has been assumed; and
(vi) an original title insurance policy (or (A) a copy of the
title insurance policy, or (B) a binder thereof or copy of such
binder together with a certificate from the related Originator that
the original Mortgage has been delivered to the title insurance
company that issued such binder for recordation).
In instances where the original recorded Mortgage and a
completed assignment thereof in recordable form cannot be delivered by the
Depositor to the Trustee prior to or concurrently with the execution and
delivery of this Agreement (or, with respect to Subsequent Mortgage Loans, prior
to or on the Subsequent Transfer Date), due to a delay in connection with
recording, the Depositor may:
(x) In lieu of delivering such original recorded Mortgage,
deliver to the Trustee a copy thereof provided that the related Originator
certifies that the original Mortgage has been delivered to a title insurance
company for recordation after receipt of its policy of title insurance or binder
therefor; and
(y) In lieu of delivering the completed assignment in
recordable form, deliver to the Trustee the assignment in recordable form,
otherwise complete except for recording information.
The Trustee shall promptly upon receipt thereof, with respect
to each Mortgage Note described in (i) above and each assignment described in
(iv) above, endorse such Mortgage Note and assignment as follows: "The Chase
Manhattan Bank, as Trustee under the Pooling and Servicing Agreement dated as of
September 1, 1998, ABFS Mortgage Loan Trust 1998-3."
As promptly as practicable, but in any event within thirty
(30) days from the Closing Date or the Subsequent Transfer Date, as applicable,
the related Originator shall cause to be recorded, at the related Originator's
expense, in the appropriate public office for real property records, the
assignments of the Mortgages to the Trustee.
38
<PAGE>
All original documents relating to the Mortgage Loans which
are not delivered to the Trustee, as permitted by Section 2.05(a) of the
Unaffiliated Seller's Agreement and this Section 2.05(a), are and shall be held
by the related Originator, the Unaffiliated Seller or the Servicer in trust for
the benefit of the Trustee on behalf of the Certificateholders.
(b) Within 30 days following delivery of the Mortgage Files to
the Trustee, the Trustee will review each Mortgage File to ascertain that all
required documents set forth in Section 2.05(a) have been executed and received,
and that such documents relate to the Mortgage Loans identified on the Mortgage
Loan Schedule, and in so doing the Trustee may rely on the purported due
execution and genuineness of any signature thereon. If within such 30-day period
(or, with respect to any Qualified Replacement Mortgage, within 30 days after
the assignment thereof) the Trustee finds any document constituting a part of a
Mortgage File not to have been executed or received or to be unrelated to the
Mortgage Loans identified in the Mortgage Loan Schedule, the Trustee shall
promptly notify the Servicer, which shall have a period of 60 days after such
notice within which to correct or cure any such defect. Each original recorded
assignment of a Mortgage shall be delivered to the Trustee within 10 days
following the date on which it is returned to the Servicer by the office with
which such assignment was filed for recording and within 10 days following
receipt by the Trustee of the recorded assignment or the assignment in
recordable form, as the case may be, the Trustee shall review such assignment to
confirm the information specified above with respect to the documents
constituting the Mortgage File. Upon receipt by the Trustee of the recorded
assignment or the assignment in recordable form, as the case may be, such
recorded assignment or assignment in recordable form shall become part of the
Mortgage File. The Trustee shall notify the Servicer of any defect in such
assignment based on such review. The Servicer shall have a period of 60 days
following such notice to correct or cure such defect. In the event that the
Servicer fails to record an assignment of a Mortgage as herein provided the
Trustee shall, at the Servicer's expense, use reasonable efforts to prepare and,
if required hereunder, file such assignments for recordation in the appropriate
real property or other records and the Servicer hereby appoints the Trustee as
its attorney-in-fact with full power and authority acting in its stead for the
purpose of such preparation, execution and filing.
(c) It is intended that the conveyance of the Mortgage Loans
and other property by the Depositor to the Trustee as provided in this Section
2.05 and Sections 2.02 and 2.03 be, and be construed as, a sale of the Mortgage
Loans and such other property by the Depositor to the Trustee for the benefit of
the Certificateholders. It is, further, not intended that such conveyance be
deemed a pledge of the Mortgage Loans or such other property by the Depositor to
the Trustee to secure a debt or other obligation of the Depositor. However, in
the event that the Mortgage Loans or any of such other property are held to be
property of the Depositor, or if for any reason this Agreement is held or deemed
to create a security interest in the Mortgage Loans or any of such other
property, then it is intended that: (i) this Agreement shall also be deemed to
be a security agreement within the meaning of the Uniform Commercial Code; (ii)
the conveyance provided for in this Section shall be deemed to be a grant by the
Depositor to the Trustee of a security interest in all of the Depositor's right,
title and interest in and to the Mortgage Loans and such other property and all
amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including,
without limitation, all amounts from time to time held or invested in the
Certificate Account, whether in the form of cash, instruments, securities or
other property; (iii) the possession by the Trustee or its agent of the Mortgage
Notes and such other items of property as constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to the
Uniform Commercial Code; and (iv) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from financial intermediaries, bailees or agents (as
39
<PAGE>
applicable) of the Trustee for the purpose of perfecting such security interest
under applicable law. The Depositor and the Trustee shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the
Mortgage Loans or any of such other property, such security interest would be
deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the term of this Agreement.
(d) Without diminution of the requirements of Sections 2.04(c)
and this Section 2.05, all original documents relating to the Mortgage Loans
that are not delivered to the Trustee are and shall be held by the Servicer in
trust for the benefit of the Trustee on behalf of the Certificateholders and the
Certificate Insurer. In the event that any such original document is required
pursuant to the terms of this Section 2.05 to be a part of a Mortgage File, such
document shall be delivered promptly to the Trustee pursuant to the Unaffiliated
Seller's Agreement. In acting as custodian of any such original document, the
Servicer agrees further that it does not and will not have or assert any
beneficial ownership interest in the Mortgage Loans or the Mortgage Files.
Promptly upon the Depositor's and the Trust's acquisition thereof and the
Servicer's receipt thereof, the Servicer on behalf of the Trust shall mark
conspicuously each original document not delivered to the Trustee, and the
Unaffiliated Seller's master data processing records evidencing each Mortgage
Loan with a legend, acceptable to the Trustee, evidencing that the Trust has
purchased the Mortgage Loans and all right and title thereto and interest
therein pursuant to the Unaffiliated Seller's Agreement and this Agreement.
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee. (a) The Trustee agrees to execute and
deliver to the Depositor, the Certificate Insurer, the Servicer and the
Unaffiliated Seller on or prior to the Closing Date an acknowledgment of receipt
of the Certificate Insurance Policy and, on or prior to the Closing Date or any
Subsequent Transfer Date, with respect to each Mortgage Loan transferred on such
date, the original Mortgage Note (with any exceptions noted), in the form
attached as Exhibit E hereto and declares that it will hold such documents and
any amendments, replacements or supplements thereto, as well as any other assets
included in the definition of Trust Fund and delivered to the Trustee, as
Trustee in trust upon and subject to the conditions set forth herein for the
benefit of the Certificateholders and the Certificate Insurer. The Trustee
agrees, for the benefit of the Certificateholders and the Certificate Insurer,
to review (or cause to be reviewed) each Trustee's Mortgage File within 30 days
after the Closing Date (with respect to the Initial Mortgage Loans) or any
Subsequent Transfer Date (with respect to the Subsequent Mortgage Loans), as
applicable, and to deliver to the Unaffiliated Seller, the Servicer, the
Depositor and the Certificate Insurer a certification in the form attached
hereto as Exhibit F to the effect that, as to each Mortgage Loan listed in the
related Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in such certification as not covered by
such certification), (i) all documents required to be delivered to it pursuant
to Section 2.05 are in its possession, (ii) each such document has been reviewed
by it and has not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections shall not constitute physical
alteration if initialed by the Mortgagor), appears regular on its face and
relates to such Mortgage Loan, and (iii) based on its examination and only as to
the foregoing documents, the information set forth on the Mortgage Loan Schedule
as to the information set forth in (i), (ii), (v) and (vi) of the definition of
"Mortgage Loan Schedule" set forth herein accurately reflects the information
set forth in the Trustee's Mortgage File delivered on such date. The Trustee
shall be under no duty or obligation to inspect, review or examine any such
documents, instruments, certificates or other papers to determine that they are
genuine, enforceable, or appropriate for the represented purpose or that they
are other than what they purport to be on their face.
Within 90 days of the Closing Date, with respect to the
Initial Mortgage Loans, and within 90 days of any Subsequent Transfer Date, with
respect to the Subsequent Mortgage Loans
40
<PAGE>
transferred on such date, the Trustee shall deliver (or cause to be delivered)
to the Servicer, the Unaffiliated Seller, the Depositor, the Rating Agencies and
the Certificate Insurer a final certification in the form attached hereto as
Exhibit G to the effect that, as to each Mortgage Loan listed in the related
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in such certification as not covered by
such certification), (i) all documents required to be delivered to it pursuant
to Section 2.05 are in its possession, (ii) each such document has been reviewed
by it and has not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections shall not constitute physical
alteration if initialed by the Mortgagor), appears regular on its face and
relates to such Mortgage Loan, and (iii) based on its examination and only as to
the foregoing documents, the information set forth in (i), (ii), (v) and (vi) of
the definition of "Mortgage Loan Schedule" set forth herein accurately reflects
the information set forth in the Trustee's Mortgage File delivered on such date.
(b) If the Trustee during the process of reviewing the
Trustee's Mortgage Files finds any document constituting a part of a Trustee's
Mortgage File which is not executed, has not been received, is unrelated to the
Mortgage Loan identified in the related Mortgage Loan Schedule, or does not
conform to the requirements of Section 2.05 or the description thereof as set
forth in the related Mortgage Loan Schedule, the Trustee or the Certificate
Insurer, as applicable, shall promptly so notify the Servicer, the Unaffiliated
Seller, the Certificate Insurer and the Trustee. In performing any such review,
the Trustee may conclusively rely on the Unaffiliated Seller as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Trustee's review of the Mortgage Files is limited solely
to confirming that the documents listed in Section 2.05 have been executed and
received and relate to the Mortgage Files identified in the related Mortgage
Loan Schedule. Pursuant to the Unaffiliated Seller's Agreement, the Unaffiliated
Seller and the Originators have agreed to use reasonable efforts to cause to be
remedied a material defect in a document constituting part of a Mortgage File of
which it is so notified by the Trustee. If, however, within 60 days after the
Trustee's notice to it respecting such defect the Unaffiliated Seller has not
caused to be remedied the defect and the defect materially and adversely affects
the interest of the Certificateholders in the related Mortgage Loan or the
interests of the Certificate Insurer, the Unaffiliated Seller and the
Originators will be obligated, pursuant to the Unaffiliated Seller's Agreement,
to either (i) substitute in lieu of such Mortgage Loan a Qualified Substitute
Mortgage Loan in the manner and subject to the conditions set forth in Section
3.03 or (ii) purchase such Mortgage Loan at a purchase price equal to the
Principal Balance of such Mortgage Loan as of the date of purchase, plus all
accrued and unpaid interest on such Principal Balance computed at the Mortgage
Interest Rate, net of the Servicing Fee if the Unaffiliated Seller or an
Originator, as applicable, is the Servicer, plus the amount of any unreimbursed
Servicing Advances made by the Servicer with respect to such Mortgage Loan,
which purchase price shall be deposited in the Collection Account on the next
succeeding Servicer Distribution Date, after deducting therefrom any amounts
received in respect of such repurchased Mortgage Loan or Loans and being held in
the Collection Account for future distribution to the extent such amounts have
not yet been applied to principal or interest on such Mortgage Loan (the "Loan
Repurchase Price"). For purposes of calculating the Available Funds, any Loan
Repurchase Price or Substitution Adjustment that is paid shall be deemed
deposited in the Certificate Account in the Due Period preceding such Servicer
Distribution Date.
(c) Upon receipt by the Trustee of a certification of a
Servicing Officer of such substitution or purchase and, in the case of a
substitution, upon receipt of the related Trustee's Mortgage File, and the
deposit of the amounts described above in the Collection Account (which
certification shall be in the form of Exhibit H hereto), the Trustee shall
release to the Servicer for release to the Unaffiliated Seller the related
Trustee's Mortgage File and shall execute, without recourse, and deliver such
instruments of transfer furnished by the Unaffiliated Seller as may be necessary
to transfer such Mortgage
41
<PAGE>
Loan to the Unaffiliated Seller. The Trustee shall notify the Certificate
Insurer if the Unaffiliated Seller fails to repurchase or substitute for a
Mortgage Loan in accordance with the foregoing.
Section 2.07 Designations under REMIC Provisions; Designation
of Startup Day. (a) The Class A Certificates are hereby designated as the
"regular interests", and the Class R Certificates are designated the single
class of "residual interests" in the REMIC Trust for the purposes of the REMIC
Provisions.
(b) The Closing Date will be the "startup day" of the REMIC
Trust within the meaning of Section 860G(a)(9) of the Code.
Section 2.08 Execution of Certificates. The Trustee
acknowledges the assignment to it of the Mortgage Loans and the delivery of the
Trustee's Mortgage Files relating thereto to it and, concurrently with such
delivery, has executed, authenticated and delivered to or upon the order of the
Depositor, in exchange for the Mortgage Loans, the Trustee's Mortgage Files and
the other assets included in the definition of Trust Fund, Certificates duly
authenticated by the Trustee in Authorized Denominations evidencing the entire
ownership of the Trust Fund.
Section 2.09 Application of Principal and Interest. In the
event that Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than
the Principal Balance of the related Mortgage Loan plus accrued interest
thereon, or any Mortgagor makes a partial payment of any Monthly Payment due on
a Mortgage Loan, such Net Liquidation Proceeds or partial payment shall be
applied to payment of the related Mortgage Note as provided therein, and if not
so provided, first to interest accrued at the Mortgage Interest Rate and then to
principal.
Section 2.10 Grant of Security Interest. (a) Except with
respect to the REMIC Provisions, it is the intention of the parties hereto that
the conveyance by the Depositor of the Trust Fund to the Trustee on behalf of
the Trust shall constitute a purchase and sale of such Trust Fund and not a
loan. In the event, however, that a court of competent jurisdiction were to hold
that the transaction evidenced hereby constitutes a loan and not a purchase and
sale, it is the intention of the parties hereto that this Agreement shall
constitute a security agreement under applicable law, and that the Depositor
shall be deemed to have granted to the Trustee, on behalf of the Trust, a first
priority perfected security interest in all of the Depositor's right, title and
interest in, to and under the Trust Fund. The conveyance by the Depositor of the
Trust Fund to the Trustee on behalf of the Trust shall not constitute and is not
intended to result in an assumption by the Trustee or any Certificateholder of
any obligation of the Unaffiliated Seller or any other Person in connection with
the Trust Fund.
(b) The Depositor and the Servicer shall take no action
inconsistent with the Trust's ownership of the Trust Fund and each shall
indicate or shall cause to be indicated in its records and records held on its
behalf that ownership of each Mortgage Loan and the assets in the Trust Fund are
held by the Trustee on behalf of the Trust. In addition, the Depositor and the
Servicer shall respond to any inquiries from third parties with respect to
ownership of a Mortgage Loan or any other asset in the Trust Fund by stating
that it is not the owner of such asset and that ownership of such Mortgage Loan
or other Trust Fund asset is held by the Trustee on behalf of the Trust.
42
<PAGE>
Section 2.11 Further Action Evidencing Assignments. (a) The
Servicer agrees that, from time to time, at its expense, it shall cause the
Unaffiliated Seller (and the Depositor on behalf of itself also agrees that it
shall), promptly to execute and deliver all further instruments and documents,
and take all further action, that may be necessary or appropriate, or that the
Servicer or the Trustee may reasonably request, in order to perfect, protect or
more fully evidence the transfer of ownership of the Trust Fund or to enable the
Trustee to exercise or enforce any of its rights hereunder. Without limiting the
generality of the foregoing, the Servicer and the Depositor will, upon the
request of the Servicer or the Trustee execute and file (or cause to be executed
and filed) such real estate filings, financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate.
(b) The Depositor hereby grants to the Servicer and the
Trustee powers of attorney to execute all documents on its behalf under this
Agreement and the Unaffiliated Seller's Agreement as may be necessary or
desirable to effectuate the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.01 Representations of the Servicer. The Servicer
hereby represents and warrants to the Trustee, the Depositor, the Certificate
Insurer and the Certificateholders as of the Closing Date and during the term of
this Agreement that:
(a) Each of the Unaffiliated Seller, the Servicer and the
Subservicers is a corporation duly organized, validly existing and in good
standing under the laws of their respective states of incorporation and has the
corporate power to own its assets and to transact the business in which it is
currently engaged. Each of the Unaffiliated Seller, the Servicer and the
Subservicers is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it or the performance of its
obligations hereunder requires such qualification and in which the failure so to
qualify could reasonably be expected to have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the
Unaffiliated Seller, the Servicer or the Subservicers or the performance of
their respective obligations hereunder;
(b) The Unaffiliated Seller and the Servicer each has the
power and authority to make, execute, deliver and perform this Agreement and all
of the transactions contemplated under this Agreement, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement. When executed and delivered, this Agreement will constitute
the legal, valid and binding obligation of the Unaffiliated Seller and the
Servicer, enforceable in accordance with its terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and by the availability of
equitable remedies;
(c) Neither the Unaffiliated Seller nor the Servicer is
required to obtain the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration with, any
governmental authority, bureau or agency which consent already has not been
obtained in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except such as have been obtained prior to the
Closing Date;
(d) The execution, delivery and performance of this Agreement
by the Unaffiliated Seller and the Servicer will not violate any provision of
any existing law or regulation or any order or decree of
43
<PAGE>
any court or the Articles of Incorporation or Bylaws of the Unaffiliated Seller
or the Servicer, respectively, or constitute a breach of any mortgage,
indenture, contract or other Agreement to which the Unaffiliated Seller or the
Servicer, respectively, is a party or by which it may be bound;
(e) There is no action, suit, proceeding or investigation
pending or threatened against the Servicer, the Unaffiliated Seller or the
Subservicers which, either in any one instance or in the aggregate, is, in the
Servicer's and the Unaffiliated Seller's judgment, likely to result in any
material adverse change in the business, operations, financial condition,
properties, or assets of the Servicer, the Unaffiliated Seller or the
Subservicers, or in any material impairment of the right or ability of any of
them to carry on its business substantially as now conducted, or in any material
liability on the part of any of them, or which would draw into question the
validity of this Agreement, the Certificates, or the Mortgage Loans or of any
action taken or to be taken in connection with the obligations of the
Unaffiliated Seller or the Servicer contemplated herein or therein, or which
would be likely to impair materially the ability of the Unaffiliated Seller or
the Servicer to perform its obligations hereunder;
(f) Neither this Agreement nor any statement, report, or other
document furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby, including, without
limitation, the sale or placement of the Certificates, contains any untrue
statement of fact provided by or on behalf of the Unaffiliated Seller or the
Servicer or omits to state a fact necessary to make the statements provided by
or on behalf of the Unaffiliated Seller or the Servicer contained herein or
therein not misleading:
(g) Neither the Unaffiliated Seller nor the Servicer believes,
nor does either have any reason or cause to believe, that it cannot perform each
and every covenant contained in this Agreement;
(h) The transfer, assignment, and conveyance of the Mortgage
Loans by the Unaffiliated Seller pursuant to this Agreement is not subject to
the bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction;
(i) The Unaffiliated Seller is solvent and will not as a
result of this Agreement and the undertakings of the Unaffiliated Seller
hereunder be rendered insolvent; and
(j) None of the Unaffiliated Seller, the Servicer or the
Subservicers is an "investment company" or a company "controlled by an
investment company," within the meaning of the Investment Company Act of 1940,
as amended.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.01 shall survive the
delivery of the respective Mortgage Files to the Trustee or to a custodian, as
the case may be, and inure to the benefit of the Trustee.
Section 3.02 Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Trustee that as of the date of this Agreement or as of such date specifically
provided herein:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) The Depositor has the corporate power and authority to
convey the Mortgage Loans and to execute, deliver and perform, and to enter into
and consummate transactions contemplated by, this Agreement;
44
<PAGE>
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, all requisite corporate action having
been taken, and, assuming the due authorization, execution and delivery hereof
by the Servicer and the Trustee, constitutes or will constitute the legal, valid
and binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or court
is required for the execution, delivery and performance of or compliance by the
Depositor with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except as have been made on or prior to the
Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the Depositor or its subsidiaries; or (iii)
results in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or
against or investigations of, the Depositor pending, or to the knowledge of the
Depositor, threatened, before any court, administrative agency or other
tribunal, and no notice of any such action, which, in the Depositor's reasonable
judgment, might materially and adversely affect the performance by the Depositor
of its obligations under this Agreement, or the validity or enforceability of
this Agreement; and
(g) The Depositor is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency that may materially and adversely affect its
performance hereunder.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.02 shall survive delivery
of the respective Mortgage Files to the Trustee or to a custodian, as the case
may be, and shall inure to the benefit of the Trustee.
Section 3.03 Purchase and Substitution. (a) It is understood
and agreed that the representations and warranties set forth in Sections 3.01,
3.02 and 3.03 of the Unaffiliated Seller's Agreement shall survive delivery of
the Certificates to the Certificateholders. Pursuant to the Unaffiliated
Seller's Agreement, with respect to any representation or warranty contained in
Sections 3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement that is made
to the best of the Unaffiliated Seller's knowledge, if it is discovered by the
Servicer, any Subservicer, the Trustee, the Certificate Insurer or any
Certificateholder that the substance of such representation and warranty was
inaccurate as of the Closing Date and such inaccuracy materially and adversely
affects the value of the related Mortgage Loan, then notwithstanding the
Unaffiliated Seller's lack of knowledge with respect to the inaccuracy at the
time the representation or warranty was made, such inaccuracy shall be deemed a
breach of the applicable representation or warranty. Upon discovery by the
Unaffiliated Seller, the Servicer, any Subservicer, the Trustee or the
Certificate Insurer of a breach of any of such representations and warranties
which
45
<PAGE>
materially and adversely affects the value of the Mortgage Loans or the
interest of the Certificateholders or the Certificate Insurer, or which
materially and adversely affects the interests of the Certificate Insurer or the
Certificateholders in the related Mortgage Loan in the case of a representation
and warranty relating to a particular Mortgage Loan (notwithstanding that such
representation and warranty was made to the Unaffiliated Seller's best
knowledge), the party discovering such breach shall give prompt written notice
to the others. Subject to the last paragraph of this Section 3.03, within 60
days of the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, pursuant to the Unaffiliated Seller's Agreement, the
Servicer shall, or shall cause the Unaffiliated Seller or an Originator to (a)
promptly cure such breach in all material respects, or (b) purchase such
Mortgage Loan on the next succeeding Servicer Distribution Date, in the manner
and at the price specified in Section 2.06(b), or (c) remove such Mortgage Loan
from the Trust Fund (in which case it shall become a Deleted Mortgage Loan) and
substitute one or more Qualified Substitute Mortgage Loans; provided, that, such
substitution is effected not later than the date which is two years after the
Startup Day or at such later date, if the Trustee and the Certificate Insurer
receive an Opinion of Counsel to the effect set forth below in this Section. In
addition, pursuant to the Unaffiliated Seller's Agreement, the Unaffiliated
Seller and the related Originator shall be obligated to indemnify the Trustee,
the Certificateholders and the Certificate Insurer for any third party claims
arising out of a breach by the Unaffiliated Seller of representations or
warranties regarding the Mortgage Loans. Pursuant to the Unaffiliated Seller's
Agreement any such substitution shall be accompanied by payment by the
Unaffiliated Seller of the Substitution Adjustment, if any, to be deposited in
the Collection Account.
(b) As to any Deleted Mortgage Loan for which the Unaffiliated
Seller substitutes a Qualified Substitute Mortgage Loan or Loans, the Servicer
shall cause the Unaffiliated Seller or an Originator, as applicable, to effect
such substitution by delivering to the Trustee a certification in the form
attached hereto as Exhibit H, executed by a Servicing Officer and the documents
described in Sections 2.05(a)(i)-(vi) for such Qualified Substitute Mortgage
Loan or Loans.
(c) The Servicer shall deposit in the Collection Account all
payments received in connection with such Qualified Substitute Mortgage Loan or
Loans after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Mortgage Loan or Loans on or before the date of
substitution will be retained by the Unaffiliated Seller. The Trust Fund will
own all payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Unaffiliated Seller shall thereafter be entitled to retain
all amounts subsequently received in respect of such Deleted Mortgage Loan. The
Servicer shall give written notice to the Trustee and the Certificate Insurer
that such substitution has taken place and shall amend the Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of
this Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans. Upon such substitution, such Qualified Substitute Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects.
(d) It is understood and agreed that the obligations of the
Unaffiliated Seller and the related Originator set forth in Sections 2.05 and
3.05 of the Unaffiliated Seller's Agreement to, and the Servicer's obligation to
cause the Unaffiliated Seller and the Originator to, cure, purchase or
substitute for a defective Mortgage Loan, or to indemnify as described in clause
(a) above, constitute the sole remedies of the Trustee, the Certificate Insurer
and the Certificateholders respecting a breach of the representations and
warranties of the Unaffiliated Seller set forth in Sections 3.01 and 3.02 of the
Unaffiliated Seller's Agreement. The Trustee shall give prompt written notice to
the Certificate Insurer and the Rating Agencies of any repurchase or
substitution made pursuant to this Section 3.03 or Section 2.06(b).
(e) Upon discovery by the Servicer, the Trustee, the
Certificate Insurer or any Certificateholder that any Mortgage Loan does not
constitute a Qualified Mortgage, the party discovering such fact shall promptly
(and in any event within 5 days of the discovery) give written notice thereof to
46
<PAGE>
the other parties. In connection therewith, pursuant to the Unaffiliated
Seller's Agreement, the Unaffiliated Seller shall be required to repurchase or
substitute a Qualified Substitute Mortgage Loan for the affected Mortgage Loan
within 60 days of the earlier of such discovery by any of the foregoing parties,
or the Trustee's or the Unaffiliated Seller's receipt of notice, in the same
manner as it would a Mortgage Loan for a breach of representation or warranty
contained in Sections 3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement.
The Trustee shall reconvey to the Unaffiliated Seller the Mortgage Loan to be
released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Sections 3.01, 3.02 or 3.03 of the
Unaffiliated Seller's Agreement.
ARTICLE IV
THE CERTIFICATES
----------------
Section 4.01 The Certificates. The Class A-1, Class A-2, Class
A-3, Class A-4, and Class R Certificates shall be substantially in the forms
annexed hereto as Exhibits A-1, A-2, A-3, A-4, and B, respectively. All
Certificates shall be executed by manual or facsimile signature on behalf of the
Trustee by an authorized officer and authenticated by the manual or facsimile
signature of an authorized officer. Certificates bearing the signatures of
individuals who were at the time of the execution of the Certificates the
authorized officers of the Trustee shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
delivery of such Certificates or did not hold such offices at the date of such
Certificates. All Certificates issued hereunder shall be dated the date of their
authentication.
Section 4.02 Registration of Transfer and Exchange of
Certificates. (a) The Trustee, as registrar, shall cause to be kept a register
(the "Certificate Register") in which, subject to such reasonable regulations as
it may prescribe, the Trustee shall provide for the registration of Certificates
and the registration of transfer of Certificates. The Trustee is hereby
appointed registrar for the purpose of registering Certificates and transfers of
Certificates as herein provided. The Certificate Insurer shall be entitled to
inspect and copy the Certificate Register and the records of the Trustee
relating to the Certificates during normal business hours upon reasonable
notice.
(b) All Certificates issued upon any registration of transfer
or exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust and entitled to the same benefits under this Agreement as
the Certificates surrendered upon such registration of transfer or exchange.
(c) Every Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Trustee duly
executed by the Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made to a Holder for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(e) It is intended that the Class A Certificates be registered
so as to participate in a global book-entry system with the Depository, as set
forth herein. The Class A Certificates shall, except as otherwise provided in
the next paragraph, be initially issued in the form of a single fully registered
Certificate for each Class with a denomination equal to the Original Certificate
Principal Balance for such
47
<PAGE>
Class. Upon initial issuance, the ownership of each such Class A Certificate
shall be registered in the Certificate Register in the name of Cede & Co., or
any successor thereto, as nominee for the Depository. The Depositor and the
Trustee are hereby authorized to execute and deliver the Representation Letter
with the Depository. With respect to Class A Certificates registered in the
Certificate Register in the name of Cede & Co., as nominee of the Depository,
the Depositor, the Unaffiliated Seller, the Servicer, the Trustee and the
Certificate Insurer shall have no responsibility or obligation to Direct or
Indirect Participants or beneficial owners for which the Depository holds Class
A Certificates from time to time as a Depository. Without limiting the
immediately preceding sentence, the Depositor, the Unaffiliated Seller, the
Servicer, the Trustee and the Certificate Insurer shall have no responsibility
or obligation with respect to (i) the accuracy of the records of the Depository,
Cede & Co., or any Direct or Indirect Participant with respect to any Ownership
Interest, (ii) the delivery to any Direct or Indirect Participant or any other
Person, other than a Certificateholder, of any notice with respect to the Class
A Certificates or (iii) the payment to any Direct or Indirect Participant or any
other Person, other than a Certificateholder, of any amount with respect to any
distribution of principal or interest on the Class A Certificates. No Person
other than a Certificateholder shall receive a certificate evidencing such Class
A Certificate. Upon delivery by the Depository to the Trustee of written notice
to the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the Certificateholders
appearing as Certificateholders at the close of business on a Record Date, the
name "Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(f) In the event that (i) the Depository or the Servicer
advises the Trustee in writing that the Depository is no longer willing or able
to discharge properly its responsibilities as nominee and depository with
respect to the Class A Certificates and the Servicer or the Depository is unable
to locate a qualified successor or (ii) the Trustee at its sole option elects to
terminate the book-entry system through the Depository, the Class A Certificates
shall no longer be restricted to being registered in the Certificate Register in
the name of Cede & Co. (or a successor nominee) as nominee of the Depository. At
that time, the Servicer may determine that the Class A Certificates shall be
registered in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable to the Servicer, or such
depository's agent or designee but, if the Servicer does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names Certificateholders transferring Class A
Certificates shall designate, in accordance with the provisions hereof;
provided, however, that any such reregistration shall be at the expense of the
Servicer.
(g) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Class A Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Class A Certificates as the case may be and all notices with
respect to such Class A Certificates as the case may be shall be made and given,
respectively, in the manner provided in the Representation Letter.
(h) No transfer, sale, pledge or other disposition of any
Class R Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the Securities Act of 1933, as amended
and effective registration or qualification under applicable state securities
laws or "Blue Sky" laws, or is made in a transaction that does not require such
registration or qualification. None of the Servicer, the Depositor, the
Unaffiliated Seller or the Trustee is obligated under this Agreement to register
Certificates under the Securities Act of 1933, as amended or any other
securities law or to take any action not otherwise required under this Agreement
to permit the transfer of the Class R Certificates without such registration or
qualification. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the
Unaffiliated Seller, the Servicer and the Certificate Insurer against any
liability that may result if the transfer is not exempt or is not made in
accordance with such applicable federal and state laws. Promptly after receipt
by an indemnified party
48
<PAGE>
under this paragraph of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this paragraph. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to appoint counsel reasonably satisfactory to such indemnified party to
represent the indemnified party in such action; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such action
and approval by the indemnified party of such counsel, the indemnifying party
will not be liable to such indemnified party under this paragraph for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso of the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel for any indemnified party),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. Under no circumstances shall the indemnified party enter
into a settlement agreement with respect to any lawsuit, claim or other
proceeding without the prior written consent of the indemnifying party.
(i) Subject to the restrictions set forth in this Agreement,
upon surrender for registration of transfer of any Certificate at the office or
agency of the Trustee located in New York, New York, the Trustee shall execute,
authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and Percentage Interest and
dated the date of authentication by the Trustee. At the option of the
Certificateholders, Certificates may be exchanged for other Certificates of
Authorized Denominations of a like aggregate Percentage Interest, upon surrender
of the Certificates to be exchanged at such office. Whenever any Certificates
are so surrendered for exchange, the Trustee shall execute, authenticate and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. No service charge shall be made for any transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be cancelled and destroyed by the
Trustee in accordance with the Trustee's standard procedures.
(j) No transfer of a Class A Certificate shall be made to the
Unaffiliated Seller or, to the actual knowledge of a Responsible Officer of the
Trustee, to any of the Unaffiliated Seller's Affiliates, successors or assigns.
(k) Each Person who has or who acquires any Ownership Interest
in a Class R Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions
and to have irrevocably appointed the Servicer or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (8)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Ownership Interest in a Class R Certificate are expressly subject
to the following provisions:
49
<PAGE>
(i) Each Person holding or acquiring any Ownership Interest in a Class R
Certificate shall be a Permitted Transferee and a United States Person
and shall promptly notify the Trustee of any change or impending change
in its status as either a United States Person or a Permitted Transferee.
(ii) In connection with any proposed Transfer of any Ownership Interest in a
Class R Certificate, the Trustee shall require delivery to it of, and
shall not register the Transfer of any Class R Certificate until its
receipt of, an affidavit and agreement (a "Transfer Affidavit and
Agreement") attached hereto as Exhibit I from the proposed Transferee, in
form and substance satisfactory to the Trustee, representing and
warranting, among other things, that such Transferee is a Permitted
Transferee, that it is not acquiring its Ownership Interest in the Class
R Certificate that is the subject of the proposed Transfer as a nominee,
trustee or agent for any Person that is not a Permitted Transferee, that
as long as it retains its Ownership Interest in a Class R Certificate, it
will endeavor to remain a Permitted Transferee, and that it has reviewed
the provisions of this Section 4.02(k) and agrees to be bound by them.
(iii) Notwithstanding the delivery of a Transfer Affidavit and Agreement by a
proposed Transferee under clause (ii) above, if the Trustee has actual
knowledge that the proposed Transferee is not a Permitted Transferee, no
Transfer of an Ownership Interest in a Class R Certificate to such
proposed Transferee shall be effected.
(iv) Each Person holding or acquiring any Ownership Interest in a Class R
Certificate shall agree (x) to require a Transfer Affidavit and Agreement
from any other Person to whom such Person attempts to transfer its
Ownership Interest in a Class R Certificate and (y) not to transfer its
Ownership Interest unless it provides a certificate (attached hereto as
Exhibit J) to the Trustee stating that, among other things, it has no
actual knowledge that such other Person is not a Permitted Transferee.
(v) Each Person holding or acquiring an Ownership Interest in a Class R
Certificate, by purchasing an Ownership Interest in such Certificate,
agrees to give the Trustee written notice that it is a "pass-through
interest holder" within the meaning of temporary Treasury regulation
Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an Ownership
Interest in a Class R Certificate, if it is, or is holding an Ownership
Interest in a Class R Certificate on behalf of, a "pass-through interest
holder".
(vi) The Trustee will register the Transfer of any Class R Certificate only if
it shall have received the Transfer Affidavit and Agreement and all of
such other documents as shall have been reasonably required by the
Trustee as a condition to such registration. In addition, no Transfer of
a Class R Certificate shall be made unless the Trustee shall have
received a representation letter from the Transferee of such Certificate
to the effect that such Transferee is a United States Person and is not a
"disqualified organization" (as defined in Section 860E(e)(5) of the
Code).
(vii) Any attempted or purported transfer of any Ownership Interest in a Class
R Certificate in violation of the provisions of this Section 4.02 shall
be absolutely null and void and shall vest no rights in the purported
transferee. If any purported transferee shall become a Holder of a Class
R Certificate in violation of the provisions of this Section 4.02, then
the last preceding Permitted Transferee shall be restored to all rights
as Holder thereof retroactive to the date of registration of transfer of
such Class R Certificate. The Trustee shall notify the Servicer upon
receipt of written notice or discovery by a Responsible Officer that the
registration of transfer of a Class R Certificate was not in fact
permitted by this Section 4.02. Knowledge shall not be imputed to the
Trustee with respect to an impermissible transfer in the absence of such
a written notice or
50
<PAGE>
discovery by a Responsible Officer. The Trustee shall be under no
liability to any Person for any registration of transfer of a Class R
Certificate that is in fact not permitted by this Section 4.02 or for
making any payments due on such Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions
of this Agreement so long as the transfer was registered after receipt of
the related Transfer Affidavit and Transfer Certificate. The Trustee
shall be entitled, but not obligated to, recover from any Holder of a
Class R Certificate that was in fact not a Permitted Transferee at the
time it became a Holder or, at such subsequent time as it became other
than a Permitted Transferee, all payments made on such Class R
Certificate at and after either such time. Any such payments so recovered
by the Trustee shall be paid and delivered by the Trustee to the last
preceding Holder of such Certificate.
(viii) If any purported transferee shall become a Holder of a Class R
Certificate in violation of the restrictions in this Section 4.02, then
the Servicer or its designee shall have the right, without notice to the
Holder or any prior Holder of such Class R Certificate, to sell such
Class R Certificate to a purchaser selected by the Servicer or its
designee on such reasonable terms as the Servicer or its designee may
choose. Such purchaser may be the Servicer itself or any Affiliate of the
Servicer. The proceeds of such sale, net of commissions, expenses and
taxes due, if any, will be remitted by the Servicer to the last preceding
purported transferee of such Class R Certificate, except that in the
event that the Servicer determines that the Holder or any prior Holder of
such Class R Certificate may be liable for any amount due under this
Section 4.02 or any other provision of this Agreement, the Servicer may
withhold a corresponding amount from such remittance as security for such
claim. The terms and conditions of any sale under this clause (8) shall
be determined in the sole discretion of the Servicer or its designee, and
it shall not be liable to any Person having an Ownership Interest in a
Class R Certificate as a result of its exercise of such discretion.
(l) The provisions of Section 4.02(k) may be modified, added
to or eliminated, provided that there shall have been delivered to the Trustee
and the Certificate Insurer an Opinion of Counsel to the effect that such
modification of, addition to or elimination of such provisions will not cause
the REMIC Trust to cease to qualify as a REMIC and will not cause (x) the REMIC
Trust to be subject to an entity-level tax caused by the Transfer of any
Ownership Interest in a Class R Certificate to a Person that is not a Permitted
Transferee or (y) a Person other than the prospective transferee to be subject
to a REMIC-related tax caused by the Transfer of an Ownership Interest in a
Class R Certificate to a Person that is not a Permitted Transferee.
(m) The Trustee and the Servicer shall require the prospective
transferee of any Class R Certificate to certify (in the form of Exhibit K
hereto) that it is not a pension or benefit plan or individual retirement
arrangement that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or to Section 4975 of the Code (a "Plan") or an
entity whose underlying assets are deemed to be assets of a Plan by reason of
such plan's or arrangement's investment in the entity, as determined under U.S.
Department of Labor Regulations 29 C.F.R. ss. 2510.3-101 or otherwise. Any
Person who acquires an Ownership Interest in a Group I Certificate during the
Pre-Funding Period shall be deemed to represent that it is not a Plan and is not
using the assets of a Plan to acquire such Ownership Interest.
Section 4.03 Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (b) there is delivered to the Servicer, the
Certificate Insurer and the Trustee such security or indemnity as may reasonably
be required by each of them to save each of them harmless, then, in the absence
of notice to the Servicer and the Trustee that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in
51
<PAGE>
exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest, but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate under this Section 4.03, the Servicer and the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and their fees and expenses connected
therewith. Any duplicate Certificate issued pursuant to this Section 4.03 shall
constitute complete and indefeasible evidence of ownership in the Trust Fund, as
if originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time.
Section 4.04 Persons Deemed Owners. Prior to due presentation
of a Certificate for registration of transfer and subject to the provisions of
Section 4.02 and Article X, the Servicer, the Depositor, the Unaffiliated
Seller, the Certificate Insurer and the Trustee may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving remittances pursuant to Section 6.05 and for all other
purposes whatsoever, and the Servicer, the Depositor, the Unaffiliated Seller,
the Certificate Insurer and the Trustee shall not be affected by notice to the
contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
--------------------------------------------------
Section 5.01 REMIC Matters; The Servicer. (a) The parties
intend that the Trust Fund formed hereunder shall, except for the Capitalized
Interest Account and the Pre-Funding Account, constitute, and that the affairs
of the Trust Fund shall be conducted and this Agreement shall be construed so as
to qualify the Trust Fund as, a "real estate mortgage investment conduit" as
defined in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Trustee covenants and agrees that it shall, to the extent
permitted by applicable law, act as agent (and the Trustee is hereby appointed
to act as agent) on behalf of the Trust Fund and that in such capacity it shall:
(a) prepare and file, or cause to be prepared and filed, all required federal,
state and local tax returns for the REMIC using a calendar year as the taxable
year for the Trust Fund when and as required by the REMIC Provisions and other
applicable federal, state and local income tax laws; (b) maintain or cause the
maintenance of the books of the Trust Fund on the accrual method of accounting;
(c) make an election, on behalf of the Trust Fund, to be treated as a REMIC on
the federal tax return of the Trust Fund for its first taxable year, in
accordance with the REMIC Provisions; provided, however, that such election
shall not be made with respect to the Capitalized Interest Account and the
Pre-Funding Account and shall specifically exclude the Capitalized Interest
Account and the Pre-Funding Account from the assets for which a REMIC election
is made; (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders all information reports as and when required to be provided
to them in accordance with the REMIC Provisions; (e) conduct the affairs of the
Trust Fund at all times that any Certificates are outstanding so as to maintain
the status thereof as a REMIC under the REMIC Provisions; and (f) not knowingly
or intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of the Trust Fund.
The Capitalized Interest Account is an "outside reserve fund"
within the meaning of Treasury Regulations Section 1.860G-2(h) and is not an
asset of the REMIC. The Unaffiliated Seller is the owner of the Capitalized
Interest Account for purposes of Treasury Regulations Section 1.860G-2(h). For
all federal income tax purposes, amounts transferred by the REMIC to the
Capitalized Interest Account, if any, will be treated as amounts distributed by
the REMIC to the Unaffiliated Seller.
52
<PAGE>
In the event that any income tax (including any tax with
regard to "prohibited transactions" of the Trust Fund as defined in Section 860F
of the Code) is imposed on the Trust Fund, such tax shall be charged against
amounts otherwise distributable to the Holders of the Class R Certificates on a
pro rata basis to the extent hereinafter provided. In the event that any such
tax shall be due and owing at a time when amounts otherwise distributable to the
Holders of the Class R Certificates are not available, the Trustee shall pay
such tax from its own funds. In such event, the Trustee is hereby authorized to
retain from amounts otherwise distributable to the Holders of the Class R
Certificates on any Distribution Date sufficient funds to reimburse the Trustee
for the payment of such tax (to the extent that the Trustee has not been
previously reimbursed or indemnified therefor) (but such obligation shall not
prevent the Trustee or any other appropriate Person from contesting any such tax
in appropriate proceedings and shall prevent the Trustee from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings).
(b) The Servicer shall service and administer the Mortgage
Loans in accordance with the Accepted Servicing Practices and shall have full
power and authority to do any and all things not inconsistent therewith in
connection with such servicing and administration which it may deem necessary or
desirable subject to the limitations set forth in this Agreement. The Trustee
shall furnish the Servicer with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered
by the Trustee, to execute and deliver, on behalf of itself, the
Certificateholders and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, and to effect such modifications, waivers,
indulgences and other like matters as are in its judgment necessary or
desirable, with respect to the Mortgage Loans and the Mortgaged Properties and
the servicing and administration thereof. The Servicer shall notify the Trustee
of any such waiver, release, discharge, modification, indulgence or other such
matter by delivering to the Trustee an Officer's Certificate certifying that
such agreement is in compliance with this Section 5.01(b) together with the
original copy of any written agreement or other document executed in connection
therewith, all of which written agreements or documents shall, for all purposes,
be considered a part of the related Mortgage File to the same extent as all
other documents and instruments constituting a part thereof. Notwithstanding
anything in this Agreement to the contrary, the Servicer shall not permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Interest Rate, reduce or increase the principal balance, change the lien
priority, or change the final maturity date on or of such Mortgage Loan unless
(i) the Mortgagor is in default with respect to the Mortgage Loan or such
default is, in the judgment of the Servicer, imminent and (ii) the Certificate
Insurer consents to such modifications in writing; provided, however, that the
Servicer shall be permitted to extend the final maturity date on a Mortgage Loan
by 180 days or less without the consent of the Certificate Insurer.
The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Trustee under this Agreement
is intended by the parties to be that of an independent contractor and not that
of a joint venturer, partner or agent.
Section 5.02 Collection of Certain Mortgage Loan Payments;
Collection Account. (a) The Servicer shall make its reasonable efforts to
collect all payments called for under the terms and provisions of the Mortgage
Loans, and shall, to the extent such procedures shall be consistent with this
Agreement, follow the Accepted Servicing Practices. Consistent with the
foregoing, the Servicer may in its discretion waive any assumption fees or other
fees which may be collected in the ordinary course of servicing such Mortgage
Loans.
53
<PAGE>
(b) The Servicer shall establish and maintain in the name of
the Trustee the Collection Account, in trust for the benefit of the
Certificateholders and the Certificate Insurer. The Collection Account shall be
established and maintained as an Eligible Account.
(c) The Servicer shall deposit in the Collection Account any
amounts representing Monthly Payments on the Mortgage Loans due or to be applied
as of a date after the Cut-Off Date, and thereafter, on a daily basis (except as
otherwise permitted herein), the following payments and collections received or
made by it (other than in respect of principal collected and interest due on the
Mortgage Loans on or before the Cut-Off Date):
(i) Payments of interest on the Mortgage Loans;
(ii) Payments of principal of the Mortgage Loans;
(iii) The Loan Repurchase Price of Mortgage Loans repurchased
pursuant to Sections 2.06 or 5.05;
(iv) The Substitution Adjustment received in connection with
Mortgage Loans for which Qualified Replacement Mortgages
are received pursuant to Sections 2.06 and 3.03;
(v) All Liquidation Proceeds; and
(vi) All Insurance Proceeds (including, for this purpose, any
amounts required to be deposited by the Servicer pursuant
to the last sentence of Section 5.04).
It is understood that the Servicer need not deposit amounts
representing fees, prepayment premiums, late payment charges or extension or
other administrative charges payable by Mortgagors, or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items.
(d) The Trustee shall invest any funds in the Collection
Account in Permitted Investments as directed by the Servicer, which shall mature
not later than the Business Day next preceding the Distribution Date next
following the date of such investment (except that any investment held by the
Trustee may mature on such Distribution Date) and shall not be sold or disposed
of prior to its maturity. All net income and gain realized from any such
investment shall be for the benefit of the Servicer and shall be subject to its
withdrawal or order on a Distribution Date. The Servicer shall deposit from its
own funds the amount of any loss, to the extent not offset by investment income
or earnings, in the Collection Account upon the realization of such loss.
Section 5.03 Permitted Withdrawals from the Collection
Account. The Trustee shall make withdrawals from the Collection Account, on any
Distribution Date, for the following purposes:
(a) to reimburse the Servicer for Liquidation Expenses
theretofore incurred in respect of any Mortgage Loan in an amount not to exceed
the amount of the sum of the related Insurance Proceeds and Liquidation Proceeds
deposited in the Collection Account pursuant to Section 5.02(c)(v)-(vi);
(b) to reimburse the Servicer for amounts expended by it
pursuant to Section 5.04 in good faith in connection with the restoration of
damaged property, in an amount not to exceed the amount of the related Insurance
Proceeds and Liquidation Proceeds (net of withdrawals pursuant to clause (i)
above) and amounts representing proceeds of other insurance policies covering
the property subject to the related Mortgage deposited in the Collection Account
pursuant to Section 5.02(c)(v)-(vi);
54
<PAGE>
(c) to pay to the Unaffiliated Seller amounts received in
respect of any Defective Mortgage Loan purchased or substituted for by the
Unaffiliated Seller to the extent that the distribution of any such amounts on
the Distribution Date upon which the proceeds of such purchase are distributed
would make the total amount distributed in respect of any such Mortgage Loan on
such Distribution Date greater than the Loan Repurchase Price or the
Substitution Adjustment therefor;
(d) to reimburse the Servicer for unreimbursed Servicing
Advances, without interest, with respect to the Mortgage Loans for which it has
made a Servicing Advance, from subsequent collections with respect to interest
on such Mortgage Loans and from Liquidation Proceeds, Insurance Proceeds and/or
the Loan Repurchase Price or Substitution Adjustment of or relating to such
Mortgage Loans;
(e) to reimburse the Servicer for any Periodic Advances
determined in good faith to have become Nonrecoverable Advances, such
reimbursement to be made from any funds in the Collection Account;
(f) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction;
(g) to withdraw any funds deposited in the Collection Account
that were not required to be deposited therein; and
(h) to pay the Servicer Servicing Compensation pursuant to
Section 5.08 hereof to the extent not retained or paid.
The Servicer shall keep and maintain a separate accounting for
each Mortgage Loan for the purpose of accounting for withdrawals from the
Collection Account pursuant to subclause (a).
Section 5.04 Hazard Insurance Policies; Property Protection
Expenses. (a) The Servicer shall cause to be maintained for each Mortgage Loan a
hazard insurance policy with extended coverage which contains a standard
mortgagee's clause with an appropriate endorsement in an amount equal to the
lesser of (a) the maximum insurable value of the related Mortgaged Property or
(b) the sum of the Principal Balance of such Mortgage Loan plus the outstanding
balance of any mortgage loan senior to such Mortgage Loan, but in no event shall
such amount be less than is necessary to prevent the Mortgagor from becoming a
coinsurer thereunder. The Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements which are a part of such
property or (ii) the combined Principal Balance of such Mortgage Loan and the
principal balance of any mortgage loan senior to such Mortgage Loan at the time
of such foreclosure plus accrued interest and the good-faith estimate of the
Servicer of related Liquidation Expenses to be incurred in connection therewith.
Amounts collected by the Servicer under any such policies shall be deposited in
the Collection Account to the extent that they constitute Liquidation Proceeds
or Insurance Proceeds. Each hazard insurance policy shall contain a standard
mortgage clause naming the Originator, its successors and assigns, as mortgagee.
The Servicer shall be under no obligation to require that any Mortgagor maintain
earthquake or flood or other additional insurance and shall be under no
obligation itself to maintain any such additional insurance on property acquired
in respect of a Mortgage Loan, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance.
(b) If the Servicer shall obtain and maintain a blanket policy
issued by an insurer
55
<PAGE>
acceptable to the Rating Agencies and the Certificate Insurer insuring against
hazard losses on all of the Mortgage Loans, it shall conclusively be deemed to
have satisfied its obligations as set forth in Section 5.04(a), it being
understood and agreed that such policy may contain a deductible clause, in which
case the Servicer shall, in the event that there shall not have been maintained
on the related Mortgaged Property a policy complying with Section 5.04(a), and
there shall have been a loss which would have been covered by such policy,
deposit in the Collection Account the amount not otherwise payable under the
blanket policy because of such deductible clause.
(c) If the Mortgaged Property or REO Property is located at
the time of origination of the Mortgage Loan in a federally designated special
flood hazard area (and if the flood insurance policy referenced herein has been
made available), the Servicer will cause to be maintained flood insurance in
respect thereof. Such flood insurance shall be in an amount equal to the lesser
of (i) the Principal Balance of the related Mortgage Loan and the balance of the
related first lien, if any, (ii) the maximum insurable value of the related
Mortgaged Property, and (iii) the maximum amount of such insurance available for
the related Mortgaged Property under the national flood insurance program
(assuming that the area in which such Mortgaged Property is located is
participating in such program).
Section 5.05 Assumption and Modification Agreements. In any
case in which a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall exercise its right to accelerate the maturity of
the related Mortgage Loan and require that the Principal Balance thereof be paid
in full on or prior to such conveyance by the Mortgagor under any "due-on-sale"
clause applicable thereto. If such "due-on-sale" clause, by its terms, is not
operable or the Servicer is prevented, as provided in the last paragraph of this
Section 5.05, from enforcing any such clause, the Servicer is authorized,
subject to the consent of the Certificate Insurer, to take or enter into an
assumption and modification agreement from or with the Person to whom such
property has been or is about to be conveyed, pursuant to which such Person
becomes liable under the Mortgage Note and the Mortgagor remains liable thereon
or, if the Servicer in its reasonable judgment finds it appropriate, is released
from liability thereon. The Servicer shall notify the Trustee that any
assumption and modification agreement has been completed by delivering to the
Trustee and the Certificate Insurer an Officer's Certificate certifying that
such agreement is in compliance with this Section 5.05 together with the
original copy of such assumption and modification agreement. Any such assumption
and modification agreement shall, for all purposes, be considered a part of the
related Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such agreement, the then
current Mortgage Interest Rate thereon shall not be increased or decreased. Any
fee collected by the Servicer for entering into any such agreement will be
retained by the Servicer as additional servicing compensation. At its sole
election, the Servicer may purchase from the Trust Fund any Mortgage Loan that
has been assumed in accordance with this Section 5.05 within one month after the
date of such assumption at a price equal to the greater of (i) the fair market
value of such Mortgage Loan (as determined by the Servicer in its good faith
judgment) and (ii) the Loan Repurchase Price. Such amount, if any, shall be
deposited into the Collection Account in the Due Period in which such repurchase
is made.
Notwithstanding the foregoing paragraph of this Section 5.05
or any other provision of this Agreement, the Servicer shall not be deemed to be
in default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Mortgage Loan, or transfer of any Mortgaged Property
without the assumption thereof, by operation of law or any assumption or
transfer which the Servicer reasonably believes it may be restricted by law from
preventing for any reason whatsoever.
Section 5.06 Realization Upon Defaulted Mortgage Loans. (a)
The Servicer shall foreclose upon or otherwise comparably convert to ownership
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be
56
<PAGE>
made for collection of delinquent payments pursuant to Section 5.02(a). Prior to
conducting any sale in a foreclosure proceeding or accepting a deed-in-lieu of
foreclosure with respect to any Mortgaged Property, the Servicer shall cause an
environmental review to be performed, in accordance with Accepted Servicing
Practices on the Mortgaged Property by a company such as Equifax, Inc. or
Toxicheck. If such review reveals that the Mortgaged Property has on it, under
it or is near hazardous or toxic material or waste or reveals any other
environmental problem, the Servicer shall not foreclose or accept a deed-in-lieu
of foreclosure. In connection with such foreclosure or other conversion, the
Servicer shall follow such practices (including, in the case of any default on a
related senior mortgage loan, the advancing of funds to correct such default)
and procedures which are consistent with the Accepted Servicing Practices as it
shall deem necessary or advisable and as shall be normal and usual in its
general first and second mortgage loan servicing activities. The foregoing is
subject to the proviso that the Servicer shall not be required to expend its own
funds in connection with any foreclosure or towards the correction of any
default on a related senior mortgage loan or restoration of any property unless,
in the reasonable judgment of the Servicer, such expenses will be recoverable
from Liquidation Proceeds.
(b) In the event that title to any Mortgaged Property is
acquired in foreclosure or by deed in lieu of foreclosure, the deed or
certificate of sale shall be issued to the Trustee, or to its nominee on behalf
of Certificateholders. In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, such Mortgaged Property shall be disposed of by or
on behalf of the Trust Fund within two years after its acquisition by the Trust
Fund unless the Servicer shall have furnished the Trustee with an Opinion of
Counsel to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to two years after its acquisition will not result in the
imposition of taxes on "prohibited transactions" of the Trust Fund as defined in
Section 860F of the Code or cause the Trust Fund to fail to qualify as a REMIC
at any time that any Certificates are outstanding.
(c) Any Insurance Proceeds or Liquidation Proceeds received
with respect to a Mortgage Loan or REO Property (other than received in
connection with a purchase by the Class R Certificateholders of all the Mortgage
Loans and REO Properties in the Trust Estate pursuant to Section 8.01(b)) will
be applied in the following order of priority, in each case to the extent of
available funds: first, to pay the Servicer any accrued and unpaid Servicing
Fees relating to such Mortgage Loan; second, to reimburse the Servicer or any
Subservicer for any related unreimbursed Servicing Advances, and any related
unreimbursed Periodic Advances theretofore funded by the Servicer or any
Subservicer from its own funds, in each case, with respect to the related
Mortgage Loan; third, to accrued and unpaid interest on the Mortgage Loan, at
the Mortgage Loan Rate (or at such lesser rate as may be in effect for such
Mortgage Loan pursuant to application of the Civil Relief Act) on the Principal
Balance of such Mortgage Loan, to the date such Mortgage Loan is determined to
be a Liquidated Mortgage Loan if it is a Liquidated Mortgage Loan, or to the Due
Date in the Due Period prior to the Distribution Date on which such amounts are
to be distributed if such determination has not yet been made, minus any unpaid
Servicing Fees with respect to such Mortgage Loan; fourth, to the extent of the
Principal Balance of the Mortgage Loan outstanding immediately prior to the
receipt of such proceeds, as a recovery of principal of the related Mortgage
Loan; and fifth, to any prepayment or late payment charges or penalty interest
payable in connection with the receipt of such proceeds and to all other fees
and charges due and payable with respect to such Mortgage Loan. The amount of
any gross Insurance Proceeds and Liquidation Proceeds received with respect to
any Mortgage Loan or REO Property minus the amount of any unreimbursed Servicing
Advances, unreimbursed Periodic Advances or unpaid Servicing Fees, in each case,
with respect to the related Mortgage Loan, are the "Net Recovery Proceeds" with
respect to such Mortgage Loan or REO Property.
Section 5.07 Trustee to Cooperate. Upon the payment in full of
the Principal Balance of any Mortgage Loan, the Servicer will notify the Trustee
by a certification (which certification shall
57
<PAGE>
include a statement to the effect that all amounts received in connection with
such payment which are required to be deposited in the Collection Account
pursuant to Section 5.02 have been so deposited) of a Servicing Officer. Upon
any such payment in full, the Servicer is authorized to execute, pursuant to the
authorization contained in Section 5.01, an instrument of satisfaction regarding
the related Mortgage, which instrument of satisfaction shall be recorded by the
Servicer if required by applicable law and be delivered to the Person entitled
thereto, it being understood and agreed that no expenses incurred in connection
with such instrument of satisfaction shall be reimbursed from the Collection
Account. From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, the Trustee shall, upon request of the Servicer and
delivery to the Trustee of a trust receipt signed by a Servicing Officer,
release the related Mortgage File to the Servicer and shall execute such
documents as shall be necessary for the prosecution of any such proceedings.
Such trust receipt shall obligate the Servicer to return the Mortgage File to
the Trustee when the need therefor by the Servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate
of a Servicing Officer similar to that hereinabove specified, the trust receipt
shall be released by the Trustee to the Servicer.
Section 5.08 Servicing Compensation; Payment of Certain
Expenses by Servicer. On each Distribution Date, the Servicer shall be entitled
to receive and the Trustee shall pay, out of collections on the Mortgage Loans
for the Due Period, as servicing compensation for such Due Period, an amount
(the "Monthly Servicing Fee") equal to the product of one-twelfth of the
Servicing Fee Rate and the Pool Principal Balance as of the beginning of such
Due Period. Additional servicing compensation in the form of assumption fees,
late payment charges or extension and other administrative charges shall be
retained by the Servicer. The Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder (including payment of
all fees and expenses of the Subservicer and payment of the Trustee Fee to the
extent that monies in the Collection Account are insufficient therefor, as
provided in Section 9.05 hereof, and all other fees and expenses not expressly
stated hereunder to be payable by or from another source) and shall not be
entitled to reimbursement therefor except as specifically provided herein.
Section 5.09 Annual Statement as to Compliance. The Servicer
will deliver to the Trustee, the Rating Agencies, the Certificate Insurer and
each Certificateholder, on or before April 30 of each year, beginning April 30,
1999, an Officer's Certificate of the Servicer stating that (a) a review of the
activities of the Servicer during the preceding calendar year and of its
performance under this Agreement has been made under such Officer's supervision
and (b) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its material obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
Section 5.10 Annual Independent Public Accountants' Servicing
Report. On or before April 30 of each year, beginning April 30, 1999, the
Servicer at its expense shall cause a firm of independent public accountants
that is a member of the American Institute of Certified Public Accountants (who
may also render other services to the Servicer) to furnish a report to the
Trustee, the Rating Agencies and each Certificateholder to the effect that such
firm has examined certain documents and records relating to the servicing of
mortgage loans under pooling and servicing agreements (including this Agreement)
substantially similar to this Agreement, and that such examination, which has
been conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers (to the extent that the procedures in such audit
guide are applicable to the servicing obligations set forth in such agreements),
has disclosed no items of noncompliance with the provisions of this Agreement
which, in the opinion of such firm, are material, except for such items of
noncompliance as shall be set forth in such report.
58
<PAGE>
Section 5.11 Access to Certain Documentation. Each of the
Servicer and the Unaffiliated Seller shall permit the designated agents or
representatives of each Certificateholder, the Certificate Insurer and the
Trustee (i) to examine and make copies of and abstracts from all books, records
and documents (including computer tapes and disks) in the possession or under
the control of the Servicer or the Unaffiliated Seller relating to the Mortgage
Loans and (ii) to visit the offices and properties of the Servicer and of the
Unaffiliated Seller for the purpose of examining such materials and to discuss
matters relating to the Mortgage Loans and the Servicer's and the Unaffiliated
Seller's performance under this Agreement with any of the officers or employees
of the Servicer and the Unaffiliated Seller having knowledge thereof and with
the independent public accountants of the Servicer (and by this provision the
Servicer and the Unaffiliated Seller each authorize their respective accountants
to discuss their respective finances and affairs), all at such reasonable times,
as often as may be reasonably requested and without charge to such
Certificateholder, the Certificate Insurer or the Trustee.
Section 5.12 Maintenance of Fidelity Bond. The Servicer shall
during the term of its service as servicer maintain in force a fidelity bond and
errors and omissions insurance in respect of its officers, employees or agents.
Such bond and insurance shall comply with the requirements from time to time of
the FNMA for Persons performing servicing for mortgage loans purchased by such
association.
Section 5.13 The Subservicers. The parties acknowledge that
the Servicer intends to appoint the Subservicers as the Servicer's agents for
the purpose of servicing on the Servicer's behalf such of the Mortgage Loans as
were originated in the States of New Jersey, Pennsylvania and New York. The
Servicer agrees to cause the Subservicers to service such Mortgage Loans in a
manner consistent with the Accepted Servicing Practices set forth in this
Agreement, and agrees that receipt by the Subservicers of any and all amounts
which by the terms hereof are required to be deposited in the Collection Account
shall constitute receipt thereof by the Servicer for all purposes hereof as of
the date so received by the Subservicers. Notwithstanding such designation of
the Subservicers, the Servicer agrees that it is, and it shall remain, fully
obligated under the terms hereof as Servicer with respect to all such Mortgage
Loans, and nothing herein shall relieve or release the Servicer from its
obligations to the other parties hereto to service such Mortgage Loans in the
manner provided in this Agreement.
Section 5.14 Reports to the Trustee; Collection Account
Statements. Not later than 15 days after each Distribution Date, the Servicer
shall provide to the Trustee and the Certificate Insurer a statement, certified
by a Servicing Officer, setting forth the status of the Collection Account as of
the close of business on the related Distribution Date, stating that all
distributions required by this Agreement to be made by the Servicer on behalf of
the Trustee have been made (or if any required distribution has not been made by
the Servicer, specifying the nature and status thereof) and showing, for the
period covered by such statement, the aggregate of deposits into and withdrawals
from the Collection Account for each category of deposit specified in Section
5.02 and each category of withdrawal specified in Section 5.03 and the aggregate
of deposits into the Collection Account as specified in Section 6.01(c). Such
statement shall also state the aggregate unpaid principal balance of all the
Mortgage Loans as of the close of business on the last day of the month
preceding the month in which such Distribution Date occurs. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon
request.
Section 5.15 Optional Purchase of Defaulted Mortgage Loans.
(a) The Unaffiliated Seller or any Affiliate of the Unaffiliated Seller, in its
sole discretion, shall have the right to elect (by written notice sent to the
Servicer, the Trustee and the Certificate Insurer), but shall not be obligated,
to purchase for its own account from the Trust Fund any Mortgage Loan which is
90 days or more Delinquent in the manner and at the price specified in Section
2.06(b) except that the amount described in clause (ii) of Section 2.06(b) shall
in no case be net of the Servicing Fee. The purchase price for any
59
<PAGE>
Mortgage Loan purchased hereunder shall be deposited in the Collection Account
and the Trustee, upon receipt of such deposit, shall release or cause to be
released to the purchaser of such Mortgage Loan the related Trustee's Mortgage
File and shall execute and deliver such instruments of transfer or assignment
prepared by the purchaser of such Mortgage Loan, in each case without recourse,
as shall be necessary to vest in the purchaser of such Mortgage Loan any
Mortgage Loan released pursuant hereto and the purchaser of such Mortgage Loan
shall succeed to all the Trustee's right, title and interest in and to such
Mortgage Loan and all security and documents related thereto. Such assignment
shall be an assignment outright and not for security. The purchaser of such
Mortgage Loan shall thereupon own such Mortgage Loan, and all security and
documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
(b) After the Unaffiliated Seller or an Affiliate of the
Unaffiliated Seller has repurchased defaulted Mortgage Loans in a principal
amount equal to 1% of the Maximum Collateral Amount, then notwithstanding the
foregoing, unless the Certificate Insurer consents, any such Unaffiliated Seller
or Affiliate of the Unaffiliated Seller may only exercise its option pursuant to
this Section 5.15 with respect to the Mortgage Loan or Mortgage Loans that have
been Delinquent for the longest period at the time of such repurchase. Any
request by the Unaffiliated Seller or Affiliate to the Certificate Insurer for
consent to repurchase Mortgage Loans that are not the most Delinquent shall be
accompanied by a description of the Mortgage Loans that have been Delinquent
longer than the Mortgage Loan or Mortgage Loans the Unaffiliated Seller or such
Affiliate proposes to repurchase. If the Certificate Insurer fails to respond to
such request within 10 Business Days after receipt thereof, the Unaffiliated
Seller or such Affiliate may repurchase the Mortgage Loan or Mortgage Loans
proposed to be repurchased without the consent of, or any further action by, the
Certificate Insurer. Notice to the Certificate Insurer shall be delivered in
accordance with the terms of the Insurance and Indemnity Agreement.
Section 5.16 Reports to be Provided by the Servicer. (a) In
connection with the transfer of the Certificates, the Trustee on behalf of any
Certificateholder may request that the Servicer make available to any
prospective Certificateholder annual audited financial statements of the
Servicer for one or more of the most recently completed five fiscal years for
which such statements are available, which request shall not be unreasonably
denied or unreasonably delayed. Such annual audited financial statements also
shall be made available to the Certificate Insurer upon request.
(b) The Servicer also agrees to make available on a reasonable
basis to the Certificate Insurer or any prospective Certificateholder a
knowledgeable financial or accounting officer for the purpose of answering
reasonable questions respecting recent developments affecting the Servicer or
the financial statements of the Servicer and to permit the Certificate Insurer
or any prospective Certificateholder to inspect the Servicer's servicing
facilities during normal business hours for the purpose of satisfying the
Certificate Insurer or such prospective Certificateholder that the Servicer has
the ability to service the Mortgage Loans in accordance with this Agreement.
Section 5.17 Adjustment of Servicing Compensation in Respect
of Prepaid Mortgage Loans. The Monthly Servicing Fee that the Servicer shall be
entitled to receive with respect to all of the Mortgage Loans and each
Distribution Date shall be offset on such Distribution Date by an amount equal
to the aggregate Prepayment Interest Shortfall with respect to all Mortgage
Loans which were subjects of Principal Prepayments during the month preceding
the month of such Distribution Date. The amount of any offset against the
Monthly Servicing Fee with respect to any Distribution Date under this Section
5.17 shall be limited to the Monthly Servicing Fee otherwise payable to the
Servicer (without adjustment on account of Prepayment Interest Shortfalls) with
respect to such Distribution Date, and the rights of the Certificateholders to
the offset of the aggregate Prepayment Interest Shortfalls shall not be
cumulative.
60
<PAGE>
Section 5.18 Periodic Advances; Special Advance. (a) If, on
any Servicer Distribution Date, the Servicer determines that any Monthly
Payments due on the Due Date immediately preceding such Servicer Distribution
Date have not been received as of the close of business on the Business Day
preceding such Servicer Distribution Date, the Servicer shall determine the
amount of any Periodic Advance required to be made with respect to the related
Distribution Date. The Servicer shall, one Business Day after such Servicer
Distribution Date, deliver a magnetic tape or diskette to the Trustee indicating
the payment status of each Mortgage Loan as of such Servicer Distribution Date.
The Servicer shall include in the amount to be deposited in the Collection
Account on such Servicer Distribution Date an amount equal to the Periodic
Advance, if any, which deposit may be made in whole or in part from funds in the
Collection Account being held for future distribution or withdrawal on or in
connection with Distribution Dates in subsequent months. Any funds being held
for future distribution to Certificateholders and so used shall be replaced by
the Servicer from its own funds by deposit in the Collection Account on or
before the Business Day preceding any such future Servicer Distribution Date to
the extent that funds in the Collection Account on such Servicer Distribution
Date shall be less than payments to Certificateholders required to be made on
such date.
The Servicer shall designate on its records the specific
Mortgage Loans and related installments (or portions thereof) as to which such
Periodic Advance shall be deemed to have been made, such determination being
conclusive for purposes of withdrawals from the Collection Account pursuant to
Section 5.03.
(b) In addition to the Periodic Advances the Servicer shall
make a special advance (the "Special Advance") on the Servicer Distribution Date
occurring in October 1998, of $270,536.02, with respect to interest on Mortgage
Loans not having their first payment due until after September 1998 and a
special advance of $5,297.11 on the Servicer Distribution Date occurring in
November 1998, with respect to interest on Mortgage Loans not having their first
payment due until after October 1998. The Special Advance shall be made without
regard to recoverability, and shall not be reimbursable. In no event shall the
Trustee, as successor Servicer, be liable for the payment of the Special
Advance.
Section 5.19 Indemnification; Third Party Claims. (a) The
Servicer agrees to indemnify and to hold each of the Depositor, the Trustee, the
Unaffiliated Seller, the Certificate Insurer and each Certificateholder harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Depositor, the Trustee, the Unaffiliated Seller, the Certificate Insurer and any
Certificateholder may sustain in any way related to the failure of the Servicer
to perform its duties and service the Mortgage Loans in compliance with the
terms of this Agreement. Each indemnified party and the Servicer shall
immediately notify the other indemnified parties if a claim is made by a third
party with respect to this Agreement, and the Servicer shall assume the defense
of any such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Depositor, the Servicer, the Trustee,
the Unaffiliated Seller, the Certificate Insurer and/or a Certificateholder in
respect of such claim. The Trustee shall reimburse the Servicer in accordance
with Section 5.08 hereof for all amounts advanced by it pursuant to the
preceding sentence except when the claim relates directly to the failure of the
Servicer to service and administer the Mortgages in compliance with the terms of
this Agreement; provided, that the Servicer's indemnity hereunder shall not be
in any manner conditioned on the availability of funds for such reimbursement.
(b) The Trustee may, if necessary, reimburse the Servicer from
amounts otherwise distributable on the Class R Certificates for all amounts
advanced by it pursuant to Section 4.04(a)(ii) of the Unaffiliated Seller's
Agreement, except when the claim relates directly to the failure of the
Servicer, if it is, or is an Affiliate of, the Unaffiliated Seller, to perform
its obligations to service and administer the
61
<PAGE>
Mortgages in compliance with the terms of the Unaffiliated Seller's Agreement,
or the failure of the Unaffiliated Seller to perform its duties in compliance
with the terms of this Agreement.
(c) The Trustee shall reimburse the Unaffiliated Seller from
amounts otherwise distributable on the Class R Certificates for all amounts
advanced by the Unaffiliated Seller pursuant to the second sentence of Section
4.04(a)(ii) of the Unaffiliated Seller's Agreement except when the relevant
claim relates directly to the failure of the Unaffiliated Seller to perform its
duties in compliance with the terms of the Unaffiliated Seller's Agreement.
Section 5.20 Maintenance of Corporate Existence and Licenses;
Merger or Consolidation of the Servicer. (a) The Servicer will keep in full
effect its existence, rights and franchises as a corporation, will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 3.01 to be true and correct at all
times under this Agreement.
(b) Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to the business of the Servicer, shall be an established mortgage loan servicing
institution that has a net worth of at least $15,000,000 and is a Permitted
Transferee, and in all events shall be the successor of the Servicer without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding. The Servicer
shall send notice of any such merger or consolidation to the Trustee and the
Certificate Insurer.
Section 5.21 Assignment of Agreement by Servicer; Servicer Not
to Resign. The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Unaffiliated Seller, the Certificate Insurer and the Trustee or
upon the determination that the Servicer's duties hereunder are no longer
permissible under applicable law and that such incapacity cannot be cured by the
Servicer without incurring, in the reasonable judgment of the Certificate
Insurer, unreasonable expense. Any such determination that the Servicer's duties
hereunder are no longer permissible under applicable law permitting the
resignation of the Servicer shall be evidenced by a written Opinion of Counsel
(who may be counsel for the Servicer) to such effect delivered to the Trustee,
the Unaffiliated Seller, the Depositor and the Certificate Insurer. No such
resignation shall become effective until the Trustee or a successor appointed in
accordance with the terms of this Agreement has assumed the Servicer's
responsibilities and obligations hereunder in accordance with Section 7.02. The
Servicer shall provide the Trustee, the Rating Agencies and the Certificate
Insurer with 30 days prior written notice of its intention to resign pursuant to
this Section 5.21.
Section 5.22 Periodic Filings with the Securities and Exchange
Commission; Additional Information. The Trustee shall prepare or cause to be
prepared for filing with the Commission (other than the initial Current Report
on Form 8-K to be filed by the Depositor in connection with the issuance of the
Certificates) any and all reports, statements and information respecting the
Trust and/or the Certificates required to be filed, and shall solicit any and
all proxies of the Certificateholders whenever such proxies are required to be
solicited, pursuant to the Securities Exchange Act of 1934, as amended. The
Depositor shall promptly file, and exercise its reasonable best efforts to
obtain a favorable response to, no-action requests with, or other appropriate
exemptive relief from, the Commission seeking the usual and customary exemption
from such reporting requirements granted to issuers of securities similar to the
Certificates. Fees and expenses incurred by the Trustee in connection with the
foregoing shall be reimbursed pursuant to Section 9.05 and shall not be paid by
the Trust.
62
<PAGE>
The Servicer and the Depositor each agree to promptly furnish
to the Trustee, from time to time upon request, such further information,
reports and financial statements as the Trustee deems appropriate to prepare and
file all necessary reports with the Securities and Exchange Commission.
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
--------------------------
Section 6.01 Establishment of Accounts; Withdrawals from
Accounts; Deposits to the Certificate Account. (a) The Trustee shall establish
and maintain the Certificate Account which shall be titled "Certificate Account,
The Chase Manhattan Bank, as trustee for the registered holders of ABFS Mortgage
Loan Trust 1998-3, Mortgage Pass-Through Certificates, Series 1998-3", the
Pre-Funding Account which shall be titled "Pre-Funding Account, The Chase
Manhattan Bank, as trustee for the registered holders of ABFS Mortgage Loan
Trust 1998-3, Mortgage Pass-Through Certificates, Series 1998-3", the
Capitalized Interest Account which shall be titled "Capitalized Interest
Account, The Chase Manhattan Bank, as trustee for the registered holders of ABFS
Mortgage Loan Trust 1998-3, Mortgage Pass-Through Certificates, Series 1998-3",
each of which such Account shall be an Eligible Account. Upon receipt of the
proceeds of the sale of the Certificates, on the Closing Date, the Trustee
shall, upon the Unaffiliated Seller's direction, from the proceeds of the sale
of the Certificates, deposit, on behalf of the Certificateholders (i) in the
Pre-Funding Account, the Original Pre-Funded Amount, and (ii) in the Capitalized
Interest Account, an amount equal to $398,042.81.
(b) The Servicer may direct the Trustee in writing to invest
the funds in the Certificate Account only in Permitted Investments. No Permitted
Investment shall be sold or disposed of at a gain prior to maturity unless the
Servicer has delivered to the Trustee an Opinion of Counsel (at the Servicer's
expense) that such sale or disposition will not cause the Trust Fund to be
subject to the tax on income from prohibited transactions imposed by Code
Section 860F(a)(1), otherwise subject the Trust Fund to tax or cause the Trust
Fund to fail to qualify as a REMIC and the Certificate Insurer consents to such
disposition. All income (other than any gain from a sale or disposition of the
type referred to in the preceding sentence) realized from any such Permitted
Investment shall be for the benefit of the Servicer as additional servicing
compensation. The amount of any losses incurred in respect of any such
investments shall be deposited in the Certificate Account by the Servicer out of
its own funds immediately as realized.
(c) On each Servicer Distribution Date, the Servicer shall
cause to be deposited in the Certificate Account, from funds on deposit in the
Collection Account, (a) an amount equal to the Servicer Remittance Amount and
(b) Net Foreclosure Profits, if any with respect to the related Distribution
Date, minus any portion thereof payable to the Servicer pursuant to Section
5.03. On each Servicer Distribution Date, the Servicer shall also deposit into
the Certificate Account any Periodic Advances with respect to the related
Distribution Date calculated in accordance with Section 5.18 and any amounts
required to be deposited in connection with a Subsequent Mortgage Loan pursuant
to Section 2.03(f); on the Servicer Distribution Dates occurring on October 26,
1998, and November 25, 1998 the Servicer also will deposit the Special Advance;
(d) On the October 25, 1998, November 25, 1998 and December
28, 1998 Distribution Dates, the Trustee shall transfer from the Capitalized
Interest Account to the Certificate Account the Capitalized Interest
Requirement, if any, for such Distribution Date.
(e) On the Distribution Date following either the final
Subsequent Transfer Date or November 30, 1998 whichever date is earlier, any
amounts remaining in the Capitalized Interest Account, after taking into account
the transfers in respect of the Distribution Date described in clause (d) above,
shall be paid to the Unaffiliated Seller.
63
<PAGE>
(f) On any Subsequent Transfer Date, the Unaffiliated Seller
shall instruct in writing the Trustee to withdraw from the Pre-Funding Account
an amount equal to 100% of the aggregate Principal Balances as of the related
Subsequent Cut-Off Date of the Subsequent Mortgage Loans sold to the Trust on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Unaffiliated Seller upon satisfaction of the conditions set forth in Section
2.03(b) and (c) hereof with respect to such transfer. The Trustee may
conclusively rely on such written instructions from the Unaffiliated Seller.
(g) If the Pre-Funding Amount (exclusive of Pre-Funding
Earnings) has been reduced to $100,000 or less by September 30, 1998, by October
31, 1998, or November 30, 1998 then, on the October 26, 1998, the November 25,
1998 and December 28, 1998 Distribution Dates, respectively, after giving effect
to any reductions in the Pre-Funding Amount on such date, the Trustee shall
withdraw from the Pre-Funding Account on such date and deposit in the
Certificate Account the amount on deposit in the Pre-Funding Account other than
any Pre-Funding Earnings; if the Pre-Funding Amount has not been reduced to zero
by November 30, 1998, and the remaining Pre-Funding Amount (exclusive of
Pre-Funding Earnings) is (i) less than or equal to 1% of the Pool Principal
Balance on such date, the Trustee shall withdraw from the Pre-Funding Account
the amount on deposit therein, other than the Pre-Funding Earnings, and deposit
such amount into the Collection Account or (ii) greater than 1% of the Pool
Principal Balance on such date, the Trustee shall withdraw from the Pre-Funding
Account the amount on deposit therein, other than the Pre-Funding Earnings, and
distribute such amount to the Holders of the Group I Certificates, pro rata, as
a separate payment of principal, on the December 28, 1998 Distribution Date.
(h) On the October 25, 1998, the November 25, 1998 and
December 28, 1998 Distribution Dates the Trustee shall transfer from the
Pre-Funding Account to the Certificate Account the Pre-Funding Earnings, if any,
applicable to each such date.
Section 6.02 Permitted Withdrawals From the Certificate
Account. The Trustee shall withdraw or cause to be withdrawn funds from the
Certificate Account for the following purposes:
(a) to effect the distributions described in Section 6.05;
(b) to pay to the Unaffiliated Seller with respect to each
Mortgage Loan or property acquired in respect thereof that has been repurchased
or replaced pursuant to Section 2.04 or 2.05 or to pay to the Servicer with
respect to each Mortgage Loan or property acquired in respect thereof that has
been purchased all amounts received thereon and not required to be distributed
as of the date on which the related repurchase or purchase price or Principal
Balance was determined;
(c) to pay the Servicer any interest earned on or investment
income earned with respect to funds in the Certificate Account;
(d) to return to the Collection Account any amount deposited
in the Certificate Account that was not required to be deposited therein; and
(e) to clear and terminate the Certificate Account upon
termination of the Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Certificate Account pursuant to each of subclauses (a)
through (e) listed above.
64
<PAGE>
Section 6.03 Collection of Money. Except as otherwise
expressly provided herein, the Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Trustee pursuant to
this Agreement, including (a) all payments due on the Mortgage Loans in
accordance with the respective terms and conditions of such Mortgage Loans and
required to be paid over to the Trustee by the Servicer or by any Sub-Servicer
and (b) Insured Payments. The Trustee shall hold all such money and property
received by it, as part of the Trust Fund and shall apply it as provided in this
Agreement.
Section 6.04 The Certificate Insurance Policy. (a) Within two
(2) days of each Servicer Distribution Date, the Trustee shall determine with
respect to the immediately following Distribution Date, the amount to be on
deposit in the Certificate Account on such Distribution Date as a result of the
(i) Servicer's remittance of the Servicer Remittance Amount on the related
Servicer Distribution Date, and (ii) any transfers to the Certificate Account
made from the Capitalized Interest Account and/or the Pre-Funding Account
relating to such Distribution Date pursuant to Section 6.01 hereof, excluding
the amount of any Insured Payment and prior to the application of the amounts
described in clauses (a)(i) through (a)(iii) of Section 6.05 for the related
Distribution Date. The amounts described above in the preceding sentence with
respect to the Distribution Date are the "Available Funds". The amounts relating
to collections or otherwise with respect to Mortgage Loan Group I are the
"Available Funds for Group I" and the amounts relating to collections or
otherwise with respect to Mortgage Loan Group II are the "Available Funds for
Group II".
(b) If on any Distribution Date there is an Available Funds
Shortfall for either Group, the Trustee shall complete a Notice in the form of
Exhibit A to the Certificate Insurance Policy and submit such notice to the
Certificate Insurer no later than 12:00 noon New York City time on the second
Business Day preceding such Distribution Date as a claim for an Insured Payment
in an amount equal to such Available Funds Shortfall.
(c) The Trustee shall establish a separate Eligible Account
for the benefit of Holders of the Certificates and the Certificate Insurer
referred to herein as the "Certificate Insurance Payment Account" over which the
Trustee shall have exclusive control and sole right of withdrawal. The Trustee
shall deposit upon receipt any amount paid under the Certificate Insurance
Policy in the Certificate Insurance Payment Account and distribute such amount
only for purposes of payment to the Certificateholders of the related Group of
the Insured Distribution Amount for such Group for which a claim was made and
such amount may not be applied to satisfy any costs, expenses or liabilities of
the Servicer, the Trustee or the Trust Fund. Amounts paid under the Certificate
Insurance Policy, to the extent needed to pay the Insured Distribution Amount
shall be transferred to the Certificate Account on the related Distribution Date
and disbursed by the Trustee to the Certificateholders in accordance with
Section 6.05. It shall not be necessary for such payments to be made by checks
or wire transfers separate from the checks or wire transfers used to pay the
Insured Distribution Amount with other funds available to make such payment.
However, the amount of any payment of principal or of interest on the
Certificates to be paid from funds transferred from the Certificate Insurance
Payment Account shall be noted as provided in paragraph (d) below in the
Certificate Register and in the statement to be furnished to Holders of the
Certificates pursuant to Section 6.07. Funds held in the Certificate Insurance
Payment Account shall not be invested. Any funds remaining in the Certificate
Insurance Payment Account on the first Business Day following a Distribution
Date shall be returned to the Certificate Insurer pursuant to the written
instructions of the Certificate Insurer by the end of such Business Day.
(d) The Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Certificate from
moneys received under the Certificate Insurance Policy. The Certificate Insurer
shall have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.
65
<PAGE>
(e) In the event that the Trustee has received a certified
copy of an order of the appropriate court that any Insured Payment has been
voided in whole or in part as a preference payment under applicable bankruptcy
law, the Trustee shall so notify the Certificate Insurer, shall comply with the
provisions of the Certificate Insurance Policy to obtain payment by the
Certificate Insurer of such voided Insured Payment, and shall, at the time it
provides notice to the Certificate Insurer, notify, by mail to the
Certificateholders of the affected Certificates that, in the event any
Certificateholder's Insured Payment is so recovered, such Certificateholder will
be entitled to payment pursuant to the Certificate Insurance Policy, a copy of
which shall be made available through the Trustee, the Certificate Insurer or
the Certificate Insurer's fiscal agent, if any, and the Trustee shall furnish to
the Certificate Insurer or its fiscal agent, if any, its records evidencing the
payments which have been made by the Trustee and subsequently recovered from the
Certificateholders, and dates on which such payments were made.
(f) The Trustee shall promptly notify the Certificate Insurer
of any proceeding or the institution of any action, of which a Responsible
Officer of the Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any distribution made with respect to the
Certificates. Each Certificateholder, by its purchase of Certificates, the
Servicer and the Trustee agree that, the Certificate Insurer (so long as no
Certificate Insurer Default exists) may at any time during the continuation of
any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (i) the direction of any
appeal of any order relating to such Preference Claim and (ii) the posting of
any surety, supersedas or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Certificate Insurer shall be
subrogated to, and each Certificateholder, the Servicer and the Trustee hereby
delegate and assign to the Certificate Insurer, to the fullest extent permitted
by law, the rights of the Servicer, the Trustee and each Certificateholder in
the conduct of any such Preference Claim, including, without limitation, all
rights of any party to any adversary proceeding or action with respect to any
court order issued in connection with any such Preference Claim.
(g) The Trustee shall, upon retirement of the Certificates,
furnish to the Certificate Insurer a notice of such retirement, and, upon
retirement of the Certificates and the expiration of the term of the Certificate
Insurance Policy, surrender the Certificate Insurance Policy to the Certificate
Insurer for cancellation.
Section 6.05 Distributions. (a) No later than 12:00 noon
Pennsylvania time on the fourth Business Day preceding each Distribution Date,
the Servicer shall deliver to the Trustee a report in computer-readable form
containing such information as to each Mortgage Loan and as to each Mortgage
Loan Group as of such Distribution Date and such other information as the
Trustee shall reasonably require. With respect to the Certificate Account, on
each Distribution Date, the Trustee shall make the following allocations,
disbursements and transfers in the following order of priority, and each such
allocation, transfer and disbursement shall be treated as having occurred only
after all preceding allocations, transfers and disbursements have occurred:
(i) to the Trustee, an amount equal to the Trustee's
Fees then due to it;
(ii) (a) from amounts then on deposit in the
Certificate Account relating to Group I (excluding any Insured
Payments) to the Certificate Insurer the lesser of (x) the excess of
(i) the amount then on deposit in the Certificate Account relating
to Group I over (ii) the Insured Distribution Amount for Group I and
such Distribution Date and (y) the sum of (i) the sum of (A) the
amount of all Reimbursement Amounts allocable to Group I which have
not been previously repaid as of such Distribution Date and any
other amounts then due to the Certificate Insurer
66
<PAGE>
pursuant to the Insurance and Indemnity Agreement and (B) and such
amounts allocable to Group II but not paid pursuant to clause (b)
below and (ii) the Premium Amount allocable to Group I; and (b) from
amounts then on deposit in the Certificate Account relating to Group
II (excluding any Insured Payments) to the Certificate Insurer the
lesser of (x) the excess of (i) the amount then on deposit in the
Certificate Account relating to Group II over (ii) the Insured
Distribution Amount for Group II and such Distribution Date and (y)
the sum of (i) the sum of (A) the amount of all Reimbursement
Amounts allocable to Group II which have not been previously repaid
as of such Distribution Date and any other amounts then due to the
Certificate Insurer pursuant to the Insurance and Indemnity
Agreement and (B) any such amounts allocable to Group I but not paid
pursuant to clause (a) above (ii) the Premium Amount allocable to
Group II;
(iii) (a) from amounts then on deposit in the
Certificate Account relating to Group I, pro rata, (A) to the Owners
of the Class A-1 Certificates, the Class A-1 Distribution Amount for
such Distribution Date; (B) to the Owners of the Class A-2
Certificates, the Class A-2 Distribution Amount for such
Distribution Date; (C) to the Owners of the Class A-3 Certificates,
the Class A-3 Distribution Amount for such Distribution Date; and
(b) from amounts then on deposit in the Certificate Account relating
to Group II, to the Owners of the Class A-4 Certificates, the Class
A-4 Distribution Amount for such Distribution Date;
(iv) from amounts then on deposit in the Certificate
Account, to the Holders of Class A-4 Certificates, the Available
Funds Cap Carry-forward Amount;
(v) following the making by the Trustee of all
allocations, transfers and disbursements described above, from
amounts then on deposit in the Certificate Account, the Trustee
shall distribute to the Holders of the Class R Certificates, the
amount remaining in the Certificate Account on such Distribution
Date, if any; provided, however, that if, on any Distribution Date,
(x) the Certificate Insurer is then in default under the Certificate
Insurance Policy relating to the Mortgage Loans and (y) an
Overcollateralization Deficit exists, then any distribution of the
Principal Distribution Amount on such Distribution Date shall be
made pro rata to the Owners of each of the Class A Certificates.
Notwithstanding the foregoing, the aggregate amounts
distributed on all Distribution Dates to the Holders of each Class of Class A
Certificates on account of principal shall not exceed the Original Certificate
Principal Balance for the related Class A Certificates.
Section 6.06 Investment of Accounts. (a) So long as no Event
of Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account other than the
Certificate Insurance Payment Account held by the Trustee shall be invested and
reinvested by the Trustee, as directed in writing by the Servicer, in one or
more Permitted Investments bearing interest or sold at a discount. If an Event
of Default shall have occurred and be continuing or if the Servicer does not
provide investment directions, the Trustee shall invest all Accounts in
Permitted Investments described in paragraph (iv) of the definition of Permitted
Investments. No such investment in any Account shall mature later than the
Business Day immediately preceding the next Distribution Date (except that if
such Permitted Investment is an obligation of the Trustee, then such Permitted
Investment shall mature not later than such Distribution Date).
(b) Subject to Section 6.01(b), if any amounts are needed for
disbursement from any Account held by the Trustee and sufficient uninvested
funds are not available to make such disbursement, the Trustee shall cause to be
sold or otherwise converted to cash a sufficient amount of the investments in
67
<PAGE>
such Account. The Trustee shall not be, and the Servicer shall be, liable for
any investment loss or other charge resulting therefrom unless the Trustee's
failure to perform in accordance with this Section 6.06 is the cause of such
loss or charge.
(c) Subject to Section 9.01 hereof, the Trustee shall not in
any way be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any investment loss on any Permitted Investment included
therein (except to the extent that the Trustee is the obligor and has defaulted
thereon or as provided in subsection (b) of this Section 6.06).
(d) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in any Account (excluding the Certificate Insurance
Payment Account) shall be for the benefit of the Servicer as servicing
compensation (in addition to the Servicing Fee). The Servicer shall deposit in
the related Account the amount of any loss incurred in respect of any Permitted
Investment held therein which is in excess of the income and gain thereon
immediately upon realization of such loss, without any right to reimbursement
therefor from its own funds.
Section 6.07 Reports by the Trustee. (a) On each Distribution
Date the Trustee shall provide to each Holder, to the Servicer, to the
Certificate Insurer, to the Underwriter, to the Depositor and to the Rating
Agencies a written report (the "Trustee Remittance Report"), setting forth
information including, without limitation, the following information:
(i) the amount of the distribution with respect to the Class A-1, Class
A-2, Class A-3, Class A-4 and Class R Certificates;
(ii) the amount of such distributions allocable to principal, separately
identifying the aggregate amount of any Prepayments or other
unscheduled recoveries of principal included therein and separately
identifying any Overcollateralization Increase Amounts;
(iii) the amount of such distributions allocable to interest and the
calculation thereof;
(iv) the Certificate Principal Balance of the Class A-1, Class A-2, Class
A-3 and Class A-4 Certificates as of such Distribution Date, together
with the principal amount of the Class A-1, Class A-2, Class A-3 and
Class A-4 Certificates (based on a Certificate in an original principal
amount of $1,000) then outstanding, in each case after giving effect to
any payment of principal on such Distribution Date;
(v) the amount of any Insured Payment included in the amounts distributed
to the Class A Certificateholders on such Distribution Date;
(vi) the total of any Substitution Adjustments and any Loan Repurchase Price
amounts included in such distribution;
(vii) the amounts, if any, of any Liquidated Loan Losses for consumer purpose
loans and for business purpose loans for the related Due Period and
cumulative Liquidated Loan Losses since the Startup Date for consumer
purpose loans and for business purpose loans; and
(viii) LIBOR for such Payment Date.
Items (i), (ii) and (iii) above shall, with respect to each
Class of Class A Certificates, be presented on the basis of a Certificate having
a $1,000 denomination. In addition, by January 31 of each
68
<PAGE>
calendar year following any year during which the Certificates are outstanding,
the Trustee shall furnish a report to each Holder of record if so requested in
writing at any time during each calendar year as to the aggregate of amounts
reported pursuant to (i), (ii) and (iii) with respect to the Certificates for
such calendar year.
(b) All distributions made to each Class of Class A
Certificateholders and the Class R Certificateholders as a Class on each
Distribution Date will be made on a pro rata basis among the Certificateholders
of each Class on the next preceding Record Date based on the Percentage Interest
represented by their respective Certificates, and shall be made by wire transfer
of immediately available funds to the account of such Certificateholder at a
bank or other entity having appropriate facilities therefor, if, in the case of
a Class A Certificateholder, such Certificateholder shall own of record
Certificates of the same Class which have denominations aggregating at least
$5,000,000 appearing in the Certificate Register and shall have provided
complete wiring instructions at least five Business Days prior to the Record
Date, and otherwise by check mailed to the address of such Certificateholder
appearing in the Certificate Register.
(c) In addition, on each Distribution Date the Trustee will
distribute to each Holder, to the Certificate Insurer, to the Underwriter, to
the Servicer, to the Depositor and to the Rating Agencies, together with the
information described in subsection (a) preceding, the following information
with respect to all Mortgage Loans as well as a break out as to (x) consumer
purpose and business purpose Mortgage Loans and (y) each Mortgage Loan Group, in
each case, as of the close of business on the last Business Day of the prior
calendar month (except as otherwise provided in clause (v) below), which is
hereby required to be prepared by the Servicer and furnished to the Trustee for
such purpose and to the Certificate Insurer (via E-mail at rmgtapesefsa.com) on
or prior to the related Servicer Distribution Date:
(i) the total number of Mortgage Loans and the aggregate Principal
Balances thereof, together with the number, aggregate principal
balances of such Mortgage Loans and the percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of the aggregate
Principal Balances of such Mortgage Loans to the aggregate Principal
Balance of all Mortgage Loans (A) 31-60 days Delinquent, (B) 61-90
days Delinquent and (C) 91 or more days Delinquent;
(ii) the number, aggregate Principal Balances of all Mortgage Loans and
percentage (based on the aggregate Principal Balances of the Mortgage
Loans) of the aggregate Principal Balances of such Mortgage Loans to
the aggregate Principal Balance of all Mortgage Loans in foreclosure
proceedings and the number, aggregate Principal Balances of all
Mortgage Loans and percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of any such Mortgage Loans also
included in any of the statistics described in the foregoing clause
(i);
(iii) the number, aggregate Principal Balances of all Mortgage Loans and
percentage (based on the aggregate Principal Balances of the Mortgage
Loans) of the aggregate Principal Balances of such Mortgage Loans to
the aggregate Principal Balance of all Mortgage Loans relating to
Mortgagors in bankruptcy proceedings and the number, aggregate
Principal Balances of all Mortgage Loans and percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of any such
Mortgage Loans also included in any of the statistics described in
the foregoing clause (i);
(iv) the number, aggregate Principal Balances of all Mortgage Loans and
percentage (based on the aggregate Principal Balances of the Mortgage
Loans) of the aggregate Principal Balances of such Mortgage Loans to
the aggregate Principal Balance of all Mortgage Loans relating to REO
Properties and the number, aggregate Principal Balances of all
Mortgage Loans and percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of any such Mortgage Loans also
included in any of the statistics described in the foregoing clause
(i);
69
<PAGE>
(v) the weighted average Mortgage Interest Rate as of the Due Date
occurring in the Due Period related to such Distribution Date;
(vi) the weighted average remaining term to stated maturity of all
Mortgage Loans;
(vii) the book value of any REO Property;
(viii) the Pool Cumulative Loan Losses and the aggregate Pool Cumulative
Loan Losses since the Closing Date; and
(ix) the total number of Mortgage Loans and the Pool Principal Balance.
Section 6.08 Additional Reports by Trustee. (a) The Trustee
shall report to the Depositor, the Servicer and the Certificate Insurer with
respect to the amount then held in each Account (including investment earnings
accrued or scheduled to accrue) held by the Trustee and the identity of the
investments included therein, as the Depositor, the Servicer or the Certificate
Insurer may from time to time request in writing.
(b) From time to time, at the request of the Certificate
Insurer, the Trustee shall report to the Certificate Insurer with respect to its
actual knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth in
any Unaffiliated Seller's Agreement or in Section 3.01 or 3.02 hereof. The
Trustee shall also provide the Certificate Insurer such other information as may
be reasonably requested by it.
Section 6.09 Compensating Interest. Not later than the close
of business on the third Business Day prior to the Distribution Date, the
Servicer shall remit to the Trustee (without right or reimbursement therefor)
for deposit into the Certificate Account an amount equal to the lesser of (a)
the aggregate of the Prepayment Interest Shortfalls for the related Distribution
Date resulting from Principal Prepayments during the related Due Period and (b)
its aggregate Monthly Servicing Fees received in the related Due Period and
shall not have the right to reimbursement therefor (the "Compensating
Interest").
Section 6.10 Effect of Payments by the Certificate Insurer;
Subrogation. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Certificates which is made with
moneys received pursuant to the terms of the Certificate Insurance Policy shall
not be considered payment of the Certificates from the Trust Fund. The
Depositor, the Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Certificate agrees, that without the need for any further action
on the part of the Certificate Insurer, the Depositor, the Servicer, the Trustee
or the Certificate Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Certificates to the Holders of such Certificates, the Certificate Insurer will
be fully subrogated to, and each Certificateholder, the Servicer and the Trustee
hereby delegate and assign to the Certificate Insurer, to the fullest extent
permitted by law, the rights of such Holders to receive such principal and
interest from the Trust Fund, including, without limitation, any amounts due to
the Certificateholders in respect of securities law violations arising from the
offer and sale of the Certificates, and (b) the Certificate Insurer shall be
paid such amounts from the sources and in the manner provided herein for the
payment of such amounts and as provided in the Insurance and Indemnity
Agreement. The Trustee and the Servicer shall cooperate in all respects with any
reasonable request by the Certificate Insurer for action to preserve or enforce
the Certificate Insurer's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Holders as otherwise set
forth herein.
70
<PAGE>
ARTICLE VII
DEFAULT
-------
Section 7.01 Events of Default. (a) In case one or more of the
following Events of Default by the Servicer shall occur and be continuing, that
is to say:
(i) any failure by the Servicer to remit to the Trustee any payment
required to be made by the Servicer under the terms of this Agreement
which continues unremedied for one (1) Business Day after the date
upon which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer and the Certificate
Insurer by the Trustee or to the Servicer and the Trustee by the
Certificate Insurer or Certificateholders of Class A Certificates
evidencing Percentage Interests of at least 25%;
(ii) the failure by the Servicer to make any required Servicing Advance
which failure continues unremedied for a period of 30 days after the
date on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by the Trustee or
to the Servicer and the Trustee by any Certificateholder or the
Certificate Insurer;
(iii) any failure on the part of the Servicer duly to observe or perform in
any material respect any other of the covenants or agreements on the
part of the Servicer contained in this Agreement, or the failure of
any representation and warranty made pursuant to Section 3.01 to be
true and correct which continues unremedied for a period of 30 days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer, as the
case may be, by the Depositor or the Trustee or to the Servicer and
the Trustee by any Certificateholder or the Certificate Insurer;
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law or for
the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force,
undischarged or unstayed for a period of 30 days;
(v) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially
all of the Servicer's property;
(vi) the Servicer shall admit in writing its inability to pay its debts as
they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations;
(vii) the Certificate Insurer shall notify the Trustee of any event of
default under the Insurance and Indemnity Agreement;
(viii) if on any Distribution Date the Rolling Six Month Delinquency Rate
exceeds 12.75% for Mortgage Loan Group I and 12.75% for Mortgage Loan
Group II;
(ix) if on any Distribution Date, commencing in September 1999, the Twelve
Month Loss Amount exceeds 1.75% of the Pool Principal Balance for
Mortgage Loan Group I and 1.75% for Mortgage Loan Group II as of the
close of business on the first day of the twelfth preceding
71
<PAGE>
calendar month;
(x) if (a) on any Distribution Date occurring before October 1, 1999, the
aggregate Pool Cumulative Loan Losses since the Cut-Off Date exceed
1.00% of the Original Pool Principal Balance, (b) on any Distribution
Date on or after October 1, 1999 and before October 1, 2000, the
aggregate Pool Cumulative Loan Losses since the Cut-Off Date exceed
1.50% of the Original Pool Principal Balance, (c) on any Distribution
Date on or after October 1, 2000 and before October 1, 2001, the
aggregate Pool Cumulative Loan Losses since the Cut-Off Date exceed
2.25% of the Original Pool Principal Balance, (d) on any Distribution
Date on or after October 1, 2001 and before October 1, 2002, the
aggregate Pool Cumulative Loan Losses since the Cut-Off Date exceed
3.00% of the Original Pool Principal Balance, or (e) on any
Distribution Date on or after October 1, 2002, the aggregate Pool
Cumulative Loan Losses since the Cut-Off Date exceed 3.75% of the
Original Pool Principal Balance.
(b) then, and in each and every such case, so long as an Event
of Default shall not have been remedied: (x) with respect solely to clause (i)
above, if such payment is in respect of Periodic Advances or Compensating
Interest owing by the Servicer and such payment is not made by 12:00 Noon New
York time on the second Business Day prior to the applicable Distribution Date,
the Trustee, upon receipt of written notice or discovery by a Responsible
Officer of such failure, shall give immediate telephonic notice of such failure
to a Servicing Officer of the Servicer and to the Certificate Insurer and the
Trustee shall, with the consent of the Certificate Insurer, terminate all of the
rights and obligations of the Servicer under this Agreement and the Trustee, or
a successor servicer appointed in accordance with Section 7.02, shall
immediately make such Periodic Advance or payment of Compensating Interest and
assume, pursuant to Section 7.02 hereof, the duties of a successor Servicer; (y)
with respect to that portion of clause (i) above not referred to in the
preceding clause (x) and clauses (ii), (iii), (iv), (v), (vi) and (vii) above,
the Trustee shall, but only at the direction of the Certificate Insurer or the
Majority Certificateholders, by notice in writing to the Servicer and a
Responsible Officer of the Trustee and subject to the prior written consent of
the Certificate Insurer, in the case of any removal at the direction of the
Majority Certificateholders, and in addition to whatever rights such
Certificateholders may have at law or equity to damages, including injunctive
relief and specific performance, terminate all the rights and obligations of the
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof, as servicer; and (z) with respect to clause (viii)-(x) above, the
Trustee shall, but only at the direction of the Certificate Insurer, after
notice in writing to the Servicer and a Responsible Officer of the Trustee,
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof, as Servicer. Upon
receipt by the Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall, subject to Section 7.02, pass to and be vested in the Trustee
or its designee approved by the Certificate Insurer and the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, at the expense of the Servicer, any and all
documents and other instruments and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including, but not limited to, the transfer and endorsement or
assignment of the Mortgage Loans and related documents. The Servicer agrees to
cooperate (and pay any related costs and expenses) with the Trustee in effecting
the termination of the Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to the Trustee or its designee for
administration by it of all amounts which shall at the time be credited by the
Servicer to the Collection Account or thereafter received with respect to the
Mortgage Loans. The Trustee shall promptly notify the Certificate Insurer and
the Rating Agencies of the occurrence of an Event of Default.
Section 7.02 Trustee to Act; Appointment of Successor. (a) On
and after the time the Servicer receives a notice of termination pursuant to
Section 7.01 or fails to receive a Servicer Extension
72
<PAGE>
Notice pursuant to Section 8.04, or the Trustee receives the resignation of the
Servicer evidenced by an Opinion of Counsel pursuant to Section 5.21, or the
Servicer is removed as Servicer pursuant to Article VII, in which event the
Trustee shall promptly notify the Rating Agencies, except as otherwise provided
in Section 7.01, the Trustee shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof arising on or after the date of succession;
provided, however, that the Trustee shall not be liable for any actions or the
representations and warranties of any servicer prior to it and including,
without limitation, the obligations of the Servicer set forth in Sections 2.06
and 3.03. The Trustee, as successor servicer, shall be obligated to pay
Compensating Interest pursuant to Section 6.09 in any event and to make advances
pursuant to Section 5.18 unless, and only to the extent the Trustee determines
reasonably and in good faith that such advances would not be recoverable
pursuant to Section 5.04, such determination to be evidenced by a certification
of a Responsible Officer of the Trustee delivered to the Certificate Insurer.
(b) Notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act or if the Majority
Certificateholders with the consent of the Certificate Insurer or the
Certificate Insurer so requests in writing to the Trustee, appoint, pursuant to
such direction of the Majority Certificateholders and Certificate Insurer or the
Certificate Insurer, or if no such direction is provided to the Trustee,
pursuant to the provisions set forth in paragraph (c) below, or petition a court
of competent jurisdiction to appoint, any established mortgage loan servicing
institution acceptable to the Certificate Insurer that has a net worth of not
less than $15,000,000 as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer hereunder.
(c) In the event the Trustee is the successor servicer, it
shall be entitled to the same Servicing Compensation (including the Servicing
Fee as adjusted pursuant to the definition thereof) and other funds pursuant to
Section 5.08 hereof as the Servicer if the Servicer had continued to act as
servicer hereunder. In the event the Trustee is unable or unwilling to act as
successor servicer, the Trustee shall solicit, by public announcement, bids from
housing and home finance institutions, banks and mortgage servicing institutions
meeting the qualifications set forth above. Such public announcement shall
specify that the successor servicer shall be entitled to the full amount of the
aggregate Servicing Fees hereunder as servicing compensation, together with the
other Servicing Compensation. Within thirty days after any such public
announcement, the Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest qualifying bid. The Trustee shall deduct
from any sum received by the Trustee from the successor to the Servicer in
respect of such sale, transfer and assignment all costs and expenses of any
public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder and the amount of any unreimbursed
Servicing Advances and Periodic Advances owed to the Trustee. After such
deductions, the remainder of such sum shall be paid by the Trustee to the
Servicer at the time of such sale, transfer and assignment to the Servicer's
successor.
(d) The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Servicer agrees to cooperate with the Trustee and any successor
servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Trustee or
such successor servicer, as applicable, at the Servicer's cost and expense, all
documents and records reasonably requested by it to enable it to assume the
Servicer's functions hereunder and shall promptly also transfer to the Trustee
or such successor servicer, as applicable, all amounts that then have been or
should have been deposited in the Collection Account by the Servicer or that are
thereafter received with respect to the Mortgage Loans. Any collections received
by the Servicer after such removal or resignation shall be endorsed by it to the
73
<PAGE>
Trustee and remitted directly to the Trustee or, at the direction of the
Trustee, to the successor servicer. Neither the Trustee nor any other successor
servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer hereunder. Notwithstanding anything to the
contrary herein, no appointment of a successor to the Servicer under this
Agreement shall be effective until the Trustee and the Certificate Insurer shall
have consented thereto, and written notice of such proposed appointment shall
have been provided by the Trustee to the Certificate Insurer and to each
Certificateholder. The Trustee shall not resign as servicer until a successor
servicer reasonably acceptable to the Certificate Insurer has been appointed.
The Certificate Insurer shall have the right to remove the Trustee as successor
Servicer under this Section 7.02 without cause, and the Trustee shall appoint
such other successor Servicer as directed by the Certificate Insurer.
(e) Pending appointment of a successor to the Servicer
hereunder, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer pursuant to
Section 5.08, together with other Servicing Compensation. The Servicer, the
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
Section 7.03 Waiver of Defaults. The Majority
Certificateholders may, on behalf of all Certificateholders, and subject to the
consent of the Certificate Insurer, waive any events permitting removal of the
Servicer as servicer pursuant to this Article VII; provided, however, that the
Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies and the Certificate Insurer.
Section 7.04 Rights of the Certificate Insurer to Exercise
Rights of Class A Certificateholders. By accepting its Certificate, each Class A
Certificateholder agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall be deemed to be the Certificateholders for all
purposes (other than with respect to the receipt of payment on the Certificates)
and shall have the right to exercise all rights of the Class A
Certificateholders under this Agreement and under the Class A Certificates
without any further consent of the Class A Certificateholders, including,
without limitation:
(a) the right to require the Unaffiliated Seller to repurchase
Mortgage Loans pursuant to Section 2.06 or 3.03 hereof to the extent set forth
in such Sections;
(b) the right to give notices of breach or to terminate the
rights and obligations of the Servicer as servicer pursuant to Section 7.01
hereof and to consent to or direct waivers of Servicer defaults pursuant to
Section 7.03 hereof;
(c) the right to direct the actions of the Trustee during the
continuance of a Servicer default pursuant to Sections 7.01 and 7.02 hereof;
(d) the right to institute proceedings against the Servicer
pursuant to Section 7.01 hereof;
74
<PAGE>
(e) the right to direct the Trustee to investigate certain
matters pursuant to Section 9.02(a)(v) hereof;
(f) the right to remove the Trustee pursuant to Section 9.07
hereof;
(g) the right to direct foreclosures upon the failure of the
Servicer to do so in accordance with the provisions of Section 5.06 of this
Agreement; and
(h) any rights or remedies expressly given the Majority
Certificateholders.
In addition, each Certificateholder agrees that, subject to
Section 10.02, unless a Certificate Insurer Default exists, the rights
specifically enumerated above may only be exercised by the Certificateholders
with the prior written consent of the Certificate Insurer.
Section 7.05 Trustee To Act Solely with Consent of the
Certificate Insurer. Unless a Certificate Insurer Default exists, the Trustee
shall not, without the Certificate Insurer's consent or unless directed by the
Certificate Insurer:
(a) terminate the rights and obligations of the Servicer as
Servicer pursuant to Section 7.01 hereof;
(b) agree to any amendment pursuant to Section 10.03 hereof;
or
(c) undertake any litigation.
The Certificate Insurer may, in writing and in its sole
discretion renounce all or any of its rights under Sections 7.04, 7.05 or 7.06
or any requirement for the Certificate Insurer's consent for any period of time.
Section 7.06 Mortgage Loans, Trust Fund and Accounts Held for
Benefit of the Certificate Insurer. (a) The Trustee shall hold the Trust Fund
and the Mortgage Files for the benefit of the Certificateholders and the
Certificate Insurer and all references in this Agreement and in the Certificates
to the benefit of Holders of the Certificates shall be deemed to include the
Certificate Insurer. The Trustee shall cooperate in all reasonable respects with
any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement and
the Certificates unless, as stated in an Opinion of Counsel addressed to the
Trustee and the Certificate Insurer, such action is adverse to the interests of
the Certificateholders or diminishes the rights of the Certificateholders or
imposes additional burdens or restrictions on the Certificateholders.
(b) The Servicer hereby acknowledges and agrees that it shall
service the Mortgage Loans for the benefit of the Certificateholders and for the
benefit of the Certificate Insurer, and all references in this Agreement to the
benefit of or actions on behalf of the Certificateholders shall be deemed to
include the Certificate Insurer.
Section 7.07 Certificate Insurer Default. Notwithstanding
anything elsewhere in this Agreement or in the Certificates to the contrary, if
a Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of all of its rights under this
Agreement, the provisions of this Article VII and all other provisions of this
Agreement which (a) permit the Certificate Insurer to exercise rights of the
Certificateholders, (b) restrict the ability of the Certificateholders, the
Servicer or the Trustee to act without the consent or approval of the
Certificate
75
<PAGE>
Insurer, (c) provide that a particular act or thing must be acceptable to the
Certificate Insurer, (d) permit the Certificate Insurer to direct (or otherwise
to require) the actions of the Trustee, the Servicer or the Certificateholders,
(e) provide that any action or omission taken with the consent, approval or
authorization of the Certificate Insurer shall be authorized hereunder or shall
not subject the party taking or omitting to take such action to any liability
hereunder or (f) which have a similar effect, shall be of no further force and
effect and the Trustee shall administer the Trust Fund and perform its
obligations hereunder solely for the benefit of the Holders of the Certificates.
Nothing in the foregoing sentence, nor any action taken pursuant thereto or in
compliance therewith, shall be deemed to have released the Certificate Insurer
from any obligation or liability it may have to any party or to the
Certificateholders hereunder, under any other agreement, instrument or document
(including, without limitation, the Certificate Insurance Policy) or under
applicable law.
ARTICLE VIII
TERMINATION
-----------
Section 8.01 Termination. (a) Subject to Section 8.02, this
Agreement shall terminate upon notice to the Trustee of either: (i) the later of
the distribution to Certificateholders of the final payment or collection with
respect to the last Mortgage Loan (or Periodic Advances of same by the
Servicer), or the disposition of all funds with respect to the last Mortgage
Loan and the remittance of all funds due hereunder and the payment of all
amounts due and payable to the Certificate Insurer and the Trustee or (ii)
mutual consent of the Servicer, the Certificate Insurer and all
Certificateholders in writing; provided, however, that in no event shall the
Trust established by this Agreement terminate later than twenty-one years after
the death of the last surviving lineal descendant of Joseph P. Kennedy, late
Ambassador of the United States to the Court of St. James, alive as of the date
hereof.
(b) In addition, subject to Section 8.02, the Servicer may, at
its option and at its sole cost and expense, terminate this Agreement on the
First Distribution Date after any Distribution Date on which the Pool Principal
Balance is less than 10% of the Maximum Collateral Amount (the "Clean-Up Call
Date") by purchasing, on such succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the sum of (i)
100% of the aggregate Principal Balance of each outstanding Mortgage Loan and
each REO Property and (ii) the greater of (1) the aggregate amount of accrued
and unpaid interest on the Mortgage Loans through the related Due Period and (2)
30 days' accrued interest thereon computed at a rate equal to the related
Mortgage Interest Rate, in each case net of the Servicing Fee, and (iii) any
unreimbursed amounts due to the Certificate Insurer under this Agreement and any
I&I Payments (the "Termination Price"). Any such purchase shall be accomplished
by deposit into the Certificate Account of the Termination Price. No such
termination is permitted without the prior written consent of the Certificate
Insurer if it would result in a draw on the Certificate Insurance Policy.
(c) If on any Distribution Date, the Servicer determines that
there are no outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than funds in the Certificate Account, the Servicer shall send
a final distribution notice promptly to each such Certificateholder in
accordance with paragraph (d) below.
(d) Notice of any termination, specifying the Distribution
Date upon which the Trust Fund will terminate and the Certificateholders shall
surrender their Certificates to the Trustee for payment of the final
distribution and cancellation, shall be given promptly by the Servicer by letter
to Certificateholders mailed during the month of such final distribution before
the Servicer Distribution Date in such month, specifying (i) the Distribution
Date upon which final payment of the Certificates will be made upon presentation
and surrender of Certificates at the office of the Trustee therein designated,
76
<PAGE>
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Trustee therein specified. The Servicer shall give such notice to the
Trustee therein specified. The Servicer shall give such notice to the Trustee at
the time such notice is given to Certificateholders. The obligations of the
Certificate Insurer hereunder shall terminate upon the deposit by the Servicer
with the Trustee of a sum sufficient to purchase all of the Mortgage Loans and
REO Properties as set forth above or when the Class A Principal Balance has been
reduced to zero.
(e) In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the time
specified in the above-mentioned written notice, the Servicer shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice, all of the Certificates
shall not have been surrendered for cancellation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates and
the cost thereof shall be paid out of the funds and other assets which remain
subject hereto. If within nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Class R
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds and the Certificateholders shall
look only to the Class R Certificateholders for payment and not to the
Certificate Insurer. Such funds shall remain uninvested.
Section 8.02 Additional Termination Requirements. (a) In the
event that the Servicer exercises its purchase option as provided in Section
8.01, the Trust Fund shall be terminated in accordance with the following
additional requirements, unless the Trustee has been furnished with an Opinion
of Counsel to the effect that the failure of the REMIC Trust to comply with the
requirements of this Section 8.02 will not (i) result in the imposition of taxes
on "prohibited transactions" of the REMIC Trust as defined in Section 860F of
the Code or (ii) cause the REMIC Trust to fail to qualify as a REMIC at any time
that any Class A Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date the Servicer
shall adopt and the Trustee shall sign, a plan of complete
liquidation of the REMIC Trust meeting the requirements of a
"Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the
Trustee shall sell all of the assets of the Trust Fund to the
Servicer for cash; and
(iii) At the time of the making of the final payment on the Certificates,
the Trustee shall distribute or credit, or cause to be distributed or
credited (A) to the Class A Certificateholders the Class A Principal
Balance, plus one month's interest thereon at the Class A
Pass-Through Rate, (B) to the Certificate Insurer any amounts due the
Certificate Insurer under this Agreement and unpaid, including
unreimbursed Insured Payments and I&I Payments and (C) to the Class R
Certificateholders, all cash on hand after such payment to the Class
A Certificateholders (other than cash retained to meet claims) and
the Trust Fund shall terminate at such time.
(b) By their acceptance of the Certificates, the Holders
thereof hereby agree to appoint the Servicer as their attorney in fact to: (i)
adopt such a plan of complete liquidation (and the Certificateholders hereby
appoint the Trustee as their attorney in fact to sign such plan) as appropriate
or upon the written request of the Certificate Insurer and (ii) to take such
other action in connection therewith as may be reasonably required to carry out
such plan of complete liquidation all in accordance with the terms hereof.
77
<PAGE>
Section 8.03 Accounting Upon Termination of Servicer. Upon
termination of the Servicer, the Servicer shall, at its expense:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Trustee, the funds in any Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Trustee all Mortgage Files and related documents and
statements held by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to its successor and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the "Servicer" under this
Agreement.
Section 8.04 Retention and Termination of the Servicer. The
Servicer hereby covenants and agrees to act as servicer under this Agreement for
an initial term commencing on the Closing Date and expiring on December 31, 1998
(the "Initial Term"). Thereafter, the Initial Term shall be extendible in the
sole discretion of the Certificate Insurer by written notice (each, a "Servicer
Extension Notice") of the Certificate Insurer (or the Trustee if revocable
written standing instructions of the Certificate Insurer have been previously
delivered to the Trustee), for any specified number of three month terms to the
Servicer. Each such Servicer Extension Notice (if any) shall be delivered by the
Certificate Insurer (or the Trustee, as applicable,) to the other parties to
this Agreement. The Servicer hereby agrees that, as of the date hereof and upon
its receipt of any Servicer Extension Notice the Servicer shall be bound for the
duration of the Initial Term and the term covered by any such Servicer Extension
Notice to act as the Servicer, subject to and in accordance with the other
provisions of this Agreement. The Servicer agrees that if, as of the fifteenth
day prior to the last day of any such servicing term, the Servicer shall not
have received a Servicer Extension Notice from the Certificate Insurer (or
Trustee, as applicable), the Servicer shall, within five days thereafter, give
written notice of such non-receipt to the Certificate Insurer and the Trustee.
The failure of the Certificate Insurer or the Trustee, as applicable, to deliver
a Servicer Extension Notice by the end of any such three-month term shall result
in the automatic termination of the Servicer.
Section 8.05 Termination of the Class A-4 Certificates. The
Servicer may, at its option and at its sole cost and expense, terminate the
Class A-4 Certificates on or after the Class A-4 Clean-up Call Date by
depositing into the Certificate Account an amount equal to the sum of (i) 100%
of the Class A-4 Certificate Principal Balance (the "Class A-4 Termination
Price"). The Servicer must deposit the Class A-4 Termination Price in the
Certificate Account on or prior to the Servicer Distribution Date. The Trustee
shall distribute the amount deposited therein on the next Distribution Date. No
such termination is permitted without the prior written consent of the
Certificate Insurer if it would result in a draw on the Certificate Insurance
Policy.
78
<PAGE>
ARTICLE IX
THE TRUSTEE
-----------
Section 9.01 Duties of Trustee. (a) The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If an Event of Default has
occurred and has not been cured or waived, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and use the same degree of
care and skill in its exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform on their face to the requirements of this
Agreement; provided, however, that the Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Servicer or the
Unaffiliated Seller hereunder. If any such instrument is found not to conform on
its face to the requirements of this Agreement, the Trustee shall take action as
it deems appropriate to have the instrument corrected and, if the instrument is
not corrected to the Trustee's satisfaction, the Trustee will, at the expense of
the Servicer notify the Certificate Insurer and request written instructions as
to the action it deems appropriate to have the instrument corrected, and if the
instrument is not so corrected, the Trustee will provide notice thereof to the
Certificate Insurer who shall then direct the Trustee as to the action, if any,
to be taken.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after the curing
of all such Events of Default which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee
and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error of judgment
made in good faith by a Responsible Officer or other officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or with the
consent of the Certificate Insurer, the Class A Certificateholders
holding Class A Certificates evidencing Percentage Interests of at
least 25%, relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement;
(iv) the Trustee shall not be required to take notice or be deemed to have
notice or knowledge of any default or Event of Default (except an
Event of Default with respect to the nonpayment of any
79
<PAGE>
amount described in Section 7.01(a)), unless a Responsible Officer of
the Trustee shall have received written notice thereof. In the
absence of receipt of such notice, the Trustee may conclusively
assume that there is no default or Event of Default (except a failure
to make a Periodic Advance);
(v) the Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if
there is reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it and none of the provisions contained in this
Agreement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any of the obligations
of the Servicer under this Agreement except during such time, if any,
as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance
with the terms of this Agreement; and
(vi) subject to the other provisions of this Agreement (and except in its
capacity as successor Servicer) and without limiting the generality
of this Section, the Trustee shall have no duty (A) to see to any
recording, filing, or depositing of this Agreement or any agreement
referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any
rerecording, refiling or redepositing of any thereof, (B) to see to
any insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance
of any kind owing with respect to, assessed or levied against, any
part of the Trust, the Trust Fund, the Certificateholders or the
Mortgage Loans, (D) to confirm or verify the contents of any reports
or certificates of the Servicer delivered to the Trustee pursuant to
this Agreement believed by the Trustee to be genuine and to have been
signed or presented by the proper party or parties.
(d) It is intended that the REMIC Trust formed hereunder shall
constitute, and that the affairs of the REMIC Trust shall be conducted so as to
qualify it as, a REMIC as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Unaffiliated Seller, as Class
R Certificateholder, covenants and agrees that it shall act as agent (and the
Unaffiliated Seller, as Class R Certificateholder, is hereby appointed to act as
agent) and as Class R Certificateholder Tax Matters Person on behalf of the
REMIC Trust, and that in such capacities it shall:
(i) prepare, sign and file, or cause to be prepared and filed, in a
timely manner, a U.S. Real Estate Mortgage Investment Conduit Income
Tax Return (Form 1066) and any other Tax Return required to be filed
by the REMIC Trust, using a calendar year as the taxable year for the
REMIC Trust;
(ii) make, or cause to be made, an election, on behalf of the REMIC Trust,
to be treated as a REMIC on the federal tax return of the REMIC Trust
for its first taxable year;
(iii) prepare and forward, or cause to be prepared and forwarded, to the
Trustee, the Certificateholders and to the Internal Revenue Service
and any other relevant governmental taxing authority all information
returns or reports as and when required to be provided to them in
accordance with the REMIC Provisions;
(iv) to the extent that the affairs of the REMIC Trust are within its
control, conduct such affairs of the REMIC Trust at all times that
any Certificates are outstanding so as to maintain the status of the
REMIC Trust as a REMIC under the REMIC Provisions and any other
applicable federal,
80
<PAGE>
state and local laws, including, without limitation, information
reports relating to "original issue discount," as defined in the
Code, based upon the Prepayment Assumption and calculated by using
the issue price of the Certificates;
(v) not knowingly or intentionally take any action or omit to take any
action that would cause the termination of the REMIC status of the
REMIC Trust;
(vi) pay the amount of any and all federal, state, and local taxes,
including, without limitation, any minimum tax imposed by Section
23151(a) and 23153(a) of the Pennsylvania Revenue and Taxation Code
upon the Trustee or the Certificateholders in connection with the
Trust, the Trust Fund or the Mortgage Loans, prohibited transaction
taxes as defined in Section 860F of the Code, other than any amount
due as a result of a transfer or attempted or purported transfer in
violation of Section 4.02, imposed on the Trust Fund when and as the
same shall be due and payable (but such obligation shall not prevent
the Trustee or any other appropriate Person from contesting any such
tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings). The Trustee shall be entitled to
reimbursement in accordance with Sections 9.01(c) and 9.05 hereof;
(vii) ensure that any such returns or reports filed on behalf of the Trust
Fund by the Trustee are properly executed by the appropriate person
and submitted in a timely manner;
(viii) represent the Trust Fund in any administrative or judicial
proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any
taxable year of the Trust Fund, enter into settlement agreements with
any governmental taxing agency, extend any statute of limitations
relating to any item of the Trust Fund and otherwise act on behalf of
the Trust Fund in relation to any tax matter involving the Trust
Fund;
(ix) as provided in Section 5.12 hereof, make available information
necessary for the computation of any tax imposed (1) on transferors
of residual interests to transferees that are not Permitted
Transferees or (2) on pass-through entities, any interest in which is
held by an entity which is not a Permitted Transferee. The Trustee
covenants and agrees that it will cooperate with the Servicer in the
foregoing matters and that it will sign, as Trustee, any and all Tax
Returns required to be filed by the Trust Fund. Notwithstanding the
foregoing, at such time as the Trustee becomes the successor
Servicer, the holder of the largest percentage of the Class R
Certificates shall serve as Tax Matters Person until such time as an
entity is appointed to succeed the Trustee as Servicer;
(x) make available to the Internal Revenue Service and those Persons
specified by the REMIC Provisions all information necessary to
compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Class R Certificate to any Person who is not
a Permitted Transferee, including the information described in
Treasury regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5)with
respect to the "excess inclusions" of such Class R Certificate and
(B) as a result of any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an
Ownership Interest in a Class R Certificate having as among its
record holders at any time any Person that is not a Permitted
Transferee. Reasonable compensation for providing such information
may be accepted by the Trustee;
(xi) pay out of its own funds, without any right of reimbursement, any and
all tax related expenses
81
<PAGE>
of the Trust Fund (including, but not limited to, tax return
preparation and filing expenses and any professional fees or expenses
related to audits or any administrative or judicial proceedings with
respect to the Trust Fund that involve the Internal Revenue Service
or state tax authorities), other than the expense of obtaining any
Opinion of Counsel required pursuant to Sections 3.03, 5.10 and 8.02
and other than taxes except as specified herein;
(xii) upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificates the Form 1066 and
each Form 1066Q and shall respond promptly to written requests made
not more frequently than quarterly by any Holder of Class R
Certificates with respect to the following matters:
(A) the original projected principal and interest cash
flows on the Closing Date on the regular and residual
interests created hereunder and on the Mortgage Loans, based
on the Prepayment Assumption;
(B) the projected remaining principal and interest cash
flows as of the end of any calendar quarter with respect to
the regular and residual interests created hereunder and the
Mortgage Loans, based on the Prepayment Assumption;
(C) the Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and
interest cash flows described above;
(D) the original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or
amortized through the end of such calendar quarter with
respect to the regular or residual interests created hereunder
and with respect to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(E) the treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder,
including the timing and amount of any cancellation of
indebtedness income of the REMIC with respect to such regular
interests or bad debt deductions claimed with respect to the
Mortgage Loans;
(F) the amount and timing of any non-interest expenses of
the REMIC; and
(G) any taxes (including penalties and interest) imposed
on the REMIC, including, without limitation, taxes on
"prohibited transactions," "contributions" or "net income from
foreclosure property" or state or local income or franchise
taxes; and
(xiii) make any other required reports in respect of
interest payments in respect of the Mortgage Loans and acquisitions and
abandonments of Mortgaged Property to the Internal Revenue Service
and/or the borrowers, as applicable.
(e) In the event that any tax is imposed on "prohibited
transactions" of the REMIC as defined in Section 860F(a)(2) of the Code, on the
"net income from foreclosure property" of the REMIC as defined in Section
860G(c) of the Code, on any contribution to the REMIC after the Startup Day
pursuant to Section 860G(d) of the Code, or any other tax (other than any
minimum tax imposed by
82
<PAGE>
Sections 23151(a) or 23153(a) of the Pennsylvania Revenue and Taxation Code) is
imposed, such tax shall be paid by (i) the Trustee, if such tax arises out of or
results from a breach by the Trustee of any of its obligations under this
Agreement, (ii) the Servicer, if such tax arises out of or results from a breach
by the Servicer of any of its obligations under this Agreement, or otherwise
(iii) the holders of the Class R Certificates in proportion to their Percentage
Interests. To the extent such tax is chargeable against the holders of the Class
R Certificates, notwithstanding anything to the contrary contained herein, the
Trustee is hereby authorized to retain from amounts otherwise distributable to
the Holders of the Class R Certificates on any Distribution Date sufficient
funds to reimburse the Trustee for the payment of such tax (to the extent that
the Trustee has not been previously reimbursed or indemnified therefor).
Section 9.02 Certain Matters Affecting the Trustee. (a) Except
as otherwise provided in Section 9.01:
(i) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, Opinion of
Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(ii) the Trustee may consult with counsel and any Opinion of Counsel shall
be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and
in accordance with such opinion of counsel;
(iii) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to institute,
conduct or defend by litigation hereunder or in relation hereto at
the request, order or direction of the Certificate Insurer or any of
the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders or the Certificate Insurer, as
applicable, shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be
incurred therein by the Trustee or thereby; nothing contained herein
shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default (which has not been cured), to
exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;
(iv) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) prior to the occurrence of an Event of Default hereunder and after
the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in
writing to do so by the Certificate Insurer or Holders of Class A
Certificates evidencing Percentage Interests aggregating not less
than 25%; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee
may require reasonable indemnity against such expense or liability as
a condition to taking any such action. The reasonable expense of
every such examination shall be paid by the Servicer or, if paid by
the Trustee, shall be repaid by the Servicer upon demand from the
Servicer's own funds;
83
<PAGE>
(vi) the right of the Trustee to perform any discretionary act enumerated
in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;
(vii) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust created hereby or the powers
granted hereunder; and
(viii) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents
or attorneys.
(b) Following the Startup Day, the Trustee shall not knowingly
accept any contribution of assets to the Trust Fund, unless the Trustee shall
have received an Opinion of Counsel (at the expense of the Servicer) to the
effect that the inclusion of such assets in the Trust Fund will not cause the
REMIC Trust to fail to qualify as a REMIC at any time that any Certificates are
outstanding or subject the REMIC Trust to any tax under the REMIC Provisions or
other applicable provisions of federal, state and local law or ordinances. The
Trustee agrees to indemnify the Trust Fund and the Servicer for any taxes and
costs, including any attorney's fees, imposed or incurred by the Trust Fund or
the Servicer as a result of the breach of the Trustee's covenants set forth
within this subsection (b).
Section 9.03 Trustee Not Liable for Certificates or Mortgage
Loans. The recitals contained herein (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Unaffiliated Seller or the Servicer as the case may be, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Agreement or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application of any funds paid to the Servicer in respect of the Mortgage Loans
or deposited in or withdrawn from the Collection Account by the Servicer. The
Trustee shall not be responsible for the legality or validity of the Agreement
or the validity, priority, perfection or sufficiency of the security for the
Certificates issued or intended to be issued hereunder.
Section 9.04 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgor of Certificates
with the same rights it would have if it were not Trustee, and may otherwise
deal with the parties hereto.
Section 9.05 Trustee's Fees and Expenses; Indemnity. (a) The
Trustee acknowledges that in consideration of the performance of its duties
hereunder it is entitled to receive the Trustee's Fee in accordance with the
provision of Section 6.04(a). Additionally, the Trustee hereby covenants, for
the benefit of the Depositor, that the Trustee has arranged separately with the
Servicer for the payment to the Trustee of all of the Trustee's expenses in
connection with this Agreement, including, without limitation, all of the
Trustee's fees and expenses in connection with any actions taken by the Trustee
pursuant to Section 9.12 hereof. For the avoidance of doubt, the parties hereto
acknowledge that it is the intent of the parties that the Depositor and the
Certificate Insurer shall not pay any of the Trustee's fees and expenses in
connection with this transaction. The Trustee shall not be entitled to
compensation for any expense, disbursement or advance as may arise from its
negligence or bad faith, and the Trustee shall have no lien on the Trust Fund
for the payment of its fees and expenses.
(b) The Trust Fund, the Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified by the Servicer and held
harmless against any loss, liability, claim, damage or expense arising out of,
or imposed upon the Trust or the Trustee through the Servicer's acts or
omissions in violation of this Agreement, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence of
the Trustee in the performance of its duties hereunder or by reason of the
Trustee's reckless disregard of obligations and duties hereunder. The
obligations of the Servicer under this Section 9.05 arising prior to any
resignation or termination of the Servicer hereunder shall survive termination
of the Servicer and payment of the Certificates, and shall extend to any
co-trustee appointed pursuant to this Article IX.
84
<PAGE>
Section 9.06 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a banking entity (a) organized and doing
business under the laws of any state or the United States of America subject to
supervision or examination by federal or state authority, (b) authorized under
such laws to exercise corporate trust powers, including taking title to the
Trust Fund assets on behalf of the Certificateholders, (c) having a combined
capital and surplus of at least $50,000,000, (d) whose long-term deposits, if
any, shall be rated at least BBB- by S&P and Baa3 by Moody's (except as provided
herein) or such lower long-term deposit rating as may be approved in writing by
the Certificate Insurer, and (e) reasonably acceptable to the Certificate
Insurer as evidenced in writing. If such banking entity publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of
determining an entity's combined capital and surplus for clause (c) of this
Section, the amount set forth in its most recent report of condition so
published shall be deemed to be its combined capital and surplus. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.07.
Section 9.07 Resignation and Removal of the Trustee. (a) The
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Servicer, the Certificate Insurer and
all Certificateholders. Upon receiving such notice of resignation, the Servicer
at the direction of the Certificate Insurer shall promptly appoint a successor
trustee by written instrument, in duplicate, which instrument shall be delivered
to the resigning Trustee and to the successor trustee. A copy of such instrument
shall be delivered to the Depositor, the Certificateholders, the Certificate
Insurer and the Unaffiliated Seller by the Servicer. Unless a successor trustee
shall have been so appointed and shall have accepted appointment within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 and shall fail to resign after
written request therefor by the Servicer or the Certificate Insurer, or if at
any time the Trustee shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer (with the consent of the Certificate Insurer) or
the Certificate Insurer may remove the Trustee and the Servicer shall, within 30
days after such removal, appoint, at the direction of the Certificate Insurer, a
successor trustee by written instrument, in duplicate, which instrument shall be
delivered to the Trustee so removed and to the successor trustee. A copy of such
instrument shall be delivered to the Depositor, the Certificateholders, the
Certificate Insurer and the Unaffiliated Seller by the Servicer.
(c) If the Trustee fails to perform in accordance with the
terms of this Agreement, the Majority Certificateholders or the Certificate
Insurer may remove the Trustee and appoint a successor trustee by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Servicer, one complete set to the Trustee so removed and one
complete set to the successor Trustee so appointed.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 9.08.
85
<PAGE>
Section 9.08 Successor Trustee. Any successor trustee
appointed as provided in Section 9.07 shall execute, acknowledge and deliver to
the Depositor, the Certificate Insurer, the Unaffiliated Seller, the Servicer
and to its predecessor trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and related documents and statements held by it
hereunder, and the Servicer and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations. No successor trustee shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee shall be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register and to the Rating Agencies. If the Servicer fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Servicer.
Section 9.09 Merger or Consolidation of Trustee. Any Person
into which the Trustee may be merged or converted or with which it may be
consolidated or any corporation or national banking association resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation or national banking association succeeding to the business of
the trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 9.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
9.10 and the consent of the Certificate Insurer, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 9.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 9.08 hereof.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 9.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly, except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights,
86
<PAGE>
powers, duties and obligations (including the holding of title to the Trust Fund
or any portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee or co-trustee at the direction of the
Trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article IX. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. The Trustee shall not
be responsible for any action or inaction of any such separate trustee or
co-trustee, provided that the Trustee appointed such separate trustee or
co-trustee with due care. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 9.11 Tax Returns. The Servicer and the Depositor, as
applicable, upon request, will promptly furnish the Trustee with all such
information as may be reasonably required in connection with the Trustee's
preparation of all Tax Returns of the Trust Fund or for the purpose of the
Trustee responding to reasonable requests for information made by
Certificateholders in connection with tax matters and, upon request within five
(5) Business Days after its receipt thereof, the Servicer shall (a) sign on
behalf of the Trust Fund any Tax Return that the Servicer is required to sign
pursuant to applicable federal, state or local tax laws, and (b) cause such Tax
Return to be returned to the Trustee for filing and for distribution to
Certificateholders if required.
Section 9.12 Retirement of Certificates. The Trustee shall,
upon the retirement of the Certificates pursuant hereto or otherwise, furnish to
the Certificate Insurer a notice of such retirement, and, upon retirement of the
Certificates and the expiration of the term of the Certificate Insurance Policy,
shall surrender the Certificate Insurance Policy to the Certificate Insurer for
cancellation.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
Section 10.01 Limitation on Liability of the Depositor and the
Servicer. None of the Depositor, the Servicer or any of the directors, officers,
employees or agents of the Depositor the Servicer shall be under any liability
to the Trust, the Certificateholders or the Certificate Insurer for any action
taken, or for refraining from the taking of any action, in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor or the Servicer or any such Person
against any breach of warranties or representations made herein, or against any
specific liability imposed on each such party pursuant to this Agreement or
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations or duties hereunder. The Depositor
or the Servicer and any director, officer, employee or agent of the Depositor or
the Servicer may rely in good faith on any document of any kind which, prima
facie, is properly executed and submitted by any appropriate Person respecting
any matters arising hereunder.
87
<PAGE>
Section 10.02 Acts of Certificateholders. (a) Except as
otherwise specifically provided herein, whenever Certificateholder action,
consent or approval is required under this Agreement, such action, consent or
approval shall be deemed to have been taken or given on behalf of, and shall be
binding upon, all Certificateholders if the Majority Certificateholders or the
Certificate Insurer agrees to take such action or give such consent or approval.
(b) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(c) No Certificateholder shall have any right to vote (except
as expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust Fund, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
Section 10.03 Amendment. (a) This Agreement may be amended
from time to time by the Servicer, the Depositor and the Trustee by written
agreement, upon the prior written consent of the Certificate Insurer, without
notice to or consent of the Certificateholders to cure any ambiguity, to correct
or supplement any provisions herein, to comply with any changes in the Code, or
to make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, at the expense of the party requesting the change, delivered
to the Trustee, adversely affect in any material respect the interests of any
Certificateholder; and provided further, that no such amendment shall reduce in
any manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate, or change the rights or obligations
of any other party hereto without the consent of such party. The Trustee shall
give prompt written notice to the Rating Agencies of any amendment made pursuant
to this Section 10.03 or pursuant to Section 6.09 of the Unaffiliated Seller's
Agreement.
(b) This Agreement may be amended from time to time by the
Servicer, the Depositor and the Trustee with the consent of the Certificate
Insurer, the Majority Certificateholders and the Holders of the majority of the
Percentage Interest in the Class R Certificates for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment shall be made unless the Trustee
receives an Opinion of Counsel, at the expense of the party requesting the
change, that such change will not adversely affect the status of the REMIC Trust
as a REMIC or cause a tax to be imposed on the REMIC; and provided, further,
that no such amendment shall reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Class of Certificates without the consent of the Holders of
such Class of Certificates or reduce the percentage for the Holders of which are
required to consent to any such amendment without the consent of the Holders of
100% of such Class of Certificates affected thereby.
(c) It shall not be necessary for the consent of Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
88
<PAGE>
Section 10.04 Recordation of Agreement. To the extent
permitted by applicable law, this Agreement, or a memorandum thereof if
permitted under applicable law, is subject to recordation in all appropriate
public offices for real property records in all of the counties or other
comparable jurisdictions in which any or all of the properties subject to the
Mortgages are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at the
Certificateholders' expense on direction and at the expense of Majority
Certificateholders requesting such recordation, but only when accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders or is necessary for
the administration or servicing of the Mortgage Loans.
Section 10.05 Duration of Agreement. This Agreement shall
continue in existence and effect until terminated as herein provided.
Section 10.06 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Servicer, American Business Credit, Inc.,
Balapointe Office Centre, 111 Presidential Boulevard, Suite 215, Bala Cynwyd, PA
19004, Attention: Mr. Anthony Santilli, Jr., (ii) in the case of the
Unaffiliated Seller, ABFS 1998-3, Inc., Balapointe Office Centre, 111
Presidential Boulevard, Suite 215, Bala Cynwyd, PA 19004, Attention: Mr. Anthony
Santilli, Jr., (iii) in the case of the Trustee, The Chase Manhattan Bank,
Global Trust Services, 450 West 33rd Street, 15th Floor, New York, NY 10001
Attention: Structured Finance Services, (iv) in the case of the
Certificateholders, as set forth in the Certificate Register, (v) in the case of
Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007
Attention: Home Equity Monitoring Group, (vi) in the case of Standard & Poor's
Rating Services, 26 Broadway, New York, New York 10004 Attention: Residential
Mortgage Surveillance Group, (vii) in the case of the Certificate Insurer,
Financial Security Assurance Inc., 350 Park Avenue, New York, New York 10022
Attention: Surveillance Department (in each case in which notice or other
communication to the Certificate Insurer refers to an Event of Default, a claim
on the Certificate Insurance Policy or with respect to which failure on the part
of the Certificate Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of each of the General Counsel and the Head --Financial
Guaranty Group and shall be marked to indicate "URGENT MATERIAL ENCLOSED") and
(viii) in the case of the Depositor or the Underwriter, Prudential Securities
Secured Financing Corporation or Prudential Securities Incorporated, One New
York Plaza, New York, New York 10292, Attention: Len Blum. Any such notices
shall be deemed to be effective with respect to any party hereto upon the
receipt of such notice by such party, except that notices to the
Certificateholders shall be effective upon mailing or personal delivery.
Section 10.07 Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall be
held invalid for any reason whatsoever, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect the
validity or enforceability of the other covenants, agreements, provisions or
terms of this Agreement.
Section 10.08 No Partnership. Nothing herein contained shall
be deemed or construed to create a co-partnership or joint venture between the
parties hereto and the services of the Servicer shall be rendered as an
independent contractor and not as agent for the Certificateholders.
89
<PAGE>
Section 10.09 Counterparts. This Agreement may be executed in
one or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement.
Section 10.10 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the Servicer, the Depositor, the
Trustee and the Certificateholders and their respective successors and permitted
assigns.
Section 10.11 Headings. The headings of the various sections
of this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
Section 10.12 The Certificate Insurer Default. Any right
conferred to the Certificate Insurer shall be suspended during any period in
which a Certificate Insurer Default exists. At such time as the Certificates are
no longer outstanding hereunder, and no amounts owed to the Certificate Insurer
hereunder remain unpaid, the Certificate Insurer's rights hereunder shall
terminate.
Section 10.13 Third Party Beneficiary. The parties agree that
each of the Unaffiliated Seller and the Certificate Insurer is intended and
shall have all rights of a third-party beneficiary of this Agreement.
Section 10.14 Intent of the Parties. It is the intent of the
Depositor and Certificateholders that, for federal income taxes, state and local
income or franchise taxes and other taxes imposed on or measured by income, the
Certificates will be treated as evidencing beneficial ownership interests in a
REMIC. The parties to this Agreement and the holder of each Certificate, by
acceptance of its Certificate, and each beneficial owner thereof, agree to
treat, and to take no action inconsistent with the treatment of, the
Certificates in accordance with the preceding sentence for purposes of federal
income taxes, state and local income and franchise taxes and other taxes imposed
on or measured by income.
Section 10.15 Appointment of Tax Matters Person. The Holders
of the Class R Certificates hereby appoint the Unaffiliated Seller to act, as
their agent, as the Tax Matters Person for the REMIC Trust for all purposes of
the Code. The Tax Matters Person will perform, or cause to be performed, such
duties and take, or cause to be taken, such actions as are required to be
performed or taken by the Tax Matters Person under the code. The Holders of the
Class R Certificates may hereafter appoint a different entity as their agent, or
may appoint one of the Class R Certificateholders to be the Tax Matters Person.
Section 10.16 Section 10.16 GOVERNING LAW; CONSENT TO
JURISDICTION; WAIVER OF JURY TRIAL (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF NEW YORK.
(b) THE SERVICER AND THE TRUSTEE HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND
EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS
SET FORTH IN SECTION 10.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE
90
<PAGE>
BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE DEPOSITOR, THE SERVICER
AND THE TRUSTEE EACH HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS,
AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE DEPOSITOR, THE
SERVICER OR THE TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT ANY OF THEIR RIGHTS TO BRING ANY ACTION OR PROCEEDING IN THE
COURTS OF ANY OTHER JURISDICTION.
(c) THE DEPOSITOR, THE SERVICER AND THE TRUSTEE EACH HEREBY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE WILL BE RESOLVED
IN A BENCH TRIAL WITHOUT A JURY.
91
<PAGE>
IN WITNESS WHEREOF, the Servicer, the Trustee and the
Depositor have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION, as Depositor
By:
----------------------------------------
Name:
Title:
AMERICAN BUSINESS CREDIT, INC., as Servicer
By:
----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee
By:
----------------------------------------
Name:
Title:
92
<PAGE>
[Signature Page to Pooling and Servicing Agreement]
93
<PAGE>
Exhibit 4.1
State of Pennsylvania )
) ss.:
County of Montgomery )
On the 29th day of September, 1998 before me, a Notary Public
in and for the State of Pennsylvania, personally appeared ______________, known
to me to be _________ of American Business Credit, Inc., the corporation that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------
Notary Public
My Commission expires:
<PAGE>
State of New York )
) ss.:
County of New York )
On the 29th day of September, 1998, before me, a Notary Public
in and for the State of New York, personally appeared ______________, known to
me to be a ________________ of The Chase Manhattan Bank, the bank that executed
the within instrument and also known to me to be the person who executed it on
behalf of said bank, and acknowledged to me that such bank executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------
Notary Public
My Commission expires:
<PAGE>
State of New York )
) ss.:
County of New York )
On the 29th day of September, 1998, before me, a Notary Public
in and for the State of New York, personally appeared _______________, known to
me to be a _______________ of Prudential Securities Secured Financing
Corporation, the corporation that executed the within instrument and also known
to me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunder to set my hand and
affixed my official seal the day and year in this certificate first above
written.
------------------------
Notary Public
My Commission expires:
<PAGE>
Exhibit 4.1
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I DEFINITIONS.............................................................................................1
SECTION 1.01 CERTAIN DEFINED TERMS...........................................................................1
SECTION 1.02 PROVISIONS OF GENERAL APPLICATION..............................................................34
SECTION 1.03 BUSINESS DAY CERTIFICATE.......................................................................35
ARTICLE II ESTABLISHMENT OF THE TRUST SALE AND CONVEYANCE OF THE TRUST FUND......................................35
SECTION 2.01 ESTABLISHMENT OF THE TRUST.....................................................................35
SECTION 2.02 PURCHASE AND SALE OF INITIAL MORTGAGE LOANS....................................................35
SECTION 2.03 PURCHASE AND SALE OF SUBSEQUENT MORTGAGE LOANS.................................................35
SECTION 2.04 POSSESSION OF MORTGAGE FILES; ACCESS TO MORTGAGE FILES.........................................37
SECTION 2.05 DELIVERY OF MORTGAGE LOAN DOCUMENTS............................................................38
SECTION 2.06 ACCEPTANCE BY TRUSTEE OF THE TRUST FUND; CERTAIN SUBSTITUTIONS; CERTIFICATION BY TRUSTEE.......40
SECTION 2.07 DESIGNATIONS UNDER REMIC PROVISIONS; DESIGNATION OF STARTUP DAY................................42
SECTION 2.08 EXECUTION OF CERTIFICATES......................................................................42
SECTION 2.09 APPLICATION OF PRINCIPAL AND INTEREST..........................................................42
SECTION 2.10 GRANT OF SECURITY INTEREST.....................................................................42
SECTION 2.11 FURTHER ACTION EVIDENCING ASSIGNMENTS..........................................................43
ARTICLE III REPRESENTATIONS AND WARRANTIES.......................................................................43
SECTION 3.01 REPRESENTATIONS OF THE SERVICER................................................................43
SECTION 3.02 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR.....................................45
SECTION 3.03 PURCHASE AND SUBSTITUTION......................................................................46
ARTICLE IV THE CERTIFICATES......................................................................................47
SECTION 4.01 THE CERTIFICATES...............................................................................47
SECTION 4.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES..........................................48
SECTION 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES..............................................52
SECTION 4.04 PERSONS DEEMED OWNERS..........................................................................52
ARTICLE V ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS.....................................................52
SECTION 5.01 REMIC MATTERS; THE SERVICER....................................................................52
SECTION 5.02 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS; COLLECTION ACCOUNT...............................54
SECTION 5.03 PERMITTED WITHDRAWALS FROM THE COLLECTION ACCOUNT..............................................55
SECTION 5.04 HAZARD INSURANCE POLICIES; PROPERTY PROTECTION EXPENSES........................................56
SECTION 5.05 ASSUMPTION AND MODIFICATION AGREEMENTS.........................................................56
SECTION 5.06 REALIZATION UPON DEFAULTED MORTGAGE LOANS......................................................57
SECTION 5.07 TRUSTEE TO COOPERATE...........................................................................58
SECTION 5.08 SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES BY SERVICER................................59
SECTION 5.09 ANNUAL STATEMENT AS TO COMPLIANCE..............................................................59
SECTION 5.10 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT........................................59
SECTION 5.11 ACCESS TO CERTAIN DOCUMENTATION................................................................59
SECTION 5.12 MAINTENANCE OF FIDELITY BOND...................................................................60
SECTION 5.13 THE SUBSERVICERS...............................................................................60
SECTION 5.14 REPORTS TO THE TRUSTEE; COLLECTION ACCOUNT STATEMENTS..........................................60
SECTION 5.15 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS..................................................60
SECTION 5.16 REPORTS TO BE PROVIDED BY THE SERVICER.........................................................61
SECTION 5.17 ADJUSTMENT OF SERVICING COMPENSATION IN RESPECT OF PREPAID MORTGAGE LOANS......................61
SECTION 5.18 PERIODIC ADVANCES; SPECIAL ADVANCE.............................................................62
SECTION 5.19 INDEMNIFICATION; THIRD PARTY CLAIMS............................................................62
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 5.20 MAINTENANCE OF CORPORATE EXISTENCE AND LICENSES; MERGER OR CONSOLIDATION OF THE SERVICER.......63
SECTION 5.21 ASSIGNMENT OF AGREEMENT BY SERVICER; SERVICER NOT TO RESIGN....................................63
SECTION 5.22 PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION; ADDITIONAL INFORMATION...........64
ARTICLE VI DISTRIBUTIONS AND PAYMENTS............................................................................64
SECTION 6.01 ESTABLISHMENT OF ACCOUNTS; WITHDRAWALS FROM ACCOUNTS; DEPOSITS TO THE CERTIFICATE ACCOUNT......64
SECTION 6.02 PERMITTED WITHDRAWALS FROM THE CERTIFICATE ACCOUNT.............................................65
SECTION 6.03 COLLECTION OF MONEY............................................................................66
SECTION 6.04 THE CERTIFICATE INSURANCE POLICY...............................................................66
SECTION 6.05 DISTRIBUTIONS..................................................................................68
SECTION 6.06 INVESTMENT OF ACCOUNTS.........................................................................69
SECTION 6.07 REPORTS BY THE TRUSTEE.........................................................................69
SECTION 6.08 ADDITIONAL REPORTS BY TRUSTEE..................................................................71
SECTION 6.09 COMPENSATING INTEREST..........................................................................72
SECTION 6.10 EFFECT OF PAYMENTS BY THE CERTIFICATE INSURER; SUBROGATION.....................................72
ARTICLE VII DEFAULT..............................................................................................72
SECTION 7.01 EVENTS OF DEFAULT..............................................................................72
SECTION 7.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.......................................................74
SECTION 7.03 WAIVER OF DEFAULTS.............................................................................76
SECTION 7.04 RIGHTS OF THE CERTIFICATE INSURER TO EXERCISE RIGHTS OF CLASS A CERTIFICATEHOLDERS.............76
SECTION 7.05 TRUSTEE TO ACT SOLELY WITH CONSENT OF THE CERTIFICATE INSURER..................................77
SECTION 7.06 MORTGAGE LOANS, TRUST FUND AND ACCOUNTS HELD FOR BENEFIT OF THE CERTIFICATE INSURER............77
SECTION 7.07 CERTIFICATE INSURER DEFAULT....................................................................77
ARTICLE VIII TERMINATION.........................................................................................78
SECTION 8.01 TERMINATION....................................................................................78
SECTION 8.02 ADDITIONAL TERMINATION REQUIREMENTS............................................................79
SECTION 8.03 ACCOUNTING UPON TERMINATION OF SERVICER........................................................79
SECTION 8.04 RETENTION AND TERMINATION OF THE SERVICER......................................................80
SECTION 8.05 TERMINATION OF THE CLASS A-4 CERTIFICATES. THE SERVICER MAY, AT ITS OPTION AND AT ITS SOLE COST AND
EXPENSE, TERMINATE THE CLASS A-4 CERTIFICATES ON OR AFTER THE CLASS A-4 CLEAN-UP CALL DATE BY
DEPOSITING INTO THE CERTIFICATE ACCOUNT AN AMOUNT EQUAL TO THE SUM OF (I) 100% OF THE CLASS A-4
CERTIFICATE PRINCIPAL BALANCE (THE "CLASS A-4 TERMINATION PRICE"). THE SERVICER MUST DEPOSIT THE
CLASS A-4 TERMINATION PRICE IN THE CERTIFICATE ACCOUNT ON OR PRIOR TO THE SERVICER DISTRIBUTION
DATE. THE TRUSTEE SHALL DISTRIBUTE THE AMOUNT DEPOSITED THEREIN ON THE NEXT DISTRIBUTION DATE. NO
SUCH TERMINATION IS PERMITTED WITHOUT THE PRIOR WRITTEN CONSENT OF THE CERTIFICATE INSURER IF IT
WOULD RESULT IN A DRAW ON THE CERTIFICATE INSURANCE POLICY..................................80
ARTICLE IX THE TRUSTEE...........................................................................................80
SECTION 9.01 DUTIES OF TRUSTEE..............................................................................80
SECTION 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE..........................................................85
SECTION 9.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS..........................................86
SECTION 9.04 TRUSTEE MAY OWN CERTIFICATES...................................................................86
SECTION 9.05 TRUSTEE'S FEES AND EXPENSES; INDEMNITY.........................................................86
SECTION 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE...........................................................87
SECTION 9.07 RESIGNATION AND REMOVAL OF THE TRUSTEE.........................................................87
SECTION 9.08 SUCCESSOR TRUSTEE..............................................................................88
SECTION 9.09 MERGER OR CONSOLIDATION OF TRUSTEE.............................................................88
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 9.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE..................................................88
SECTION 9.11 TAX RETURNS....................................................................................89
SECTION 9.12 RETIREMENT OF CERTIFICATES.....................................................................89
ARTICLE X MISCELLANEOUS PROVISIONS...............................................................................90
SECTION 10.01 LIMITATION ON LIABILITY OF THE DEPOSITOR AND THE SERVICER...................................90
SECTION 10.02 ACTS OF CERTIFICATEHOLDERS..................................................................90
SECTION 10.03 AMENDMENT...................................................................................90
SECTION 10.04 RECORDATION OF AGREEMENT....................................................................91
SECTION 10.05 DURATION OF AGREEMENT.......................................................................91
SECTION 10.06 NOTICES.....................................................................................91
SECTION 10.07 SEVERABILITY OF PROVISIONS..................................................................92
SECTION 10.08 NO PARTNERSHIP..............................................................................92
SECTION 10.09 COUNTERPARTS................................................................................92
SECTION 10.10 SUCCESSORS AND ASSIGNS......................................................................92
SECTION 10.11 HEADINGS....................................................................................92
SECTION 10.12 THE CERTIFICATE INSURER DEFAULT.............................................................92
SECTION 10.13 THIRD PARTY BENEFICIARY.....................................................................93
SECTION 10.14 INTENT OF THE PARTIES.......................................................................93
SECTION 10.15 APPOINTMENT OF TAX MATTERS PERSON...........................................................93
SECTION 10.16 SECTION 10.16 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.................93
</TABLE>
<PAGE>
EXHIBITS
EXHIBIT A-1 Class A-1 Certificate
EXHIBIT A-2 Class A-2 Certificate
EXHIBIT A-3 Class A-3 Certificate
EXHIBIT A-4 Class A-4 Certificate
EXHIBIT A-5 Class A-5 Certificate
EXHIBIT A-6 Class A-6 Certificate
EXHIBIT B Class R Certificate
EXHIBIT C Contents of the Mortgage File
EXHIBIT D Certificate Re: Prepaid Loans
EXHIBIT E Trustee's Acknowledgement of Receipt
EXHIBIT F Initial Certification of Trustee
EXHIBIT G Final Certification of Trustee
EXHIBIT H Request for Release of Documents
EXHIBIT I Transfer Affidavit and Agreement
EXHIBIT J Transferor's Certificate
EXHIBIT K ERISA Investment Representation Letter
EXHIBIT L Form of Subsequent Transfer Agreement
SCHEDULES
SCHEDULE I Mortgage Loan Schedule
<PAGE>
EXHIBITS TO POOLING AND SERVICING AGREEMENT
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
<TABLE>
<CAPTION>
<S> <C>
Series 1998-3 Pass-Through Rate: 6.400%
No. A-1-1
Original Certificate Principal Maximum Collateral Amount:
Balance: $43,100,000.00 $200,000,000.00
CUSIP: 000759AY6 Percentage Interest of this Certificate: 100%
Cut-Off Date: Date of Pooling and Servicing Agreement: As of
Close of business August 31, 1998 September 1, 1998
Closing Date: September 29, 1998
First Distribution Date: October 26, 1998 Latest Maturity Date: November 25, 2009
Servicer: American Business Credit, Inc. Trustee: The Chase Manhattan Bank
</TABLE>
------------------
Unless this Certificate is presented by an authorized
representative of the Depository Trust Company, a New York corporation ("DTC"),
to the Depositor or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certifies that CEDE & CO. is the registered owner of a
Class A-1 Certificate percentage interest (the "Percentage Interest") in certain
first and second lien mortgage loans (the "Mortgage Loans") serviced by American
Business Credit, Inc. (hereinafter called the "Servicer"), in its capacity as
servicer under that certain Pooling and Servicing Agreement (the "Agreement")
dated as of September 1, 1998 among American Business Credit, Inc., as servicer,
Prudential Securities Secured Financing Corporation, as depositor (the
"Depositor") and The Chase Manhattan Bank, as trustee (the "Trustee"). The
Mortgage Loans were originated or acquired by American Business Credit, Inc.
("ABC"), HomeAmerican Credit, Inc. d/b/a Upland Mortgage ("Upland") or New
Jersey Mortgage and Investment Corp. ("NJMIC", and together with ABC and Upland,
the "Originators") and sold to ABFS 1998-3, Inc. (the "Seller"), which in turn
sold the Mortgage Loans to the Depositor pursuant to that certain Unaffiliated
Seller's Agreement, dated as of September 1, 1998, among the Depositor, the
Originators and the Seller. The Mortgage Loans will be serviced by the Servicer
pursuant to the terms and conditions of the Agreement, certain of the pertinent
provisions of which are set forth herein. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to
A-1-1
<PAGE>
the terms, provisions and conditions of the Agreement, to which Agreement the
holder of this Certificate by virtue of the acceptance hereof assents and by
which such holder is bound.
On each Distribution Date, commencing on October 26, 1998, the
Trustee shall distribute to the Person in whose name this Certificate is
registered on the last day of the month next preceding the month of such
distribution (the "Record Date"), an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of the Class A-1 Certificates on such Distribution Date
pursuant to Section 6.05 of the Agreement.
Distributions on this Certificate will be made by the Trustee
by wire transfer of immediately available funds to the account of the Person
entitled thereto as shall appear on the Certificate Register without the
presentation or surrender of this Certificate (except for the final distribution
as described below) or the making of any notation thereon, at a bank or other
entity having appropriate facilities therefor, if such Person shall own of
record Certificates of the same Class which have denominations aggregating at
least $5,000,000 appearing in the Certificate Register and shall have so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of such Person appearing in the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Trustee in New York, New
York.
This Certificate is one of a duly authorized issue of
Certificates designated as ABFS Mortgage Loan Trust 1998-3, Mortgage
Pass-Through Certificates, Series 1998-3, Class A-1, Class A-2, Class A-3, Class
A-4 and Class R (herein called the "Certificates") and representing undivided
ownership of (i) such Mortgage Loans as from time to time are subject to the
Agreement, together with the Mortgage Files relating thereto and all collections
thereon and proceeds thereof (other than payments of interest that accrued on
each Mortgage Loan up to the Cut-Off Date), (ii) such assets as from time to
time are identified as REO Property and collections thereon and proceeds
thereof, assets that are deposited in the Accounts, including amounts on deposit
in such Accounts and invested in Permitted Investments, (iii) the Trustee's
rights with respect to the Mortgage Loans under all insurance policies required
to be maintained pursuant to the Agreement and any Insurance Proceeds, (iv) the
Certificate Insurance Policy, (v) Liquidation Proceeds and (vi) Released
Mortgaged Property Proceeds.
The Certificates do not represent an obligation of, or an
interest in, the Depositor, the Seller, the Servicer, the Originators, the
Certificate Insurer or the Trustee and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, the Federal Housing Administration or the Veterans Administration
or any other governmental agency. The Certificates are limited in right of
payment to certain collections and recoveries respecting the Mortgage Loans and,
with respect to the Class A Certificates, Insured Payments under the Certificate
Insurance Policy, all as more specifically set forth herein and in the
Agreement. In the
A-1-2
<PAGE>
event Servicer funds are advanced with respect to any Mortgage
Loan, such advance is reimbursable to the Servicer from related recoveries on
such Mortgage Loan.
Financial Security Assurance Inc. (the "Certificate Insurer")
has issued a surety bond with respect to the Class A Certificates, which
guarantees certain payments on the Class A Certificates, as described in the
Agreement.
Subject to certain restrictions, the Agreement permits the
amendment thereof by the Depositor, the Servicer and the Trustee. Subject to the
rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies maintained by the Trustee in New York,
New York, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only in fully-registered form.
As provided in the Agreement and subject to certain limitations therein set
forth, a Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Servicer, the Depositor, the Seller, the Originators and
the Trustee and any agent of any of the foregoing, may treat the person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon
notice to the Trustee of: (i) the later of (a) the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or Periodic Advances of same by the Servicer), or the disposition
of all funds with respect to the last Mortgage Loan and the remittance of all
funds due under the Agreement and the payment of all amounts due and payable to
the Certificate Insurer and the Trustee or (b) mutual consent
A-1-3
<PAGE>
of the Servicer, the Certificate Insurer and all Certificateholders, or (ii) the
purchase by the Servicer of all outstanding Mortgage Loans and REO Properties at
a price determined as provided in the Agreement (the exercise of the right of
the Servicer to purchase all the Mortgage Loans and property in respect of
Mortgage Loans will result in early retirement of the Certificates), the right
of the Servicer to purchase being subject to the Pool Principal Balance of the
Mortgage Loans and REO Properties at the time of purchase being less than ten
percent (10%) of the Maximum Collateral Amount. Unless this Certificate has been
authenticated by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
Unless this Certificate has been countersigned by the Trustee,
by manual signature, this Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
A-1-4
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed by its authorized officer.
THE CHASE MANHATTAN BANK, not
in its individual capacity,
but solely as Trustee
By:
--------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class A-1 Certificate referred to in the
within-mentioned Agreement, which Certificate is issued to Cede & Co. in the
initial denomination of $43,100,000.00.
THE CHASE MANHATTAN BANK, not
in its individual capacity,
but solely as Trustee
By:
--------------------------------
Dated: September 29, 1998
A-1-5
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
<TABLE>
<CAPTION>
<S> <C>
Series 1998-3 Pass-Through Rate: 6.020%
No. A-2-1
Original Certificate Principal Maximum Collateral Amount:
Balance: $30,000,000.00 $200,000,000.00
CUSIP: 000759AZ3 Percentage Interest of this Certificate: 100%
Cut-Off Date: Date of Pooling and Servicing Agreement: As of
Close of business August 31, 1998 September 1, 1998
Closing Date: September 29, 1998
First Distribution Date: October 26, 1998 Latest Maturity Date: July 25, 2014
Servicer: American Business Credit, Inc. Trustee: The Chase Manhattan Bank
</TABLE>
-------------------------
Unless this Certificate is presented by an authorized
representative of the Depository Trust Company, a New York corporation ("DTC"),
to the Depositor or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certifies that CEDE & CO. is the registered owner of a
Class A-2 Certificate percentage interest (the "Percentage Interest") in certain
first and second lien mortgage loans (the "Mortgage Loans") serviced by American
Business Credit, Inc. (hereinafter called the "Servicer"), in its capacity as
servicer under that certain Pooling and Servicing Agreement (the "Agreement")
dated as of September 1, 1998 among American Business Credit, Inc., as servicer,
Prudential Securities Secured Financing Corporation, as depositor (the
"Depositor") and The Chase Manhattan Bank, as trustee (the "Trustee"). The
Mortgage Loans were originated or acquired by American Business Credit, Inc.
("ABC"), HomeAmerican Credit, Inc. d/b/a Upland Mortgage ("Upland") or New
Jersey Mortgage and Investment Corp. ("NJMIC", and together with ABC and Upland,
the "Originators") and sold to ABFS 1998-3, Inc. (the "Seller"), which in turn
sold the Mortgage Loans to the Depositor pursuant to that certain Unaffiliated
Seller's Agreement, dated as of September 1, 1998, among the Depositor, the
Originators and the Seller. The Mortgage Loans will be serviced by the Servicer
pursuant to the terms and conditions of the Agreement, certain of the pertinent
provisions of which are set forth herein. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to
A-2-1
<PAGE>
the terms, provisions and conditions of the Agreement, to which Agreement the
holder of this Certificate by virtue of the acceptance hereof assents and by
which such holder is bound.
On each Distribution Date, commencing on October 26, 1998, the
Trustee shall distribute to the Person in whose name this Certificate is
registered on the last day of the month next preceding the month of such
distribution (the "Record Date"), an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of the Class A-2 Certificates on such Distribution Date
pursuant to Section 6.05 of the Agreement.
Distributions on this Certificate will be made by the Trustee
by wire transfer of immediately available funds to the account of the Person
entitled thereto as shall appear on the Certificate Register without the
presentation or surrender of this Certificate (except for the final distribution
as described below) or the making of any notation thereon, at a bank or other
entity having appropriate facilities therefor, if such Person shall own of
record Certificates of the same Class which have denominations aggregating at
least $5,000,000 appearing in the Certificate Register and shall have so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of such Person appearing in the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Trustee in New York, New
York.
This Certificate is one of a duly authorized issue of
Certificates designated as ABFS Mortgage Loan Trust 1998-3, Mortgage
Pass-Through Certificates, Series 1998-3, Class A-1, Class A-2, Class A-3, Class
A-4 and Class R (herein called the "Certificates") and representing undivided
ownership of (i) such Mortgage Loans as from time to time are subject to the
Agreement, together with the Mortgage Files relating thereto and all collections
thereon and proceeds thereof (other than payments of interest that accrued on
each Mortgage Loan up to the Cut-Off Date), (ii) such assets as from time to
time are identified as REO Property and collections thereon and proceeds
thereof, assets that are deposited in the Accounts, including amounts on deposit
in such Accounts and invested in Permitted Investments, (iii) the Trustee's
rights with respect to the Mortgage Loans under all insurance policies required
to be maintained pursuant to the Agreement and any Insurance Proceeds, (iv) the
Certificate Insurance Policy, (v) Liquidation Proceeds and (vi) Released
Mortgaged Property Proceeds.
The Certificates do not represent an obligation of, or an
interest in, the Depositor, the Seller, the Servicer, the Originators, the
Certificate Insurer or the Trustee and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, the Federal Housing Administration or the Veterans Administration
or any other governmental agency. The Certificates are limited in right of
payment to certain collections and recoveries respecting the Mortgage Loans and,
with respect to the Class A Certificates, Insured Payments under the Certificate
Insurance Policy, all as more specifically set forth herein and in the
Agreement. In the
A-2-2
<PAGE>
event Servicer funds are advanced with respect to any Mortgage Loan, such
advance is reimbursable to the Servicer from related recoveries on such Mortgage
Loan.
Financial Security Assurance Inc. (the "Certificate Insurer")
has issued a surety bond with respect to the Class A Certificates, which
guarantees certain payments on the Class A Certificates, as described in the
Agreement.
Subject to certain restrictions, the Agreement permits the
amendment thereof by the Depositor, the Servicer and the Trustee. Subject to the
rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies maintained by the Trustee in New York,
New York, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only in fully-registered form.
As provided in the Agreement and subject to certain limitations therein set
forth, a Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Servicer, the Depositor, the Seller, the Originators and
the Trustee and any agent of any of the foregoing, may treat the person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon
notice to the Trustee of: (i) the later of (a) the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or Periodic Advances of same by the Servicer), or the disposition
of all funds with respect to the last Mortgage Loan and the remittance of all
funds due under the Agreement and the payment of all amounts due and payable to
the Certificate Insurer and the Trustee or (b) mutual consent
A-2-3
<PAGE>
of the Servicer, the Certificate Insurer and all Certificateholders, or (ii) the
purchase by the Servicer of all outstanding Mortgage Loans and REO Properties at
a price determined as provided in the Agreement (the exercise of the right of
the Servicer to purchase all the Mortgage Loans and property in respect of
Mortgage Loans will result in early retirement of the Certificates), the right
of the Servicer to purchase being subject to the Pool Principal Balance of the
Mortgage Loans and REO Properties at the time of purchase being less than ten
percent (10%) of the Maximum Collateral Amount. Unless this Certificate has been
authenticated by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
Unless this Certificate has been countersigned by the Trustee,
by manual signature, this Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
A-2-4
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed by its authorized officer.
THE CHASE MANHATTAN BANK, not
in its individual capacity,
but solely as Trustee
By:
--------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class A-2 Certificate referred to in the
within-mentioned Agreement, which Certificate is issued to Cede & Co. in the
initial denomination of $30,000,000.00.
THE CHASE MANHATTAN BANK, not
in its individual capacity,
but solely as Trustee
By:
--------------------------------
Dated: September 29, 1998
A-2-5
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
<TABLE>
<CAPTION>
<S> <C>
Series 1998-3 Pass-Through Rate: 6.295%*
No. A-3-1 [* Plus 0.50% after the Clean-Up Call Date]
Original Certificate Principal Maximum Collateral Amount:
Balance: $105,100,000.00 $200,000,000.00
CUSIP: 000759BA7 Percentage Interest of this Certificate: 100%
Cut-Off Date: Date of Pooling and Servicing Agreement: As of
Close of business August 31, 1998 September 1, 1998
Closing Date: September 29, 1998
First Distribution Date: October 26, 1998 Latest Maturity Date: January 25, 2030
Servicer: American Business Credit, Inc. Trustee: The Chase Manhattan Bank
</TABLE>
-------------------------
Unless this Certificate is presented by an authorized
representative of the Depository Trust Company, a New York corporation ("DTC"),
to the Depositor or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certifies that CEDE & CO. is the registered owner of a
Class A-3 Certificate percentage interest (the "Percentage Interest") in certain
first and second lien mortgage loans (the "Mortgage Loans") serviced by American
Business Credit, Inc. (hereinafter called the "Servicer"), in its capacity as
servicer under that certain Pooling and Servicing Agreement (the "Agreement")
dated as of September 1, 1998 among American Business Credit, Inc., as servicer,
Prudential Securities Secured Financing Corporation, as depositor (the
"Depositor") and The Chase Manhattan Bank, as trustee (the "Trustee"). The
Mortgage Loans were originated or acquired by American Business Credit, Inc.
("ABC"), HomeAmerican Credit, Inc. d/b/a Upland Mortgage ("Upland") or New
Jersey Mortgage and Investment Corp. ("NJMIC", and together with ABC and Upland,
the "Originators") and sold to ABFS 1998-3, Inc. (the "Seller"), which in turn
sold the Mortgage Loans to the Depositor pursuant to that certain Unaffiliated
Seller's Agreement, dated as of September 1, 1998, among the Depositor, the
Originators and the Seller. The Mortgage Loans will be serviced by the Servicer
pursuant to the terms and conditions of the Agreement, certain of the pertinent
provisions of which are set forth herein. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to
A-3-1
<PAGE>
the terms, provisions and conditions of the Agreement, to which Agreement the
holder of this Certificate by virtue of the acceptance hereof assents and by
which such holder is bound.
On each Distribution Date, commencing on October 26, 1998, the
Trustee shall distribute to the Person in whose name this Certificate is
registered on the last day of the month next preceding the month of such
distribution (the "Record Date"), an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Class A-3 Certificates on such Distribution Date
pursuant to Section 6.05 of the Agreement.
Distributions on this Certificate will be made by the Trustee
by wire transfer of immediately available funds to the account of the Person
entitled thereto as shall appear on the Certificate Register without the
presentation or surrender of this Certificate (except for the final distribution
as described below) or the making of any notation thereon, at a bank or other
entity having appropriate facilities therefor, if such Person shall own of
record Certificates of the same Class which have denominations aggregating at
least $5,000,000 appearing in the Certificate Register and shall have so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of such Person appearing in the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Trustee in New York, New
York.
This Certificate is one of a duly authorized issue of
Certificates designated as ABFS Mortgage Loan Trust 1998-3, Mortgage
Pass-Through Certificates, Series 1998-3, Class A-1, Class A-2, Class A-3, Class
A-4 and Class R (herein called the "Certificates") and representing undivided
ownership of (i) such Mortgage Loans as from time to time are subject to the
Agreement, together with the Mortgage Files relating thereto and all collections
thereon and proceeds thereof (other than payments of interest that accrued on
each Mortgage Loan up to the Cut-Off Date), (ii) such assets as from time to
time are identified as REO Property and collections thereon and proceeds
thereof, assets that are deposited in the Accounts, including amounts on deposit
in such Accounts and invested in Permitted Investments, (iii) the Trustee's
rights with respect to the Mortgage Loans under all insurance policies required
to be maintained pursuant to the Agreement and any Insurance Proceeds, (iv) the
Certificate Insurance Policy, (v) Liquidation Proceeds and (vi) Released
Mortgaged Property Proceeds.
The Certificates do not represent an obligation of, or an
interest in, the Depositor, the Seller, the Servicer, the Originators, the
Certificate Insurer or the Trustee and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, the Federal Housing Administration or the Veterans Administration
or any other governmental agency. The Certificates are limited in right of
payment to certain collections and recoveries respecting the Mortgage Loans and,
with respect to the Class A Certificates, Insured Payments under the Certificate
Insurance Policy, all as more specifically set forth herein and in the
Agreement. In the
A-3-2
<PAGE>
event Servicer funds are advanced with respect to any Mortgage Loan, such
advance is reimbursable to the Servicer from related recoveries on such Mortgage
Loan.
Financial Security Assurance Inc. (the "Certificate Insurer")
has issued a surety bond with respect to the Class A Certificates, which
guarantees certain payments on the Class A Certificates, as described in the
Agreement.
Subject to certain restrictions, the Agreement permits the
amendment thereof by the Depositor, the Servicer and the Trustee. Subject to the
rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies maintained by the Trustee in New York,
New York, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only in fully-registered form.
As provided in the Agreement and subject to certain limitations therein set
forth, a Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Servicer, the Depositor, the Seller, the Originators and
the Trustee and any agent of any of the foregoing, may treat the person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon
notice to the Trustee of: (i) the later of (a) the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or Periodic Advances of same by the Servicer), or the disposition
of all funds with respect to the last Mortgage Loan and the remittance of all
funds due under the Agreement and the payment of all amounts due and payable to
the Certificate Insurer and the Trustee or (b) mutual consent
A-3-3
<PAGE>
of the Servicer, the Certificate Insurer and all Certificateholders, or (ii) the
purchase by the Servicer of all outstanding Mortgage Loans and REO Properties at
a price determined as provided in the Agreement (the exercise of the right of
the Servicer to purchase all the Mortgage Loans and property in respect of
Mortgage Loans will result in early retirement of the Certificates), the right
of the Servicer to purchase being subject to the Pool Principal Balance of the
Mortgage Loans and REO Properties at the time of purchase being less than ten
percent (10%) of the Maximum Collateral Amount. Unless this Certificate has been
authenticated by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
Unless this Certificate has been countersigned by the Trustee,
by manual signature, this Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
A-3-4
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed by its authorized officer.
THE CHASE MANHATTAN BANK, not
in its individual capacity,
but solely as Trustee
By:
--------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class A-3 Certificate referred to in the
within-mentioned Agreement, which Certificate is issued to Cede & Co. in the
initial denomination of $105,100,000.00
THE CHASE MANHATTAN BANK, not
in its individual capacity,
but solely as Trustee
By:
--------------------------------
Dated: September 29, 1998
A-3-5
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
<TABLE>
<CAPTION>
<S> <C>
Series 1998-3 Pass-Through Rate: Adjustable*
No. A-4-1 [* Plus 0.60% after the Clean-Up Call Date]
Original Certificate Principal Maximum Collateral Amount:
Balance: $19,800,000.00 $200,000,000.00
CUSIP: 000759BB5 Percentage Interest of this Certificate: 100%
Cut-Off Date: Date of Pooling and Servicing Agreement: As of
Close of business August 31, 1998 September 1, 1998
Closing Date: September 29, 1998
First Distribution Date: October 26, 1998 Latest Maturity Date: October 25, 2029
Servicer: American Business Credit, Inc. Trustee: The Chase Manhattan Bank
</TABLE>
-----------------------
Unless this Certificate is presented by an authorized
representative of the Depository Trust Company, a New York corporation ("DTC"),
to the Depositor or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
This certifies that CEDE & CO. is the registered owner of a
Class A-4 Certificate percentage interest (the "Percentage Interest") in certain
first and second lien mortgage loans (the "Mortgage Loans") serviced by American
Business Credit, Inc. (hereinafter called the "Servicer"), in its capacity as
servicer under that certain Pooling and Servicing Agreement (the "Agreement")
dated as of September 1, 1998 among American Business Credit, Inc., as servicer,
Prudential Securities Secured Financing Corporation, as depositor (the
"Depositor") and The Chase Manhattan Bank, as trustee (the "Trustee"). The
Mortgage Loans were originated or acquired by American Business Credit, Inc.
("ABC"), HomeAmerican Credit, Inc. d/b/a Upland Mortgage ("Upland") or New
Jersey Mortgage and Investment Corp. ("NJMIC", and together with ABC and Upland,
the "Originators") and sold to ABFS 1998-3, Inc. (the "Seller"), which in turn
sold the Mortgage Loans to the Depositor pursuant to that certain Unaffiliated
Seller's Agreement, dated as of September 1, 1998, among the Depositor, the
Originators and the Seller. The Mortgage Loans will be serviced by the Servicer
pursuant to the terms and conditions of the Agreement, certain of the pertinent
provisions of which are set forth herein. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to
A-4-1
<PAGE>
the terms, provisions and conditions of the Agreement, to which Agreement the
holder of this Certificate by virtue of the acceptance hereof assents and by
which such holder is bound.
On each Distribution Date, commencing on October 26, 1998, the
Trustee shall distribute to the Person in whose name this Certificate is
registered on the last day of the month next preceding the month of such
distribution (the "Record Date"), an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Class A-4 Certificates on such Distribution Date
pursuant to Section 6.05 of the Agreement.
Distributions on this Certificate will be made by the Trustee
by wire transfer of immediately available funds to the account of the Person
entitled thereto as shall appear on the Certificate Register without the
presentation or surrender of this Certificate (except for the final distribution
as described below) or the making of any notation thereon, at a bank or other
entity having appropriate facilities therefor, if such Person shall own of
record Certificates of the same Class which have denominations aggregating at
least $5,000,000 appearing in the Certificate Register and shall have so
notified the Trustee at least five business days prior to the related Record
Date, or by check mailed to the address of such Person appearing in the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Trustee in New York, New
York.
This Certificate is one of a duly authorized issue of
Certificates designated as ABFS Mortgage Loan Trust 1998-3, Mortgage
Pass-Through Certificates, Series 1998-3, Class A-1, Class A-2, Class A-3, Class
A-4 and Class R (herein called the "Certificates") and representing undivided
ownership of (i) such Mortgage Loans as from time to time are subject to the
Agreement, together with the Mortgage Files relating thereto and all collections
thereon and proceeds thereof (other than payments of interest that accrued on
each Mortgage Loan up to the Cut-Off Date), (ii) such assets as from time to
time are identified as REO Property and collections thereon and proceeds
thereof, assets that are deposited in the Accounts, including amounts on deposit
in such Accounts and invested in Permitted Investments, (iii) the Trustee's
rights with respect to the Mortgage Loans under all insurance policies required
to be maintained pursuant to the Agreement and any Insurance Proceeds, (iv) the
Certificate Insurance Policy, (v) Liquidation Proceeds and (vi) Released
Mortgaged Property Proceeds.
The Certificates do not represent an obligation of, or an
interest in, the Depositor, the Seller, the Servicer, the Originators, the
Certificate Insurer or the Trustee and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, the Federal Housing Administration or the Veterans Administration
or any other governmental agency. The Certificates are limited in right of
payment to certain collections and recoveries respecting the Mortgage Loans and,
with respect to the Class A Certificates, Insured Payments under the Certificate
Insurance Policy, all as more specifically set forth herein and in the
Agreement. In the
A-4-2
<PAGE>
event Servicer funds are advanced with respect to any Mortgage Loan, such
advance is reimbursable to the Servicer from related recoveries on such Mortgage
Loan.
Financial Security Assurance Inc. (the "Certificate Insurer")
has issued a surety bond with respect to the Class A Certificates, which
guarantees certain payments on the Class A Certificates, as described in the
Agreement.
Subject to certain restrictions, the Agreement permits the
amendment thereof by the Depositor, the Servicer and the Trustee. Subject to the
rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies maintained by the Trustee in New York,
New York, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only in fully-registered form.
As provided in the Agreement and subject to certain limitations therein set
forth, a Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Servicer, the Depositor, the Seller, the Originators and
the Trustee and any agent of any of the foregoing, may treat the person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon
notice to the Trustee of: (i) the later of (a) the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or Periodic Advances of same by the Servicer), or the disposition
of all funds with respect to the last Mortgage Loan and the remittance of all
funds due under the Agreement and the payment of all amounts due and payable to
the Certificate Insurer and the Trustee or (b) mutual consent
A-4-3
<PAGE>
of the Servicer, the Certificate Insurer and all Certificateholders, or (ii) the
purchase by the Servicer of all outstanding Mortgage Loans and REO Properties at
a price determined as provided in the Agreement (the exercise of the right of
the Servicer to purchase all the Mortgage Loans and property in respect of
Mortgage Loans will result in early retirement of the Certificates), the right
of the Servicer to purchase being subject to the Pool Principal Balance of the
Mortgage Loans and REO Properties at the time of purchase being less than ten
percent (10%) of the Maximum Collateral Amount. Unless this Certificate has been
authenticated by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
Unless this Certificate has been countersigned by the Trustee,
by manual signature, this Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
A-4-4
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed by its authorized officer.
THE CHASE MANHATTAN BANK, not
in its individual capacity,
but solely as Trustee
By:
--------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class A-4 Certificate referred to in the
within-mentioned Agreement, which Certificate is issued to Cede & Co. in the
initial denomination of $19,800,000.00.
THE CHASE MANHATTAN BANK, not
in its individual capacity,
but solely as Trustee
By:
--------------------------------
Dated: September 29, 1998
A-4-5
<PAGE>
EXHIBIT B
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAW OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN OPINION OF COUNSEL TO THE
TRUSTEE AND (2) AN AFFIDAVIT TO THE TRUSTEE THAT SUCH TRANSFEREE IS A PERMITTED
TRANSFEREE (AS DEFINED IN THE POOLING AND SERVICING AGREEMENT) OR AN AGENT OF A
PERMITTED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OF ANY TRANSFER OF THIS CLASS R CERTIFICATE TO A PERSON OTHER THAN A
PERMITTED TRANSFEREE OR AN AGENT OF A PERMITTED TRANSFEREE SUCH REGISTRATION
SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON
SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE MADE TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, INCLUDING INDIVIDUAL
RETIREMENT ACCOUNTS AND ANNUITIES, KEOGH PLANS AND COLLECTIVE INVESTMENT FUNDS
AND SEPARATE ACCOUNTS IN WHICH SUCH PLANS, ACCOUNTS OR ARRANGEMENTS ARE INVESTED
THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THE CODE, NOR TO AN ENTITY WHOSE UNDERLYING ASSETS ARE
DEEMED TO BE ASSETS OF SUCH A PLAN, ACCOUNT OR ARRANGEMENT BY REASON OF SUCH
PLAN'S, ACCOUNT'S OR ARRANGEMENT'S INVESTMENT IN THE ENTITY, AS DETERMINED UNDER
U.S. DEPARTMENT OF LABOR REGULATIONS 29 C.F.R. ss. 2510.3-101 OR OTHERWISE.
B-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Series 1998-3 Percentage Interest of this Certificate: 100%
No. R-1
Cut-Off Date: Date of Pooling and Servicing Agreement: As of
Close of business August 31, 1998 September 1, 1998
Closing Date: September 29, 1998
First Distribution Date: October 26, 1998 Latest Maturity Date: January 25, 2030
Servicer: American Business Credit, Inc. Trustee: The Chase Manhattan Bank
</TABLE>
-------------------------
This certifies that ABFS 1998-3, Inc. is the registered owner
of a Class R percentage interest (the "Percentage Interest") in certain first or
second lien mortgage loans (the "Mortgage Loans") serviced by American Business
Credit, Inc. (hereinafter called the "Servicer"), in its capacity as servicer
under that certain Pooling and Servicing Agreement (the "Agreement") dated as of
September 1, 1998 among American Business Credit, Inc., as servicer, Prudential
Securities Secured Financing Corporation, as depositor (the "Depositor") and The
Chase Manhattan Bank, as trustee (the "Trustee"). The Mortgage Loans were
originated or acquired by American Business Credit, Inc. ("ABC"), HomeAmerican
Credit, Inc. d/b/a Upland Mortgage ("Upland") or New Jersey Mortgage and
Investment Corp. ("NJMIC", and together with ABC and Upland, the "Originators")
and sold to ABFS 1998-3, Inc. (the "Seller"), which in turn sold the Mortgage
Loans to the Depositor pursuant to that certain Unaffiliated Seller's Agreement,
dated as of September 1, 1998, among the Depositor, the Originators and the
Seller. The Mortgage Loans will be serviced by the Servicer pursuant to the
terms and conditions of the Agreement, certain of the pertinent provisions of
which are set forth herein. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound.
On each Distribution Date, commencing on October 26, 1998, the
Trustee shall distribute to the Person in whose name this Certificate is
registered on the last day of the month next preceding the month of such
distribution (the "Record Date"), an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of the Class R Certificates on such Distribution Date
pursuant to Section 6.05 of the Agreement.
Distributions on this Certificate will be made by the Trustee
by wire transfer of immediately available funds to the account of the Person
entitled thereto as shall appear on the Certificate Register without the
presentation or surrender of this Certificate (except for the final distribution
as described below) or the making of any notation thereon, at a bank or other
entity having appropriate facilities therefor, if such Person shall own of
record Certificates of the same Class which have at least a 10% Percentage
Interest appearing in the Certificate Register and shall have so notified the
Trustee at least five business days prior to the related Record Date, or by
check mailed to the address of such Person appearing in the Certificate
Register. Notwithstanding the
B-2
<PAGE>
above, the final distribution on this Certificate will be made after due notice
by the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency maintained for that
purpose by the Trustee in New York, New York.
This Certificate is one of a duly authorized issue of
Certificates designated as ABFS Mortgage Loan Trust 1998-3, Mortgage
Pass-Through Certificates, Series 1998-3, Class A-1, Class A-2, Class A-3, Class
A-4 and Class R (herein called the "Certificates") and representing undivided
ownership of (i) such Mortgage Loans as from time to time are subject to the
Agreement, together with the Mortgage Files relating thereto and all collections
thereon and proceeds thereof (other than payments of interest that accrued on
each Mortgage Loan up to the Cut-Off Date), (ii) such assets as from time to
time are identified as REO Property and collections thereon and proceeds
thereof, assets that are deposited in the Accounts, including amounts on deposit
in such Accounts and invested in Permitted Investments, (iii) the Trustee's
rights with respect to the Mortgage Loans under all insurance policies required
to be maintained pursuant to the Agreement and any Insurance Proceeds, (iv) the
Certificate Insurance Policy, (v) Liquidation Proceeds and (vi) Released
Mortgaged Property Proceeds.
The Certificates do not represent an obligation of, or an
interest in, the Depositor, the Seller, the Servicer, the Originators, Financial
Security Assurance Inc. (the "Certificate Insurer") or the Trustee and are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, the Federal Housing Administration or
the Veterans Administration or any other governmental agency. The Certificates
are limited in right of payment to certain collections and recoveries respecting
the Mortgage Loans and, with respect to the Class A Certificates, Insured
Payments under the Certificate Insurance Policy, all as more specifically set
forth herein and in the Agreement. In the event Servicer funds are advanced with
respect to any Mortgage Loan, such advance is reimbursable to the Servicer from
related recoveries on such Mortgage Loan.
Subject to certain restrictions, the Agreement permits the
amendment thereof by the Depositor, the Servicer and the Trustee. Subject to the
rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences, except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain
limitations therein set forth, including, without limitation, with respect to
the Class R Certificates, execution and delivery as appropriate of the Transfer
Affidavit and Agreement (attached as an exhibit to the Agreement) and the
Transfer Certificate (attached as an exhibit to the Agreement) described in
Section 4.02(i) of the Agreement, the transfer of this Certificate
B-3
<PAGE>
is registrable in the Certificate Register upon surrender of this Certificate
for registration of transfer at the offices or agencies maintained by the
Trustee in New York, New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to, the Trustee, duly executed by
the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of authorized denominations evidencing
the same aggregate undivided Percentage Interest will be issued to the
designated transferee or transferees.
No transfer of a Class R Certificate or any interest therein
shall be made to any employee benefit plan or other retirement arrangement,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested, that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan"), nor to
an entity whose underlying assets are deemed to be assets of such a plan,
account or arrangement by reason of such plan's, account's or arrangement's
investment in the entity, as determined under U.S. Department of Labor
Regulations 29 C.F.R. ss. 2510.3-101 or otherwise.
The Certificates are issuable only in fully-registered form.
As provided in the Agreement and subject to certain limitations therein set
forth, a Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Servicer, the Depositor, the Seller, the Originators and
the Trustee and any agent of any of the foregoing, may treat the person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon
notice to the Trustee of: (i) the later of (a) the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or Periodic Advances of same by the Servicer), or the disposition
of all funds with respect to the last Mortgage Loan and the remittance of all
funds due under the Agreement and the payment of all amounts due and payable to
the Certificate Insurer and the Trustee or (b) mutual consent of the Servicer,
the Certificate Insurer and all Certificateholders, or (ii) the purchase by the
Servicer of all outstanding Mortgage Loans and REO Properties at a price
determined as provided in the Agreement (the exercise of the right of the
Servicer to purchase all the Mortgage Loans and property in respect of Mortgage
Loans will result in early retirement of the Certificates), the right of the
Servicer to purchase being subject to the Pool Principal Balance of the Mortgage
Loans and REO Properties at the time of purchase being less than ten percent
(10%) of the Maximum Collateral Amount. By its acceptance of this Certificate,
the Certificateholder hereby appoints the Servicer as its attorney-in-fact to
negotiate the sale and effect the transfer of a Class R Certificate in
B-4
<PAGE>
accordance with Section 4.02(i) of the Agreement and to adopt a plan of
liquidation of the Trust Fund in accordance with Section 8.02 of the Agreement.
Unless this Certificate has been countersigned by the Trustee,
by manual signature, this Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
B-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed by its authorized officer.
THE CHASE MANHATTAN BANK, not
in its individual capacity,
but solely as Trustee
By:
--------------------------------
CERTIFICATE OF AUTHENTICATION
This is a Class R Certificate referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, not
in its individual capacity,
but solely as Trustee
By:
--------------------------------
Dated: September 29, 1998
B-6
<PAGE>
EXHIBIT C
CONTENTS OF THE MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall
include each of the following items (copies to the extent the originals have
been delivered to the Trustee pursuant to Section 2.03 of the Agreement), all of
which shall be available for inspection by the Certificateholders, to the extent
required by applicable laws:
1. The original Mortgage Note, with all prior and intervening
endorsements showing a complete chain of endorsements from the
originator of the Mortgage Loan to the Person so endorsing the
Mortgage Loan to the Trustee, endorsed by such Person "Pay to
the order of ________________ without recourse" and signed, by
facsimile or manual signature, in the name of the Seller by a
Responsible Officer.
2. Either: (i) the original Mortgage, and related power of
attorney, if any, with evidence of recording thereon, or (ii)
a copy of the Mortgage and related power of attorney, if any,
certified as a true copy of the original Mortgage or power of
attorney by a Responsible Officer of the Seller on the face of
such copy substantially as follows: "certified true and
correct copy of original which has been transmitted for
recordation."
3. Either: (i) The original Assignment of Mortgage in recordable
form in blank or (ii) a copy of the Assignment certified as a
true copy of the original Assignment by a Responsible Officer
of the Seller on the face of such copy substantially as
follows: "certified true and correct copy of original which
has been transmitted for recordation." Any such Assignments of
Mortgage may be made by blanket assignments for Mortgage Loans
secured by the Mortgaged Properties located in the same
county, if permitted by applicable law.
4. The original lender's policy of title insurance or a true copy
thereof, or if such original lender's title insurance policy
has been lost, a copy thereof certified by the appropriate
title insurer to be true and complete, or if such lender's
title insurance policy has not been issued as of the Closing
Date, a marked up commitment (binder) to issue such policy.
5. All original intervening assignments, if any, showing a
complete chain of assignments from the originator to the
related Originator, including any recorded warehousing
assignments, with evidence of recording thereon, certified by
a Responsible Officer of the related Originator by facsimile
or manual signature as a true copy of the original of such
intervening assignments.
C-1
<PAGE>
6. Originals of all assumption, written assurance, substitution
and modification agreements, if any.
C-2
<PAGE>
EXHIBIT D
CERTIFICATE RE: PREPAID LOANS
I, ______________, ____________ of ABFS 1998-3, INC., as
Seller, hereby certify that between the "Cut-Off Date" (as defined in the
Pooling and Servicing Agreement dated as of September 1, 1998 among Prudential
Securities Secured Financing Corporation, American Business Credit, Inc. and The
Chase Manhattan Bank, as trustee) and the "Startup Day" the following schedule
of "Mortgage Loans" (each as defined in the Pooling and Servicing Agreement)
have been prepaid in full.
Dated: September 29, 1998
By:
------------------------
Name:
Title:
D-1
<PAGE>
EXHIBIT E
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
September 29, 1998
ABFS 1998-3, Inc.
BalaPointe Office Centre
111 Presidential Boulevard
Suite 215
Bala Cynwyd, PA 19004
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, NY 10292
American Business Credit, Inc.
BalaPointe Office Centre
111 Presidential Boulevard
Suite 215
Bala Cynwyd, PA 19004
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Re: Pooling and Servicing Agreement, dated as of September 1,
1998 (the "Pooling and Servicing Agreement"), among
Prudential Securities Secured Financing Corporation, as
Depositor, American Business Credit, Inc., as Servicer, and
The Chase Manhattan Bank, as Trustee, ABFS Mortgage Loan
Trust 1998-3, Mortgage Pass-Through Certificates, Series
1998-3, Class A-1, Class A-2, Class A-3, Class A-4 and Class
R
-----------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby acknowledges
receipt by it in good faith without notice of adverse claims, subject to the
provisions of Sections 2.05 and 2.06 of the Pooling and Servicing Agreement (as
such provisions relate to the Initial Mortgage Loans), of (x) the documents
relating to the Initial Mortgage Loans referred to
E-1
<PAGE>
in Section 2.05(a) of the Pooling and Servicing Agreement, except with respect
to the list of exceptions attached hereto, and based on its examination and only
as to the foregoing, the information set forth in the Mortgage Loan Schedule
accurately reflects information set forth in the Mortgage File as well as the
assignment to it of all other assets included in clauses (i) and (iii) of the
definition of "Trust Fund", (y) the Certificate Account, the Pre-Funding Account
and the Capitalized Interest Account and (z) the Certificate Insurance Policy
and declares that it holds and will hold the Certificate Insurance Policy and
such documents and the other documents delivered to it constituting the Mortgage
Files, and that it holds or will hold all such assets and such other assets
included in the definition of "Trust Fund" that are delivered to it, in trust
for the exclusive use and benefit of all present and future Certificateholders.
The Trustee has made no independent examination of any such
documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any such
documents or any of the Mortgage Loans identified on the Mortgage Loan Schedule,
or (ii) the collectability, insurability, effectiveness or suitability of any
such Mortgage Loan.
The Schedule of Mortgage Loans is attached to this Receipt.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
THE CHASE MANHATTAN BANK,
as Trustee
By:
---------------------------------
Name:
Title:
E-2
<PAGE>
EXHIBIT F
INITIAL CERTIFICATION OF TRUSTEE
September 29, 1998
ABFS 1998-3, Inc.
BalaPoint Office Centre
111 Presidential Boulevard
Suite 215
Bala Cynwyd, PA 19004
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, NY 10292
American Business Credit, Inc.
BalaPoint Office Centre
111 Presidential Boulevard
Suite 215
Bala Cynwyd, PA 19004
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Re: Pooling and Servicing Agreement, dated as of September 1, 1998
(the "Pooling and Servicing Agreement") among Prudential
Securities Secured Financing Corporation, as Depositor,
American Business Credit, Inc., as Servicer, and The Chase
Manhattan Bank, as Trustee, ABFS Mortgage Loan Trust 1998-3,
Mortgage Pass-Through Certificates, Series 1998-3, Class A-1,
Class A-2, Class A-3, Class A-4 and Class R
-------------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 2.06 of the
above-referenced Pooling and Servicing Agreement, the undersigned, as Trustee,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan listed
on the attachment hereto), it has reviewed the documents delivered to it
pursuant to Section 2.03 of the Pooling and Servicing Agreement and has
determined that (i) all documents required to be delivered to it pursuant to the
above-referenced Pooling and Servicing Agreement are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
have
F-1
<PAGE>
not been mutilated, damaged, torn or otherwise physically altered and
relate to such Mortgage Loan, (iii) based on its examination and only as to the
foregoing documents, the information set forth in the Mortgage Loan Schedule
respecting such Mortgage Loan accurately reflects the information set forth in
the Trustee's Mortgage File and (iv) each Mortgage Note has been endorsed as
provided in Section 2.03 of the Pooling and Servicing Agreement. The Trustee has
made no independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trustee
makes no representations as to: (i) the validity, legality, enforceability or
genuineness of any such documents contained in each or any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
THE CHASE MANHATTAN BANK, as
Trustee
By:
--------------------------------
Name:
Title:
F-2
<PAGE>
EXHIBIT G
FINAL CERTIFICATION OF TRUSTEE
________________, 1998
ABFS 1998-3, Inc.
BalaPoint Office Centre
111 Presidential Boulevard
Suite 215
Bala Cynwyd, PA 19004
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, NY 10292
American Business Credit, Inc.
BalaPoint Office Centre
111 Presidential Boulevard
Suite 215
Bala Cynwyd, PA 19004
Financial Security Assurance, Inc.
350 Park Avenue
New York, NY 10022
Re: Pooling and Servicing Agreement, dated as of September 1, 1998
(the "Pooling and Servicing Agreement") among Prudential
Securities Secured Financing Corporation, as Depositor,
American Business Credit, Inc., as Servicer, and The Chase
Manhattan Bank, as Trustee, ABFS Mortgage Loan Trust 1998-3,
Mortgage Pass-Through Certificates, Series 1998-3, Class A-1,
Class A-2, Class A-3, Class A-4 and Class R
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby certifies that,
except as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it has reviewed the documents delivered to it pursuant to
Section 2.03 of the Pooling and Servicing Agreement and has determined that (i)
all documents required to be delivered to it pursuant to the above-referenced
Pooling and Servicing Agreement are in its possession, (ii) such documents have
been reviewed by it and appear regular on their face
G-1
<PAGE>
and have not been mutilated, damaged, torn or otherwise physically altered and
relate to such Mortgage Loan, and (iii) based on its examination, and only as to
the foregoing documents, the information set forth in the Mortgage Loan Schedule
respecting such Mortgage Loan accurately reflects the information set forth in
the Trustee's Mortgage File. The Trustee has made no independent examination of
such documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
THE CHASE MANHATTAN BANK,
as Trustee
By:
-------------------------------
Name:
Title:
G-2
<PAGE>
EXHIBIT H
REQUEST FOR RELEASE OF DOCUMENTS
________________, 1998
To: The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Re: ABFS Mortgage Loan Trust 1998-3, Mortgage Pass-Through
Certificates, Series 1998-3, Class A-1, Class A-2, Class A-3,
Class A-4 and Class R
-------------------------------------------------------------
In connection with the administration of the pool of Mortgage
Loans held by you as Trustee for the Certificateholders, we request the release,
and acknowledge receipt, of the (Trustee's Mortgage File/[specify document]) for
the Mortgage Loan described below, for the reason indicated.
Mortgagor's Name, Address & Zip Code:
- -------------------------------------
Mortgage Loan Number:
- ---------------------
Reason for Requesting Documents (check one)
- -------------------------------
____ 1. Mortgage Loan Paid in Full
(Servicer hereby certifies that all amounts received
in connection therewith have been credited to the
Collection Account.)
____ 2. Mortgage Loan Liquidated
(Servicer hereby certifies that all proceeds of
foreclosure, insurance or other liquidation have been
finally received and credited to the Collection
Account.)
____ 3. Mortgage Loan in Foreclosure
____ 4. Mortgage Loan Repurchased Pursuant to Section 5.18 of the
Pooling and Servicing Agreement.
H-1
<PAGE>
____ 5. Mortgage Loan Repurchased or Substituted pursuant to Article
II or III of the Pooling and Servicing Agreement (Servicer
hereby certifies that the repurchase price or Substitution
Adjustment has been credited to the Certificate Account and
that the substituted mortgage loan is a Qualified Substitute
Mortgage Loan.)
____ 6. Other (explain)_____________________________________________
If box 1 or 2 above is checked, and if all or part of the
Trustee's Mortgage File was previously released to us, please release to us our
previous receipt on file with you, as well as any additional documents in your
possession relating to the above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all
of the above documents to you as Trustee, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
By:
---------------------------------
Name:
Title:
Documents returned to Trustee:
THE CHASE MANHATTAN BANK, as
Trustee
By:
--------------------------
Date:
------------------------
H-2
<PAGE>
EXHIBIT I
TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
: ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or
beneficial owner of ABFS Mortgage Loan Trust 1998-3, Mortgage Pass-Through
Certificates, Series 1998-3, Class R (the "Owner")), a [savings institution]
[corporation] duly organized and existing under the laws of [the State of
______] [the United States], on behalf of which he makes this affidavit and
agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986 (the "Code"), (ii) will endeavor to remain
other than a disqualified organization for so long as it retains its ownership
interest in the Class R Certificates, and (iii) is acquiring the Class R
Certificates for its own account or for the account of another Owner from which
it has received an affidavit and agreement in substantially the same form as
this affidavit and agreement. A "Permitted Transferee" is any person other than
a "disqualified organization" or a possession of the United States. (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that generally is exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of Class R Certificates to disqualified organizations under
the Code, that applies to all transfers of Class R Certificates after March 31,
1988; (ii) that such tax would be on the transferor, or, if such transfer is
through an agent (which person includes a broker, nominee or middleman) for a
disqualified organization, on the agent; (iii) that the person otherwise liable
for the tax shall be relieved of liability for the tax if the transferee
furnishes to such person an affidavit that the transferee is not a disqualified
organization and, at the time of transfer, such person does not have actual
knowledge that the affidavit is false; and (iv) that the Class R Certificates
may be "noneconomic residual interests" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code
I-1
<PAGE>
and that the transferor of a noneconomic residual interest will remain liable
for any taxes due with respect to the income on such residual interest, unless
no significant purpose of the transfer was to impede the assessment or
collection of tax.
4. That the Owner is aware of the tax imposed on a
"pass-through entity" holding Class R Certificates if at any time during the
taxable year of the pass-through entity a disqualified organization is the
record holder of an interest in such entity. (For this purpose, a "pass through
entity" includes a regulated investment company, a real estate investment trust
or common trust fund, a partnership, trust or estate, and certain cooperatives.)
5. That the Owner is aware that the Trustee will not register
the transfer of any Class R Certificates unless the transferee, or the
transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it knows
or believes that any of the representations contained in such affidavit and
agreement are false.
6. That the Owner has reviewed the restrictions set forth on
the face of the Class R Certificates and the provisions of Section 4.02(i) of
the Pooling and Servicing Agreement under which the Class R Certificates were
issued (in particular, clauses (g) and (h) of Section 4.02(i) which authorize
the Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such
Certificates in violation of Section 4.02(i)). The Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.
7. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is not a disqualified
organization.
8. That the Owner's Taxpayer Identification Number
is ____________.
9. This affidavit and agreement relates only to the Class R
Certificates held by the Owner and not to any other holder of the Class R
Certificates. The Owner understands that the liabilities described herein relate
only to the Class R Certificates.
10. That no purpose of the Owner relating to the transfer of
any of the Class R Certificates by the Owner is or will be to impede the
assessment or collection of any tax.
11. That the Owner has no present knowledge or expectation
that it will be unable to pay any United States taxes owed by it so long as any
of the Certificates remain outstanding.
I-2
<PAGE>
12. That the Owner has no present knowledge or expectation
that it will become insolvent or subject to a bankruptcy proceeding for so long
as any of the Class R Certificates remain outstanding.
13. That the Owner is 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 political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includable in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
14. That the Owner will, in connection with any transfer that
it makes of the Class R Certificates, deliver to the Trustee an affidavit in
form and substance satisfactory to the Trustee, representing and warranting that
it is not transferring the Class R Certificates to impede the assessment or
collection of any tax and that it has no actual knowledge that the proposed
transferee: (i) has insufficient assets to pay any taxes owned by such
transferee as holder of the Class R Certificates; (ii) may become insolvent or
subject to a bankruptcy proceeding, for so long as the Class R Certificates
remains outstanding and; (iii) is not a Permitted Transferee.
15. That the Owner agrees to require a Transfer Affidavit and
Agreement from any person to whom the Owner attempts to transfer a percentage
interest in the Class R Certificates, and in connection with any transfer by a
person for whom the Owner is acting as nominee, trustee or agent, and the Owner
will not transfer its percentage interest or cause any percentage interest to be
transferred to any person that the Owner knows is not a Permitted Transferee. In
connection with any such transfer by the Owner, the Owner agrees to deliver to
the Trustee a transfer certificate in the form attached to the Pooling and
Servicing Agreement as Exhibit J to the effect that the Owner has no actual
knowledge that the person to which the transfer is to be made is not a Permitted
Transferee.
I-3
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Title of Officer] and its corporate seal to be hereunto attached, attested
by its [Assistant] Secretary, this _ day of_________.
[NAME OF OWNER]
By: ____________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
- ------------------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of
Officer], known or proved to me to be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Owner, and acknowledged to me
that he executed the same as his free act and deed and the free act and deed of
the Owner.
Subscribed and sworn before me this ____ day of ________ ____.
__________________________
NOTARY PUBLIC
COUNTY OF_________________
STATE OF__________________
My Commission expires
the ____ day of
____________, ____.
I-4
<PAGE>
EXHIBIT J
TRANSFEROR'S CERTIFICATE
________________, 19__
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trust Administration
Re: ABFS Mortgage Loan Trust 1998-3, Mortgage Pass-Through
Certificates, Series 1998-3, Class R Certificates
-------------------------------------------------------
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by _____________________ (the "Seller") to ______________________ (the
"Purchaser") of a ___% Percentage Interest of ABFS Mortgage Loan Trust 1998-3,
Mortgage Pass-Through Certificates, Series 1998-3, Class R (the "Certificates"),
pursuant to Section 4.02 of the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of September 1, 1998 among American Business
Credit, Inc., as servicer (the "Company"), Prudential Securities Secured
Financing Corporation, as depositor, and The Chase Manhattan Bank, as trustee
(the "Trustee"). All terms used herein and not otherwise defined shall have the
meanings set forth in the Pooling and Servicing Agreement. The Seller hereby
certifies, represents and warrants to, and covenants with, the Company and the
Trustee that:
1. No purpose of the Seller relating to the transfer of the
Certificates by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Seller understands that the Purchaser has delivered to
the Trustee and the Company a transfer affidavit and agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit I. The Seller does
not know or believe that any representation contained therein is false.
J-1
<PAGE>
3. The Seller has no actual knowledge that the proposed
Transferee is not both a United States Person and a Permitted Transferee.
Very truly yours,
---------------------------------
(Seller)
By:
------------------------------
Name:
Title:
J-2
<PAGE>
EXHIBIT K
ERISA INVESTMENT REPRESENTATION LETTER
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, NY 10292
American Business Credit, Inc.
BalaPointe Office Centre
111 Presidential Boulevard
Suite 215
Bala Cynwyd, PA 19004
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Re: ABFS Mortgage Loan Trust 1998-3, Mortgage Pass-Through
Certificates, Series 1998-3, Class R Certificates
-------------------------------------------------------
The undersigned (the "Purchaser") proposes to purchase certain
Class R Certificates (the "Certificates"). In doing so, the Purchaser hereby
acknowledges and agrees as follows:
Section 1. Definitions. Each capitalized term used herein and
not otherwise defined shall have the meaning given it in the Pooling and
Servicing Agreement, dated as of September 1, 1998 (the "Agreement"), among
Prudential Securities Secured Financing Corporation, as Depositor (the
"Depositor"), American Business Credit, Inc., as Servicer (the "Servicer") and
The Chase Manhattan Bank, as Trustee (the "Trustee") relating to the
Certificates.
Section 2. Representations and Warranties of the Purchaser. In
connection with the proposed transfer, the Purchaser represents and warrants to
the Depositor and the Trustee that the Purchaser is not a pension or benefit
plan or individual retirement arrangement that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or to Section 4975
of the Code or an entity whose underlying assets are deemed to be assets of such
a plan or arrangement by reason of such plan's or arrangement's investment in
the entity, as determined under U.S. Department of Labor Regulations 29 C.F.R.
ss. 2510.3-101 or otherwise.
K-1
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this ERISA
Investment Representation Letter to be validly executed by its duly authorized
representative as of the date first above written.
[NAME OF PURCHASER]
By:
-----------------------------
Name:
Title:
K-2
<PAGE>
EXHIBIT L
FORM OF SUBSEQUENT TRANSFER AGREEMENT
ABFS MORTGAGE LOAN TRUST 1998-3
American Business Credit, Inc., HomeAmerican Credit, Inc.
d/b/a Upland Mortgage and New Jersey Mortgage Investment Corp., as originators
(the "Originators"), ABFS 1998-3, Inc., as seller (the "Seller"), Prudential
Securities Secured Financing Corporation, as depositor (the "Depositor"), and
ABFS Mortgage Loan Trust 1998-3, as purchaser (the "Purchaser"), pursuant to the
Pooling and Servicing Agreement, dated as of September 1, 1998 (the "Pooling and
Servicing Agreement"), among the Depositor, American Business Credit, Inc., as
servicer (in such capacity, the "Servicer") and The Chase Manhattan Bank, as
trustee (the "Trustee"), hereby confirm, as of this ____ day of _______, 1998,
their understanding with respect to the sale by the Originators to the Seller,
the sale by the Seller to the Depositor, and the sale by the Depositor to the
Purchaser of those Mortgage Loans listed on the attached Schedule of Mortgage
Loans (the "Subsequent Mortgage Loans").
Conveyance of Subsequent Mortgage Loans. The Originators do
hereby irrevocably sell, transfer, assign, set over and otherwise convey to the
Seller, without recourse (except as otherwise explicitly provided for herein)
all of its right, title and interest in and to the Subsequent Mortgage Loans,
exclusive of the obligations of the Originators with respect to the Subsequent
Mortgage Loans but including specifically, without limitation, the Mortgages,
the Files and all other documents, materials and properties appurtenant thereto
and the Notes, including all interest and principal collected by the Originators
on or with respect to the Subsequent Mortgage Loans on or after the related
Subsequent Cut-Off Date, together with all of its right, title and interest in
and to the proceeds received on or after such Subsequent Cut-Off Date of any
related insurance policies on behalf of the Seller. The Originators shall
deliver the original Note, Mortgage or mortgage assignment with evidence of
recording thereon (except as otherwise provided by the Pooling and Servicing
Agreement) and other required documentation in accordance with the delivery
requirements of the Seller set forth in Section 2.05 of the Unaffiliated
Seller's Agreement, dated as of September 1, 1998 (the "Unaffiliated Seller's
Agreement"), among the Originators, the Seller and the Depositor.
The Seller does hereby irrevocably sell, transfer, assign, set
over and otherwise convey to the Depositor, without recourse (except as
otherwise explicitly provided for herein) all of its right, title and interest
in and to the Subsequent Mortgage Loans, exclusive of the obligations of the
Seller or any other Person with respect to the Subsequent Mortgage Loans but
including specifically, without limitation, the Mortgages, the Files and all
other documents, materials and properties appurtenant thereto and the Notes,
including all interest and principal collected by the Seller on or with respect
to the Subsequent Mortgage Loans on or after the related Subsequent
L-1
<PAGE>
Cut-Off Date, together with all of its right, title and interest in and to the
proceeds received on or after such Subsequent Cut-Off Date of any related
insurance policies on behalf of the Depositor. The Seller shall deliver the
original Note, Mortgage or mortgage assignment with evidence of recording
thereon (except as otherwise provided by the Pooling and Servicing Agreement)
and other required documentation in accordance with the terms set forth in
Section 2.05 of the Unaffiliated Seller's Agreement.
The Depositor does hereby irrevocably sell, transfer, assign,
set over and otherwise convey to the Purchaser, without recourse (except as
otherwise explicitly provided for herein) all of its right, title and interest
in and to the Subsequent Mortgage Loans, exclusive of the obligations of the
Depositor or any other Person with respect to the Subsequent Mortgage Loans but
including specifically, without limitation, the Mortgages, the Files and all
other documents, materials and properties appurtenant thereto and the Notes,
including all interest and principal collected by the Depositor on or with
respect to the Subsequent Mortgage Loans on or after the related Subsequent
Cut-Off Date, together with all of its right, title and interest in and to the
proceeds received on or after such Subsequent Cut-Off Date of any related
insurance policies on behalf of the Purchaser. The Depositor shall deliver the
original Mortgage or mortgage assignment with evidence of recording thereon
(except as otherwise provided by the Pooling and Servicing Agreement) and other
required documentation in accordance with the terms set forth in Section 2.05 of
the Pooling and Servicing Agreement.
The expenses and costs relating to the delivery of the
Subsequent Mortgage Loans specified in this Subsequent Transfer Agreement and
the Pooling and Servicing Agreement shall be borne by the Seller.
The Originators and the Seller hereby affirm the
representations and warranties set forth in the Unaffiliated Seller's Agreement,
respectively, that relate to the Subsequent Mortgage Loans on the date hereof.
The Originators and the Seller each hereby deliver notice and confirm that each
of the conditions set forth in Section 2.03(b) of the Pooling and Servicing
Agreement are satisfied as of the date hereof.
The Depositor hereby affirms any of its representations and
warranties set forth in the Unaffiliated Seller's Agreement that relate to the
Subsequent Mortgage Loans as of the date hereof. The Depositor hereby delivers
notice and confirms that each of the conditions set forth in Section 2.03(b) to
the Pooling and Servicing Agreement are satisfied as of the date hereof.
Additional terms of the sale are attached hereto as Attachment
A.
To the extent permitted by applicable law, this Subsequent
Transfer Agreement, or a memorandum thereof if permitted under applicable law,
is subject to recordation in all appropriate public offices for real property
records in all counties or other comparable jurisdictions in which any or all of
the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the Certificateholders' expense on the direction of
the Majority Certificateholders, but only when accompanied by an opinion of
counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders or is necessary for the administration
or servicing of the Mortgage Loans.
L-2
<PAGE>
Capitalized terms used herein but not defined herein shall
have the meanings ascribed thereto in the Pooling and Servicing Agreement.
This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to the principles of conflicts of laws.
This Agreement may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same Agreement.
All terms and conditions of the Pooling and Servicing
Agreement are hereby ratified, confirmed and incorporated herein; provided, that
in the event of any conflict the provisions of this Subsequent Transfer
Agreement shall control over the conflicting provisions of the Pooling and
Servicing Agreement.
[Remainder of Page Intentionally Left Blank]
L-3
<PAGE>
Terms capitalized herein and not defined herein shall have their respective
meanings as set forth in the Pooling and Servicing Agreement.
AMERICAN BUSINESS CREDIT, INC.
as Originator
By:
----------------------------------
Name:
Title:
HOMEAMERICAN CREDIT, INC.
D/B/A UPLAND MORTGAGE, as
Originator
By:
----------------------------------
Name:
Title:
NEW JERSEY MORTGAGE
INVESTMENT CORP., as Originator
By:
----------------------------------
Name:
Title:
ABFS 1998-3, INC.,
as Seller
By:
----------------------------------
Name:
Title:
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION,
as Depositor
By:
----------------------------------
Name:
Title:
L-4
<PAGE>
THE CHASE MANHATTAN BANK,
as Trustee
By:
----------------------------------
Name:
Title:
L-5
<PAGE>
SCHEDULE I
MORTGAGE LOAN SCHEDULE
[See Schedule A to Unaffiliated Seller's Agreement]
<PAGE>
Exhibit 4.2
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
Depositor,
ABFS 1998-3, INC.,
Unaffiliated Seller
and
AMERICAN BUSINESS CREDIT, INC.
HOMEAMERICAN CREDIT, INC., D/B/A UPLAND MORTGAGE, and
NEW JERSEY MORTGAGE AND INVESTMENT CORP.
Originators
---------------------------
UNAFFILIATED SELLER'S AGREEMENT
Dated as of September 1, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE DEFINITIONS...........................................................................1
Section 1.01. Definitions...........................................................................1
ARTICLE TWO PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS.......................................4
Section 2.01. Agreement to Purchase the Initial Mortgage Loans......................................4
Section 2.02. Agreement to Purchase the Subsequent Mortgage Loans...................................5
Section 2.03. Purchase Price........................................................................6
Section 2.04. Conveyance of Mortgage Loans; Possession of Mortgage Files............................7
Section 2.05. Delivery of Mortgage Loan Documents...................................................7
Section 2.06. Acceptance of Mortgage Loans..........................................................9
Section 2.07. Transfer of Mortgage Loans; Assignment of Agreement..................................10
Section 2.08. Examination of Mortgage Files........................................................11
Section 2.09. Books and Records....................................................................11
Section 2.10. Cost of Delivery and Recordation of Documents........................................11
ARTICLE THREE REPRESENTATIONS AND WARRANTIES....................................................12
Section 3.01. Representations and Warranties as to the Originators.................................12
Section 3.02. Representations and Warranties as to the Unaffiliated Seller.........................14
Section 3.03. Representations and Warranties Relating to the Mortgage Loans........................16
Section 3.04. Representations and Warranties of the Depositor......................................24
Section 3.05. Repurchase Obligation for Defective Documentation and for Breach of a Representation
or Warranty..........................................................................25
ARTICLE FOUR THE UNAFFILIATED SELLER..............................................................28
Section 4.01. Covenants of the Originators and the Unaffiliated Seller.............................28
Section 4.02. Merger or Consolidation..............................................................28
Section 4.03. Costs................................................................................28
Section 4.04. Indemnification......................................................................29
ARTICLE FIVE CONDITIONS OF CLOSING................................................................31
Section 5.01. Conditions of Depositor's Obligations................................................31
Section 5.02. Conditions of Unaffiliated Seller's Obligations......................................33
Section 5.03. Termination of Depositor's Obligations...............................................33
ARTICLE SIX MISCELLANEOUS........................................................................34
Section 6.01. Notices..............................................................................34
Section 6.02. Severability of Provisions...........................................................34
Section 6.03. Agreement of Unaffiliated Seller.....................................................34
Section 6.04. Survival.............................................................................34
Section 6.05. Effect of Headings and Table of Contents.............................................34
Section 6.06. Successors and Assigns...............................................................34
Section 6.07. Confirmation of Intent; Grant of Security Interest...................................35
Section 6.08. Miscellaneous........................................................................35
Section 6.09. Amendments...........................................................................35
Section 6.10. Third-Party Beneficiaries............................................................36
Section 6.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.........................36
Section 6.12. Execution in Counterparts............................................................37
</TABLE>
Exhibit A - Mortgage Loan Schedule
<PAGE>
THIS UNAFFILIATED SELLER'S AGREEMENT, dated as of September 1, 1998, by
and among PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware
corporation, its successors and assigns (the "Depositor"), ABFS 1998-3, INC., a
Delaware corporation and its successors (the "Unaffiliated Seller"), AMERICAN
BUSINESS CREDIT, INC., a Pennsylvania corporation ("ABC"), HOMEAMERICAN CREDIT,
INC. D/B/A UPLAND MORTGAGE, a Pennsylvania corporation ("Upland") and NEW JERSEY
MORTGAGE INVESTMENT CORP., a New Jersey corporation ("NJMIC", and together with
ABC and Upland, the "Originators").
WHEREAS, Exhibit A attached hereto and made a part hereof lists certain
fixed rate business and consumer purpose first and second lien mortgage loans
(the "Mortgage Loans") owned by the Originators that the Originators desire to
sell to the Unaffiliated Seller and the Unaffiliated Seller desires to sell to
the Depositor and that the Depositor desires to purchase;
WHEREAS, it is the intention of the Originators, the Unaffiliated
Seller and the Depositor that simultaneously with the Originators' conveyance of
the Mortgage Loans to the Unaffiliated Seller and the Unaffiliated Seller's
conveyance of the Mortgage Loans to the Depositor on the Closing Date, (a) the
Depositor shall deposit the Mortgage Loans in a trust pursuant to a Pooling and
Servicing Agreement to be dated as of September 1, 1998 (the "Pooling and
Servicing Agreement"), to be entered into by and among the Depositor, as
depositor, American Business Credit, Inc., as servicer (in such capacity, the
"Servicer") and The Chase Manhattan Bank, as trustee (the "Trustee") and (b) the
Trustee shall issue certificates evidencing beneficial ownership interests in
the property of the trust fund formed by the Pooling and Servicing Agreement to
the Depositor;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used herein, the following words
and phrases, unless the context otherwise requires, shall have the meanings
specified in this Article:
"Accepted Servicing Practices" means the Servicer's normal servicing
practices, which in general will conform to the mortgage servicing practices of
prudent mortgage lending institutions which service for their own account
mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Mortgaged Properties are located.
"Agreement" means this Unaffiliated Seller's Agreement, as amended or
supplemented in accordance with the provisions hereof.
"Appraised Value" means the appraised value of the Mortgaged Property
based upon the appraisal made by or on behalf of the Originators.
"Certificate Insurer" means Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
and any successors thereto.
<PAGE>
"Closing Date" shall have the meaning ascribed thereto in Section
2.01(c).
"Commission" means the Securities and Exchange Commission.
"Cut-Off Date" means, with respect to the Initial Mortgage Loans, the
Initial Cut-Off Date, and with respect to the Subsequent Mortgage Loans, the
Subsequent Cut-Off Date.
"Cut-Off Date Aggregate Principal Balance" means the aggregate unpaid
principal balance of the Initial Mortgage Loans as of the Cut-Off Date (or, with
respect to Initial Mortgage Loans which were originated after the Cut-Off Date,
as of the date of origination). The Cut-Off Date Aggregate Principal Balance is
$139,904,460.46.
"Cut-Off Date Principal Balance" means as to each Mortgage Loan, its
unpaid principal balance as of the Cut-Off Date (or, with respect to Initial
Mortgage Loans which were originated after the Cut-Off Date, as of the date of
origination).
"Deleted Mortgage Loan" means a Mortgage Loan replaced by or to be
replaced by a Qualified Substitute Mortgage Loan pursuant to the terms of the
Pooling and Servicing Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Initial Cut-Off Date" means the close of business on August 31, 1998
or, with respect to Initial Mortgage Loans originated after August 31, 1998, the
date of origination of such Initial Mortgage Loans.
"Initial Mortgage Loans" means the Mortgage Loans transferred and
assigned to the Depositor on the Closing Date.
"Monthly Payment" means, as to any Mortgage Loan (including any REO
Mortgage Loan) and any Due Date, the payment of principal and interest due
thereon in accordance with the amortization schedule at the time applicable
thereto (after adjustment for any Curtailments and Deficient Valuations
occurring prior to such Due Date but before any adjustment to such amortization
schedule by reason of any bankruptcy, other than Deficient Valuations or similar
proceeding or any moratorium or similar waiver or grace period).
"Mortgage" means the mortgage or deed of trust creating a first or
second lien on an estate in fee simple in real property, and securing a Mortgage
Note, as amended or modified.
"Mortgage Interest Rate" means, as to any Mortgage Loan, the fixed per
annum rate at which interest accrues on the unpaid principal balance thereof.
"Mortgage Loan Group I" means a pool of mortgages held in a trust
created pursuant to the Pooling and Servicing Agreement. The Class A-1, Class
A-2 and Class A-3 Certificates represent undivided ownership interest in the
Mortgage Loan Group I pool.
"Mortgage Loan Group II" means a pool of mortgages held in a trust
created pursuant to the Pooling and Servicing Agreement. The Class A-4
Certificates represent undivided ownership interest in the Mortgage Loan Group
II pool.
2
<PAGE>
"Mortgage Loans" means such of the mortgage loans to be sold,
transferred and assigned to the Depositor on the Closing Date and each
Subsequent Transfer Date pursuant to Article Two hereof (including the related
Mortgage Notes and related Mortgages), all as identified in the Mortgage Loan
Schedule, and including any mortgage loan substituting or replacing a Mortgage
Loan pursuant to the terms of the Pooling and Servicing Agreement.
"Mortgage Loan Schedule" shall have the meaning ascribed thereto in
Section 2.01(b).
"Mortgage Note" means the note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan, as amended or
modified.
"Mortgaged Property" means the property subject to a Mortgage.
"Mortgagor" means the obligor on a Mortgage Note.
"Pooling and Servicing Agreement" shall have the meaning ascribed
thereto in the recitals hereof.
"Prospectus" means the Prospectus dated September 4, 1998 relating to
the offering by the Depositor from time to time of its Pass-Through Certificates
(Issuable in Series) in the form in which it was or will be filed with the
Securities Exchange Commission pursuant to Rule 424(b) under the Securities Act
with respect to the offer and sale of the Certificates.
"Prospectus Supplement" means the Prospectus Supplement dated September
14, 1998, relating to the offering of the Certificates in the form in which it
was or will be filed with the Commission pursuant to Rule 424(b) under the
Securities Act with respect to the offer and sale of the Certificates.
"Qualified Appraiser" means an appraiser, duly appointed by the
Unaffiliated Seller, who had no interest, direct or indirect, in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of the Mortgage Loan, and such
appraiser and the appraisal made by such appraiser both satisfy the requirements
of Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
"Registration Statement" means that certain registration statement on
Form S-3, as amended (Registration No. 333-61939) relating to the offering by
the Depositor from time to time of its Pass-Through Certificates (Issuable in
Series) as heretofore declared effective by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsequent Cut-Off Date" means the date specified in the Addition
Notice relating to Subsequent Mortgage Loans.
"Subsequent Mortgage Loans" means the Mortgage Loans hereafter
transferred and assigned to the Depositor on a Subsequent Transfer Date.
3
<PAGE>
"Termination Event" means the existence of any one or more of the
following conditions:
(a) a stop order suspending the effectiveness of the Registration
Statement shall have been issued or a proceeding for that purpose shall
have been initiated or threatened by the Commission; or
(b) subsequent to the execution and delivery of this Agreement, a
downgrading, or public notification of a possible change, without
indication of direction, shall have occurred in the rating afforded any of
the debt securities or claims paying ability of any person providing any
form of credit enhancement for any of the Certificates, by any "nationally
recognized statistical rating organization," as that term is defined by
the Commission for purposes of Rule 436(g)(2) under the Securities Act; or
(c) subsequent to the execution and delivery of this Agreement,
there shall have occurred an adverse change in the condition, financial or
otherwise, earnings, affairs, regulatory situation or business prospects
of the Certificate Insurer or the Unaffiliated Seller reasonably
determined by the Depositor to be material; or
(d) subsequent to the date of this Agreement there shall have
occurred any of the following: (i) a suspension or material limitation in
trading in securities substantially similar to the Certificates; (ii) a
general moratorium on commercial banking activities in New York declared
by either Federal or New York State authorities; or (iii) the engagement
by the United States in hostilities, or the escalation of such
hostilities, or any calamity or crisis, if the effect of any such event
specified in this clause (iii) in the reasonable judgment of the Depositor
makes it impracticable or inadvisable to proceed with the public offering
or the delivery of the Certificates on the terms and in the manner
contemplated in the Prospectus Supplement.
"Unaffiliated Seller" means ABFS 1998-3, Inc., in its capacity as
Unaffiliated Seller of the Mortgage Loans under this Agreement and any successor
to ABFS 1998-3, Inc., whether through merger, consolidation, purchase and
assumption of ABFS 1998-3, Inc. or all or substantially all of its assets or
otherwise.
Capitalized terms used herein that are not otherwise defined shall have
the respective meanings ascribed thereto in the Pooling and Servicing Agreement.
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Agreement to Purchase the Initial Mortgage Loans. (a)
Subject to the terms and conditions of this Agreement, the Originators agree to
sell, and the Unaffiliated Seller agrees to purchase on the Closing Date and
immediately subsequent thereto, the Unaffiliated Seller agrees to sell, and the
Depositor agrees to purchase, the Mortgage Loans having the Cut-Off Date
Aggregate Principal Balance or, in accordance with Section 2.08 hereof, such
other balance as is evidenced by the actual Cut-Off Date Aggregate Principal
Balance of the Mortgage Loans accepted by the Depositor on the Closing Date and
listed in the Mortgage Loan Schedule.
4
<PAGE>
(b) Subject to Section 2.08 hereof, the Depositor and the Unaffiliated
Seller have agreed upon which of the Unaffiliated Seller's Mortgage Loans are to
be purchased by the Depositor on the Closing Date pursuant to this Agreement,
and the Unaffiliated Seller has prepared a schedule describing the Mortgage
Loans (the "Mortgage Loan Schedule") setting forth all of the Mortgage Loans to
be purchased under this Agreement, which schedule is attached hereto as Exhibit
A. The Mortgage Loan Schedule shall conform to the requirements of the Depositor
and to the definition of "Mortgage Loan Schedule" under the Pooling and
Servicing Agreement.
(c) The closing for the purchase and sale of the Mortgage Loans shall
take place at the offices of Dewey Ballantine LLP, New York, New York, at 10:00
a.m., New York time, on September 29, 1998 or such other place and time as the
parties shall agree (such time being herein referred to as the "Closing Date").
Section 2.02. Agreement to Purchase the Subsequent Mortgage Loans. (a)
Subject to the terms and conditions of this Agreement, the Originators agree to
sell, and the Unaffiliated Seller agrees to purchase each Subsequent Transfer
Date and immediately subsequent thereto, the Unaffiliated Seller agrees to sell,
and the Depositor agrees to purchase, Subsequent Mortgage Loans, having an
Aggregate Principal Balance of up to $60,095,539.54 as listed in the Mortgage
Loan Schedule attached to the related Addition Notice.
(b) Subject to Section 2.08 herein, the Mortgage Loans that are to be
purchased by the Depositor on a Subsequent Transfer Date pursuant to this
Agreement will be set forth on a Mortgage Loan Schedule to be attached to the
related Addition Notice.
(c) Subject to the satisfaction of the conditions set forth in
paragraph (d) below, (i) in consideration of the Unaffiliated Seller's delivery
on the related Subsequent Transfer Dates to or upon the order of the Originators
of the purchase price, the Originators shall on any Subsequent Transfer Date
sell, transfer, assign, set over and convey to the Trustee without recourse but
subject to terms and provisions of this Agreement, all of the right, title and
interest of the Originators in and to the Subsequent Mortgage Loans, including
all principal outstanding as of, and all interest due after, the Subsequent
Cut-Off Date, and all other assets included or to be included in the Trust Fund
for the benefit of the Certificateholders and the Certificate Insurer and (ii)
in consideration of the Depositor's delivery on the related Subsequent Transfer
Dates to or upon the order of the Unaffiliated Seller of the purchase price, the
Unaffiliated Seller shall on any Subsequent Transfer Date sell, transfer,
assign, set over and convey to the Trustee without recourse but subject to terms
and provisions of this Agreement, all of the right, title and interest of the
Originators in and to the Subsequent Mortgage Loans, including all principal
outstanding as of, and all interest due after, the Subsequent Cut-Off Date, and
all other assets included or to be included in the Trust Fund for the benefit of
the Certificateholders.
(d) The Subsequent Mortgage Loans and the other property and rights
related thereto described in paragraph (c) above shall be transferred by the
Depositor to the Trust only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Unaffiliated Seller shall have provided the Trustee, the
Rating Agencies and the Certificate Insurer with a timely Addition Notice,
which shall include a Mortgage Loan Schedule listing the Subsequent
Mortgage Loans and shall have provided any other information reasonably
requested by any of the foregoing with respect to the Subsequent Mortgage
Loans;
5
<PAGE>
(ii) the Unaffiliated Seller shall have deposited in the Collection
Account all collections of (x) principal in respect of the Subsequent
Mortgage Loans received after the related Subsequent Cut-Off Date and (y)
interest due on the Subsequent Mortgage Loans after the related Subsequent
Cut-Off Date;
(iii) as of each Subsequent Transfer Date, the Depositor was not
insolvent nor will be made insolvent by such transfer nor is the Depositor
aware of any pending insolvency;
(iv) such addition will not result in a material adverse tax
consequence to the Trust or the Holders of the Certificates;
(v) the Pre-Funding Period shall not have terminated;
(vi) the Unaffiliated Seller shall have delivered to the Trustee an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (d) and that the Subsequent Mortgage
Loans comply with the provisions of Section 3.03(af) hereof and Section
2.03(c) of the Pooling and Servicing Agreement;
(vii) there shall have been delivered to the Certificate Insurer,
the Rating Agencies and the Trustee, independent Opinions of Counsel with
respect to the transfer of the Subsequent Mortgage Loans substantially in
the form of the Opinions of Counsel delivered to the Certificate Insurer
and the Trustee on the Startup Date (bankruptcy, corporate and tax
opinions); and
(viii) the Originators, the Seller and the Depositor shall have
delivered to the Trustee an executed subsequent transfer agreement
substantially in the form of Exhibit L to the Pooling and Servicing
Agreement.
(e) The obligation of the Depositor to purchase a Subsequent Mortgage
Loan on any Subsequent Transfer Date is subject to the requirements set forth in
Section 2.03(c) of the Pooling and Servicing Agreement.
Section 2.03. Purchase Price. On the Closing Date, as full
consideration for the Unaffiliated Seller's sale of the Initial Mortgage Loans
to the Depositor, the Depositor will deliver to the Unaffiliated Seller (i) an
amount in cash equal to the sum of (A) 99.65%, 99.65%, 99.65% and 99.65% of the
aggregate principal balance as of the Closing Date of the Class A-1, Class A-2,
Class A-3 and Class A-4 Certificates, respectively, and (B) accrued interest on
such principal balance at the rate of 6.400%, 6.020% and 6.295% per annum, on
the Class A-1, Class A-2 and Class A-3 Certificates, respectively, from (and
including) September 1, 1998 to (but not including) September 29, 1998, payable
by wire transfer of same day funds and (ii) the Class R Certificates to be
issued pursuant to the Pooling and Servicing Agreement.
On the Closing Date, as full consideration for the Originators' sale of
the Initial Mortgage Loans to the Unaffiliated Seller, the Unaffiliated Seller
will deliver to the Originators an amount in cash equal to the sum of (A)
99.65%, 99.65%, 99.65% and 99.65% of the aggregate principal balance as of the
Closing Date of the Class A-1, Class A-2, Class A-3 and Class A-4 Certificates,
respectively, and (B) accrued interest on such principal balance at the rate
6.400%, 6.020% and 6.295% per annum, on the Class A-1, Class A-2 and Class A-3
Certificates, respectively, from (and including) September 1, 1998 to (but not
including) September 29, 1998, payable by wire transfer of same day funds.
6
<PAGE>
(b) On each Subsequent Transfer Date, as full consideration for the
Originators' sale to the Unaffiliated Seller and the Unaffiliated Seller's sale
of the Subsequent Mortgage Loans to the Depositor, the Depositor will deliver to
the Unaffiliated Seller and the Unaffiliated Seller will deliver to the
Originators an amount in cash equal to the sum of 100% of the aggregate
Principal Balance of the Subsequent Mortgage Loans as of the related Subsequent
Cut-Off Date.
Section 2.04. Conveyance of Mortgage Loans; Possession of Mortgage
Files. (a) On the Closing Date and on each Subsequent Transfer Date, the
Originators shall sell, transfer, assign, set over and convey to the
Unaffiliated Seller, without recourse but subject to the terms of this
Agreement, all right, title and interest in and to the applicable Mortgage
Loans, including all principal outstanding as of, and all interest due after,
the Subsequent Cut-Off Date, the insurance policies relating to each such
Mortgage Loan and all right, title and interest in and to the proceeds of such
insurance policies from and after the Closing Date and the Unaffiliated Seller
shall sell, transfer, assign, set over and convey to the Depositor, without
recourse but subject to the terms of this Agreement, all right, title and
interest in and to the applicable Mortgage Loans, including all principal
outstanding as of, and all interest due after, the Subsequent Cut-Off Date, the
insurance policies relating to each such Mortgage Loan, all right, title and
interest in and to the proceeds of such insurance policies and all of its rights
under this Agreement with respect to the Mortgage Loans from and after the
Closing Date. Upon payment of the purchase price for such Mortgage Loans as
provided in Section 2.03 of this Agreement, the Originators and the Unaffiliated
Seller shall have hereby, and shall be deemed to have, sold, transferred,
assigned, set over and conveyed such Mortgage Loans, the insurance policies
relating to each such Mortgage Loan, all right, title and interest in and to the
proceeds of such insurance policies and all of its rights under this Agreement
with respect to the Mortgage Loans from and after the Closing Date.
(b) Upon the sale of such Mortgage Loans, the ownership of each related
Mortgage Note, each related Mortgage and the contents of the related Mortgage
File shall immediately vest in the Depositor and the ownership of all related
records and documents with respect to each Mortgage Loan prepared by or which
come into the possession of the Originators or the Unaffiliated Seller shall
immediately vest in the Depositor. The contents of any Mortgage File in the
possession of the Originators or the Unaffiliated Seller at any time after such
sale, and any principal collected and interest due on the Mortgage Loans after
the Cut-Off Date and received by the Originators or the Unaffiliated Seller,
shall be held in trust by the Originators or the Unaffiliated Seller for the
benefit of the Depositor as the owner thereof, and shall be promptly delivered
by the Originators or the Unaffiliated Seller to or upon the order of the
Depositor.
(c) Pursuant to the Pooling and Servicing Agreement, the Depositor
shall, on the Closing Date, assign all of its right, title and interest in and
to the applicable Mortgage Loans to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer.
Section 2.05. Delivery of Mortgage Loan Documents. (a) On or prior to
the Closing Date or Subsequent Transfer Date, as applicable, the related
Originator shall deliver to the Unaffiliated Seller, and the Unaffiliated Seller
shall deliver to the Trustee (as assignee of the Depositor pursuant to the
Pooling and Servicing Agreement), each of the following documents for each
applicable Mortgage Loan:
(i) The original Mortgage Note, endorsed without recourse in blank
by the related Originator, including all intervening endorsements showing
a complete chain of endorsement;
7
<PAGE>
(ii) The related original Mortgage with evidence of recording
indicated thereon or a copy thereof certified by the applicable recording
office;
(iii) The recorded mortgage assignment, or copy thereof certified by
the applicable recording office, if any, showing a complete chain of
assignment from the originator of the related Mortgage Loan to the related
Originator (which assignment may, at the related Originator's option, be
combined with the assignment referred to in subpart (iv) hereof);
(iv) A mortgage assignment in recordable form (which, if acceptable
for recording in the relevant jurisdiction, may be included in a blanket
assignment or assignments) of each Mortgage from the related Originator to
the Trustee;
(v) Originals of all assumption, modification and substitution
agreements in those instances where the terms or provisions of a Mortgage
or Mortgage Note have been modified or such Mortgage or Mortgage Note has
been assumed; and
(vi) An original policy of title insurance (or (A) a copy of the
title insurance policy, or (B) a binder thereof or copy of such binder,
together with a certificate from the related Originator that the original
Mortgage has been delivered to the title insurance company that issued
such binder for recordation).
In instances where the original recorded Mortgage and a completed
assignment thereof in recordable form cannot be delivered by the related
Originator to the Unaffiliated Seller, and by the Unaffiliated Seller to the
Trustee prior to or concurrently with the execution and delivery of this
Agreement (or, with respect to Subsequent Mortgage Loans, prior to or on the
Subsequent Transfer Date), due to a delay in connection with recording, the
related Originator may:
(x) In lieu of delivering such original recorded Mortgage, deliver
to the Trustee a copy thereof provided that the related Originator
certifies that the original Mortgage has been delivered to a title
insurance company for recordation after receipt of its policy of title
insurance or binder therefor; and
(y) In lieu of delivering the completed assignment in recordable
form, deliver to the Trustee the assignment in recordable form, otherwise
complete except for recording information.
(b) Pursuant to the Pooling and Servicing Agreement, the Unaffiliated
Seller shall be required to promptly submit, or cause to be submitted by the
related Originator, for recording in the appropriate public office for real
property records, each assignment referred to in (a) above. The Trustee shall be
required to retain a copy of each assignment submitted for recording. In the
event that any such assignment is lost or returned unrecorded because of a
defect therein, the Unaffiliated Seller or such Originator shall promptly
prepare a substitute assignment or cure such defect, as the case may be, and
thereafter the Unaffiliated Seller or such Originator shall be required to
submit each such assignment for recording.
8
<PAGE>
(c) The Unaffiliated Seller or the related Originator shall, within
five Business Days after the receipt thereof, deliver or cause to be delivered
to the Trustee (as assignee of the Depositor pursuant to the Pooling and
Servicing Agreement): (i) the original recorded Mortgage and related power of
attorney, if any, in those instances where a copy thereof certified by the
related Originator was delivered to the Trustee (as assignee of the Depositor
pursuant to the Pooling and Servicing Agreement); (ii) the original recorded
assignment of Mortgage from the related Originator to the Trustee (as assignee
of the Depositor pursuant to the Pooling and Servicing Agreement), which,
together with any intervening assignments of Mortgage, evidences a complete
chain of assignment from the originator of the Mortgage Loan to the Trustee in
those instances where copies of such assignments certified by the related
Originator were delivered to the Trustee (as assignee of the Depositor pursuant
to the Pooling and Servicing Agreement); and (iii) the title insurance policy or
title opinion required in clause (a)(vi) above. Notwithstanding anything to the
contrary contained in this Section 2.05, in those instances where the public
recording office retains the original Mortgage, power of attorney, if any,
assignment or assignment of Mortgage after it has been recorded or such original
has been lost, the Unaffiliated Seller or the related Originator shall be deemed
to have satisfied its obligations hereunder upon delivery to the Trustee (as
assignee of the Depositor pursuant to the Pooling and Servicing Agreement) of a
copy of such Mortgage, power of attorney, if any, assignment or assignment of
Mortgage certified by the public recording office to be a true copy of the
recorded original thereof. From time to time the Unaffiliated Seller or the
related Originator may forward or cause to be forwarded to the Trustee (as
assignee of the Depositor pursuant to the Pooling and Servicing Agreement)
additional original documents evidencing an assumption or modification of a
Mortgage Loan.
(d) All original documents relating to the Mortgage Loans that are not
delivered to the Trustee (as assignee of the Depositor pursuant to the Pooling
and Servicing Agreement) as permitted by Section 2.05 (a) are and shall be held
by the Unaffiliated Seller or the related Originator in trust for the benefit of
the Trustee on behalf of the Certificateholders and the Certificate Insurer. In
the event that any such original document is required pursuant to the terms of
this Section 2.05 to be a part of a Mortgage File, such document shall be
delivered promptly to the Trustee (as assignee of the Depositor pursuant to the
Pooling and Servicing Agreement). From and after the sale of the Mortgage Loans
to the Depositor pursuant hereto, to the extent that the Unaffiliated Seller or
the related Originator retains legal title of record to any Mortgage Loans prior
to the vesting of legal title in the Trustee (as assignee of the Depositor
pursuant to the Pooling and Servicing Agreement), such title shall be retained
in trust for the Depositor as the owner of the Mortgage Loans and the Trustee,
as the Depositor's assignee.
Section 2.06. Acceptance of Mortgage Loans. (a) Pursuant to the Pooling
and Servicing Agreement, the Trustee has agreed to execute and deliver on or
prior to the Closing Date, or any Subsequent Transfer Date, an acknowledgment of
receipt of, for each Mortgage Loan, the original Mortgage Note with respect to
each Mortgage Loan (with any exceptions noted), in the form attached as Exhibit
E to the Pooling and Servicing Agreement and declares that it will hold such
documents and any amendments, replacements or supplements thereto, as well as
any other assets included in the definition of Trust Fund in the Pooling and
Servicing Agreement and delivered to the Trustee, as Trustee in trust upon and
subject to the conditions set forth in the Pooling and Servicing Agreement for
the benefit of the Certificateholders and the Certificate Insurer. Pursuant to
the Pooling and Servicing Agreement, the Trustee has agreed, for the benefit of
the Certificateholders and the Certificate Insurer, to review (or cause to be
reviewed) each Trustee's Mortgage File within 30 days after the Closing Date or
the Subsequent Transfer Date, as applicable (or, with respect to any Qualified
Substitute Mortgage Loan, within 30 days after the receipt by the Trustee
thereof), and to deliver to the Unaffiliated Seller, the Servicer and the
Certificate Insurer a certification in the form attached to the Pooling and
Servicing Agreement as Exhibit F to the effect that, as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full
or any Mortgage Loan specifically identified in such certification as not
covered by such certification), (i) all documents
9
<PAGE>
required to be delivered to it pursuant to the Pooling and Servicing Agreement
are in its possession, (ii) each such document has been reviewed by it and has
not been mutilated, damaged, torn or otherwise physically altered (handwritten
additions, changes or corrections shall not constitute physical alteration if
initiated by the Mortgagor), appears regular on its face and relates to such
Mortgage Loan, and (iii) based on its examination and only as to the foregoing
documents, the information set forth on the Mortgage Loan Schedule accurately
reflects the information set forth in the Trustee's Mortgage File delivered on
such date. Pursuant to the Pooling and Servicing Agreement, the Trustee shall be
under no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face. Pursuant to the Pooling and
Servicing Agreement, within 90 days of the Closing Date, with respect to the
Initial Mortgage Loans, and within 90 days of the Subsequent Transfer Date, with
respect to any related Subsequent Mortgage Loans, the Trustee shall be required
to deliver (or cause to be delivered) to the Servicer, the Unaffiliated Seller,
the initial Certificateholders and the Certificate Insurer a final certification
in the form attached to the Pooling and Servicing Agreement as Exhibit G to the
effect that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as not covered by such certification), (i) all
documents required to be delivered to it pursuant to the Pooling and Servicing
Agreement are in its possession, (ii) each such document has been reviewed by it
and has not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections shall not constitute physical
alteration if initialed by the Mortgagor), appears regular on its face and
relates to such Mortgage Loan, and (iii) based on its examination and only as to
the foregoing documents, the information set forth on the Mortgage Loan Schedule
accurately reflects the information set forth in the Trustee's Mortgage File
delivered on such date.
(b) The Pooling and Servicing Agreement provides that, if the Trustee during the
process of reviewing the Trustee's Mortgage Files finds any document
constituting a part of a Trustee's Mortgage File which is not executed, has not
been received, is unrelated to the Mortgage Loan identified in the Mortgage Loan
Schedule, or does not conform to the requirements of Section 2.05 or the
description thereof as set forth in the Mortgage Loan Schedule, the Trustee
shall promptly so notify the Servicer, the Unaffiliated Seller, the related
Originator and the Certificate Insurer. The Unaffiliated Seller agrees that in
performing any such review, the Trustee may conclusively rely on the
Unaffiliated Seller as to the purported genuineness of any such document and any
signature thereon. Each of the Originators and the Unaffiliated Seller agrees to
use reasonable efforts to remedy a material defect in a document constituting
part of a Mortgage File of which it is notified. If, however, within 60 days
after such notice neither the Unaffiliated Seller nor any Originator has
remedied the defect and the defect materially and adversely affects the interest
of the Certificateholders in the related Mortgage Loan or the interests of the
Certificate Insurer, then the Unaffiliated Seller and the Originators shall be
obligated to either substitute in lieu of such Mortgage Loan a Qualified
Substitute Mortgage Loan or purchase such Mortgage Loan in the manner and
subject to the conditions set forth in Section 3.05.
(c) The failure of the Trustee or the Certificate Insurer to give any
notice contemplated herein within the time periods specified above shall not
affect or relieve the Unaffiliated Seller's obligation to repurchase for any
Mortgage Loan pursuant to this Section 2.06 or Section 3.05 of this Agreement.
10
<PAGE>
Section 2.07. Transfer of Mortgage Loans; Assignment of Agreement. The
Originators and the Unaffiliated Seller each hereby acknowledges and agrees that
the Depositor may assign its interest under this Agreement to the Trustee as may
be required to effect the purposes of the Pooling and Servicing Agreement,
without further notice to, or consent of, the Unaffiliated Seller or the
Originators, and the Trustee shall succeed to such of the rights and obligations
of the Depositor hereunder as shall be so assigned. The Depositor shall,
pursuant to the Pooling and Servicing Agreement, assign all of its right, title
and interest in and to the Mortgage Loans and its right to exercise the remedies
created by Sections 2.06 and 3.05 hereof for breaches of the representations,
warranties, agreements and covenants of the Unaffiliated Seller or the
Originators contained in Sections 2.05, 2.06, 3.02 and 3.03 hereof to the
Trustee for the benefit of the Certificateholders and the Certificate Insurer.
Each of the Originators and the Unaffiliated Seller agrees that, upon such
assignment to the Trustee, such representations, warranties, agreements and
covenants will run to and be for the benefit of the Trustee and the Trustee may
enforce, without joinder of the Depositor, the repurchase obligations of the
Unaffiliated Seller and the Originators set forth herein with respect to
breaches of such representations, warranties, agreements and covenants.
Section 2.08. Examination of Mortgage Files. Prior to the Closing Date
and each Subsequent Transfer Date, as applicable, the Unaffiliated Seller shall
make the Mortgage Files available to the Depositor or its designee for
examination at the Unaffiliated Seller's offices or at such other place as the
Unaffiliated Seller shall reasonably specify. Such examination may be made by
the Depositor or its designee at any time on or before the Closing Date or
Subsequent Transfer Date, as the case may be. If the Depositor or its designee
makes such examination prior to the Closing Date or Subsequent Transfer Date, as
the case may be, and identifies any Mortgage Loans that do not conform to the
requirements of the Depositor as described in this Agreement, such Mortgage
Loans shall be deleted from the Mortgage Loan Schedule and may be replaced,
prior to the Closing Date or Subsequent Transfer Date, as the case may be, by
substitute Mortgage Loans acceptable to the Depositor. The Depositor may, at its
option and without notice to the Unaffiliated Seller, purchase all or part of
the Mortgage Loans without conducting any partial or complete examination. The
fact that the Depositor or the Trustee has conducted or has failed to conduct
any partial or complete examination of the Mortgage Files shall not affect the
rights of the Depositor or the Trustee to demand repurchase or other relief as
provided in this Agreement.
Section 2.09. Books and Records. The sale of each Mortgage Loan shall
be reflected on each of the Originators' and the Unaffiliated Seller's
accounting and other records, balance sheet and other financial statements as a
sale of assets by the Originators to the Unaffiliated Seller and by the
Unaffiliated Seller to the Depositor. Each of the Originators and the
Unaffiliated Seller shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Mortgage Loan which shall be clearly
marked to reflect the ownership of each Mortgage Loan by the Trustee for the
benefit of the Certificateholders and the Certificate Insurer.
Section 2.10. Cost of Delivery and Recordation of Documents. The costs
relating to the delivery and recordation of the documents specified in this
Article Two in connection with the Mortgage Loans shall be borne by the
Unaffiliated Seller.
11
<PAGE>
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the Originators.
Each of the Originators hereby represents and warrants to the Unaffiliated
Seller and the Depositor, as of the Closing Date, that:
(a) The Originator is a corporation duly organized, validly existing
and in good standing under the laws of (i) the State of Pennsylvania (with
respect to ABC and Upland) or (ii) the State of New Jersey (with respect to
NJMIC) and has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in each state where a
Mortgaged Property is located if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by the
Originator and to perform its obligations as the Originator hereunder, and in
any event the Originator is in compliance with the laws of any such state to the
extent necessary to ensure the enforceability of the related Mortgage Loan; the
Originator has the full power and authority, corporate and otherwise, to execute
and deliver this Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) by the Originator and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Originator; and all requisite corporate action has been taken
by the Originator to make this Agreement valid and binding upon the Originator
in accordance with its terms;
(b) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Originator of, nor compliance by the Originator with, this
Agreement or the sale of the Mortgage Loans pursuant to the terms of this
Agreement nor the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to the Closing
Date;
(c) Neither the execution and delivery of this Agreement, the
acquisition nor origination of the Mortgage Loans by the Originator or the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, has or will conflict with or result in a
breach of any of the terms, conditions or provisions of the Originator's charter
or by-laws or any legal restriction or any agreement or instrument to which the
Originator is now a party or by which it is bound or to which its property is
subject, or constitute a default or result in an acceleration under any of the
foregoing, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Originator or its property is subject, or impair
the ability of the Trustee (or the Servicer as the agent of the Trustee) to
realize on the Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Neither this Agreement nor the information contained in the
Prospectus Supplement under the captions "The Mortgage Pools "The Originators,
the Seller and the Servicer" and "Servicing of the Mortgage Loans" nor any
statement, report or other document prepared by the Originator and furnished or
to be furnished pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement or alleged untrue
statement of any material fact or omits to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading;
12
<PAGE>
(e) There is no action, suit, proceeding or investigation pending or,
to the knowledge of the Originator, threatened before a court, administrative
agency or government tribunal against the Originator which, either in any one
instance or in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the
Originator, or in any material impairment of the right or ability of the
Originator to carry on its business substantially as now conducted, or in any
material liability on the part of the Originator, or which would draw into
question the validity of this Agreement, the Mortgage Loans, or of any action
taken or to be taken in connection with the obligations of the Originator
contemplated herein, or which would impair materially the ability of the
Originator to perform under the terms of this Agreement or that might prohibit
its entering into this Agreement or the consummation of any of the transactions
contemplated hereby;
(f) The Originator is not in violation of or in default with respect
to, and the execution and delivery of this Agreement by the Originator and its
performance of and compliance with the terms hereof will not constitute a
violation or default with respect to, any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or governmental
agency, which violation or default might have consequences that would materially
and adversely affect the condition (financial or other) or operations of the
Originator or its properties or might have consequences that would materially
and adversely affect its performance hereunder or under any Subservicing
Agreement;
(g) Upon the receipt of each Trustee's Mortgage File by the Depositor
under this Agreement, the Depositor will have good title on behalf of the Trust
Fund to each related Mortgage Loan and such other items comprising the corpus of
the Trust Fund free and clear of any lien created by the Originator (other than
liens which will be simultaneously released);
(h) The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Originator, and the transfer,
assignment and conveyance of the Mortgage Notes and the Mortgages by the
Originator pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions in effect in any applicable jurisdiction;
(i) With respect to any Mortgage Loan purchased by the Originator, the
Originator acquired title to the Mortgage Loan in good faith, without notice of
any adverse claim;
(j) The Originator does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in
this Agreement. The Originator is solvent and the sale of the Mortgage Loans by
the Originator pursuant to the terms of this Agreement will not cause the
Originator to become insolvent. The sale of the Mortgage Loans by the Originator
pursuant to the terms of this Agreement was not undertaken with the intent to
hinder, delay or defraud any of the Originator's creditors;
(k) The Mortgage Loans are not intentionally selected in a manner so as
to affect adversely the interests of the Depositor or of any transferee of the
Depositor (including the Trustee);
(l) The Originator has determined that it will treat the disposition of
the Mortgage Loans pursuant to this Agreement as a sale for accounting and tax
purposes;
13
<PAGE>
(m) The Originator has not dealt with any broker or agent or anyone
else that may be entitled to any commission or compensation in connection with
the sale of the Mortgage Loans to the Depositor other than to the Depositor or
an affiliate thereof; and
(n) The consideration received by the Originator upon the sale of the
Mortgage Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Mortgage Loans.
Section 3.02. Representations and Warranties as to the Unaffiliated
Seller. The Unaffiliated Seller hereby represents and warrants to the Depositor,
as of the Closing Date, that:
(a) The Unaffiliated Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each state where a Mortgaged
Property is located if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by the Unaffiliated Seller
and to perform its obligations as the Unaffiliated Seller hereunder, and in any
event the Unaffiliated Seller is in compliance with the laws of any such state
to the extent necessary to ensure the enforceability of the related Mortgage
Loan; the Unaffiliated Seller has the full power and authority, corporate and
otherwise, to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Unaffiliated Seller and the consummation of the transactions contemplated hereby
have been duly and validly authorized; this Agreement evidences the valid,
binding and enforceable obligation of the Unaffiliated Seller; and all requisite
corporate action has been taken by the Unaffiliated Seller to make this
Agreement valid and binding upon the Unaffiliated Seller in accordance with its
terms;
(b) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Unaffiliated Seller of or compliance by the Unaffiliated
Seller with this Agreement or the sale of the Mortgage Loans pursuant to the
terms of this Agreement or the consummation of the transactions contemplated by
this Agreement, or if required, such approval has been obtained prior to the
Closing Date;
(c) Neither the execution and delivery of this Agreement, the
acquisition nor origination of the Mortgage Loans by the Unaffiliated Seller nor
the transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement, has or will conflict with or result
in a breach of any of the terms, conditions or provisions of the Unaffiliated
Seller's charter or by-laws or any legal restriction or any agreement or
instrument to which the Unaffiliated Seller is now a party or by which it is
bound or to which its property is subject, or constitute a default or result in
an acceleration under any of the foregoing, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Unaffiliated
Seller or its property is subject, or impair the ability of the Trustee (or the
Servicer as the agent of the Trustee) to realize on the Mortgage Loans, or
impair the value of the Mortgage Loans;
(d) Neither this Agreement nor the information contained in the
Prospectus Supplement under the captions "The Mortgage Pools "The Originators,
the Seller and the Servicer" and "Servicing of the Mortgage Loans" nor any
statement, report or other document prepared by the Unaffiliated Seller and
furnished or to be furnished pursuant to this Agreement or in connection with
the transactions contemplated hereby contains any untrue statement or alleged
untrue statement of any material fact or omits to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading;
14
<PAGE>
(e) There is no action, suit, proceeding or investigation pending nor,
to the knowledge of the Unaffiliated Seller, threatened before a court,
administrative agency or government tribunal against the Unaffiliated Seller
which, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial condition,
properties or assets of the Unaffiliated Seller, or in any material impairment
of the right or ability of the Unaffiliated Seller to carry on its business
substantially as now conducted, or in any material liability on the part of the
Unaffiliated Seller, or which would draw into question the validity of this
Agreement, the Mortgage Loans, or of any action taken or to be taken in
connection with the obligations of the Unaffiliated Seller contemplated herein,
or which would impair materially the ability of the Unaffiliated Seller to
perform under the terms of this Agreement or that might prohibit its entering
into this Agreement or the consummation of any of the transactions contemplated
hereby;
(f) The Unaffiliated Seller is not in violation of or in default with
respect to, and the execution and delivery of this Agreement by the Unaffiliated
Seller and its performance of and compliance with the terms hereof will not
constitute a violation or default with respect to, any order or decree of any
court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which violation or default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Unaffiliated Seller or its properties or might have
consequences that would materially and adversely affect its performance
hereunder or under any Subservicing Agreement;
(g) Upon the receipt of each Trustee's Mortgage File by the Depositor
under this Agreement, the Depositor will have good title on behalf of the Trust
Fund to each related Mortgage Loan and such other items comprising the corpus of
the Trust Fund free and clear of any lien created by the Unaffiliated Seller
(other than liens which will be simultaneously released);
(h) The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Unaffiliated Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Unaffiliated Seller pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(i) With respect to any Mortgage Loan purchased by the Unaffiliated
Seller, the Unaffiliated Seller acquired title to the Mortgage Loan in good
faith, without notice of any adverse claim;
(j) The Unaffiliated Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement. The Unaffiliated Seller is solvent and the sale of
the Mortgage Loans by the Unaffiliated Seller pursuant to the terms of this
Agreement will not cause the Unaffiliated Seller to become insolvent. The sale
of the Mortgage Loans by the Unaffiliated Seller pursuant to the terms of this
Agreement was not undertaken with the intent to hinder, delay or defraud any of
the Unaffiliated Seller's creditors;
15
<PAGE>
(k) The Mortgage Loans are not intentionally selected in a manner so as
to affect adversely the interests of the Depositor or of any transferee of the
Depositor (including the Trustee);
(l) The Unaffiliated Seller has determined that it will treat the
disposition of the Mortgage Loans pursuant to this Agreement as a sale for
accounting and tax purposes;
(m) The Unaffiliated Seller has not dealt with any broker or agent or
anyone else that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans to the Depositor other than to the Depositor
or an affiliate thereof; and
(n) The consideration received by the Unaffiliated Seller upon the sale
of the Mortgage Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Mortgage Loans.
Section 3.03. Representations and Warranties Relating to the Mortgage
Loans. The Originators represent and warrant to the Unaffiliated Seller and the
Unaffiliated Seller represents to the Depositor that, as of the Closing Date, as
to each Initial Mortgage Loan, and as of the Subsequent Transfer Date, as to
each Subsequent Mortgage Loan, immediately prior to the sale and transfer of
such Mortgage Loan by the Unaffiliated Seller to the Depositor:
(a) The information set forth in each Mortgage Loan Schedule is
complete, true and correct;
(b) The information to be provided by the Unaffiliated Seller or the
Originators, directly or indirectly, to the Depositor in connection with a
Subsequent Mortgage Loan will be true and correct in all material respects at
the date or dates respecting which such information is furnished;
(c) Each Mortgage is a valid first or second lien on a fee simple (or
its equivalent under applicable state law) estate in the real property securing
the amount owed by the Mortgagor under the Mortgage Note subject only to (i) the
lien of current real property taxes and assessments which are not delinquent,
(ii) with respect to any Mortgage Loan identified on the Mortgage Loan Schedule
as secured by a second lien, the related first mortgage loan, (iii) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions generally
in the area wherein the property subject to the Mortgage is located or
specifically reflected in the appraisal obtained in connection with the
origination of the related Mortgage Loan obtained by the Unaffiliated Seller and
(iv) other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by such Mortgage;
(d) Immediately prior to the transfer and assignment by the related
Originator to the Unaffiliated Seller and by the Unaffiliated Seller to the
Trustee, the Unaffiliated Seller or such Originator, as applicable, had good
title to, and was the sole owner of each Mortgage Loan, free of any interest of
any other Person, and the Unaffiliated Seller or such Originator has transferred
all right, title and interest in each Mortgage Loan to the Trustee or the
Unaffiliated Seller, as applicable;
16
<PAGE>
(e) As of the Cut-Off Date, no payment of principal or interest on or
in respect of any Mortgage Loan remains unpaid for 30 or more days past the date
the same was due in accordance with the related Mortgage Note without regard to
applicable grace periods;
(f) As of the Statistical Calculation Date, no Mortgage Loan has a
Mortgage Interest Rate less than 7.99% per annum in Mortgage Loan Group I and
8.99% per annum in Mortgage Loan Group II and the weighted average Mortgage
Interest Rate of the Mortgage Loans is 11.34% in Mortgage Loan Group I and
12.13% in Mortgage Loan Group II;
(g) At origination, no Mortgage Loan in Mortgage Loan Group I or II had
an original term to maturity of greater than 360 months;
(h) As of the Statistical Calculation Date, the weighted average
remaining term to maturity of the Mortgage Loans is 252 months for the Mortgage
Loans in Mortgage Loan Group I and 243 months for the Mortgage Loans in Mortgage
Loan Group II;
(i) To the best knowledge of the Unaffiliated Seller and each of the
Originators, there is no mechanics' lien or claim for work, labor or material
(and no rights are outstanding that under law could give rise to such lien)
affecting the premises subject to any Mortgage which is or may be a lien prior
to, or equal or coordinate with, the lien of such Mortgage, except those which
are insured against by the title insurance policy referred to in (ff) below;
(j) To the best knowledge of the Unaffiliated Seller and each of the
Originators, there is no delinquent tax or assessment lien against any Mortgaged
Property;
(k) Such Mortgage Loan, the Mortgage, and the Mortgage Note, including,
without limitation, the obligation of the Mortgagor to pay the unpaid principal
of and interest on the Mortgage Note, are each not subject to any right of
rescission (or any such rescission right has expired in accordance with
applicable law), set-off, counterclaim, or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note or the
Mortgage, or the exercise of any right thereunder, render either the Mortgage
Note or the Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set-off, counterclaim, or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim, or defense has
been asserted with respect thereto;
(l) To the best knowledge of the Unaffiliated Seller and each of the
Originators, the Mortgaged Property is free of material damage and is in good
repair, and there is no pending or threatened proceeding for the total or
partial condemnation of the Mortgaged Property;
(m) Neither the Originators nor the Unaffiliated Seller has received a
notice of default of any first mortgage loan secured by the Mortgaged Property
which has not been cured by a party other than the Unaffiliated Seller;
(n) Each Mortgage Note and Mortgage are in substantially the forms
previously provided to the Trustee on behalf of the Unaffiliated Seller;
(o) No Mortgage Loan had, at the date of origination, a Combined
Loan-to-Value Ratio in excess of 100%, and the weighted average Combined
Loan-to-Value ratio of all Mortgage Loans as of the Statistical Calculation Date
is approximately 76.18% in Mortgage Loan Group I and 72.05% in Mortgage Loan
Group II;
17
<PAGE>
(p) The Mortgage Loan was not originated in a program in which the
amount of documentation in the underwriting process was limited in comparison to
the originator's normal documentation requirements; (q) No more than the
following percentages of the Mortgage Loans by Principal Balance as of the
Statistical Calculation Date are secured by Mortgaged Properties located in the
following states:
Mortgage Loan Group II
-----------------------------------------------------------
Percent of
State Principal Balance
-------------------------- --------------------------
Colorado 0.08%
Connecticut 1.27
Delaware 2.37
Florida 6.00
Georgia 9.17
Illinois 1.39
Indiana 0.26
Maryland 2.47
Michigan 0.06
Mississippi 1.22
New Jersey 27.54
New York 19.32
North Carolina 0.95
Ohio 1.92
Pennsylvania 23.21
South Carolina 0.27
Tennessee 0.58
Virginia 1.92
------
100.00%
======
Mortgage Loan Group II
-----------------------------------------------------------
Percent of
State Principal Balance
-------------------------- --------------------------
Connecticut 3.59%
Georgia 12.23
Maryland 2.31
New Jersey 33.88
New York 27.45
Ohio 2.08
Pennsylvania 16.79
Virginia 1.66
------
100.00%
======
(r) The Mortgage Loans were not selected by the Unaffiliated Seller or
the Originators for sale hereunder or inclusion in the Trust Fund on any basis
adverse to the Trust Fund relative to the portfolio of similar mortgage loans of
the Unaffiliated Seller or the Originators;
(s) None of the Mortgage Loans constitutes a lien on leasehold
interests;
18
<PAGE>
(t) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security including (A) in the case of a Mortgage designated as a deed of trust,
by trustee's sale and (B) otherwise by judicial foreclosure. To the best of the
Unaffiliated Seller's and the Originators' knowledge, there is no homestead or
other exemption available to the related Mortgagor which would materially
interfere with the right to sell the related Mortgaged Property at a trustee's
sale or the right to foreclose the related Mortgage. The Mortgage contains
customary and enforceable provisions for the acceleration of the payment of the
Principal Balance of such Mortgage Loan in the event all or any part of the
related Mortgaged Property is sold or otherwise transferred without the prior
written consent of the holder thereof;
(u) The proceeds of such Mortgage Loan have been fully disbursed,
including reserves set aside by the Unaffiliated Seller or the Originators,
there is no requirement for, and neither the Unaffiliated Seller nor the
Originators shall make any, future advances thereunder. Any future advances made
prior to the Cut-Off Date have been consolidated with the principal balance
secured by the Mortgage, and such principal balance, as consolidated, bears a
single interest rate and single repayment term reflected on the applicable
Mortgage Loan Schedule. The Principal Balance as of the Cut-Off Date does not
exceed the original principal amount of such Mortgage Loan. Except with respect
to no more than $150,000 of escrow funds, any and all requirements as to
completion of any on-site or off-site improvements and as to disbursements of
any escrow funds therefor have been complied with. All costs, fees, and expenses
incurred in making, or recording such Mortgage Loan have been paid;
(v) All Mortgage Loans were originated in compliance with the
Originators' Underwriting Guidelines;
(w) The terms of the Mortgage and the Mortgage Note have not been
impaired, waived, altered, or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest of the
Trustee and which has been delivered to the Trustee. The substance of any such
alteration or modification is or as to Subsequent Mortgage Loans will be
reflected on the applicable Mortgage Loan Schedule and, to the extent necessary,
has been or will be approved by (i) the insurer under the applicable mortgage
title insurance policy, and (ii) the insurer under any other insurance policy
required hereunder for such Mortgage Loan where such insurance policy requires
approval and the failure to procure approval would impair coverage under such
policy;
(x) No instrument of release, waiver, alteration, or modification has
been executed in connection with such Mortgage Loan, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption agreement
which has been approved by the insurer under any insurance policy required
hereunder for such Mortgage Loan where such policy requires approval and the
failure to procure approval would impair coverage under such policy, and which
is part of the Mortgage File and has been delivered to the Trustee, and the
terms of which are reflected in the applicable Mortgage Loan Schedule;
(y) Other than delinquencies described in clause (e) above, there is no
default, breach, violation, or event of acceleration existing under the Mortgage
or the Mortgage Note and no event which, with the passage of time or with notice
and the expiration of any grace or cure period, would constitute such a default,
breach, violation or event of acceleration, and neither the Originators nor the
Unaffiliated Seller has waived any such default, breach, violation or event of
acceleration. All taxes, governmental assessments (including assessments payable
in future installments), insurance premiums, water, sewer, and municipal
charges, leaseholder payments, or ground rents which previously became due and
owing in respect of or affecting the related Mortgaged Property have been paid.
Neither the Originators nor the Unaffiliated Seller has advanced funds, or
induced, solicited, or knowingly received any advance of funds by a party other
than the Mortgagor, directly or indirectly, for the payment of any amount
required by the Mortgage or the Mortgage Note;
19
<PAGE>
(z) All of the improvements which were included for the purposes of
determining the Appraised Value of the Mortgaged Property were completed at the
time that such Mortgage Loan was originated and lie wholly within the boundaries
and building restriction lines of such Mortgaged Property. Except for de minimis
encroachments, no improvements on adjoining properties encroach upon the
Mortgaged Property. To the best of the Unaffiliated Seller's and the
Originators' knowledge, no improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation. All
inspections, licenses, and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property (including all such
improvements which were included for the purpose of determining such Appraised
Value) and, with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriters certificates, have
been made or obtained from the appropriate authorities and the Mortgaged
Property is lawfully occupied under applicable law;
(aa) To the best of the Unaffiliated Seller's and the Originators'
knowledge, there do not exist any circumstances or conditions with respect to
the Mortgage, the Mortgaged Property, the Mortgagor, or the Mortgagor's credit
standing that can be reasonably expected to cause such Mortgage Loan to become
delinquent or adversely affect the value or marketability of such Mortgage Loan,
other than any such circumstances or conditions permitted under the Originator's
Underwriting Guidelines;
(bb) All parties which have had any interest in the Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (i) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located and (ii) (A) organized under the laws of such
state, (B) qualified to do business in such state, (C) federal savings and loan
associations or national banks having principal offices in such state, (D) not
doing business in such state, or (E) not required to qualify to do business in
such state;
(cc) The Mortgage Note and the Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally and except that the
equitable remedy of specific performance and other equitable remedies are
subject to the discretion of the courts. All parties to the Mortgage Note and
the Mortgage had legal capacity to execute the Mortgage Note and the Mortgage
and convey the estate therein purported to be conveyed, and the Mortgage Note
and the Mortgage have been duly and properly executed by such parties or
pursuant to a valid power-of-attorney that has been recorded with the Mortgage;
(dd) The transfer of the Mortgage Note and the Mortgage as and in the
manner contemplated by this Agreement is sufficient either (i) fully to transfer
to the Depositor all right, title, and interest of the Unaffiliated Seller and
the Originators thereto as note holder and mortgagee or (ii) to grant to the
Depositor the security interest referred to in Section 6.07 hereof. The Mortgage
has been duly assigned and the Mortgage Note has been duly endorsed. The
assignment of Mortgage delivered to the Trustee pursuant to Section 2.04(a)(iv)
is in recordable form and is acceptable for recording under the laws of the
applicable jurisdiction. The endorsement of the Mortgage Note, the delivery to
the Trustee of the endorsed Mortgage Note, and such assignment of Mortgage, and
the delivery of such assignment of Mortgage for recording to, and the due
recording of such assignment of Mortgage in, the appropriate public recording
office in the jurisdiction in which the Mortgaged Property is located are
sufficient to permit the Trustee to avail itself of all protection available
under applicable law against the claims of any present or future creditors of
the Unaffiliated Seller and the Originators, and are sufficient to prevent any
other sale, transfer, assignment, pledge, or hypothecation of the Mortgage Note
and Mortgage by the Unaffiliated Seller or the Originators from being
enforceable;
20
<PAGE>
(ee) Any and all requirements of any federal, state, or local law
including, without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity, or disclosure
laws applicable to such Mortgage Loan have been complied with, and the Servicer
shall maintain in its possession, available for the Trustee's inspection, and
shall deliver to the Trustee or its designee upon demand, evidence of compliance
with all such requirements. The consummation of the transactions contemplated by
this Agreement will not cause the violation of any such laws;
(ff) Such Mortgage Loan is covered by an ALTA mortgage title insurance
policy or such other generally used and acceptable form of policy, issued by and
the valid and binding obligation of a title insurer qualified to do business in
the jurisdiction where the Mortgaged Property is located, insuring the
Unaffiliated Seller, and its successors and assigns, as to the first or second
priority lien, as applicable, of the Mortgage in the original principal amount
of such Mortgage Loan. The assignment to the Trustee of the Unaffiliated
Seller's interest in such mortgage title insurance policy does not require the
consent of or notification to the insurer. Such mortgage title insurance policy
is in full force and effect and will be in full force and effect and inure to
the benefit of the Trustee upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such mortgage
title insurance policy and neither the Unaffiliated Seller nor any prior holder
of the Mortgage has done, by act or omission, anything which would impair the
coverage of such mortgage title insurance policy;
(gg) All improvements upon the Mortgaged Property are insured against
loss by fire, hazards of extended coverage, and such other hazards as are
customary in the area where the Mortgaged Property is located pursuant to
insurance policies conforming to the requirements of Section 3.05 hereof. If the
Mortgaged Property at origination was located in an area identified on a flood
hazard boundary map or flood insurance rate map issued by the Federal Emergency
Management Agency as having special flood hazards (and such flood insurance has
been made available), such Mortgaged Property was covered by flood insurance at
origination. Each individual insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and will be in full
force and effect and inure to the benefit of the Trustee upon the consummation
of the transactions contemplated by this Agreement, and contain a standard
mortgage clause naming the originator of such Mortgage Loan, and its successors
and assigns, as mortgagee and loss payee. All premiums thereon have been paid.
The Mortgage obligates the Mortgagor to maintain all such insurance at the
Mortgagor's cost and expense, and upon the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance at
the Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor, and none of the Unaffiliated Seller, the related Originator or any
prior holder of the Mortgage has acted or failed to act so as to impair the
coverage of any such insurance policy or the validity, binding effect, and
enforceability thereof;
(hh) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly designated
and currently so serves and is named in such Mortgage, as no fees or expenses
are or will become payable by the Trustee or the Certificateholders to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
21
<PAGE>
(ii) The Mortgaged Property consists of one or more parcels of real
property separately assessed for tax purposes. To the extent there is erected
thereon a detached or an attached one-family residence or a detached two-to
six-family dwelling, or an individual condominium unit in a low-rise
condominium, or an individual unit in a planned unit development, or a
commercial property, or a mixed use or multiple purpose property, such
residence, dwelling or unit is not (i) a unit in a cooperative apartment, (ii) a
property constituting part of a syndication, (iii) a time share unit, (iv) a
property held in trust, (v) a mobile home, (vi) a manufactured dwelling, (vii) a
log-constructed home, or (viii) a recreational vehicle;
(jj) There exist no material deficiencies with respect to escrow
deposits and payments, if such are required, for which customary arrangements
for repayment thereof have not been made or which the Unaffiliated Seller or the
related Originator expects not to be cured, and no escrow deposits or payments
of other charges or payments due the Unaffiliated Seller have been capitalized
under the Mortgage or the Mortgage Note;
(kk) Such Mortgage Loan was not originated at a below market interest
rate. Such Mortgage Loan does not have a shared appreciation feature, or other
contingent interest feature;
(ll) The origination and collection practices used by the Unaffiliated
Seller, the Originators or the Servicer with respect to such Mortgage Loan have
been in all respects legal, proper, prudent, and customary in the mortgage
origination and servicing business;
(mm) The Mortgagor has, to the extent required by applicable law,
executed a statement to the effect that the Mortgagor has received all
disclosure materials, if any, required by applicable law with respect to the
making of fixed-rate mortgage loans. The Servicer shall maintain or cause to be
maintained such statement in the Mortgage File;
(nn) All amounts received by the Unaffiliated Seller or the Originators
with respect to such Mortgage Loan after the Cut-Off Date and required to be
deposited in the Certificate Account have been so deposited in the Certificate
Account and are, as of the Closing Date, or will be as of the Subsequent
Transfer Date, as applicable, in the Certificate Account;
(oo) The appraisal report with respect to the Mortgaged Property
contained in the Mortgage File was signed prior to the approval of the
application for such Mortgage Loan by a qualified appraiser, duly appointed by
the originator of such Mortgage Loan, who had no interest, direct or indirect,
in the Mortgaged Property or in any loan made on the security thereof and whose
compensation is not affected by the approval or disapproval of such application;
(pp) When measured by the Cut-Off Date Balances of all Mortgage Loans
as of the Statistical Calculation Date, the Mortgagors with respect to at least
89.61% of the Mortgage Loans in Mortgage Loan Group I and 80.80% of the Mortgage
Loans in Mortgage Loan Group II; represented at the time of origination that the
Mortgagor would occupy the Mortgaged Property as the Mortgagor's primary
residence;
(qq) Each of the Originators and the Unaffiliated Seller has no
knowledge with respect to the Mortgaged Property of any governmental or
regulatory action or third party claim made, instituted or threatened in writing
relating to a violation of any applicable federal, state or local environmental
law, statute, ordinance, regulation, order, decree or standard;
22
<PAGE>
(rr) Each Mortgage Loan is a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code;
(ss) With respect to second lien Mortgage Loans:
(i) the Unaffiliated Seller has no knowledge that the Mortgagor has
received notice from the holder of the prior mortgage that such prior
mortgage is in default,
(ii) no consent from the holder of the prior mortgage is needed for
the creation of the second lien Mortgage or, if required, has been
obtained and is in the related Mortgage File,
(iii) if the prior mortgage has a negative amortization, the
Combined Loan-to-Value Ratio was determined using the maximum loan amount
of such prior mortgage,
(iv) the related first mortgage loan encumbering the related
Mortgaged Property does not have a mandatory future advance provision, and
(v) the Mortgage Loans conform in all material respects to the
description thereof in the Prospectus Supplement.
(tt) Each of the Originators and the Unaffiliated Seller further
represents and warrants to the Trustee and the Certificateholders that as of the
Subsequent Cut-Off Date all representations and warranties set forth in clauses
(a) through (ss) above will be correct in all material respects as to each
Subsequent Mortgage Loan, and the representations so made in this subsection
(tt) as to the following matters will be deemed to be correct if: (i) each
Subsequent Mortgage Loan may not be 30 or more days contractually delinquent as
of the related Subsequent Cut-Off Date; (ii) the original term to maturity of
such Subsequent Mortgage Loan may not exceed 360 month; (iii) such Subsequent
Mortgage Loan must have a Mortgage Interest Rate of at least 7.50%; (iv) the
purchase of the Subsequent Mortgage Loans is consented to by the Certificate
Insurer and the Rating Agencies; (v) the principal balance of any such
Subsequent Mortgage Loan may not exceed $375,000,000; (vi) no more than 10.70%
of such Subsequent Mortgage Loans my be second liens (vii) no such Subsequent
Mortgage Loan shall have a CLTV of more than, (a) for consumer purpose loans,
90%, and (b) for business purpose loans, 80%; (viii) no more than 31% of such
Subsequent Mortgage Loans may be Balloon Loans; (ix) no more than 4.50% of such
Subsequent Mortgage Loans may be secured by mixed-use properties, commercial
properties, or four or more unit multifamily properties; and (x) following the
purchase of such Subsequent Mortgage Loans by the Trust, the Mortgage Loans
(including the Subsequent Mortgage Loans) (a) will have a weighted average
Mortgage Interest Rate, (I) for consumer purpose loans, of at least 11.10% and
(II) for business purpose loans, of at least 16%; and (b) will have a weighted
average CLTV of not more than (I) for consumer purpose loans, 76.50%, and (II)
for business purpose loans, 63%. The combined original principal balance of
loans secured by first and second lien mortgages is no greater than $227,150.00
for each mortgaged property.
23
<PAGE>
(uu) To the best of the Unaffiliated Seller's and the Originators'
knowledge, no error, omission, misrepresentation, negligence, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part of any
person, including without limitation the Mortgagor, any appraiser, any builder
or developer, or any other party involved in the origination of the Mortgage
Loan or in the application of any insurance in relation to such Mortgage Loan;
(vv) Each Mortgaged Property is in compliance with all environmental
laws, ordinances, rules, regulations and orders of federal, state or
governmental authorities relating thereto. No hazardous material has been or is
incorporated in, stored on or under, released from, treated on, transported to
or from, or disposed of on or from, any Mortgaged Property such that, under
applicable law (A) any such hazardous material would be required to be
eliminated before the Mortgaged Property could be altered, renovated, demolished
or transferred, or (B) the owner of the Mortgaged Property, or the holder of a
security interest therein, could be subjected to liability for the removal of
such hazardous material or the elimination of the hazard created thereby.
Neither the Seller nor any Mortgagor has received notification from any federal,
state or other governmental authority relating to any hazardous materials on or
affecting the Mortgaged Property or to any potential or known liability under
any environmental law arising from the ownership or operation of the Mortgaged
Property. For the purposes of this subsection, the term "hazardous materials"
shall include, without limitation, gasoline, petroleum products, explosives,
radioactive materials, polychlorinated biphenyls or related or similar
materials, asbestos or any material containing asbestos, lead, lead-based paint
and any other substance or material as may be defined as a hazardous or toxic
substance by any federal, state or local environmental law, ordinance, rule,
regulation or order, including, without limitation, CERCLA, the Clean Air Act,
the Clean Water Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act and any regulations promulgated pursuant thereto; and
(ww) With respect to any business purpose loan, the related Mortgage
Note contains an acceleration clause, accelerating the maturity date under the
Mortgage Note to the date the individual guarantying such loan becomes subject
to any bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally.
Section 3.04. Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Unaffiliated Seller,
as of the date of execution of this Agreement and the Closing Date, that:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to purchase
each Mortgage Loan and to execute, deliver and perform, and to enter into and
consummate all the transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, and, assuming the due authorization, execution and
delivery hereof by the Unaffiliated Seller, constitutes the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
24
<PAGE>
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except such as have been made on or prior to the Closing
Date;
(e) The Depositor has filed or will file the Prospectus and Prospectus
Supplement with the Commission in accordance with Rule 424(b) under the
Securities Act; and
(f) None of the execution and delivery of this Agreement, the purchase
of the Mortgage Loans from the Unaffiliated Seller, the consummation of the
other transactions contemplated hereby, or the fulfillment of or compliance with
the terms and conditions of this Agreement, (i) conflicts or will conflict with
the charter or bylaws of the Depositor or conflicts or will conflict with or
results or will result in a breach of, or constitutes or will constitute a
default or results or will result in an acceleration under, any term, condition
or provision of any indenture, deed of trust, contract or other agreement or
other instrument to which the Depositor is a party or by which it is bound and
which is material to the Depositor, or (ii) results or will result in a
violation of any law, rule, regulation, order, judgment or decree of any court
or governmental authority having jurisdiction over the Depositor.
Section 3.05. Repurchase Obligation for Defective Documentation and for
Breach of a Representation or Warranty. (a) Each of the representations and
warranties contained in Sections 3.01, 3.02 and 3.03 shall survive the purchase
by the Depositor of the Mortgage Loans and the subsequent transfer thereof by
the Depositor to the Trustee and shall continue in full force and effect,
notwithstanding any restrictive or qualified endorsement on the Mortgage Notes
and notwithstanding subsequent termination of this Agreement or the Pooling and
Servicing Agreement.
(b) With respect to any representation or warranty contained in Section
3.01 that is made to the best of the Originators' knowledge or contained in
Sections 3.02 or 3.03 hereof that is made to the best of the Unaffiliated
Seller's and the Originators' knowledge, if it is discovered by the Servicer,
any Subservicer, the Trustee, the Certificate Insurer or any Certificateholder
that the substance of such representation and warranty was inaccurate as of the
Closing Date and such inaccuracy materially and adversely affects the value of
the related Mortgage Loan, then notwithstanding the Originators' or the
Unaffiliated Seller's lack of knowledge with respect to the inaccuracy at the
time the representation or warranty was made, such inaccuracy shall be deemed a
breach of the applicable representation or warranty. Upon discovery by the
Originators, the Unaffiliated Seller, the Servicer, any Subservicer, the
Trustee, the Certificate Insurer or any Certificateholder of a breach of any of
such representations and warranties which materially and adversely affects the
value of Mortgage Loans or the interest of the Certificateholders, or which
materially and adversely affects the interests of the Certificate Insurer or the
Certificateholders in the related Mortgage Loan in the case of a representation
and warranty relating to a particular Mortgage Loan (notwithstanding that such
representation and warranty was made to the Originators' or the Unaffiliated
Seller's best knowledge), the party discovering such breach shall give pursuant
to Section 3.03 of the Pooling and Servicing Agreement prompt written notice to
the others. Subject to the next to last paragraph of this Section 3.05, within
60 days of the earlier of its discovery or its receipt of notice of any breach
of a representation or warranty, the Unaffiliated Seller and the Originators
shall (a) promptly cure such breach in all material respects, or (b) purchase
such Mortgage Loan at a purchase price equal to the Principal Balance of such
Mortgage Loan as of the date of purchase, plus the greater of (i) all accrued
and unpaid interest on such Principal Balance and (ii) 30 days' interest on such
Principal Balance, computed
25
<PAGE>
at the Mortgage Interest Rate, net of the Servicing Fee if the Unaffiliated
Seller is the Servicer, plus the amount of any unreimbursed Servicing Advances
made by the Servicer with respect to such Mortgage Loan, or (c) remove such
Mortgage Loan from the Trust Fund (in which case it shall become a Deleted
Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans;
provided, that, such substitution is effected not later than the date which is 2
years after the Startup Day or at such later date, if the Trustee and the
Certificate Insurer receive an Opinion of Counsel to the effect set forth below
in this Section. Any such substitution shall be accompanied by payment by the
Unaffiliated Seller of the Substitution Adjustment, if any, to be deposited in
the Certificate Account pursuant to the Pooling and Servicing Agreement. The
Originators shall cooperate with the Unaffiliated Seller to cure any breach and
shall reimburse the Unaffiliated Seller for the costs and expenses related to
any cure, substitution (including any Substitution Adjustment) or repurchase
incurred by the Unaffiliated Seller pursuant to this Section 3.05.
(c) As to any Deleted Mortgage Loan for which the Unaffiliated Seller
or an Originator substitutes a Qualified Substitute Mortgage Loan or Loans, the
Unaffiliated Seller or such Originator shall effect such substitution by
delivering to the Trustee a certification in the form attached to the Pooling
and Servicing Agreement as Exhibit H, executed by a Servicing Officer and the
documents described in Section 2.06(a) for such Qualified Substitute Mortgage
Loan or Loans. Pursuant to the Pooling and Servicing Agreement, upon receipt by
the Trustee of a certification of a Servicing Officer of such substitution or
purchase and, in the case of a substitution, upon receipt of the related
Trustee's Mortgage File, and the deposit of certain amounts in the Certificate
Account pursuant to Section 2.07(b) of the Pooling and Servicing Agreement
(which certification shall be in the form of Exhibit H to the Pooling and
Servicing Agreement), the Trustee shall be required to release to the Servicer
for release to the Unaffiliated Seller the related Trustee's Mortgage File and
shall be required to execute, without recourse, and deliver such instruments of
transfer furnished by the Unaffiliated Seller as may be necessary to transfer
such Mortgage Loan to the Unaffiliated Seller or such Originator.
(d) Pursuant to the Pooling and Servicing Agreement, the Servicer shall
deposit in the Certificate Account all payments received in connection with such
Qualified Substitute Mortgage Loan or Loans after the date of such substitution.
Monthly Payments received with respect to Qualified Substitute Mortgage Loans on
or before the date of substitution will be retained by the Unaffiliated Seller.
The Trust Fund will own all payments received on the Deleted Mortgage Loan on or
before the date of substitution, and the Unaffiliated Seller shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Mortgage Loan. Pursuant to the Pooling and Servicing Agreement, the Servicer
shall be required to give written notice to the Trustee and the Certificate
Insurer that such substitution has taken place and shall amend the Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of
the Pooling and Servicing Agreement and the substitution of the Qualified
Substitute Mortgage Loan. The parties hereto agree to amend the Mortgage Loan
Schedule accordingly. Upon such substitution, such Qualified Substitute Mortgage
Loan or Loans shall be subject to the terms of the Pooling and Servicing
Agreement and this Agreement in all respects, and the Unaffiliated Seller shall
be deemed to have made with respect to such Qualified Substitute Mortgage Loan
or Loans, as of the date of substitution, the representations and warranties set
forth in Sections 3.02 and 3.03 herein. On the date of such substitution, the
Unaffiliated Seller will remit to the Servicer and pursuant to the Pooling and
Servicing Agreement the Servicer will deposit into the Certificate Account an
amount equal to the Substitution Adjustment, if any.
26
<PAGE>
(e) It is understood and agreed that the obligations of the
Unaffiliated Seller and the Originator set forth in Section 2.06 and this
Section 3.05 to cure, purchase or substitute for a defective Mortgage Loan as
provided in Section 2.06 and this Section 3.05 constitute the sole remedies of
the Depositor, the Trustee, the Certificate Insurer and the Certificateholders
respecting a breach of the foregoing representations and warranties.
(f) Any cause of action against the Unaffiliated Seller or an
Originator relating to or arising out of the breach of any representations and
warranties or covenants made in Sections 2.06, 3.02 or 3.03 shall accrue as to
any Mortgage Loan upon (i) discovery of such breach by any party and notice
thereof to the Unaffiliated Seller or such Originator, (ii) failure by the
Unaffiliated Seller or such Originator to cure such breach or purchase or
substitute such Mortgage Loan as specified above, and (iii) demand upon the
Unaffiliated Seller or such Originator by the Trustee for all amounts payable in
respect of such Mortgage Loan.
(g) Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan which is not in default or as to which no default
is imminent, no purchase, or substitution pursuant to Section 2.06(b) or this
Section 3.05 shall be made unless the Unaffiliated Seller provides to the
Trustee and the Certificate Insurer an Opinion of Counsel to the effect that
such purchase or substitution would not (i) result in the imposition of taxes on
"prohibited transactions" of the REMIC Trust, as defined in Section 860F of the
Code or a tax on contributions to the REMIC Trust under the REMIC Provisions, or
(ii) cause the REMIC Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding. Any Mortgage Loan as to which purchase or
substitution was delayed pursuant to this paragraph shall be purchased or
substituted (subject to compliance with Section 2.06 and this Section 3.05) upon
the earlier of (a) the occurrence of a default or imminent default with respect
to such loan and (b) receipt by the Trustee and the Certificate Insurer of an
Opinion of Counsel to the effect that such purchase or substitution will not
result in the events described in clauses (i) and (ii) of the preceding
sentence.
(h) Pursuant to the Pooling and Servicing Agreement, upon discovery by
the Unaffiliated Seller, the Servicer, the Trustee, the Certificate Insurer or
any Certificateholder that any Mortgage Loan does not constitute a Qualified
Mortgage, the party discovering such fact shall promptly (and in any event
within 5 days of the discovery) give written notice thereof to the other
parties. In connection therewith, the Unaffiliated Seller or the related
Originator shall repurchase or substitute a Qualified Substitute Mortgage Loan
for the affected Mortgage Loan within 90 days of the earlier of such discovery
by any of the foregoing parties, or the Trustee's or the Unaffiliated Seller's
receipt of notice, in the same manner as it would a Mortgage Loan for a breach
of representation or warranty contained in Sections 3.02 or 3.03. Pursuant to
the Pooling and Servicing Agreement the Trustee shall reconvey to the
Unaffiliated Seller or the related Originator the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty
contained in Sections 3.02 or 3.03.
(i) Notwithstanding anything in this Agreement or the Pooling and
Servicing Agreement to the contrary, the Unaffiliated Seller's repurchase
obligations hereunder shall not include failure of the Trustee to record
assignments of the Mortgage Loans referenced in clause (a)(iii) in Section 2.05.
All parties hereto acknowledge and agree that the Trustee has the responsibility
to record all such assignments of the Mortgage Loans to the Trustee.
(j) Each of the Originators and the Unaffiliated Seller shall be
jointly and severally responsible for any repurchase, cure or substitution
obligation of any of the Originators or the Unaffiliated Seller under this
Agreement and the Pooling and Servicing Agreement.
27
<PAGE>
ARTICLE FOUR
THE UNAFFILIATED SELLER
Section 4.01. Covenants of the Originators and the Unaffiliated Seller.
Each of the Originators and the Unaffiliated Seller covenants to the Depositor
as follows:
(a) The Originators and the Unaffiliated Seller shall cooperate with
the Depositor and the firm of independent certified public accountants retained
with respect to the issuance of the Certificates in making available all
information and taking all steps reasonably necessary to permit the accountants'
letters required hereunder to be delivered within the times set for delivery
herein.
(b) The Unaffiliated Seller agrees to satisfy or cause to be satisfied
on or prior to the Closing Date, all of the conditions to the Depositor's
obligations set forth in Section 5.01 hereof that are within the Unaffiliated
Seller's (or its agents') control.
(c) The Originators and the Unaffiliated Seller hereby agree to do all
acts, transactions, and things and to execute and deliver all agreements,
documents, instruments, and papers by and on behalf of the Originators or the
Unaffiliated Seller as the Depositor or its counsel may reasonably request in
order to consummate the transfer of the Mortgage Loans to the Depositor and the
subsequent transfer thereof to the Trustee, and the rating, issuance and sale of
the Certificates.
Section 4.02. Merger or Consolidation. Each of the Originators and the
Unaffiliated Seller will keep in full effect its existence, rights and
franchises as a corporation and will obtain and preserve its qualification to do
business as a foreign corporation, in each jurisdiction necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement. Any Person into which any of the
Originators or the Unaffiliated Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Originators or the Unaffiliated Seller shall be a party, or any Person
succeeding to the business of the Originators or the Unaffiliated Seller, shall
be approved by the Certificate Insurer which approval shall not be unreasonably
withheld. If the approval of the Certificate Insurer is not required, the
successor shall be an established mortgage loan servicing institution that is a
Permitted Transferee and in all events shall be the successor of the Originators
or the Unaffiliated Seller without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Originators and the Unaffiliated Seller shall send
notice of any such merger or consolidation to the Trustee and the Certificate
Insurer.
Section 4.03. Costs. In connection with the transactions contemplated
under this Agreement and the Pooling and Servicing Agreement, the Unaffiliated
Seller shall promptly pay (or shall promptly reimburse the Depositor to the
extent that the Depositor shall have paid or otherwise incurred): (a) the fees
and disbursements of the Depositor's, the Seller's and the Originators' counsel;
(b) the fees of S&P and Moody's; (c) any of the fees of the Trustee and the fees
and disbursements of the Trustee's counsel; (d) expenses incurred in connection
with printing the Prospectus, the Prospectus Supplement, any amendment or
supplement thereto, any preliminary prospectus and the Certificates; (e) fees
and expenses relating to the filing of documents with the Securities and
Exchange Commission (including without limitation periodic reports under the
Exchange Act); (f) the shelf registration amortization fee of 0.04% of the Class
A Certificate Principal Balance on the Closing Date, paid in connection with the
issuance of Certificates; (g) the fees and disbursements for Deloitte and
Touche, accountants for the Originators; and (h) all of the initial expenses
(not to exceed $75,000) of the Certificate Insurer including, without
limitation, legal fees and expenses, accountant fees and expenses and expenses
in connection with due diligence conducted on the Mortgage Files but not
including the initial premium paid to the Certificate Insurer. For the avoidance
of doubt, the parties hereto acknowledge that it is the intention of the parties
that the Depositor shall not pay any of the Trustee's fees and expenses in
connection with the transactions contemplated by the Pooling and Servicing
Agreement. All other costs and expenses in connection with the transactions
contemplated hereunder shall be borne by the party incurring such expenses.
28
<PAGE>
Section 4.04. Indemnification. (a) (i) The Originators and the
Unaffiliated Seller, jointly and severally, agree to indemnify and hold harmless
the Depositor, each of its directors, each of its officers who have signed the
Registration Statement, and each of its directors and each person or entity who
controls the Depositor or any such person, within the meaning of Section 15 of
the Securities Act, against any and all losses, claims, damages or liabilities,
joint and several, to which the Depositor or any such person or entity may
become subject, under the Securities Act or otherwise, and will reimburse the
Depositor and each such controlling person for any legal or other expenses
incurred by the Depositor or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Prospectus Supplement or any
amendment or supplement to the Prospectus Supplement or the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements in the Prospectus Supplement or any
amendment or supplement to the Prospectus Supplement approved in writing by the
Originators or the Unaffiliated Seller, in light of the circumstances under
which they were made, not misleading, but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission relates to
the information contained in the Prospectus Supplement referred to in Section
3.01(d). This indemnity agreement will be in addition to any liability which the
Originators and the Unaffiliated Seller may otherwise have.
(ii) The Originators and the Unaffiliated Seller, jointly and
severally, agree to indemnify and to hold the Depositor harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Depositor may sustain in any way related to the failure of any of the
Originators or the Unaffiliated Seller to perform its duties in compliance
with the terms of this Agreement. The Originators or the Unaffiliated
Seller shall immediately notify the Depositor if a claim is made by a
third party with respect to this Agreement, and the Originators or the
Unaffiliated Seller shall assume the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be
entered against the Depositor in respect of such claim. Pursuant to the
Pooling and Servicing Agreement, the Trustee shall reimburse the
Unaffiliated Seller in accordance with the Pooling and Servicing Agreement
for all amounts advanced by the Unaffiliated Seller pursuant to the
preceding sentence except when the claim relates directly to the failure
of the Unaffiliated Seller to perform its duties in compliance with the
terms of this Agreement.
29
<PAGE>
(b) The Depositor agrees to indemnify and hold harmless each of the
Originators and the Unaffiliated Seller, each of their respective directors and
each person or entity who controls the Originators or the Unaffiliated Seller or
any such person, within the meaning of Section 15 of the Securities Act, against
any and all losses, claims, damages or liabilities, joint and several, to which
the Originators or the Unaffiliated Seller or any such person or entity may
become subject, under the Securities Act or otherwise, and will reimburse the
Originators and the Unaffiliated Seller and any such director or controlling
person for any legal or other expenses incurred by such party or any such
director or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, the Prospectus
Supplement, any amendment or supplement to the Prospectus or the Prospectus
Supplement or the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, but
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission is other than a statement or omission relating to
the information set forth in subsection (a)(i) of this Section 4.04; provided,
however, that in no event shall the Depositor be liable to the Unaffiliated
Seller under this paragraph (b) in an amount in excess of the Depositor's resale
profit or the underwriting fee on the sale of the Certificates. This indemnity
agreement will be in addition to any liability which the Depositor may otherwise
have.
(c) Promptly after receipt by an indemnified party under this Section
4.04 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
this Section 4.04, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent such indemnifying party
has been prejudiced thereby. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such indemnified
party of its election to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 4.04 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party shall not be
liable for the expenses of more than one separate counsel.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 4.04 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or
subsection (b) of this Section 4.04 in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) subject to the limits set forth in subsection (a)
and subsection (b) of this Section 4.04; provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be
30
<PAGE>
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which the
respective parties are entitled, there shall be considered the relative benefits
received by the Originators and the Unaffiliated Seller on the one hand, and the
Depositor on the other, the Originators', the Unaffiliated Seller's and the
Depositor's relative knowledge and access to information concerning the matter
with respect to which the claim was asserted, the opportunity to correct and
prevent any statement or omission, and any other equitable considerations
appropriate in the circumstances. The Originators, the Unaffiliated Seller and
the Depositor agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation. For purposes
of this Section 4.04, each director of the Depositor, each officer of the
Depositor who signed the Registration Statement, and each person, if any who
controls the Depositor within the meaning of Section 15 of the Securities Act,
shall have the same rights to contribution as the Depositor, and each director
of the Originators or the Unaffiliated Seller, and each person, if any who
controls the Originators or the Unaffiliated Seller within the meaning of
Section 15 of the Securities Act, shall have the same rights to contribution as
the Originators and the Unaffiliated Seller.
ARTICLE FIVE
CONDITIONS OF CLOSING
Section 5.01. Conditions of Depositor's Obligations. The obligations of
the Depositor to purchase the Mortgage Loans will be subject to the satisfaction
on the Closing Date of the following conditions. Upon payment of the purchase
price for the Mortgage Loans, such conditions shall be deemed satisfied or
waived.
(a) Each of the obligations of the Unaffiliated Seller required to be
performed by it on or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Unaffiliated Seller under this Agreement
shall be true and correct as of the Closing Date and no event shall have
occurred which, with notice or the passage of time, would constitute a default
under this Agreement, and the Depositor shall have received a certificate to the
effect of the foregoing signed by an authorized officer of the Unaffiliated
Seller.
(b) The Depositor shall have received a letter dated the date of this
Agreement, in form and substance acceptable to the Depositor and its counsel,
prepared by Deloitte & Touche LLP, independent certified public accountants,
regarding the numerical information contained in the Prospectus Supplement under
the captions "Prepayment and Yield Considerations" and "The Mortgage Pools."
(c) The Mortgage Loans will be acceptable to the Depositor, in its sole
discretion.
(d) The Depositor shall have received the following additional closing
documents, in form and substance satisfactory to the Depositor and its counsel:
(i) the Mortgage Loan Schedule;
(ii) the Pooling and Servicing Agreement dated as of September 1,
1998 and the Underwriting Agreement dated as of September 14, 1998 between
the Depositor and Prudential Securities Incorporated and all documents
required thereunder, duly executed and delivered by each of the parties
thereto other than the Depositor;
31
<PAGE>
(iii) officer's certificates of an officer of each of the
Originators and the Unaffiliated Seller, dated as of the Closing Date, and
attached thereto resolutions of the board of directors and a copy of the
charter and by-laws;
(iv) copy of each of the Originators and the Unaffiliated Seller's
charter and all amendments, revisions, and supplements thereof, certified
by a secretary of each entity;
(v) an opinion of the counsel for the Originators and the
Unaffiliated Seller as to various corporate matters (it being agreed that
the opinion shall expressly provide that the Trustee shall be entitled to
rely on the opinion);
(vi) opinions of counsel for the Unaffiliated Seller, in forms
acceptable to the Depositor, its counsel, S&P and Moody's as to such
matters as shall be required for the assignment of a rating to the Class A
Certificates of AAA by S&P, and Aaa by Moody's (it being agreed that such
opinions shall expressly provide that the Trustee shall be entitled to
rely on such opinions);
(vii) a letter from Moody's that it has assigned a rating of Aaa to
the Class A Certificates;
(viii) a letter from S&P that it has assigned a rating of AAA to the
Class A Certificates;
(ix) an opinion of counsel for the Trustee in form and substance
acceptable to the Depositor, its counsel, Moody's and S&P (it being agreed
that the opinion shall expressly provide that the Unaffiliated Seller
shall be entitled to rely on the opinion);
(x) an opinion or opinions of counsel for the Servicer, in form and
substance acceptable to the Depositor, its counsel, Moody's and S&P (it
being agreed that the opinion shall expressly provide that the
Unaffiliated Seller shall be entitled to rely on the opinion); and
(xi) an opinion or opinions of counsel for the Certificate Insurer,
in each case in form and substance acceptable to the Depositor, its
counsel, Moody's and S&P (it being agreed that the opinion shall expressly
provide that the Unaffiliated Seller shall be entitled to rely on the
opinion).
(e) The Certificate Insurance Policy shall have been duly executed,
delivered and issued with respect to the Class A Certificates.
(f) All proceedings in connection with the transactions contemplated by
this Agreement and all documents incident hereto shall be satisfactory in form
and substance to the Depositor and its counsel.
(g) The Unaffiliated Seller shall have furnished the Depositor with
such other certificates of its officers or others and such other documents or
opinions as the Depositor or its counsel may reasonably request.
32
<PAGE>
Section 5.02. Conditions of Unaffiliated Seller's Obligations. The
obligations of the Unaffiliated Seller under this Agreement shall be subject to
the satisfaction, on the Closing Date, of the following conditions:
(a) Each of the obligations of the Depositor required to be performed
by it at or prior to the Closing Date pursuant to the terms of this Agreement
shall have been duly performed and complied with and all of the representations
and warranties of the Depositor contained in this Agreement shall be true and
correct as of the Closing Date and the Unaffiliated Seller shall have received a
certificate to that effect signed by an authorized officer of the Depositor.
(b) The Unaffiliated Seller shall have received the following
additional documents:
(i) the Pooling and Servicing Agreement, and all documents required
thereunder, in each case executed by the Depositor as applicable; and
(ii) a copy of a letter from Moody's to the Depositor to the effect
that it has assigned a rating of Aaa to the Class A Certificates and a
copy of a letter from S&P to the Depositor to the effect that it has
assigned a rating of AAA to the Class A Certificates.
(iii) an opinion of counsel for the Trustee in form and substance
acceptable to the Unaffiliated Seller and its counsel;
(iv) an opinion or opinions of counsel for the Certificate Insurer,
in each case in form and substance acceptable to the Unaffiliated Seller
and its counsel;
(v) an opinion of the counsel for the Depositor as to securities and
tax matters; and
(vi) an opinion of the counsel for the Depositor as to true sale
matters.
(c) The Depositor shall have furnished the Unaffiliated Seller with
such other certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Agreement as the
Unaffiliated Seller may reasonably request.
Section 5.03. Termination of Depositor's Obligations. The Depositor may
terminate its obligations hereunder by notice to the Unaffiliated Seller at any
time before delivery of and payment of the purchase price for the Mortgage Loans
if: (a) any of the conditions set forth in Section 5.01 are not satisfied when
and as provided therein; (b) there shall have been the entry of a decree or
order by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Unaffiliated Seller, or for the
winding up or liquidation of the affairs of the Unaffiliated Seller; (c) there
shall have been the consent by the Unaffiliated Seller to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Unaffiliated Seller or of or relating to substantially all of the property
of the Unaffiliated Seller; (d) any purchase and assumption agreement with
respect to the Unaffiliated Seller or the assets and properties of the
Unaffiliated Seller shall have been entered into; or (e) a Termination Event
shall have occurred. The termination of the Depositor's obligations hereunder
shall not terminate the Depositor's rights hereunder or its right to exercise
any remedy available to it at law or in equity.
33
<PAGE>
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by telex or telegraph and confirmed by a similar mailed writing, if
to the Depositor, addressed to the Depositor at Prudential Securities Secured
Financing Corporation, One New York Plaza, 14th Floor, New York, New York 10292,
Attention: Asset Finance Group, or to such other address as the Depositor may
designate in writing to the Unaffiliated Seller and if to the Unaffiliated
Seller, addressed to the Unaffiliated Seller at ABFS 1998-3, Inc., Balapointe
Office Centre, 111 Presidential Boulevard, Suite 215, Bala Cynwyd, Pennsylvania
19004, Attention: Mr. Anthony Santilli, Jr., or to such other address as the
Unaffiliated Seller may designate in writing to the Depositor.
Section 6.02. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void 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 as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
Section 6.03. Agreement of Unaffiliated Seller. The Unaffiliated Seller
agrees to execute and deliver such instruments and take such actions as the
Depositor may, from time to time, reasonably request in order to effectuate the
purpose and to carry out the terms of this Agreement.
Section 6.04. Survival. The parties to this Agreement agree that the
representations, warranties and agreements made by each of them herein and in
any certificate or other instrument delivered pursuant hereto shall be deemed to
be relied upon by the other party hereto, notwithstanding any investigation
heretofore or hereafter made by such other party or on such other party's
behalf, and that the representations, warranties and agreements made by the
parties hereto in this Agreement or in any such certificate or other instrument
shall survive the delivery of and payment for the Mortgage Loans.
Section 6.05. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 6.06. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as expressly permitted by the terms
hereof, this Agreement may not be assigned, pledged or hypothecated by any party
hereto to a third party without the written consent of the other party to this
Agreement and the Certificate Insurer; provided, however, that the Depositor may
assign its rights hereunder without the consent of the Unaffiliated Seller.
34
<PAGE>
Section 6.07. Confirmation of Intent; Grant of Security Interest. It is
the express intent of the parties hereto that the conveyance of the Mortgage
Loans by the Originators to the Unaffiliated Seller and by the Unaffiliated
Seller to the Depositor as contemplated by this Unaffiliated Seller's Agreement
be, and be treated for all purposes as, a sale of the Mortgage Loans. It is,
further, not the intention of the parties that such conveyance be deemed a
pledge of the Mortgage Loans by the Originators to the Unaffiliated Seller or by
the Unaffiliated Seller to the Depositor to secure a debt or other obligation of
the Originators or the Unaffiliated Seller, as the case may be. However, in the
event that, notwithstanding the intent of the parties, the Mortgage Loans are
held to continue to be property of the Originators or the Unaffiliated Seller
then (a) this Unaffiliated Seller's Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code; (b) the transfer of the Mortgage Loans provided for herein
shall be deemed to be a grant by the Originators to the Unaffiliated Seller and
by the Unaffiliated Seller to the Depositor of a security interest in all of
such parties' right, title and interest in and to the Mortgage Loans and all
amounts payable on the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property; (c) the possession by the
Depositor of Mortgage Notes and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the Uniform Commercial Code; and (d)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed notifications
to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Depositor for the
purpose of perfecting such security interest under applicable law. Any
assignment of the interest of the Depositor pursuant to any provision hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Originators, the Unaffiliated Seller and the Depositor shall, to the
extent consistent with this Unaffiliated Seller's Agreement, take such actions
as may be necessary to ensure that, if this Unaffiliated Seller's Agreement were
deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of this
Agreement.
Section 6.08. Miscellaneous. This Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof.
Section 6.09. Amendments. (a) This Agreement may be amended from time
to time by the Originators, the Unaffiliated Seller and the Depositor by written
agreement, upon the prior written consent of the Certificate Insurer, without
notice to or consent of the Certificateholders to cure any ambiguity, to correct
or supplement any provisions herein, to comply with any changes in the Code, or
to make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, at the expense of the party requesting the change, delivered
to the Trustee, adversely affect in any material respect the interests of any
Certificateholder; and provided, further, that no such amendment shall reduce in
any manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate, or change the rights or obligations
of any other party hereto without the consent of such party.
35
<PAGE>
(b) This Agreement may be amended from time to time by the Unaffiliated
Seller and the Depositor with the consent of the Certificate Insurer, the
Majority Certificateholders and the Holders of the majority of the Percentage
Interest in the Class R Certificates for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Holders; provided, however, that
no such amendment shall be made unless the Trustee receives an Opinion of
Counsel, at the expense of the party requesting the change, that such change
will not adversely affect the status of the REMIC Trust as a REMIC or cause a
tax to be imposed on the REMIC, and provided further, that no such amendment
shall reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate or reduce the
percentage for each Class the Holders of which are required to consent to any
such amendment without the consent of the Holders of 100% of each Class of
Certificates affected thereby.
(c) It shall not be necessary for the consent of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
Section 6.10. Third-Party Beneficiaries. The parties agree that each of
the Certificate Insurer and the Trustee is an intended third-party beneficiary
of this Agreement to the extent necessary to enforce the rights and to obtain
the benefit of the remedies of the Depositor under this Agreement which are
assigned to the Trustee for the benefit of the Certificateholders and the
Certificate Insurer pursuant to the Pooling and Servicing Agreement and to the
extent necessary to obtain the benefit of the enforcement of the obligations and
covenants of the Unaffiliated Seller under Section 4.01 and 4.04(a)(ii) of this
Agreement. The parties further agree that Prudential Securities Incorporated and
each of its directors and each person or entity who controls Prudential
Securities Incorporated or any such person, within the meaning of Section 15 of
the Securities Act (each, an "Underwriter Entity") is an intended third-party
beneficiary of this Agreement to the extent necessary to obtain the benefit of
the enforcement of the obligations and covenants of the Unaffiliated Seller with
respect to each Underwriter Entity under Section 4.04(a)(i) of this Agreement.
Section 6.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.
(b) THE DEPOSITOR AND THE UNAFFILIATED SELLER EACH HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND
EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS
SET FORTH IN SECTION 6.01 OF THIS AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED
TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S.
MAIL, POSTAGE PREPAID. THE DEPOSITOR AND THE UNAFFILIATED SELLER EACH HEREBY
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE
OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE DEPOSITOR AND THE UNAFFILIATED SELLER TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO
BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
36
<PAGE>
(c) THE DEPOSITOR AND THE UNAFFILIATED SELLER EACH HEREBY WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
Section 6.12. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
[Remainder of Page Intentionally Left Blank]
37
<PAGE>
IN WITNESS WHEREOF, the parties, to this Unaffiliated Seller's
Agreement have caused their names to be signed by their respective officers
thereunto duly authorized as of the date first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:___________________________________
Name:
Title:
ABFS 1998-3, INC.
By:__________________________________
Name:
Title:
AMERICAN BUSINESS CREDIT, INC.
By:__________________________________
Name:
Title:
HOMEAMERICAN CREDIT, INC.,
D/B/A UPLAND MORTGAGE
By:_________________________________
Name:
Title:
NEW JERSEY MORTGAGE INVESTMENT
CORP.
By:_________________________________
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On September 29, 1998 before me, the undersigned, a Notary Public in
and for said County and State, personally appeared ____________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be a Vice
President of Prudential Securities Secured Financing Corporation, a Delaware
corporation, the corporation that executed the within Unaffiliated Seller's
Agreement on behalf of said corporation, and acknowledged to me that said
corporation executed it.
__________________________________________
Notary Public
My Commission expires:
<PAGE>
STATE OF PENNSYLVANIA )
) ss.
COUNTY OF MONTGOMERY )
On September 29, 1998 before me, the undersigned, a Notary Public in
and for said County and State, personally appeared _______________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be
President of ABFS 1998-3, Inc., the entity that executed the within Unaffiliated
Seller's Agreement; on behalf of said corporation, and acknowledged to me that
said corporation executed it.
__________________________________________
Notary Public
My Commission expires:
<PAGE>
STATE OF PENNSYLVANIA )
) ss.
COUNTY OF MONTGOMERY )
On September 29, 1998 before me, the undersigned, a Notary Public in
and for said County and State, personally appeared _____________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be
President of American Business Credit, Inc., the entity that executed the within
Unaffiliated Seller's Agreement; on behalf of said corporation, and acknowledged
to me that said corporation executed it.
__________________________________________
Notary Public
My Commission expires:
<PAGE>
STATE OF PENNSYLVANIA )
) ss.
COUNTY OF MONTGOMERY )
On September 29, 1998 before me, the undersigned, a Notary Public in
and for said County and State, personally appeared Jeffrey M. Ruben, personally
known to me (or proved to me on the basis of satisfactory evidence) to be a
Senior Vice President of HomeAmerican Credit, Inc., d/b/a Upland Mortgage the
entity that executed the within Unaffiliated Seller's Agreement; on behalf of
said corporation, and acknowledged to me that said corporation executed it.
__________________________________________
Notary Public
My Commission expires:
<PAGE>
STATE OF NEW JERSEY )
) ss.
COUNTY OF _____________ )
On September 29, 1998 before me, the undersigned, a Notary Public in
and for said County and State, personally appeared _________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be
__________________ of New Jersey Mortgage Investment Corp., a New Jersey
corporation the entity that executed the within Unaffiliated Seller's Agreement;
on behalf of said corporation, and acknowledged to me that said corporation
executed it.
__________________________________________
Notary Public
My Commission expires:
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
<TABLE>
<CAPTION>
LOAN_ID CUST_NAME CRED_LIM BALPRIN
NON-CONFORMING
--------------
<S> <C> <C> <C>
0000005384 ROMY BRAUNSTEIN 90000.00 89270.93
0000007752 AVON FUEL AND SUPPLY 285000.00 284348.89
0000007772 THERESA C. BOYCE 280000.00 280000.00
0000007912 ROBERT H. GERKEN 70000.00 69933.45
0000008212 ROBERT G. GANTER JR. 40000.00 39890.29
0000008292 RICHARD J. TIMMONS 60000.00 59778.28
0000008352 BIG FLAMINGO, INC. 170000.00 169610.43
0000008393 THUNDER ROAD RACING PLUS, INC. 300000.00 293367.67
0000008475 KY CAO LE 234000.00 233526.29
0000008795 ELAINE F. BRENSINGER 79000.00 78857.85
0000008876 FAMILY LIQUOR STORE, INC. 226000.00 225488.54
0000008881 CAFE DU CHEVAL BLANC, INC. 100000.00 99948.69
0000008901 J & M INTERNATIONAL, INC. 57000.00 57000.00
0000009041 MICHAEL A. CAESAR 380000.00 380000.00
0000009173 FIRST INDIAN RIVER CORPORATION 350000.00 350000.00
0000009221 BUCHANAN RECORDING GROUP, INC. 175000.00 175000.00
0000009502 KELIS CORPORATION 210000.00 210000.00
0000009682 SOAP SUDS, INC. 120000.00 120000.00
0000009742 ANIMAX PRODUCTIONS, INC 40000.00 40000.00
0000010003 MATTI'S CAFE CORP. 185000.00 185000.00
0000010046 SHARON A. SULLIVAN-INGALLS 55000.00 55000.00
0000010053 PIZZA GALLERY, INC. 225000.00 225000.00
0000010058 J & L AUTO INC 70000.00 70000.00
0000010063 JIM MCELHOSE,INC 290000.00 290000.00
0000010087 DAVID B. LEWIS 154000.00 154000.00
0001019054 ROBERT SCHIAZZA 297000.00 297000.00
0001024438 STEPHEN D. FORBES 235000.00 234674.26
0001024941 DIANE DAVIS-HUNTER 227500.00 227166.96
0001027627 ALFRED YIN 94000.00 94000.00
0001027878 FRANK K. MC CAGH 30000.00 29987.28
0001028768 RONALD P. HAMBRECHT 72500.00 72500.00
0001028894 WALY HAKIM 40000.00 39825.38
0001029187 MUNIR JAFFER 43400.00 42764.33
0001029571 RAYMOND E. STORY 315000.00 315000.00
0001029614 GLENN GROGAN 324000.00 324000.00
0001030204 THOMAS DIMARTINI 65000.00 64951.06
0001030273 THOMAS D. DIMATTEO 57600.00 57600.00
0001030631 WILTON COOKE 243000.00 243000.00
0001030799 EDWARD GREER 280000.00 280000.00
0001031191 CHARLES B. PRICE 272000.00 271028.35
0001031267 CHRISTOPHER DEMMA 54600.00 54600.00
0001031602 ELIZABETH HORTON 248000.00 248000.00
0001031677 SUSAN C. SHIN 70000.00 70000.00
0001031854 PHILIP SALVATO 24000.00 24000.00
0001031930 LEONE VISSE 103000.00 103000.00
0001032530 ALAN J. GRADY 230000.00 229284.00
0001032629 KENNETH M. BROWN 265000.00 265000.00
0001032835 HECTOR P. BADEAU AKA HECTO 340000.00 340000.00
0001033641 LORETTA M. YABURA 320450.00 320450.00
0001033890 MICHAEL MAWHINNEY 205000.00 205000.00
0001034089 HAL S. PAYNE 318750.00 318212.20
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001034143 CARLTON KINARD 25000.00 25000.00
0001034396 JOHN C. NUCATOLA 60000.00 60000.00
0001034574 RICHARD A. DE CHRISTOFANO 306000.00 306000.00
0001034632 MICHAEL LUDOVICO 38800.00 38800.00
0001034720 BRIAN E. COHEN 274000.00 274000.00
0001035081 THORA T. EASTON 34000.00 34000.00
0001035540 JAMES CAHILL 256500.00 256500.00
0001035562 RONALD J. SKUPIEN 248500.00 248500.00
0001035632 BRIAN KELSCH 252000.00 252000.00
0001035733 LEONARD SPADA 325800.00 325800.00
0001036065 BHOLI K. TREHAN 150000.00 150000.00
0001036189 DOREEN JIVENS 234000.00 234000.00
0001036222 BRAD P. CAPUANO 207000.00 207000.00
0001036740 RAFAEL ALMONTE 302940.00 302940.00
0001036747 RICHARD A. GASH 301500.00 301500.00
0001037385 LAWRENCE J. COHEN 26500.00 26500.00
0001037424 VALERIE MASSARO 157500.00 157500.00
0001037531 ANNE ELIZABETH PILEGGI 77800.00 77800.00
0001037690 SHERMAN POYTHRESS 337500.00 337500.00
0001037820 JOHN A. GIANGUZZI 255000.00 255000.00
0001038032 MICHAEL NELSON 235800.00 235800.00
0008881584 THOMAS J. SMITH SR. 260000.00 260000.00
0008882050 ROBERT GIARRUSSO 95000.00 95000.00
0009006574 EUGENE M. KOSACK 146000.00 146000.00
0009010425 LAWRENCE R. KANE 40000.00 40000.00
0009010816 HARRY ROBERT SEYBOLD 103000.00 103000.00
0009011654 ROBERT W. BEATTIE 50000.00 50000.00
3019800678 ANNA ORTIZ 233000.00 233000.00
3019805472 AARON HOFFMAN 280000.00 279808.13
3019805860 EUGENE DALTON 243000.00 242532.01
3019806431 JOSEPH R. DAILEY 290000.00 290000.00
3019831977 SAMUEL SHORTER 240555.00 239464.84
3019834133 PATRICIA LARRIER 310500.00 310443.57
3019835600 MICHAEL J. MARRESE 350000.00 350000.00
3019835684 ROBERT E. LITTELL 300000.00 297109.90
3019835978 JIM M. TANNER 350000.00 348413.10
3019836397 BERNARDO D. GONZALES, 312000.00 310891.79
3019837146 ANDRE L BETTS 232500.00 231991.20
3019837444 PELL T COLLINS IV 345000.00 345000.00
3019837960 KAREN J IVERSON 279500.00 279500.00
3019838230 VICTOR LEE 256000.00 256000.00
3039832511 KEITH PATTIZ 286000.00 286000.00
3039834899 MARTHA ELIZABETH MCCUL 120000.00 119626.44
3039835338 SUZANNE G. JAHN 146000.00 145712.51
3039836313 THOMAS CORREGAN 108000.00 108000.00
3039836631 LARRY WING CHUNG TONG 167400.00 166840.12
3039837389 RONALD GOLICK 30000.00 30000.00
3039838470 JOHN J. TODD 100000.00 100000.00
3119836625 DANIEL R PONN 311000.00 310568.05
3119837462 EDWIN T BIEHL JR 350000.00 350000.00
3119838169 KAREN M SANSONE 274500.00 274500.00
3119838408 EDWARD ARBEIT 350000.00 350000.00
103 $20,061,606.79
CONFORMI ING
NG
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0000005844 ASSAGGI D'ITALIA, INC. 100000.00 100000.00
0000007732 JAMES E. FINK 69000.00 68781.83
0000007792 CATHERINE L. BILLINGS 40000.00 39749.10
0000007812 R&R, INC. 20000.00 19981.80
0000007832 ANELLI ENTERPRISES, INC. 20000.00 19941.55
0000007872 BRIAN R. DZIENNY 31500.00 31485.29
0000007892 JENKS' INC. 108000.00 107800.39
0000007932 KIMBERLY DINER, INC. 45000.00 44879.05
0000007972 JOSEPH P. POTTER JR. 78000.00 77820.68
0000007992 SMALLS' STEPPING STONE DAY CAR 127000.00 126823.38
0000008012 FRANCINE NIGRO 78000.00 77864.47
0000008052 HUONG K. TAN 24000.00 24000.00
0000008072 NORTHERN BAY CONTRACTORS, INC. 220000.00 216016.84
0000008092 MICHAEL L. LEIDY 40000.00 39891.34
0000008112 DANIEL M. WALTERS 25000.00 24855.08
0000008132 ANTONINO H. CALON, M.D., P.A. 75000.00 74627.13
0000008152 JOAN W. HARDY 60000.00 59568.49
0000008232 CARMEN D'AMORE 17000.00 16631.19
0000008252 FOREST HILL CONTRACTING, INC. 45000.00 44897.46
0000008272 PORTUGUESE-AMERICAN SUPERMARKE 30000.00 30000.00
0000008312 WILLIAM J. CULLINANE 175000.00 175000.00
0000008372 DISCOUNT CARPET AND WALL COVER 90000.00 89677.05
0000008392 CARDALE A. GOENS 24000.00 24000.00
0000008412 WILLIAMS QUICK COPY/PRINT CENT 115000.00 115000.00
0000008413 ROBERT E. JENKINS 34000.00 33999.21
0000008434 MOUNT MONUMENT CORP. 115000.00 114741.99
0000008435 ALONZO PICKRON 35000.00 34552.20
0000008455 DAVID R. DARRAH 35000.00 35000.00
0000008495 SUFFOLK COPYWORLD & STATIONERS 90000.00 90000.00
0000008515 THREE CORNERS BRIDAL SUPPLY CO 145000.00 145000.00
0000008535 CLASSIC MARINE, INC. 38000.00 37847.23
0000008575 DOUBLE JACK'S TAVERN, INC. 23000.00 22696.19
0000008595 PAUL BINDELL 100000.00 99722.05
0000008615 RICHARD G. WEINLE JR. 17000.00 16984.51
0000008655 EDGAR S. VITEK 30000.00 29892.71
0000008675 PETER M. MENSICK, JR. 24000.00 24000.00
0000008695 MICHAEL A. TURNER 65000.00 65000.00
0000008835 KEGRESSE & FOGERTY, INC. 66000.00 65851.93
0000008855 CAROLYN E. ALLEN 50000.00 49932.23
0000008875 APOLLO IMPORT SERVICE LTD 65000.00 64738.69
0000008879 SHIPWAY'S AGAIN, INC. 30000.00 29972.66
0000008880 SUSAN D. SIRMONS 27000.00 26976.54
0000008961 BRUCE & STIFF, INC. 105000.00 104764.44
0000008981 MARCS, INC. 193000.00 192994.89
0000009001 BILLY W. BUCK 41000.00 40908.01
0000009021 COOZER'S LOUNGE, INC. 135000.00 134472.37
0000009061 JAMES H. MILLER, JR. PLUMBING, 175000.00 174807.40
0000009081 ROSE'S CURTAIN DESIGNS, INC. 40000.00 39892.49
0000009101 PAUL AXEN 20000.00 19717.54
0000009121 LAWRENCE P. RAY 25000.00 24966.12
0000009141 ZDI, INC. 50000.00 49954.44
0000009174 STEERING WHEEL, INC. 195000.00 194371.37
0000009175 N & N FAMILY, INC. 78000.00 77721.07
0000009241 PAUL J. DIAMOND 40000.00 39874.71
0000009242 VICTOR VICENTE 55000.00 54852.16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0000009262 LIPPY'S INC. 100000.00 99109.39
0000009282 DONALD A. MULL 35000.00 34952.55
0000009283 RUTH ANN WEARY 25000.00 24910.59
0000009302 INDEX MENSWARE INC. 100000.00 99686.81
0000009342 HOLTZ, INC. 15000.00 15000.00
0000009362 PETRO'S STEEL & IRONWORKS INC 35000.00 34833.65
0000009382 BLANCHE M. SMITH 18000.00 17911.65
0000009402 RON'S TACKLE SHOP, INC. 25000.00 25000.00
0000009422 WILMA N. WATKINS 17000.00 17000.00
0000009442 FREDI W. BOESE 25000.00 25000.00
0000009443 JAMES WRIGHT 72000.00 72000.00
0000009462 DORENE M. LAROSA 49000.00 49000.00
0000009522 SHERRY MOONEY 58000.00 58000.00
0000009562 LORRAINE PHILMORE 30000.00 30000.00
0000009602 GIFTS -N- STUFF, LTD. 27000.00 27000.00
0000009642 EBBLEE THE FLORIST, INC. 48000.00 47572.51
0000009662 JAMES W. ATKINS 15000.00 15000.00
0000009702 DAVID B. LEWIS 80000.00 80000.00
0000009722 PIER 18, INC. 35000.00 35000.00
0000009762 JOHN H. ROBBINS CO, INC. 37000.00 37000.00
0000009782 AUDREY JOHNSON 220000.00 220000.00
0000009802 PORT JERVIS DINER INC 150000.00 150000.00
0000009803 LOUISE BIRTON 30000.00 30000.00
0000009823 DRASS INSURANCE AGENCY, INC. 28000.00 28000.00
0000009843 CHARLES KMILCSIK 18000.00 18000.00
0000009863 DEBORAH L. JOHNSON 19000.00 19000.00
0000009883 R.G. FRIDLEY, INC. 37500.00 37500.00
0000009923 PATRICK M. MCANEENY 14000.00 14000.00
0000009963 BENJAMIN N. TUPAS 28000.00 28000.00
0000009983 TOBALDI, LTD 50000.00 50000.00
0000010023 DENISE M. CARMELLA 15000.00 15000.00
0000010044 FRANCIS DUMBUYA 68000.00 68000.00
0000010045 RITE WAY MANAGEMENT CORP. 45000.00 45000.00
0000010048 FINN'S NEWSSTAND 165000.00 165000.00
0000010049 TEDDI WALL FINISHING, LTD 45000.00 45000.00
0000010050 JOHN J. NOLAN IV 15000.00 15000.00
0000010051 GOOD LUCK TAVERN, INC. 55000.00 55000.00
0000010055 RHONDA HOLLOWAY 15000.00 15000.00
0000010056 LISA DERRICKSON 55000.00 55000.00
0000010057 ROBERT C. HENRY, II 28000.00 28000.00
0000010059 ANTHONY A. ORAPALLO 35000.00 35000.00
0000010061 BRADLEY WHITEHEAD 109000.00 109000.00
0000010062 DONATO BROS., INC. 60000.00 60000.00
0000010064 VIA CARE INFO SOLUTIONS, INC. 30000.00 30000.00
0000010065 VON WESTERNHAGEN INC. 130000.00 130000.00
0000010066 WILMA J. BANKS 25000.00 25000.00
0000010068 WEATHER-SHIELD REMODELING, INC 45500.00 45500.00
0000010069 GRAUBART & GRAUBART PTR. 180000.00 180000.00
0000010071 PAUL F. DOWNES 50000.00 50000.00
0000010072 TORNADO FASHION, INC. 40000.00 40000.00
0000010073 ABSOLUTELY CLEANERS, INC 22000.00 22000.00
0000010074 FLORAL SYMPHONY, INC. 50000.00 50000.00
0000010075 JAMES LIEM 56500.00 56500.00
0000010076 MICHAEL BERBERICH 60000.00 60000.00
0000010077 SUSAN KASRAI 34000.00 34000.00
0000010081 OXON HILL MUSIC, INC. 20000.00 20000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0000010082 JENNIE P. TOLLIVER 50000.00 50000.00
0000010083 CHRISTOPHER E. LEBLANC 20000.00 20000.00
0000010085 DIAZ CONSTRUCTION & REMODELING 45000.00 45000.00
0000010088 LAWRENCE F. GOMBEDA 70000.00 70000.00
0000010089 ROY R. WALTON JR. 170000.00 170000.00
0000010090 POINT PLEASANT FURNITURE COMPA 55000.00 55000.00
0000010092 SENNTEK DIGITAL SOLUTIONS, INC 85000.00 85000.00
0000010093 PARTY CUPBOARD, INC. 28000.00 28000.00
0000010094 RALPH S. JACKSON 25000.00 25000.00
0000010095 RANDALL JACQUEMIN 30000.00 30000.00
0000010099 KATIEDID INC. 30000.00 30000.00
0000010100 DORIS LEE JAMES 38000.00 38000.00
0000010102 KYONG TAE CHON 20000.00 20000.00
0000010104 TODD A. SWIM 16000.00 16000.00
0000010106 COLE' S USED CARS 142000.00 142000.00
0000010108 LAURA JANE M. LEIBY 40000.00 40000.00
0001012992 CONNIE CONWAY 36000.00 36000.00
0001015687 CHARMAINE F. KIRSCH 35000.00 34804.30
0001016948 YUKSEL BICIOGLU HUNT 15000.00 14829.19
0001019180 JOANNA DALE HALEY 67500.00 67500.00
0001019612 JOHN MARTUCCI 60300.00 60119.33
0001019964 GAIL A. NOONAN 92800.00 92642.20
0001020041 CHARLES T. MCDERMOTT 42000.00 42000.00
0001020276 JESSE K. CLARK 107000.00 107000.00
0001020832 STEVE TRAVALI 135000.00 134921.74
0001021135 JOHN HIGHLAND 36000.00 36000.00
0001021152 SHANNON MAURICE BRODIE 37800.00 37800.00
0001021337 RUSSELL BRYANT BUTLER 40375.00 40370.83
0001022034 EILEEN E. REPSHER 65250.00 65250.00
0001022265 WILLIAM S. MCGUIRE 35900.00 35791.73
0001022312 GARY L. KLINE 63000.00 63000.00
0001022322 RAY JONDONERO 72250.00 72002.24
0001022356 DAVID R. BELL 55250.00 55229.13
0001022426 ROBERT N. TOWNSEND 50000.00 50000.00
0001023330 PATRICIA A. KIRSCH 21000.00 20789.83
0001023355 JAMES HEARD 70875.00 70677.49
0001023666 BERTHA LINDSEY 40000.00 40000.00
0001023824 ROBERT A. BRIGHT 47200.00 47200.00
0001023965 PATRICK KAMMERER 42610.00 42327.15
0001024007 GEORGE J. NOONA JR. 72000.00 71796.73
0001024307 ANDREAS ANDONIADIS 100000.00 99809.19
0001024405 RONALD BOUGHEY 20000.00 19766.20
0001024463 NORMAN JERRY ALLEN JR. 29500.00 29178.94
0001024473 DONNA L. GILLIGAN 37000.00 36847.50
0001024495 STACY CRONIC 39000.00 39000.00
0001024713 MARY JO JAFFE 35000.00 35000.00
0001024718 RICHARD J. HANDSCHUH 126000.00 126000.00
0001024776 KURT W. MARTI 72900.00 72782.21
0001025093 ROBERT P. WHEELER 16000.00 16000.00
0001025240 MURIEL KING 46300.00 46182.82
0001025268 EDWARD L. ARMSTRONG 25000.00 24753.46
0001025304 DELORES RATLIFF BRENT 13500.00 13465.97
0001025336 MARGARET DELORES STUDEVAN 23400.00 23399.03
0001025365 ARTHUR KISTLER 57500.00 57314.82
0001025422 TRUDY ANNE TAYLOR 100000.00 99957.45
0001025432 SHARON B. GRIFFIN 28000.00 27802.07
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001025474 CAROL S. TIMMERMAN 85000.00 84645.57
0001025538 EUGENE ELLISON 20000.00 19805.52
0001025635 JOSEPH F. DE ROSE 81000.00 80799.08
0001025665 JOHN B. OSBORNE 60000.00 59852.11
0001025835 WILLIAM R. WALLACE 22500.00 22476.22
0001025931 EDWARD D. BOTZUM 37000.00 36991.54
0001025968 VERONICA PIERCE 78795.00 78789.81
0001026087 SIDNEY P. WALKER 44000.00 44000.00
0001026089 HELEN J. ANDERSEN 118000.00 117189.98
0001026185 SHIRLEY ANN RHAMES 58500.00 58476.64
0001026224 TAMARA KIRKPATRICK 27000.00 26946.83
0001026334 INEZ ORR STEELE 75000.00 74687.34
0001026380 WILLIAM J. KEHOE JR 125000.00 124707.40
0001026471 KENNETH ENGLAND 63750.00 63612.49
0001026480 MEGAN A. TELESCA N/K/A MEG 17000.00 16954.37
0001026487 CHARLES J. REGISTER 20000.00 19949.28
0001026507 ALEXANDER I. RAJIS 26700.00 26700.00
0001026525 GARY G. BLUME 64000.00 63611.00
0001026533 HAROLD M. POULTER 64000.00 63936.72
0001026536 RAYMOND G. FRATTONE JR. 54000.00 53848.47
0001026588 CASWELL TOWNSEND 11000.00 10965.06
0001026611 DAVID A. MYERS 17000.00 16833.80
0001026683 JENNIFER A. SONGER 77350.00 77350.00
0001026747 GERALD M. SWARTZBERG 22000.00 22000.00
0001026750 CLYDE PETERSON 18000.00 17850.62
0001026816 CELIA GONZALEZ 65000.00 64927.20
0001026897 BOBBY LEE MOON 61700.00 61597.39
0001026932 LATANYA U. HENSON 56700.00 56700.00
0001026978 JOAN ANN DEMASSE 50000.00 49811.74
0001026996 GEORGE CARLIER 122000.00 122000.00
0001027019 JACK J. KENNEDY 154200.00 153295.10
0001027027 LINDA MCEACHERN 26000.00 25787.01
0001027093 HALIMAH H. PHILLIPS 64000.00 63926.29
0001027124 BARRY WHITMOYER 67200.00 67200.00
0001027161 SHIRLEY T. EALEY 180000.00 179751.55
0001027264 JOSEPH MAGNES 50000.00 49913.76
0001027271 ROBERT H. VAN HOESEN 25000.00 24858.04
0001027278 BLAISE PASTORE 86800.00 86800.00
0001027293 HELEN VIRGINIA WADE 120600.00 120588.52
0001027298 JAMES BISHOP 96000.00 95992.52
0001027349 DARLENE W. EBRON 56000.00 55944.29
0001027420 ELLA E. LEWIS 60000.00 60000.00
0001027456 JOHN DUBOIS 60000.00 60000.00
0001027470 MICHAEL M. DESIMONE 25000.00 24645.01
0001027475 PHILLIP G. HEINER 200000.00 200000.00
0001027486 ERIC A. BATHURST 81000.00 81000.00
0001027524 MICHAEL A. BATTLE 24000.00 23882.39
0001027527 JAMES W. POWELL 58500.00 58235.31
0001027546 JOSEPH C. HARTLEY 56700.00 55924.59
0001027548 GARY GIBSON 30000.00 29666.59
0001027568 HELEN C. WALKER 17000.00 16916.08
0001027607 DIANE MILLER 32000.00 31930.28
0001027613 CHRISTOPHER J. WAGNER 31750.00 31750.00
0001027650 PETER D. SAMUELS 25000.00 24974.64
0001027665 HERBERT K. POWELL 17700.00 17700.00
0001027702 MICHAEL J. DEMAYO 37100.00 36793.51
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001027709 JUNE GOODWIN BURRIS 25000.00 24962.70
0001027792 PATRICIA E. BROWN 68000.00 67955.88
0001027794 ROBERT T. ROSE 119000.00 119000.00
0001027798 DAMON M. LOWRY 14500.00 14345.51
0001027803 ROSIE GHOLSTON 52000.00 51641.10
0001027815 DANIEL COURSEY 36550.00 36531.68
0001027853 THOMAS HOFFMAN 53500.00 53488.63
0001027858 ROBERT W. STACEY 50400.00 50225.44
0001027946 WILLIAM L. CARPENTER 25000.00 24921.86
0001027953 DEBORAH S. STEVENSON 36000.00 35617.96
0001027957 JAMES H. MARSEE 86000.00 85707.22
0001027968 EFRAIN NEGRON 40000.00 39853.33
0001027983 ESAU HAIRSTON 47200.00 47064.63
0001027986 KENNETH R. SNOW 12000.00 11884.90
0001027987 ANTHONY VASCONCELOS 19200.00 18983.61
0001027998 MARCIA E. GAUTHNEY 35000.00 34750.75
0001028010 ANGELO ROSSILLIO 25000.00 24916.55
0001028039 VELMA L. GRIGGS 54400.00 54230.42
0001028043 IDA G. PROPHET 80000.00 79907.28
0001028048 ROMAINE S. NOBLE 13500.00 13500.00
0001028049 TIMOTHY P. O'DONNELL 54000.00 53889.14
0001028071 ANTHONY REGINELLI 20198.00 20138.90
0001028075 VERONICA CHANDLER 31000.00 30867.39
0001028116 STANLEY BRZYSKI 31000.00 30960.02
0001028120 WAYNE P. MALLON 100000.00 99885.73
0001028138 DORIS M. PLOTTENBERG 121665.47 121665.47
0001028147 ROBERT SANTELLA 13450.00 13384.37
0001028154 ANTHONY DE MARCO 106200.00 106064.38
0001028162 DANIEL KLOSS 23350.00 23350.00
0001028185 NEAL ALICAKOS 171000.00 171000.00
0001028188 DIMITRIOS KONTOGEORGOS 88500.00 88500.00
0001028190 SALVATORE PERNACI 42000.00 41865.45
0001028196 DAVID A. SPENCER 76000.00 76000.00
0001028206 CARROL A. CREWS 57800.00 57658.01
0001028208 PRISCILLA OGUNMWONYI 77400.00 77307.43
0001028242 REBECCA C. SAUL 15200.00 15118.63
0001028266 CHRISTOPHER SCOTT HINSON 56100.00 56100.00
0001028275 ROBERT B. CREMEANS 36600.00 36600.00
0001028280 AGAPITO VILLANUEVA 41600.00 41129.24
0001028281 GEORGE KUCY JR. 40000.00 39761.68
0001028286 JONES BEDFORD III 35000.00 34922.20
0001028288 STACEY E. REDMOND 18000.00 17984.56
0001028303 LISA DIAZ 55000.00 54964.24
0001028313 CHRISTINA A. TORCHIA 32800.00 32710.98
0001028314 ALICE A. WITTMER 45000.00 44936.58
0001028350 WILLIAM C. STANTON 52500.00 52500.00
0001028353 MIRIAN E. HAYES 36000.00 35931.32
0001028359 BETTY PRINCE 56000.00 55923.25
0001028375 ROBERT L. RUSHTON 67500.00 67405.39
0001028379 SANDRA S. JOHNSTON 54400.00 54367.29
0001028382 NELLIE BURGESS 64000.00 63306.23
0001028392 THOMAS J. CLONAN, JR. 20870.00 20847.33
0001028398 RICHARD CARMEN 92650.00 92650.00
0001028403 DANIEL LETTIRE 29450.00 29300.03
0001028412 SALVATORE MARASA 20000.00 19992.56
0001028417 MICHAEL PAULHUS 112500.00 112496.07
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001028423 LOIS VISINGER 121500.00 121500.00
0001028429 DOUGLAS M. KAISER 57600.00 57550.59
0001028439 JOHN O'MARA 18525.00 18525.00
0001028441 MATTIE R. CAMP 57800.00 57773.20
0001028452 JAMES GANNON 182000.00 182000.00
0001028464 AMERICO STELLATO JR. 135000.00 134837.49
0001028480 WILLIAM J. BECHT 56000.00 55697.16
0001028488 YVONNE W. MATTOX 70200.00 70200.00
0001028504 KEVIN DEVINE 111600.00 111529.40
0001028510 ALBERT H. BAKER, III 34400.00 34143.85
0001028516 JAMES ROBERT WOODLEY 25000.00 24908.84
0001028522 BRIAN C. MENKE 83000.00 82483.69
0001028524 FREDDIE BASS 23000.00 22924.07
0001028527 WILSON E. NOLL 43000.00 42841.92
0001028542 LENORE R. RIGELL 130000.00 130000.00
0001028546 ROBERT L. CATO 36650.00 36500.98
0001028555 JUANITA COCHRAN-BOONE 12500.00 12169.29
0001028560 ROBERT M. ALLEGRA 126000.00 126000.00
0001028566 TIMOTHY M. GAUNTT 15500.00 15470.29
0001028571 ROBERT A. BELL 57800.00 57800.00
0001028583 ALFRED JACKSON 43200.00 42991.79
0001028603 BEVERLY J. HURTA 33600.00 33423.34
0001028606 MARY E. BLEVINS 80000.00 79758.55
0001028616 RICHARD P. LOPATA 56000.00 55782.77
0001028619 LARRY HAYES 104700.00 104549.83
0001028622 KENNETH RUBINSTEIN 23000.00 22870.61
0001028629 BUFORD MCCLURE 68000.00 68000.00
0001028631 RACHEAL K. SMOGUR 52000.00 51968.41
0001028636 SERGE BLANCHARD 50400.00 50400.00
0001028654 LEOPOLD MONTEITH 142650.00 142650.00
0001028668 PAUL W. WADDELL 45000.00 44455.30
0001028670 BILLIE R. BUREL 59500.00 59366.68
0001028680 JOSE MATUTE 63000.00 63000.00
0001028683 DAVID M. TRUSTY 48100.00 48016.95
0001028720 JOYCE M. ANDERSON 56250.00 56250.00
0001028738 GINA JOHNSON 81600.00 81509.12
0001028741 MISTY G. BERNHAGEN 57600.00 57551.29
0001028749 ANTHONY CLEMONS 10420.00 10375.07
0001028750 STANLEY HOLTS 66000.00 66000.00
0001028752 MICHAEL SULLIVAN 12570.00 12570.00
0001028755 PAULINE E. EARLE 26000.00 26000.00
0001028767 ANTHONY TRANUMN 160200.00 160200.00
0001028774 SUZANNE WHITE 13500.00 13500.00
0001028779 LINDA D. BRIGHAM 46400.00 46313.99
0001028781 BRIAN J. REMS 171700.00 171700.00
0001028784 MACIEJ S. LUBASZKA 26400.00 26209.02
0001028795 KELVIN LOUIE 180000.00 180000.00
0001028832 THOMAS LEE MOODY 35700.00 35661.10
0001028833 GEORGE BRUCE OLIVE 22650.00 22591.59
0001028837 BRIAN WADDINGTON 74800.00 74778.03
0001028838 FRANK SAUDARG 56100.00 56020.48
0001028874 LISA T. CANN 60000.00 59868.97
0001028878 ALAN S. MCVEY 130500.00 130500.00
0001028889 ROBERT S. CAMPBELL 87750.00 87654.39
0001028896 TOLAN NGUYEN 40000.00 40000.00
0001028898 TIMOTHY A. SMITH 42500.00 42307.22
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001028907 MARY FRANCES CASH 48300.00 48300.00
0001028920 WILLIAM J. MAHER 66000.00 65817.87
0001028966 JOHN M. BALOTSKY 37000.00 36702.10
0001028973 KAREN STELL 60550.00 60497.44
0001028974 GERALD W. SMITH 82000.00 81909.40
0001028976 BOBBY CALLOWAY GORDY 64800.00 64800.00
0001028981 DEBORAH ANN DOYLE 111500.00 111317.38
0001029000 RAMONA G. HOUSTON 10800.00 10765.10
0001029003 WILHELMINA PYLE 60000.00 59832.17
0001029012 WILLIAM ZESTER 20600.00 20596.50
0001029013 STEPHEN R. BENSON 17000.00 16855.25
0001029014 HELEN CIPELLI 28000.00 28000.00
0001029020 CHARLES W. BELL 32000.00 31838.49
0001029022 TANYA M. COVINGTON 16250.00 16130.94
0001029078 GOVERNOR SHERMAN 58300.00 58157.99
0001029097 WILBERT COLBERT 24000.00 23927.61
0001029108 TERRY M. ROBERTS 21116.00 21076.96
0001029113 JEFFREY J. JAREMBACK 10000.00 9988.81
0001029133 SHELIA B. GILLIAM 10000.00 9992.72
0001029151 DONALD P. FREEMAN 40000.00 39886.38
0001029156 LEONARDO B. PRINGLE 95400.00 95234.22
0001029163 PAOLO SCAGLIARINI 150000.00 149897.22
0001029164 WAYNE B. DESHLER 38400.00 38371.53
0001029166 CRAIG D. MUSGNUNG 100000.00 99828.24
0001029169 ANTHONY RAMIREZ 123250.00 123115.74
0001029184 JOHN L. BANKS 10880.00 10880.00
0001029189 MARY M. HURNOVICH 56250.00 56250.00
0001029206 FELICIA C. CARTER 35000.00 34723.30
0001029208 CHARLES MATHENY 15000.00 14930.97
0001029213 RICHARD CHONG 141300.00 141152.59
0001029218 EUGENE R. FORNARIO 88000.00 87692.60
0001029237 JOSEPHINE PIRAGNOLI 45000.00 45000.00
0001029242 PAUL E. NISKANEN 50500.00 50500.00
0001029267 BETTY RUTH MOON PATTERSON 67500.00 67396.06
0001029271 DONNA SIMMONDS 15000.00 14827.56
0001029275 MICHELLE M. ALBERTY 14900.00 14801.66
0001029282 PETER J. HEIM 66000.00 65975.86
0001029316 SHELIA G. LEACH 44000.00 43900.77
0001029333 DONALD T. POWELL 63000.00 63000.00
0001029348 CARTER S. COLEMAN 87500.00 87396.78
0001029365 ERITH E. WILLIAMS 94500.00 94500.00
0001029367 QUESANDRA W. LEMON 80000.00 79776.98
0001029388 DAVID A. ANDERSON 157000.00 156804.49
0001029397 SHERRIAN BROUSSARD 30000.00 29996.55
0001029399 LARRY R. SMITH 10000.00 9998.36
0001029401 ERIC BEVERLY 16500.00 16284.81
0001029409 GENINE CASE 36000.00 36000.00
0001029418 JEFFREY A. GROSS 75000.00 75000.00
0001029422 RICARDO GARCIA 78000.00 77992.57
0001029424 ALISON M. ASKEW 154800.00 154800.00
0001029426 CYNTHIA J. WASHBURN 16000.00 16000.00
0001029447 BRADFORD V. SMITH 108000.00 108000.00
0001029456 NANCY M. COLLINS 67600.00 67543.81
0001029464 BRIAN MENKE 64350.00 63936.38
0001029475 CALVIN SION BROPLEH 85500.00 85500.00
0001029477 CHERLEEN P. AMES 40500.00 40496.28
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001029480 PETER M. LATHBURY 64000.00 64000.00
0001029502 LISA SWEAT 48000.00 47840.16
0001029517 KATHERINE VLASTARAS 158000.00 158000.00
0001029521 PATRICIA KALUNZY PAVNICA 60300.00 60300.00
0001029528 MITCHELL J. SOBEL 180000.00 179456.28
0001029537 ERNESTINE REID 59500.00 59472.41
0001029561 EMANUEL L. JOHNSON 60200.00 60109.99
0001029570 LOUIS C. KLUTZARITZ 50500.00 50152.92
0001029581 DANA T. FRANKLIN 25000.00 24987.69
0001029583 SAMMY MICHAEL MAGEE 73500.00 73500.00
0001029585 FREDERICK P. MITCHELL JR. 36000.00 36000.00
0001029601 BRIAN J. REMS 131000.00 131000.00
0001029602 BERNARD ENGLISH 62900.00 62883.92
0001029629 MARINA THOMAS 45750.00 45749.74
0001029647 EVELYN A FIMPLE BY HER ATT 30500.00 30500.00
0001029653 DYONIA MASON 81000.00 81000.00
0001029660 DEBORAH Y. BAYLOR 20000.00 19869.90
0001029664 STEPHEN A. MITTNACHT 105300.00 105300.00
0001029668 ANDREW J. HARMER 64500.00 64354.31
0001029676 ELSIE SUSAN MARCHESE 35000.00 34910.46
0001029678 HUNG H. BUI 35000.00 34952.82
0001029685 THADDEUS LAWHORNE 125000.00 125000.00
0001029691 MAE L. GALLOWAY 52000.00 51786.84
0001029704 BARBARA ANN SUSWELL 49500.00 49080.62
0001029716 HAMMIE M. LOADHOLT 10000.00 9963.88
0001029719 JAMES I. CORLEY SR. 30000.00 29965.72
0001029724 ROBERT J. BEATTY 100000.00 100000.00
0001029753 ANDREW J. HARMER 40000.00 39933.24
0001029785 JAMES P. RUTIGLIANO 68500.00 68103.82
0001029792 DONNA M. BUTTERBAUGH 22000.00 22000.00
0001029798 TODD PIERCE 20000.00 19983.58
0001029801 RUFUS WHITWORTH 50000.00 49945.97
0001029803 MERLEND R. MCKNIGHT 98000.00 98000.00
0001029805 SAMUEL L. POWELL 56250.00 56250.00
0001029809 REUBEN F. LIVERPOOL 153000.00 153000.00
0001029810 CYNTHIA I. BUTLER 14800.00 14737.21
0001029832 ARTIE T. CASTON JR. 44795.00 44795.00
0001029855 DIANE M. SUDVOY F/K/A DIANE M. 29950.00 29950.00
0001029860 HENRY JOSEPH MARION 62000.00 61791.15
0001029898 DONNA J. POOLE 121500.00 121500.00
0001029906 ALBERT MOORE 99000.00 99000.00
0001029909 EDWIN PEREZ 25000.00 24548.65
0001029926 HENRY PHILLIP BURKLE 61200.00 61120.07
0001029954 JOSEPH DISTEFANO 96000.00 95912.15
0001029955 ANGELA E. SALDALA 56000.00 55869.87
0001029956 FLOREDDA C. GAINEY 59000.00 58918.21
0001029958 ROBERT ELLIOT 40000.00 39912.80
0001029969 GERALD WEICHERT 151200.00 151200.00
0001029986 THOMAS C. ROSE 48600.00 48581.64
0001030002 GARY S. ALLIE 28450.00 28349.04
0001030006 PAUL A. DE CARLO JR. 202000.00 202000.00
0001030014 LEON GOODIN 59500.00 59500.00
0001030028 CHRISTINA M. MUKHERJEE 44000.00 43881.45
0001030042 JOHN R. GILSON 20000.00 19861.67
0001030045 LEWIS C. PRESTON 75200.00 75095.93
0001030078 RAMON FELICIANO 59500.00 59500.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001030082 ELLEN A. JAURIS 80000.00 79968.21
0001030137 BRENDA I. REEVES 50000.00 49900.68
0001030140 ETHEL CAROLYN GOODWIN 25000.00 24905.07
0001030144 MARGUERITE PIERRE-DUFOUR 38250.00 38184.95
0001030164 KEVIN VARRELL 12000.00 12000.00
0001030181 LEON CUMMINGS 127500.00 127460.48
0001030191 WILLIAM HAHN 159600.00 159347.30
0001030214 DIANNE POWELL 40000.00 39832.15
0001030235 ROCCO GREGORIO 53000.00 52823.92
0001030239 MARGUERITE R. MORLEY 14250.00 14201.24
0001030267 ROBERT HITE 28000.00 27849.38
0001030284 GLORIA GHOLSTOM 92600.00 92327.49
0001030289 ANIBAL COLON 58540.00 58540.00
0001030290 FRANK RUOCCO 81600.00 81600.00
0001030296 DAVID B. SHAAK 112000.00 111646.50
0001030300 ROBERT JOSEPH BAINES 67000.00 66919.17
0001030306 RICHARD EKKERT 134100.00 133426.47
0001030316 DOROTHY M. DOMALEWSKI 25000.00 24890.11
0001030327 KELLY D. BURTON 84800.00 84800.00
0001030330 JUDITH CHRISMON 26000.00 25579.00
0001030348 TONY W. BRASHER 33200.00 33200.00
0001030367 JAMES E. WENCE 114000.00 113807.65
0001030368 ALGIEN EPPS 68000.00 67783.11
0001030377 GARY HATAWAY 45050.00 45050.00
0001030385 STANLEY MATHIS 38000.00 38000.00
0001030390 CYNTHIA SPADOLA 60000.00 59940.31
0001030415 BEVERLY R. ROTTMAN 16000.00 15962.13
0001030423 ROSEMARIE CHIARAMONTE 99000.00 98567.80
0001030429 DAISY P. EDWARDS 48800.00 48655.22
0001030431 FRANCIS P. COLLINS 30000.00 30000.00
0001030439 JERRY P. JOSEPHS 45000.00 45000.00
0001030458 LOUISE A. FLETCHER 58500.00 58225.15
0001030462 WILLIAM N. CROSSON 128000.00 127463.15
0001030467 VANDETTA N. CHERRY 30000.00 29963.42
0001030469 TIDY V. CHAMBERS 73525.00 73525.00
0001030470 ADELE MCDERMOTT AKA ADELE 19400.00 19362.28
0001030483 JAMES R. AIKENS 148000.00 148000.00
0001030489 BARBARA I. BLACK 62550.00 62550.00
0001030497 LORENZO WRIGHT 70550.00 70550.00
0001030499 GERALD B. CASPER 18000.00 18000.00
0001030506 LORENZO S. WRIGHT 53500.00 53500.00
0001030507 JOHN M. FLORIO 46900.00 46892.04
0001030519 JOHN MILLS 60000.00 60000.00
0001030529 ROBERT S. HERMAN 120000.00 119564.53
0001030539 ROBERT R. ZODDA 90000.00 89738.01
0001030548 BRENDA S. LESLIE 40000.00 40000.00
0001030556 JOSEPH C. SERRONE 110000.00 109989.53
0001030593 JOSEPH EAGLE 70400.00 70400.00
0001030596 INCHIANG LIEU 72000.00 71961.32
0001030600 JAMES C. CLYNE 205000.00 205000.00
0001030602 MARILYN ROSS 84000.00 83762.00
0001030615 KELLY BURTON 73500.00 73500.00
0001030624 SCOTT M. HECKMAN 55250.00 55250.00
0001030625 JAMES STEVEN CHANDLER 12500.00 12466.83
0001030626 SUSAN SHAW PEARSE 29808.00 29752.08
0001030633 MARTIN J. QUINN 97136.00 96561.72
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001030640 JAMES B. EVANS 25000.00 24960.54
0001030651 ROBERT F. MORTON 117000.00 116642.96
0001030662 JOHN R. HUNTER 116550.00 116550.00
0001030685 ANTHONY J. DESTEFANO 126000.00 125822.44
0001030688 CLIFTON SPICER JR. 97750.00 97384.94
0001030690 LOLA NICHOLS 37000.00 37000.00
0001030694 JAMES G. SMITH 56100.00 56100.00
0001030696 JEFFREY H. SEDGWICK 17800.00 17767.29
0001030710 LEONEL MENDOZA 22500.00 22500.00
0001030711 CHRISTOPHER J. MACHIN 95000.00 94896.82
0001030712 ALVAREZ D. WILLIAMS 108000.00 108000.00
0001030723 WAVERLY MAXINE ROBINSON 20000.00 19945.86
0001030743 RHONDA DUNCAN-WILSON 182600.00 182600.00
0001030744 NANNETTE E. BLACK 30000.00 29906.92
0001030751 LESLIE LLOYD 26500.00 26432.87
0001030756 ROBERTA GASS 37000.00 36883.55
0001030759 NORMAN GARRETT 15000.00 14989.89
0001030764 ERIC COFER 148500.00 148500.00
0001030766 DIANE A. POWELL 25000.00 24928.79
0001030772 KATHLEEN THOMPSON 23000.00 22913.15
0001030785 ROBERT ANDERSON 48800.00 48786.15
0001030789 GLORIA A. ONOFRI 11000.00 10817.67
0001030838 PATRICIA M. ROMANO 171000.00 169633.64
0001030841 PASQUALE ANTIGNANI 129200.00 129200.00
0001030842 PATRICIA M. DWYER 40500.00 40416.27
0001030848 JOAN TAYLOR 17700.00 17562.55
0001030902 DANIEL H. CHENG 50000.00 49996.66
0001030916 RONALD JONES 51000.00 50890.95
0001030937 LILLIAN BROWN 98000.00 97963.67
0001030941 GARY S. DELUCIA 83300.00 83300.00
0001030958 RAYMOND HAISLIP 110500.00 110065.13
0001030963 DAVID M. HACKER 12500.00 12500.00
0001030967 MICHAEL J. LANCELLA 67000.00 66926.16
0001030971 CURTIS DILWORTH, D.D.S. 136000.00 136000.00
0001030994 RICHARD SILVEY 110500.00 109763.74
0001031007 MICHAEL A. SANTOSUSSO 37600.00 37600.00
0001031010 LAWRENCE E. COLEMAN 25200.00 25200.00
0001031012 DIANE THOMAS-MYERS 29600.00 29497.08
0001031014 VENICE D. SMITH 10000.00 9877.60
0001031038 BOSTON FEAR 18000.00 18000.00
0001031086 SANDRA OPPENHEIMER 35000.00 34800.37
0001031088 LAWRENCE BROOKS JR. 22000.00 21930.20
0001031091 STEPHEN E. SULLIVAN 113000.00 113000.00
0001031135 KIM N. PUCINO 48000.00 47801.59
0001031143 GEORGE N. CHARTOFILLIS 193000.00 192347.64
0001031168 CLINT DARLAND 60000.00 60000.00
0001031169 DANIEL J. GRAHAM 55879.00 55879.00
0001031172 JOSEPH RUSSO 117000.00 117000.00
0001031205 ADELE G. SPADACCINO 95000.00 94746.33
0001031219 HEATHER M. HAMILTON 25000.00 25000.00
0001031221 JAMES E. LONG 64000.00 64000.00
0001031239 SHIRLENE BRANTON 55000.00 55000.00
0001031240 MELVIN E. GOWANS 144000.00 143811.22
0001031257 JAMES COOK 73750.00 73750.00
0001031276 ROBERTA LAPORTE 40000.00 40000.00
0001031281 KARLA PIACENTINI 90000.00 90000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001031288 DORTHIA F. JORDAN 22950.00 22950.00
0001031294 GERALD MCDONALD 70000.00 69942.55
0001031299 MYRNA A. PINKETT 81000.00 80937.66
0001031304 MARIAN LLORELLA 10000.00 9946.10
0001031315 BETH LYNNE NELSON 35300.00 35300.00
0001031320 DONALD LANDAAS 160200.00 160200.00
0001031356 JANE MARTIN 36000.00 36000.00
0001031404 SUSAN N. HOWARD 30000.00 29958.69
0001031407 JAMES BERRIAN 82500.00 82490.53
0001031408 MICHELLE OWEN 94350.00 94350.00
0001031410 WILLIAM E. RAVERT 153000.00 153000.00
0001031443 SANDRA KELLY 75200.00 75200.00
0001031450 SHIRLEY A. QUIGLEY 91530.00 91530.00
0001031455 JUNIOR CAMPBELL 25450.00 25450.00
0001031466 ALAN R. HELD 80000.00 80000.00
0001031480 THOMAS H. BROWN 42400.00 42177.36
0001031498 DOROTHY GILL 53000.00 53000.00
0001031512 JAMES M. FITZGERALD 36000.00 35959.63
0001031540 JAMES J. TIERINNI 21180.00 21046.05
0001031543 GEORGE R. MILLS 179250.00 179250.00
0001031547 QUANDA RODRIGUEZ 59400.00 59400.00
0001031548 BARBARA BEVELLE 17000.00 17000.00
0001031573 BURTON C. PARRY 25000.00 25000.00
0001031585 KATHLEEN A MCHUGH ZALESKI 144000.00 144000.00
0001031594 CORTEZ VALLIE WALKER 45000.00 45000.00
0001031599 WYNDA V. WRIGHT 100200.00 100200.00
0001031605 ANGEL RAFAEL VILLALOBOS 85000.00 85000.00
0001031606 THERESSA HOLLAND 83700.00 83700.00
0001031608 EDWARD F. HENDRICKSON 114300.00 114300.00
0001031638 BENJAMIN L. LOMASANG 106400.00 106400.00
0001031646 GAIL R. REDMON 45000.00 44893.07
0001031664 ROBERT C. BUCH 110000.00 110000.00
0001031687 FRANKIE LEE DUNLAP 50400.00 50395.23
0001031701 RANDALL L. MINYARD 60450.00 60450.00
0001031704 ROBERT COLTER 78000.00 78000.00
0001031706 MICHAEL J. HARPER 30750.00 30750.00
0001031737 O'VERNE H. JOLLY 79050.00 79050.00
0001031742 LYZANNETTE GARCIA 18500.00 18500.00
0001031749 STACY EDWARD DUEITT 64000.00 63859.34
0001031767 TIMOTHY C. PURDUE 169000.00 169000.00
0001031769 PETER NICOLO 65000.00 64953.87
0001031783 JANICE M. CLEVELAND 85500.00 85407.19
0001031816 DANIEL J. CONN 51750.00 51750.00
0001031842 GWENDOLYN JOHNSON 22750.00 22602.69
0001031843 WILLIE C. HARRIS N/K/A WIL 56950.00 56950.00
0001031848 GLORIA JONES 36075.00 36075.00
0001031869 THELMA J. GOLER 97000.00 97000.00
0001031873 CHERYL GOINS 56700.00 56700.00
0001031878 JAMES L. DAVIS 52500.00 52500.00
0001031898 MORZETTE HAYWOOD 72000.00 72000.00
0001031901 MICHAEL G. BALESTRIERI 25000.00 25000.00
0001031943 ARLENE BELTZ 111700.00 111700.00
0001031944 LOUIE M. FINE 150500.00 150500.00
0001031947 MARGARET M. FOLMSBEE 76000.00 76000.00
0001031971 RUBY LEE DOE 83300.00 83300.00
0001031989 DAVID EARL THOMPSON 75600.00 75600.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001031991 ROBERT M. HOFFMAN 105000.00 105000.00
0001032000 THOMAS J. SUGDEN 72800.00 72800.00
0001032004 JOHN R. SABOL 117000.00 117000.00
0001032009 ROBERT RIDGLEY 51300.00 51300.00
0001032019 IRMA GRISWOLD 97750.00 97750.00
0001032028 CHRISTOPHER TY HUNT 30000.00 29937.21
0001032043 LINDA WHEELER 20800.00 20663.83
0001032044 SHIRLEY J. WILSON 71100.00 71100.00
0001032052 MARK CAUSERANO 60000.00 60000.00
0001032064 KISMET B. BRIDGEFORTH 57000.00 57000.00
0001032065 THOMAS P. COUGHLIN 30000.00 30000.00
0001032075 ELLIOTT EHRLICH 51850.00 51850.00
0001032081 ROBERT BELMONT 39000.00 39000.00
0001032090 ALICIA G. TURSI 30000.00 30000.00
0001032100 BLANCA RIVERA 142500.00 142500.00
0001032115 SHARON E. MILLER 32500.00 32500.00
0001032126 MARVIN JOHNSON 47700.00 47700.00
0001032138 ULRIKE KRAMER 69300.00 69300.00
0001032146 MARGON MALVOISON 18750.00 18750.00
0001032148 ULRIKE KRAMER 135000.00 135000.00
0001032153 RICK O. DACANAY 77000.00 76853.60
0001032164 MARION I. REIGLE 40000.00 40000.00
0001032171 JOHN L. MCKEE 107100.00 107100.00
0001032180 BARBARA J. MANIGAULT 84000.00 84000.00
0001032184 JOSEPH AULETTO, JR. 120000.00 120000.00
0001032193 RICHARD ARNOLD 36000.00 36000.00
0001032196 ERNESTINE J. LEE 25000.00 25000.00
0001032218 ANNA A. DOYLE 28000.00 28000.00
0001032222 RITA TSANGO 53500.00 53500.00
0001032228 BRIAN K. MCBRIDE 34000.00 34000.00
0001032231 ROSEMARY P. NIXON 72800.00 72800.00
0001032263 DWAIN DRINKARD 40500.00 40500.00
0001032277 VIRGINIA E. CORBIE 102000.00 102000.00
0001032284 TRACEY MENAFEE-HIE 82800.00 82800.00
0001032289 MANOJ JAIN 22506.00 22506.00
0001032304 THOMAS J. CALLAHAN 80000.00 80000.00
0001032314 SCOTT DAWSON 50000.00 50000.00
0001032334 GEORGE F. MAYO 23000.00 23000.00
0001032336 CHARLES W. TEETER 40000.00 40000.00
0001032374 PAUL VISCUSO 25000.00 25000.00
0001032381 SALLY LERMAN 135000.00 135000.00
0001032390 JEFFREY P. GRANOWSKI 90000.00 90000.00
0001032393 ROBERT TREMBOWICZ 40800.00 40691.97
0001032405 DENISE G. MCALLISTER 58500.00 58500.00
0001032415 SCOTT EDWARD CEPICKY 30200.00 30200.00
0001032428 VICTOR E. STRAUGHTER 70000.00 70000.00
0001032479 JOANN C. VAN BROCKLIN 154000.00 154000.00
0001032483 NAI K. CHENG 50000.00 50000.00
0001032484 SONIA CASTRO 15495.00 15495.00
0001032493 ROBERT J. DRUMMOND JR. 68000.00 68000.00
0001032535 WILLIAM J. LUMPKIN 60000.00 60000.00
0001032554 RICHARD J. HUBANY 10000.00 10000.00
0001032571 JOAN F. LEONE 88000.00 88000.00
0001032584 CHRISTINE Y. FLANIGHAN 116000.00 114440.36
0001032589 RICHARD C. BOYER 29100.00 29100.00
0001032601 FRANK B. BORAH 66090.00 66090.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001032607 MARY S. TYAS 56000.00 56000.00
0001032639 JUANITA E. WHITAKER 40000.00 39843.93
0001032657 THOMAS G. PONTOLILLO 147900.00 147900.00
0001032693 WILLIAM S. KENNEDY 40000.00 40000.00
0001032721 MARLENE STRICK 20500.00 20500.00
0001032725 LYNN JOHNSON-BOYD 20000.00 19733.31
0001032730 RICHARD W. MOORE 48000.00 48000.00
0001032732 VIRGINIA M. FITZGERALD 36000.00 36000.00
0001032738 BUFORD D. BYROM JR. 36800.00 36800.00
0001032765 JOHN E. BEEMAN 36000.00 36000.00
0001032768 JUDITH A. KRUK 30000.00 30000.00
0001032770 SCOTT R. HAFETZ 28000.00 28000.00
0001032790 JOHN J. MAHON 142800.00 142800.00
0001032791 JOY MCRAE 120560.00 120560.00
0001032817 LAURIE E. MILSAP 20000.00 20000.00
0001032833 CAROL POLVERE 15000.00 15000.00
0001032834 LEONARDO CORONADO 87000.00 87000.00
0001032846 GEMMA JACOBS 35000.00 35000.00
0001032877 NEFEESA H. SALEM 155700.00 155700.00
0001032921 CHARLES E. WATKINS 60200.00 60200.00
0001032931 EVELYN PRESSMAN 40000.00 40000.00
0001032934 NORMAN W. PRINGLE 10000.00 9839.50
0001032936 LILA JO WILSON DUNN 106400.00 106400.00
0001032939 ANTHONY G. COTTRELL 96000.00 96000.00
0001032943 JOHN T. HAGEL 45000.00 44813.04
0001032944 EARLENE SHEDRICK 200000.00 200000.00
0001032970 CASSANDRA MADISON 51000.00 51000.00
0001032981 JOSEPH M. SMITH 19754.00 19754.00
0001032998 ANTHONY M. ABATE 25000.00 25000.00
0001033023 SAM JENKINS 76800.00 76800.00
0001033030 LINDA MCGLOTHAN RATCLIFF 36400.00 36400.00
0001033040 DAVID FLUKER 73600.00 73600.00
0001033050 ANNA E. REID 67150.00 67150.00
0001033130 MARK STEPHEN DRAFT 23775.00 23775.00
0001033171 DAVID S. HARRIS 28000.00 28000.00
0001033179 FLORENCE L. ROBINSON 55000.00 55000.00
0001033188 ADA E. POTTS 64000.00 64000.00
0001033194 FELICITAS MCCRANIE 37600.00 37600.00
0001033200 ARTHUR BANKS 93600.00 93600.00
0001033202 MARJORIE MINGO 45000.00 45000.00
0001033231 ALVIN R. CARR 67500.00 67500.00
0001033248 CURTIS F. HAYDEN JR. 32000.00 32000.00
0001033251 CHARLES BROWN 85500.00 85500.00
0001033259 CLAUDE CUMMINGS 128700.00 128700.00
0001033263 JEANETTE M. WILLIAMS 20000.00 20000.00
0001033295 CARLOS E. TORRES 90900.00 90900.00
0001033299 BARRY L. SMITH 33750.00 33659.02
0001033308 PHERNETTA WASHINGTON 41600.00 41600.00
0001033362 JANET L. WILLIAMS 58460.00 58460.00
0001033375 CHARLIE H. STUDEBAKER 61200.00 61200.00
0001033397 THOMAS C. MUIR 63500.00 63500.00
0001033409 DAVID A. NELSON SR. 130500.00 130500.00
0001033477 AFTON R. JONES 32000.00 32000.00
0001033494 BARRY K. RAFF 90900.00 90900.00
0001033500 SAEDI MEHRON 122400.00 122400.00
0001033507 CHARLES F. KENNEDY 60000.00 60000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001033509 ALTHEA FORRESTER 109600.00 109600.00
0001033539 JACK RAY BLANTON 30000.00 30000.00
0001033544 ROGER LINGER 44000.00 44000.00
0001033554 LEONARD CASSARO 99150.00 99150.00
0001033570 CHARLES RAYMOND POWELL 81450.00 81450.00
0001033580 VERA CIFELLI 56000.00 56000.00
0001033588 BRIAN E. WEDEKIND 26800.00 26800.00
0001033589 LUIS I. CORADO 142560.00 142560.00
0001033604 C. SCOTT RUBEL 27500.00 27500.00
0001033606 MICHAEL W. TATE 21250.00 21250.00
0001033632 STELLA AULISIO 18000.00 18000.00
0001033649 BETTY I. GIBBS ATTORNEY IN 50000.00 50000.00
0001033652 JOHN M. BUTALA 81000.00 81000.00
0001033661 JEANETTE G. THOMPSON 105000.00 105000.00
0001033664 NEVILLE E. BRYDEN 83200.00 82924.20
0001033678 WILLIAM J. BIRKS 69900.00 69900.00
0001033711 A.C. BRANNAN,III 132000.00 132000.00
0001033715 THOMAS R. HERD 87000.00 87000.00
0001033726 WILLIE F. BROWN SR. 26300.00 26300.00
0001033737 JAMES C. SUMBRY 22000.00 22000.00
0001033741 JOHN BARKER 107000.00 107000.00
0001033768 DARRELL D. STOVALL 68000.00 68000.00
0001033792 PATRICIA LONGAZEL 40000.00 40000.00
0001033811 SCOTT S. SEMDER 78000.00 78000.00
0001033813 JOSEPHINE PORTER ALDRICH A 112500.00 112500.00
0001033820 DALE L. ANDREWS 57600.00 57600.00
0001033834 ROBERT S. BAILEY JR. 10000.00 10000.00
0001033840 DENISE-BONNETTE JONES 16000.00 16000.00
0001033841 NORMAN LAING 104125.00 104125.00
0001033880 HARRIET EISENBERG 20000.00 20000.00
0001033883 KIMBERLY J. WYNN 97400.00 97400.00
0001033896 GLADYS GONZALES 12000.00 12000.00
0001033897 RODNEY SCHAFFER 48600.00 48600.00
0001033905 DARLENE HARNER 76500.00 76500.00
0001033912 FREDERICK P. MITCHELL JR. 77350.00 77350.00
0001033920 GAYLA M. ODOM 28000.00 28000.00
0001033922 JERMAINE PARKER 140250.00 140250.00
0001033931 RONALD D. UTTERBACK 92000.00 92000.00
0001033941 WENNETTE THOMPSON 106250.00 106250.00
0001033957 DENNIS K. WILLIAMS 89000.00 89000.00
0001033965 JESUS OCASIO 120700.00 120700.00
0001033985 RODDY B. ROY SR. 37000.00 36781.20
0001033998 SIDNEY E. ARNOLD 44000.00 44000.00
0001034005 MARIE C. O'NEIL 60000.00 60000.00
0001034014 IRA B. GEORGE 24750.00 24750.00
0001034015 JACK L. SELWYN 155700.00 155700.00
0001034017 ROBERT T. GILL 202500.00 202500.00
0001034052 GRACE M. PHILLIPS 76500.00 76500.00
0001034069 WOODRENE HUGHES 108000.00 108000.00
0001034072 ANNA LASOTA 177000.00 177000.00
0001034074 VALERIE WHEAT 67500.00 67500.00
0001034077 CHRISTINE BILLACK 88000.00 88000.00
0001034080 THOMAS B. ADAMS 70300.00 70300.00
0001034094 NANCY J. ESLINGER 63000.00 63000.00
0001034120 JOHN DELLICARPINI 15000.00 15000.00
0001034179 WILLIAM D. WHEELER 106000.00 106000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001034192 GARY VIX 32400.00 32400.00
0001034200 REITA LORENTZ 24000.00 24000.00
0001034207 RONALD B. ZAPPAN 143000.00 143000.00
0001034211 RICHARD A. PODOLINSKI 58400.00 58400.00
0001034229 LAZARO V. MATO 120000.00 120000.00
0001034250 JOHN M. BOLTE 11000.00 11000.00
0001034266 RICHARD C. ROBERTSON 18701.00 18701.00
0001034274 RONALD L. WANGLE 37600.00 37600.00
0001034279 FREDERICK IPPOLITO 189000.00 189000.00
0001034289 ALIRIO ZAPATA 116000.00 116000.00
0001034306 ZINA L. MURRAY 68000.00 68000.00
0001034313 KIM E. ECKER 60000.00 60000.00
0001034327 ROBERT J. JARDEL 10500.00 10500.00
0001034350 LINDA RIVELLO 18000.00 18000.00
0001034362 GENE W. KAYE 32500.00 32500.00
0001034368 DARLENE L. FERNANDER 62400.00 62400.00
0001034370 ROBERT BRUSCO 195300.00 195300.00
0001034376 MARK D. RINEHART 52700.00 52700.00
0001034388 DEBORAH A. PEPPER 68600.00 68600.00
0001034390 CLAUDIA K. KOSLOW 100000.00 100000.00
0001034394 ELLANEDA F. ANCRUM 76500.00 76500.00
0001034397 SEAN M. RAMSEY 65600.00 65600.00
0001034405 EVANS BALFOUR 117000.00 117000.00
0001034410 ROBERT DENNIS YOUNG 117300.00 117300.00
0001034442 TIMOTHY JAMES GISINER 106500.00 106500.00
0001034446 BENJAMIN SANTOS JR. 81000.00 81000.00
0001034496 JEFFREY LYNN SNOWBERGER 52000.00 52000.00
0001034498 JOSEPH WARD 37500.00 37500.00
0001034514 ROBERT C. BARROWS 41000.00 41000.00
0001034519 CLAUDIA L. DABBIERI 52425.00 52425.00
0001034523 VIRGINIA DIAZ 148500.00 148500.00
0001034562 JOSE V. GUTIERREZ 121500.00 121500.00
0001034566 DAVID J. SINGLEY 21950.00 21950.00
0001034635 RICHARD F. PROTO 112000.00 112000.00
0001034640 KIM J. BAEZ 174000.00 174000.00
0001034651 LARRY EUGENE CROFT 95966.00 95966.00
0001034658 PHILIP GWINN 160000.00 160000.00
0001034675 DOY SWAIN 93500.00 93500.00
0001034686 WILLIE LOFTON 148000.00 148000.00
0001034694 OLIVIA GRIMES 20000.00 20000.00
0001034698 NORBERT J. ERICHSEN 198000.00 198000.00
0001034754 MARY A. BUCCI 80000.00 80000.00
0001034759 ROBERT DENNIS 44000.00 44000.00
0001034790 BRUCE L. WINSLADE 20000.00 20000.00
0001034792 JOAN RAMBO 25000.00 25000.00
0001034793 OTIS L. BOWDEN 62000.00 62000.00
0001034795 TERRY TATE 82500.00 82500.00
0001034822 LEONITIAS TORRES JR. 121500.00 121500.00
0001034843 ALI SARMAD 22000.00 22000.00
0001034845 ABDOUL R. KAMARA SR. 63700.00 63700.00
0001034846 ANDREW HERSHOFF 200000.00 200000.00
0001034854 GARY L. WILLIAMSON 35100.00 35100.00
0001034861 EUGENE SHOLLENBERGER 20000.00 20000.00
0001034875 ALBA QUINTANILLA 114750.00 114750.00
0001034883 BLANCHE L. VICKERY 54000.00 54000.00
0001034887 RAQUEL MYERS 126000.00 126000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001034891 ISMAEL ORTIZ 118400.00 118400.00
0001034896 EDITH N. WILLIAMS 68000.00 68000.00
0001034907 EDWARD E. THROGMORTON 80000.00 80000.00
0001034922 ISAIAH STANSBERRY 19500.00 19500.00
0001034924 HELMUT HOESS 42000.00 42000.00
0001034926 CHRISTOPHER MENY 112500.00 112500.00
0001034940 GREGORY A. MYERS 137600.00 137600.00
0001034950 SAMUEL STEWART 57000.00 57000.00
0001034960 EDWARD BARBER 100000.00 100000.00
0001034985 BRUCE R. CONSONERY 52700.00 52700.00
0001034986 JAY SANDFORD 40000.00 40000.00
0001034993 JULIA R. CAMPBELL 68600.00 68600.00
0001035002 JOSEPH DE TULLIO 26000.00 26000.00
0001035012 RICHARD B. KELLER 100000.00 100000.00
0001035039 WILHELMINA WILLIAMS 45600.00 45600.00
0001035044 ANTHONY GAMBALE 180000.00 180000.00
0001035051 GREGORY KENNETH LARSEN 33200.00 33200.00
0001035054 BRENDA A. FINEBERG 49600.00 49600.00
0001035101 THOMAS PRIDGEON 60615.00 60615.00
0001035120 LORRI MARCHIANO 40000.00 40000.00
0001035129 HARRY G. KNITTEL 21500.00 21500.00
0001035135 GUS DELLA PIA 50000.00 50000.00
0001035136 CLARENCE L. HAWK 15000.00 15000.00
0001035177 JOSEPH G. ORTIZ 144000.00 144000.00
0001035183 MARISA BULLINGTON 52000.00 52000.00
0001035192 MARIA DIAZ 148500.00 148500.00
0001035199 LEON E. YATES 153900.00 153900.00
0001035202 SHERRILL L. SMEDLEY 49100.00 49100.00
0001035204 GERALDO AGUILAR 99000.00 99000.00
0001035205 CATHERINE ROMAN 60000.00 60000.00
0001035242 STANFORD TAYLOR 64000.00 64000.00
0001035251 JAMES S. FILIPEK 145800.00 145800.00
0001035268 MICHAEL BATTAGLIA 31500.00 31500.00
0001035298 CLAUDIA EDWARDS 148500.00 148500.00
0001035305 DAVID T. MITCHELL 100800.00 100800.00
0001035309 JAMES WAXMAN 35000.00 35000.00
0001035317 JAMES C. CUSTIS JR. 37500.00 37500.00
0001035319 ANTOINETTE BROWN 45830.00 45300.00
0001035344 BARRY P. WIESER 206250.00 206250.00
0001035356 DOMENICK MASOTTA 165000.00 165000.00
0001035367 GRACE HAMIL 84000.00 84000.00
0001035369 JOHN GASCHEL 80000.00 80000.00
0001035377 DUANE MONTOUTH 170000.00 170000.00
0001035402 JAY M. SANDFORD 30000.00 30000.00
0001035403 JAY M. SANDFORD 30000.00 30000.00
0001035409 JAMES D. WILLIAMS 43438.00 43438.00
0001035416 GLADYS STAFFORD 95000.00 95000.00
0001035437 MERCEDES HERNANDEZ 148500.00 148500.00
0001035450 TONY ROBINSON 38350.00 38350.00
0001035459 CHRISTOPHER G. GRAHAM 93500.00 93500.00
0001035503 JAMES E. CARSTEN 60000.00 60000.00
0001035512 TYRONE EUGENE ROBINSON 47100.00 47100.00
0001035516 ANGELA FARIES 27000.00 27000.00
0001035531 DIANNE L. SULEK 42300.00 42300.00
0001035546 RONALD VANCE RIDDICK 24000.00 24000.00
0001035599 RAY L. BROWN 28965.00 28965.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001035601 DEAN B. DRENTH 91000.00 91000.00
0001035620 EDWARD ELDRIDGE 10750.00 10750.00
0001035622 DARNELL A. HUNTER 44000.00 44000.00
0001035627 DELORES L. TAYLOR 66400.00 66400.00
0001035633 VALARIE H. PAGAN 56100.00 56100.00
0001035641 RALPH J. CIPOLLO 60000.00 60000.00
0001035651 JAMES B. MYERS 144000.00 144000.00
0001035663 FRANTZ P. ULYSSE 44000.00 44000.00
0001035682 DONALD WEATHERBY 94500.00 94500.00
0001035691 MICHAEL MEILLAREC 20000.00 20000.00
0001035701 RONALD CROUSE 45500.00 45500.00
0001035730 LARRY B. ODUM 60350.00 60350.00
0001035753 PATRICIA A. NIXON 55200.00 55200.00
0001035767 DONALD R. VOORHEES 16325.00 16325.00
0001035770 MATTEO ULLO 135000.00 135000.00
0001035779 VICTOR M. FERULLO 25000.00 25000.00
0001035785 JOHN GROZINSKI 50000.00 50000.00
0001035787 AUDREY L. SLEDGE 190000.00 190000.00
0001035790 ROBERT A. MADDALENA 72000.00 72000.00
0001035797 JUDY ROBERSON 63000.00 63000.00
0001035820 JUAN A. ESPARZA 39000.00 39000.00
0001035821 TIMOTHY A. METZGER 36000.00 36000.00
0001035843 DANIEL HICKS 68400.00 68400.00
0001035853 DOROTHY MAE ALEXANDER 94000.00 94000.00
0001035855 LYNNE G. JACKELS 119000.00 119000.00
0001035856 VERONICA PIERCE 63000.00 63000.00
0001035858 SHAWN M. STOCKTON 72250.00 72250.00
0001035863 MICHAEL CUNEO 35000.00 35000.00
0001035865 KEVIN J. WIKFORS 191000.00 191000.00
0001035900 DEBRA L. STILES 42400.00 42400.00
0001035913 JEANNE M. BABCOCK 52500.00 52500.00
0001035915 JOHN J. HENRY 98400.00 98400.00
0001035982 MELVIN PROVDA 37930.00 37930.00
0001035998 ANGELINA GILDA STABILE 65000.00 65000.00
0001036000 FREDERICK T. MALONEY 20000.00 20000.00
0001036038 MILES MUSSENDEN 25000.00 25000.00
0001036042 WILLIAM B. MCCUTCHEON 74750.00 74750.00
0001036050 DAVID C. MALASON 23000.00 23000.00
0001036061 JEFFREY S. BROWN 13700.00 13700.00
0001036071 MARK E. LOUISIGNAU 126000.00 126000.00
0001036083 DEBRA CHEEK CONLEY 19000.00 19000.00
0001036110 AUGUSTA LOCKHART 130250.00 130250.00
0001036154 RALPH RHINEHART JR. 50000.00 50000.00
0001036157 LUKE B. MCCOY 54000.00 54000.00
0001036162 CHARLES A. KIBLING IV 66702.00 66702.00
0001036165 VINCENTE MACEIRA 40000.00 40000.00
0001036176 LISA L. RICKETTS 14000.00 14000.00
0001036193 RICHARD A. ROSEN 40000.00 40000.00
0001036195 GEORGE W. CRAWFORD 39720.00 39720.00
0001036205 HERBERT A. MARKS 30000.00 30000.00
0001036208 KIM C. OLIVER 119000.00 119000.00
0001036212 KENNETH J. ANNEXSTEIN 55800.00 55800.00
0001036237 CHARLOTTE JEAN SWOPE 93000.00 93000.00
0001036238 RUSTY J. STETZEL 109800.00 109800.00
0001036247 JOSEPH ERCOLONO 20000.00 20000.00
0001036254 ROBERT VERSLUIS 40000.00 40000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001036257 JULIA JOHNSON 45000.00 45000.00
0001036271 LEE ESTER THOMPSON 46800.00 46800.00
0001036277 GORVY PIERRE 81900.00 81900.00
0001036284 JAMES MICHAEL JARUSINSKI 108000.00 108000.00
0001036299 WILLIAM CAPPIELLO 64500.00 64500.00
0001036304 DAVID W. THOMAS 57600.00 57600.00
0001036316 MICHELLE PALLIS 27000.00 27000.00
0001036319 SANDRA B. MILHOLLEN 33250.00 33250.00
0001036322 PHILIP HUFNAGEL 15000.00 15000.00
0001036330 GEORGETTE BRYANT 30000.00 30000.00
0001036331 JOHNNIE BELL WILLIAMS 74700.00 74700.00
0001036358 PAUL T. HAND 70000.00 70000.00
0001036388 FLOYD E. HAYES 33750.00 33750.00
0001036389 DONALD P. GODFREY 140000.00 140000.00
0001036402 LORI A. STEWART 88200.00 88200.00
0001036422 ANDREA FRIEDMAN 157500.00 157500.00
0001036426 WALTER E. EDWARDS 137000.00 137000.00
0001036429 JOSEPH LIBERATO JR. 31000.00 31000.00
0001036439 CLARENCE R. EBO 27000.00 27000.00
0001036440 CHRISTOPHER J. PAUL 74000.00 74000.00
0001036441 WILLIAM A. BROWN 52000.00 52000.00
0001036451 JERRY L. SMITH 92000.00 92000.00
0001036471 DANIEL T. VELEZ 166500.00 166500.00
0001036500 LOUIS G. PAPA 88750.00 88750.00
0001036503 JOSEPH R. KELLEY 36000.00 36000.00
0001036529 SHIRLEY B. BURRIS 62000.00 62000.00
0001036560 DAVID STANLEY MOSS 45000.00 45000.00
0001036563 FREDDIE BASS 27900.00 27900.00
0001036564 MARTIN ROSENBLUM 60000.00 60000.00
0001036570 DONALD K. BLOCHER 91000.00 91000.00
0001036604 HENRY C. CLAY III 135000.00 135000.00
0001036620 HANFORD E. REYNOLDS 15000.00 15000.00
0001036638 BRENDA D. HAYES 171900.00 171900.00
0001036663 MARIA F. AMAYA 21500.00 21500.00
0001036684 DAVID A. SANTMIER 23500.00 23500.00
0001036685 MELISSA LOWE 76800.00 76800.00
0001036694 JENNIE S. FAGAN 20800.00 20800.00
0001036697 ALVIN C. ASKEW 65000.00 65000.00
0001036718 ERNEST L. MINER 30000.00 30000.00
0001036721 JOHN MINEO 156000.00 156000.00
0001036725 DOLORES LEONARD 50000.00 50000.00
0001036729 BARBARA BLEW 10000.00 10000.00
0001036744 YVONNE WILLIAMS 103500.00 103500.00
0001036765 MARGARET E. SMIDT 26000.00 26000.00
0001036771 RICHARD M. DUNN 133200.00 133200.00
0001036819 JOSEPH DONALD MORAN JR. 57800.00 57800.00
0001036865 DEBORAH GRACE BONVOULOIR 10000.00 10000.00
0001036873 DAVID PETRUZZIELLO 55000.00 55000.00
0001036876 DOUGLAS MILLWOOD 46750.00 46750.00
0001036917 JODY D. RUSSELL 108800.00 108800.00
0001036938 JOSEPH P. MARTINEZ 146700.00 146700.00
0001036942 ROBIN L. BENNER 110500.00 110500.00
0001036947 SOLOMON ANDEMARIAM 80000.00 80000.00
0001036949 SUSAN J. PETRETTI 52000.00 52000.00
0001036969 LUTHERIA R. FORBES 15000.00 15000.00
0001036987 ELLA MAE REID 72000.00 72000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001036990 DANNY LEE ALLEN 52500.00 52500.00
0001036991 GERARD T. SMITH 84000.00 80000.00
0001037011 KEVIN J. FINLEY 37000.00 37000.00
0001037019 WARREN E. SWARTZENTRUBER 58500.00 58500.00
0001037029 STEPHEN A. MELVILLE 170350.00 170350.00
0001037071 TERRY B. HALPINE 60000.00 60000.00
0001037082 MARY R. SMITH A/K/A MARY R. SM 22000.00 22000.00
0001037104 ISHWAR HARPRASHAD 189900.00 189900.00
0001037120 ANDY E. MEAGLEY 60000.00 60000.00
0001037140 WALLACE A. WHITFIELD 44000.00 44000.00
0001037176 BETTY L. HAMRAC 72000.00 72000.00
0001037233 MARY JO MCCOY 94400.00 94400.00
0001037235 JUDY ANN PAYNE 44100.00 44100.00
0001037250 JOSEPH J. CUNNINGHAM SR. 44000.00 44000.00
0001037264 MARK HANNA 40500.00 40500.00
0001037319 RICHARD A. JOHNSON 24500.00 24500.00
0001037336 CONNELLY T. WHITEHEAD 64000.00 64000.00
0001037340 GEOFFREY SOLTER 40000.00 40000.00
0001037348 SHERRY GILMORE 46000.00 46000.00
0001037384 ROSE MARIE EGOLF 13000.00 13000.00
0001037393 CARLTON LONGMORE 88000.00 88000.00
0001037437 CHARLES A. MULL 100000.00 100000.00
0001037456 BOBBIE MOREA 120000.00 120000.00
0001037489 ESTELLE MONTGOMERY FKA ESTELLE 73000.00 73000.00
0001037502 GREGORY L. CUNNINGHAM 101700.00 101700.00
0001037556 LORI MONIZ 177000.00 177000.00
0001037572 JAMES WAYNE KING 28700.00 28700.00
0001037640 MAYRA MUNIAS 149400.00 149400.00
0001037645 WILLARD J. HOWELLS 85500.00 85500.00
0001037662 MARY ALLEN 30000.00 30000.00
0001037699 JAMES V. KAIN III 95000.00 95000.00
0001037701 DARTANION MUHAMMAD 104000.00 104000.00
0001037718 JACKIE L. WENTZ 67575.00 67575.00
0001037719 JORGE F. CHONG 30000.00 30000.00
0001037733 CRAIG ELLIOTT 60000.00 60000.00
0001037775 MATTHEW N. PEAK 57600.00 57600.00
0001037780 LORETTA WALKER ANGLIN 63750.00 63750.00
0001037783 CATHERINE D. HEARN 67500.00 67500.00
0001037786 WILLIE J. WILLIAMS 99000.00 99000.00
0001037788 REX RHODEN 108000.00 108000.00
0001037793 LORETTA WALKER ANGLIN 55250.00 55250.00
0001037800 RAFAEL A. FERMIN 100000.00 100000.00
0001037803 SAUL GUSTAMA 64800.00 64800.00
0001037819 BRIAN A. MARTIN 15000.00 15000.00
0001037845 JAMES A. JORDAN 45000.00 45000.00
0001037900 ANNIE F. GOOLSBY 136000.00 136000.00
0001037905 DORIS HANEL 131400.00 131400.00
0001037938 TIMMY L. ELDER 81900.00 81900.00
0001037986 JANICE A. JOHNSON 131400.00 131400.00
0001038004 CESAR ABRAMS 121500.00 121500.00
0001038009 REGENIA WHITE 24750.00 24750.00
0001038079 DONNAMAE EDWARDS 126000.00 126000.00
0001038140 LEWIS GIBSON 100000.00 100000.00
0001038143 MAGNOLIA BAILEY 27500.00 27500.00
0001038336 ROSALYN YVETTE SHAW MOODY 76500.00 76500.00
0001038349 JUNE PLANAS 25000.00 25000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0001038352 ROY W. FAULKNER 56000.00 56000.00
0001038375 JERRY CAMPBELL 60000.00 60000.00
0001038422 BRENDA J. SCHEFFLER 22000.00 22000.00
0001038461 PHYLLIS ANN CASNER 146250.00 146250.00
0001038478 WILLIAM H. MINSTER 40000.00 40000.00
0001038505 PATRICIA CHARLENE DODD FAUSCET 44800.00 44800.00
0001038522 TAMIA C. WATSON 148500.00 148500.00
0001038607 LENWOOD PIERCE JR. 121500.00 121500.00
0001038610 GEORGE A. BORRERO 93600.00 93600.00
0001038820 NENA E. GUTIERREZ 140250.00 140250.00
0001039051 HERMAN BRIDGES 20000.00 20000.00
0002012357 ALBERTHA MINCY 34400.00 34384.16
0002013811 EUTAN C. HUDSON 71200.00 71000.29
0002015334 MICHAEL D. GOODFELLOW 57600.00 57434.93
0002015464 BOBBY D. BLYTHE 91300.00 91300.00
0002017703 ROBERT L. DOW 85500.00 85500.00
0002019627 DANNY RINALDO 13000.00 13000.00
0002020057 DOROTHY L. PHILLIPS 60900.00 60900.00
0008881504 C&B TRUCKING, INC. 65000.00 65000.00
0008881544 AD INTERNATIONAL, INC. 200000.00 200000.00
0008881564 MILTON ALLEN 55000.00 54827.74
0008881604 VITALINO RIVAS 90000.00 89796.04
0008881624 LAVINIA ROMAN 40000.00 39928.01
0008881665 ZURICH INVESTMENT CORPORATION 95000.00 95000.00
0008881685 NICOLA DIMARCO 49000.00 49000.00
0008881705 CHARLES NEWTON 15000.00 14968.68
0008881725 SARAH F. GREENE 35000.00 34999.20
0008881805 J. MICHAEL MANN 63000.00 62620.44
0008881825 LOUIS E. FRANCO 25000.00 24899.50
0008881885 LARRY SAUNDERS 28000.00 28000.00
0008881905 PHILLIP RAPPA 50000.00 50000.00
0008881925 ANTONIOS ANGELOPOULOS 15000.00 15000.00
0008881965 IN SOON RUSSELL 30000.00 30000.00
0008882025 JULIE A. HELM 26000.00 26000.00
0008882046 RODERIC KRAYTON 20000.00 20000.00
0008882047 LINDA TORTAJADA 20000.00 20000.00
0008882048 KATORIGAS, INC. 185000.00 185000.00
0008882049 PETERS IRON WORKS, INC. 70000.00 70000.00
0008882051 NELSON MADERA 180000.00 180000.00
0008882054 DENNIS P. INGRALDI 46000.00 46000.00
0008882056 EDWARD P. FOWLKES 20000.00 20000.00
0008882057 ORTIZ ENTERPRISE, INC. 45000.00 45000.00
0008882058 EL MOLINO RESTAURANT II, INC. 20000.00 20000.00
0009001659 SAMIA SAID 49500.00 49477.37
0009002692 EMILY M. O'CONNELL 29700.00 29607.78
0009003110 ROBERT H. SNYDER 32000.00 31945.09
0009003235 WILLIAM J. CARPENTER 34300.00 34123.57
0009004865 HELEN SCHLEGEL 46000.00 45905.69
0009005203 ST CLAIR BROWN II 32000.00 31954.90
0009005404 MICHAEL J. ROSER 124200.00 124123.85
0009005485 MARIAMA KAI MCINTYRE 20000.00 19754.84
0009005670 DONNA L. REYES 90000.00 89540.12
0009005813 EMILY M. ZAWACKI 90000.00 89844.85
0009005906 ALBERT R. OLIVIERI 46000.00 45800.99
0009006094 SUSAN J. DILL 16412.00 16255.68
0009006174 MICHAEL K. HALDEMAN 14268.00 14268.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0009006194 MELVIN EVANS 58400.00 58155.81
0009006275 ROSE C. RANDOLPH 40000.00 39885.59
0009006294 CONNIE LEE GOTTFRIED 33000.00 32979.18
0009006494 ROSEMARIE ERDMAN 76000.00 75730.11
0009006514 PATRICIA A. CONTI 93500.00 93252.81
0009006700 WILLIAM EDWARD SMITH 60000.00 59790.15
0009006734 JERZY JUREWICZ 40000.00 39869.36
0009006754 RONALD R. COLNA 45000.00 45000.00
0009006794 GLEN BROWN 60000.00 59859.88
0009006874 GEORGE M. HAUENSTEIN 51800.00 51800.00
0009006934 THERESE M. FUERST 18000.00 17853.10
0009006974 JOANNE ZIEBER 84000.00 83100.29
0009007054 SCOTT M. LUBIK 150000.00 150000.00
0009007234 FRANCESCA MASTRICOLA 21000.00 20920.30
0009007315 WILLIAM J. HOVEMEYER 30000.00 29702.87
0009007395 WILLIAM P. LADRIGAN 55000.00 54734.25
0009007434 SHAWN R. MATTSSON 36000.00 35955.44
0009007454 ARLENE ANDERSON 26600.00 26415.80
0009007474 BILLIE K. STIFFLER 52500.00 50423.59
0009007494 ALAN G. BOUNEY 60000.00 60000.00
0009007574 LAWRENCE WATKINS 38000.00 37943.71
0009007575 WILLIAM C. SNYDER JR. 20800.00 20766.10
0009007595 SHARYN M. GENTILE 20000.00 19646.65
0009007735 JOYCE CARROLL 30222.00 30128.77
0009007776 GLEN L. YEO 40000.00 39845.02
0009007835 NAHEDA M. MUHEISEN 50000.00 49183.93
0009007899 MIRIAM C. MOORE 19700.00 19488.46
0009008176 ANA MAISONAVE 43400.00 43400.00
0009008196 THOMAS J. KELLY 15000.00 14823.28
0009008238 MARY SALZANO 55000.00 54866.77
0009008376 PATRICIA E. ABERNETHY 16000.00 15866.02
0009008576 BETTY BORENZO 70000.00 69710.95
0009008617 GERALD M. DIMATTEO 30000.00 29818.07
0009008916 ANDREW D'AMBRA 40000.00 39648.75
0009008976 GEORGE W. MASTERS JR. 25000.00 25000.00
0009009116 EILEEN S. LEADEM 70000.00 70000.00
0009009337 HAYDEE KRAVIEC 72000.00 71982.92
0009009358 CHARLES W. HOFFMAN 16000.00 15956.06
0009009458 PATRICIA HANSON 80000.00 79730.26
0009009478 ROBERT F. DE ROSA 100000.00 100000.00
0009009498 ALFRED VOLKEL 106000.00 106000.00
0009009538 JOHN W. HILLMAN JR. 35000.00 34897.72
0009009558 BARBARA WRIGHT 56000.00 55882.38
0009009598 ROBIN L. RHOADS 76000.00 75782.54
0009009698 WILLIAM M. MINGO 23392.00 23374.33
0009009758 PETER NIKOLOF 35000.00 34901.42
0009009779 GARY R. GALLO 44500.00 44342.01
0009009782 MADGE P. BOLDEN 175000.00 174809.80
0009009783 TERESA RYAN 39000.00 39000.00
0009009787 DORIS A. KOENEMUND 30000.00 29836.66
0009009788 JORGE BATISTA 35000.00 35000.00
0009009789 LINDA M. APPLEGATE 46300.00 46221.17
0009009794 THOMAS A. YEAGER 35400.00 34709.02
0009009836 DOREEN MELIA 12500.00 12477.81
0009009896 JOHN J. BELGIO 16100.00 16051.94
0009009916 CAROLYN MARY POTKAY 34000.00 34000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0009009936 S. LUCILLE JONES 37400.00 37234.98
0009009976 JOSEPH D. MELIONE 32285.00 32217.41
0009010018 WILLIAM A. BERGIN JR. 35000.00 34890.54
0009010037 LORRAINE B. SATCHELL 90000.00 90000.00
0009010057 IRENE J. COOK 54975.00 54899.17
0009010077 MARY G. MOODY 27000.00 26843.17
0009010079 CELESTINE P. HAMMOND 35000.00 35000.00
0009010080 JAMES A. MORRIS 95000.00 94709.01
0009010101 THOMAS RICHARD LIEBIG 25250.00 25250.00
0009010140 MARION J. DEMATTEO 119000.00 119000.00
0009010200 DENNIS R. FIALA 120000.00 120000.00
0009010222 MICHAEL J. MARTINELLI 28000.00 28000.00
0009010226 FRED GRANDE 65000.00 64909.44
0009010230 LAWRENCE H. NABOZNY 116000.00 116000.00
0009010241 STEPHEN F. MEISTER 53000.00 53000.00
0009010261 MARYANNE ONDECK 77000.00 77000.00
0009010400 RUTH F. GRIMES 13000.00 13000.00
0009010422 RICHARD LOUGHRAN 48000.00 48000.00
0009010444 QUEEN E. GASKINS 20000.00 20000.00
0009010464 RICHARD P. WALKER JR. 13375.00 13375.00
0009010613 CHRISTOPHER M. TEATS 10000.00 10000.00
0009010636 WILLIAM E. OLSON 35750.00 35687.87
0009010699 KAREN A. SIDEBOTHAM 28500.00 28500.00
0009010820 EDWARD S. YOUMANS 59000.00 59000.00
0009010946 ROBERT L. DORIO 190000.00 190000.00
0009010966 JOHN HOFFMAN 30000.00 30000.00
0009010987 LEONARDO G. LUBRANO 22000.00 22000.00
0009011287 CHARLES A. WHITE 53000.00 53000.00
0009011327 MARGARET VON BADINS 32000.00 32000.00
0009011347 NORAYMA MENDEZ 80000.00 80000.00
0009011448 ROBERT W. FOSTER 50000.00 50000.00
0009011469 THOMAS J. MCNAMARA 45000.00 45000.00
0009011470 JAMES H. KEESEY 50000.00 50000.00
0009011491 LUCIANO MIGLIARINO 171920.00 171920.00
0009011511 NAZIH JABADO 46500.00 46500.00
0009011551 ELIZABETH BUTLER 15000.00 15000.00
0009011572 PATRICK M. CHANDLER 24400.00 24400.00
0009011694 SHERRY CORNELIUS 28350.00 28350.00
0009011714 KENT I. STEINHAUER 65000.00 65000.00
0009011755 CAROL J. BRYANT 10000.00 10000.00
0009011775 JEFFREY DRAGOTTI 19000.00 19000.00
0009011875 CATHERINE J. STRECKEWALD 50000.00 50000.00
0009011955 TODD R. MARVIN 63750.00 63750.00
0009012055 RONAN F. CORIO 21250.00 21250.00
0009012117 FRANCES PULEIO 42500.00 42500.00
0009012224 NANCY VISCARDI 60000.00 60000.00
0009012263 LOWELL FELTMAN 15500.00 15500.00
0009012403 CYNTHIA W. MCGINNIS 70400.00 70400.00
0009012465 DANIEL K. CISNEY 46300.00 46300.00
0009012564 EDITH M. MICHALIS 25000.00 25000.00
0009012611 GEORGE LABELLA 130500.00 130500.00
0009012613 WILLIAM J. PERRINI 41500.00 41500.00
0009012614 CARMELA M. BOHLEY 24000.00 24000.00
0009012631 JAMES H. LONG 50400.00 50400.00
0009012801 NANCY J. HANSELL 60000.00 60000.00
0009012803 WALTER E. EVERETT 150000.00 150000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
0009012805 STEPHEN AMBROSE 18000.00 18000.00
0009012812 JOHN JACKOVINO 35904.00 35904.00
0009012846 JOHN A. PHALER 72400.00 72400.00
0009012849 EUGENIA FAY 28000.00 28000.00
3019800646 ZAKARIA A ALJALUDI 77775.00 77775.00
3019800651 NARCISO MOQUETE 60400.00 60400.00
3019800653 DANILO A MARTINEZ 117600.00 117600.00
3019800657 FERDINAND MARTINI 70000.00 69994.41
3019800659 MICHELE D AGARD 202500.00 202500.00
3019800660 MARVIN R ANTHONY 53550.00 53550.00
3019800666 MIGUEL A ROSA 60000.00 60000.00
3019800667 SEGUNDO A BLAS 144000.00 144000.00
3019800674 MOHAMMED M. ETTOUNEY 154500.00 154500.00
3019800728 CARMEN JULIA ORTIZ 211500.00 211500.00
3019803709 WILLIAM LOCKHART 78200.00 78162.24
3019803955 CHARLES ESTERLINE 43000.00 42903.02
3019803974 ZAIDA R. MIRANDA 52800.00 52747.86
3019804027 TIMOTHYM BLACK 41400.00 41400.00
3019804034 ROBERT DOWNTON 50250.00 49863.82
3019804053 STANLEY E. WYATT 45000.00 45000.00
3019804081 SHIRLEY JACKSON 45000.00 44896.17
3019804110 IYONNA RUSSELL 47600.00 47496.62
3019804114 CHERYL DUKES 58400.00 58400.00
3019804229 ROBERT L. KINSLEY 95250.00 95250.00
3019804230 DOROTHY M PARISH 38250.00 38250.00
3019804231 TERRANCE R AHERN 52000.00 52000.00
3019804232 G TRINESE SUMMERLIN 28475.00 28444.09
3019804244 JASON FINKE 81600.00 81600.00
3019804389 TIMOTHY J. YERGER 32000.00 32000.00
3019804421 CHARLES D NAPIER 30000.00 30000.00
3019804429 MIKE RIVERS 37100.00 37100.00
3019804438 WILLIAM JONES 30000.00 30000.00
3019805005 TIMOTHY HELLINGS 136000.00 136000.00
3019805050 DON CONAWAY 193050.00 192628.08
3019805282 ALLISON COLLINS 62400.00 62400.00
3019805462 JEFFREY BONDURICH 85600.00 85594.66
3019805520 PETRA C TURNER 102000.00 102000.00
3019805529 HUGH J MCNICHOL IV 135915.00 135915.00
3019805559 MARY C JOHNSON 79740.00 79552.45
3019805606 MATTHEW MARCKESE 61650.00 61405.28
3019805607 ROBERT STEELE 59175.00 59175.00
3019805611 WILLIAM MARK WEBB 56250.00 56250.00
3019805616 LINDA TIMMON-STILLIS 58650.00 58650.00
3019805624 JOSEPH C. LONG 52000.00 52000.00
3019805627 JAMES H. FORCINIO 78400.00 78400.00
3019805654 CHARLES D SMITH SR 143500.00 143500.00
3019805671 RICKEY R. COOPER 63750.00 63750.00
3019805705 HOWARD H. HUGHES 91500.00 91500.00
3019805728 SADY GUILLAUME 74800.00 74800.00
3019805739 RICHARD A WHISNANT 117000.00 117000.00
3019805755 WILMER SMITH 148500.00 148166.87
3019805763 DEBBIE MCNEELY 64000.00 63801.20
3019805781 MICHAEL J. CALLAHAN 35750.00 35750.00
3019805783 DEBORAH A. ROGERS 50050.00 49975.32
3019805799 ROBERT C ANTHONY 32000.00 31988.31
3019805809 WILBUR HUGGINS 59500.00 59219.04
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3019805814 JOAN R WELBY 60000.00 59987.04
3019805821 ARLINGTON C. MILFORD 40000.00 39347.76
3019805823 FELICIA A. HIGGINS 63200.00 63200.00
3019805837 THOMAS P. DESANTIS 171000.00 171000.00
3019805842 IVAN WILLIAMS 32000.00 31958.97
3019805848 ROBERT CARR 44000.00 43999.25
3019805863 DONNA MACCARI 142800.00 142800.00
3019805880 THOMAS A. BURKE 73100.00 72956.93
3019805887 THAD RAY STARKES 114300.00 114300.00
3019805893 JEFFREY E LYNN 72000.00 72000.00
3019805896 HOWARD R. YOUNG, SR. 48000.00 47848.96
3019805897 MICHAEL WORTHY 40000.00 40000.00
3019805898 JAMES R. JOHNSON 30400.00 30400.00
3019805903 DONALD BARRETT 63000.00 63000.00
3019805919 KIMBERLY ALEXANDER 119250.00 119250.00
3019805921 DAN P. OYLER 75000.00 74876.95
3019805938 KATHLEEN RUSSO GANA 166500.00 166317.18
3019805942 RONNIE GARY 39200.00 39197.49
3019805955 RHONDA M SEEGOBIN 168300.00 168300.00
3019805962 CORETHA SIMS 28000.00 27997.33
3019805963 SONDRA COBLE 60900.00 60900.00
3019805973 KENNETH FARREN 104000.00 104000.00
3019805988 DEVON GLOVER 49725.00 49725.00
3019805995 CECELIA RONEY 45900.00 45900.00
3019806005 ISABEL M. DIVIRGILIO 140500.00 140407.17
3019806012 WILLIAM THOMASON 116388.00 116388.00
3019806015 PATRICIA D. MILLER 40500.00 40500.00
3019806018 RUSSELL J. DIPPMAN 217800.00 217800.00
3019806022 WILLIAM W. REINSCH JR 160000.00 160000.00
3019806032 AHMAD ALAMIN 32000.00 32000.00
3019806039 ANNA MARZEGLIANO 61000.00 61000.00
3019806050 JOSEPH MCDOWELL III 45000.00 45000.00
3019806059 MICHELLE BENEDICT 72250.00 72250.00
3019806061 GREGORY S MCCULLOUGH 68000.00 68000.00
3019806080 MICHAEL S HINSON JR 46750.00 46750.00
3019806083 PATRICIA REED 55000.00 55000.00
3019806104 GLORIA FIGUEROA DE CORTE 32000.00 32000.00
3019806107 RICHARD W RICCHETTI 45000.00 45000.00
3019806119 MARIA HERNANDEZ 31450.00 31450.00
3019806131 SHELIA HALE OWENS 40000.00 40000.00
3019806136 FRANCIS X. TAGUE 128000.00 128000.00
3019806140 VANESSA L. GRIGGS 34850.00 34850.00
3019806158 ALISA FORD 144000.00 144000.00
3019806163 BRIAN K RICH 59500.00 59500.00
3019806189 WILLIAM E. MESSICK 57800.00 57800.00
3019806210 CRAIG MUMMERT 106250.00 106250.00
3019806224 GREGORY WOLCOTT 102400.00 102400.00
3019806243 ERIK N. HARLEY 126900.00 126900.00
3019806249 DENEEN S. COOPER 69930.00 69930.00
3019806260 ELEANORA WIMBUSH 70000.00 70000.00
3019806266 BRIAN C. DERBY 51300.00 51300.00
3019806278 ELLIS E PLOWMAN JR 180000.00 180000.00
3019806281 PAUL VITALE 90400.00 90400.00
3019806282 SYLVIA A FALCON 24150.00 24150.00
3019806318 RENITA D ROANE 43200.00 43200.00
3019806364 SCOTT A HORNBERGER 133650.00 133650.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3019806370 MICHAEL DIBRUNO 81000.00 81000.00
3019806380 GREGORY STENGEL 90400.00 90400.00
3019806382 JANE K. CARLSON 91800.00 91800.00
3019806396 LOTTIE JONES 19500.00 19500.00
3019806401 SHINEKQUA L BAINES 97750.00 97750.00
3019806413 JOSEPH M. FABRIZZIO, JR 69000.00 69000.00
3019806426 ROBIN C. BLACKSHEAR 85000.00 85000.00
3019806433 TODD HENRY 94400.00 94400.00
3019806444 GWYNNE TRACY 119000.00 119000.00
3019806475 DANIEL J CZECHOWICZ JR 121500.00 121500.00
3019806485 JAMES R. BEIRNES 128000.00 128000.00
3019829086 CLARENCE WRIGHT 118000.00 118000.00
3019830248 DERRICK A. WILLOUGHBY 190000.00 189674.23
3019830610 STEVE KRIARAS 165000.00 165000.00
3019832433 HIEP PHAN 85400.00 85105.85
3019832562 MILDRED RUIZ 70550.00 70550.00
3019832563 RAUL VEGA 100000.00 100000.00
3019832569 JAMES P. ROOT 22000.00 22000.00
3019832580 LEONARD J. LOVE 80000.00 79364.35
3019832719 MICHAEL ROBERTS 122400.00 122400.00
3019833000 DIANN M. HOLMES 70900.00 70900.00
3019833107 CELESTE ORIA 155000.00 154826.26
3019833164 CHARLES D EVANS 165750.00 165719.88
3019833211 CATHERINE M KAIN 56250.00 56250.00
3019833355 PATRICIA L HARDAWAY 112000.00 111949.43
3019833500 BARBARA TAZEWELL 38000.00 37894.36
3019833566 LOUISE GAITA 223500.00 223500.00
3019833577 JEANENE WILLIAMS 124000.00 124000.00
3019833726 FRANK J MARCHE 184000.00 184000.00
3019833761 WILLIAM COOPER 29750.00 29614.55
3019833782 MICHAEL WHITEKETTLE 85000.00 84856.59
3019833927 JOAN C TRIEU 172800.00 172716.57
3019833996 PEECHES LEMONIAUS 71500.00 71500.00
3019834099 MARGARET DONNE 157600.00 157377.34
3019834146 MAX MENDEZ 60750.00 60112.41
3019834155 ROBERT L. SPADA 100000.00 98998.25
3019834236 JOSEPH R. MAIONE 125000.00 124996.32
3019834289 MATTHEW F FEBBI 150000.00 150000.00
3019834352 AZAD KAYANI 180000.00 180000.00
3019834357 EUGENE TROTTER 55000.00 54900.66
3019834419 LINDA L FERO 80750.00 80133.22
3019834533 THOMAS RISALVATO 40000.00 39815.27
3019834561 TONI MURRAY 103500.00 103500.00
3019834598 MICHAEL BIONDI 161250.00 161075.04
3019834699 DAVID MUCCIARIELLO 108000.00 107731.44
3019834798 LUTHER GATLING 47000.00 46878.11
3019834851 ALVIN O. HILLIARD 100800.00 100621.80
3019834891 DOMENIC MATOZZO 123750.00 123750.00
3019834937 GHADIR BAGHERIAN 110000.00 110000.00
3019834972 JEFFREY LEE JENKINS 56950.00 56379.26
3019834995 ADNAN A. DANI 117000.00 116507.39
3019835021 GARY J MCCABE 160200.00 160200.00
3019835156 KEVIN W RAUCHUT 96000.00 95418.08
3019835238 KENNETH G. HAHN SR 50000.00 49820.94
3019835264 REGINALD BRYANT 59400.00 59124.49
3019835293 GAIL JONES 110400.00 110189.28
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3019835302 LINDA GIORDANO 136800.00 135405.94
3019835348 EVELYN M ASHBY 109800.00 109710.72
3019835410 LAVETTA JAMES 142400.00 142400.00
3019835456 JOHN DEFALCO 103500.00 103500.00
3019835482 NICHOLAS LUCCI 116025.00 115574.77
3019835502 GREGORY R. MARTUCCI 143200.00 142927.99
3019835552 CHRISITIAN FAUTZ 184000.00 183349.30
3019835582 PAUL W. AUGUSTINE 117000.00 116910.38
3019835593 GERMANO BENACIO 165000.00 164691.83
3019835613 DEANNE BROWN 82450.00 82450.00
3019835624 LINDA MCNEAL 23800.00 23712.05
3019835637 MAGGIE GRAY 129200.00 129200.00
3019835674 JAMES A. COOMBS 40600.00 40489.56
3019835744 JULIETA RAMIREZ 193500.00 192910.17
3019835745 LEMON MYHAND 30000.00 29851.06
3019835774 DOTHLIN E. MEYERS 18270.00 18209.74
3019835821 ELI PRICE 128000.00 128000.00
3019835823 WESLEY C JONES 71400.00 71225.76
3019835829 LESLIE R. MATTHEWS 125375.00 125375.00
3019835844 CAROL A. TOMISELLI 72250.00 72250.00
3019835853 NELSON D. KERR 128000.00 127786.73
3019835860 GEORGE T HOFFMAN 40000.00 39763.50
3019835867 MILAGROS RIVERA 25500.00 25500.00
3019835897 HAROLD LEFCOURT 88000.00 88000.00
3019835898 BRION PADILLA 91000.00 90717.11
3019835901 JOHN DAVID SCALAMONTI 146000.00 145746.31
3019835936 JEAN G SEVERE 105400.00 105400.00
3019835972 GIUSEPPE GIGLIO 124000.00 123862.01
3019836004 TRACY ANN QUAP 35700.00 35619.30
3019836012 CHARLES O'BRIEN 73000.00 72735.58
3019836016 JERRILYN M. COOK 69300.00 68868.65
3019836021 DARIEAL SUTTON 20300.00 20300.00
3019836024 QUEEN O. CANNON 36000.00 35836.49
3019836066 DARLENE W. SELBY 55000.00 54894.07
3019836134 ANSELMO MARTINEZ 80000.00 80000.00
3019836154 MICHAEL PITTS 57800.00 57800.00
3019836181 TIMIA HAYDEN TRENT 145000.00 144652.78
3019836187 ESTHER ROGAZZO 80000.00 79913.60
3019836190 UNA BARRETT 72000.00 71821.04
3019836192 ADRIANO PENA 119000.00 118733.58
3019836195 HYACINTH SHAW 119000.00 118751.14
3019836196 HATTIE M. JOHNSON 209700.00 209060.78
3019836214 CORNELIUS P. DALY, JR. 50000.00 49774.81
3019836229 ALBERT L LOTT SR 107950.00 107824.20
3019836238 OSCAR BROWN 108000.00 107921.64
3019836248 DAMON J. RUSIGNOLA 40640.00 40338.06
3019836259 PHUOC M NGUYEN 60000.00 59619.15
3019836269 CAROLINE HAYES 56100.00 56100.00
3019836284 RACHEL SANSBURY 43200.00 43131.07
3019836290 SANDRA MARTINEZ 165750.00 165750.00
3019836301 GERALD GAJEWSKI 120000.00 120000.00
3019836303 LONNIE C. CONWAY 107950.00 107950.00
3019836313 CALVIN J RAMSAMMY 116250.00 115963.95
3019836314 CALVIN J. RAMSAMMY 134300.00 133975.61
3019836315 RANDOLPH SCOTT 162000.00 162000.00
3019836319 NAVLETT PHILLIPS 117300.00 117300.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3019836330 WILLIAM MCMAHON 149000.00 148937.25
3019836331 WALLACE McINTOSH 112500.00 112500.00
3019836333 DANIEL N OLIN 49000.00 49000.00
3019836359 TIMOTHY J. GUENOT 172000.00 172000.00
3019836363 G ROBERT DUTZ 80000.00 80000.00
3019836384 MICHELLE A. MOUNT 69700.00 69700.00
3019836385 YOLANDA SALINAS 126000.00 125971.07
3019836388 IVY BENIGNO 87390.00 87390.00
3019836393 WILLIE WHITE 98000.00 97665.34
3019836414 ROBYN R. JONES 78750.00 78581.56
3019836418 ADRIAN J MOODY 212500.00 212500.00
3019836445 KEVIN T CAMPBELL 45000.00 45000.00
3019836457 ANGEL OCASIO REYES 29600.00 29496.03
3019836459 MARIE JOSY LEONARD 54000.00 53950.67
3019836468 GERALDINE TATE 43500.00 43500.00
3019836474 VICTORIA TORRES 33000.00 32904.57
3019836485 DANIEL HAYES 46350.00 46213.01
3019836510 NEREIDA PENA 75000.00 74835.21
3019836512 WILLIAM E. COOK 33750.00 33750.00
3019836518 LINDA MCNEAL 29750.00 29638.29
3019836528 LOUIS DONALD DERSY 45600.00 45487.90
3019836531 DANIEL W. SHOUDT 73600.00 73391.39
3019836558 GEORGE C FINDLAY 49000.00 49000.00
3019836575 JANET D KOERNER 129600.00 129600.00
3019836581 JOSEPH JORDAN 108000.00 108000.00
3019836600 LENA BRIGGMAN 120000.00 119391.25
3019836607 KEVIN WILLIAMS 123750.00 123749.93
3019836610 KEITH SIMON 104000.00 104000.00
3019836653 ALBERT HICKS 70550.00 70550.00
3019836657 MARIA PAYANO 65000.00 65000.00
3019836665 MICHAEL MEHRINGER 103700.00 103700.00
3019836671 MORINE A. REID 80000.00 80000.00
3019836673 KERRY COULDRON 140250.00 140250.00
3019836693 DENIS L. ABRAMOWITZ 135000.00 135000.00
3019836694 ANTOINETTE A. RENCH 48000.00 48000.00
3019836705 NATANAEL PIERRE LOUIS 27000.00 26844.79
3019836716 LEAFORD MOORE 180000.00 178298.34
3019836721 JOSEPH F MILLER 38000.00 38000.00
3019836747 RAFAEL ORELLANA 100000.00 99581.29
3019836792 WILLIE WHITE 51000.00 51000.00
3019836804 RONALD MOORE 123500.00 123388.20
3019836805 TRACEY D. JONES 52200.00 52200.00
3019836831 MICHAEL CANU 190000.00 190000.00
3019836851 ERNESTINE BAILEY 45600.00 45509.33
3019836877 WALLACE MC INTOSH SR. 101400.00 101400.00
3019836893 AMEER SALEEM 43500.00 43500.00
3019836924 LILAINE JERKINS 51000.00 51000.00
3019836955 RICHARD CALDWELL 68000.00 68000.00
3019836959 MARK R HALD 56800.00 56800.00
3019836978 RICHARD SIMPSON 103700.00 103700.00
3019836987 MALKA RAND 100000.00 100000.00
3019836992 DOROTHY G. LATNEY 45000.00 44857.44
3019837036 TINA ELIZABETH WALLACE 40000.00 40000.00
3019837040 GEORGE R. CAMPBELL 68400.00 68400.00
3019837056 VIRGINIA LYNCH 172000.00 172000.00
3019837105 JEFFREY P VOLLMUTH 112000.00 112000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3019837112 FRANCESCA MARIA CAPPEL 136000.00 136000.00
3019837132 SHEREE S FOSTER 46750.00 46750.00
3019837147 JAMES S. FABRICATORE 198000.00 198000.00
3019837152 BARBARA I GALLO 75000.00 75000.00
3019837205 GENOVEVA LUGO 26600.00 26600.00
3019837214 LLOYD GOLDING 123200.00 123102.47
3019837218 ERELYN ROSE DELA PENA 191250.00 191250.00
3019837242 MICHAEL F. MALANGA 30000.00 30000.00
3019837243 DOROTHY MAY TORICK 50000.00 50000.00
3019837244 PATRICK CARO 30000.00 30000.00
3019837251 ELIZABETH MONTGOMERY 36000.00 36000.00
3019837252 LUCIEN CHARLES 44100.00 44100.00
3019837255 THEODOCIA D MORSE 98000.00 98000.00
3019837294 BRENDA GRAY EADY 41250.00 41250.00
3019837311 VITO BARBIERA 64000.00 64000.00
3019837351 ROBERT J McCALL 60000.00 60000.00
3019837352 JAMES C HAWKINS 54300.00 54231.96
3019837427 TYREA Y WHITE 26250.00 26145.55
3019837447 MARCIA FELICIANO 93500.00 93500.00
3019837454 KEITH SIMON 96000.00 96000.00
3019837460 AMEER SALEEM 108000.00 108000.00
3019837492 HILARIO PEREZ 77000.00 77000.00
3019837494 FATIMA HOMEM 120000.00 120000.00
3019837498 DRAGOSLAV STANKOVIC 141075.00 141075.00
3019837511 REGINALD C. NOBLE 64600.00 64600.00
3019837512 BETTY L CONSTANTIN 55000.00 55000.00
3019837516 MOHAMED Y SHARIF 138750.00 138750.00
3019837529 WALTER MOODY 160000.00 160000.00
3019837530 RUBY THOMPSON 131400.00 131400.00
3019837577 SANFORD DICKERSON 79200.00 79200.00
3019837579 JOHN BARR SR 22400.00 22400.00
3019837587 KENNETH RICE 63750.00 63750.00
3019837591 JERALD BRINN 25200.00 25200.00
3019837605 JEROME WOMACK 122400.00 122400.00
3019837620 EDWARD J BOZZETTO 79050.00 79050.00
3019837652 ROBERT L GIDNEY 66000.00 66000.00
3019837656 LOUIS MARVELLI 52000.00 52000.00
3019837796 ARCADIO CRUZ 190000.00 190000.00
3019837824 MARIE T DOOLEY 131750.00 131750.00
3019837857 JORGE MONROIG 112000.00 112000.00
3019837866 NEAL FABER JR. 75000.00 75000.00
3019837878 MARIE COOPER 133000.00 133000.00
3019837900 JAMILA A PHILLIPS 44000.00 43924.08
3019837936 GLORIA G. HINSON 38250.00 38250.00
3019837939 ALVIN L KIMBROUGH 153000.00 153000.00
3019837951 AUGUSTINE D MATTHEW 216750.00 215520.06
3019837959 GARY MASTERSON 105000.00 105000.00
3019837984 DONNA A REYNOLDS 166500.00 166500.00
3019838025 GRACE MOREY 72000.00 72000.00
3019838054 FREDERICK SNYDERS 55500.00 55500.00
3019838057 DAVID GRENFELL 33800.00 33800.00
3019838086 STEPHANIE JAMES 136000.00 136000.00
3019838105 PHILIP SARNA 170000.00 170000.00
3019838121 ARTHUR G LYLE 45900.00 45900.00
3019838122 ELLEN R LACEY 21500.00 21500.00
3019838178 ELIZABETH HAWKINS OSSENF 106250.00 106250.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3019838179 DOROTHEA THOMAS 102000.00 102000.00
3019838231 WILLIE MAE THOMAS 61200.00 61200.00
3019838235 JEROME PRUETT 202500.00 202500.00
3019838276 SHERRIN A WALTERS 64000.00 64000.00
3019838284 WALTER SCATTONE 25000.00 25000.00
3019838301 CARMEN TORRES 216000.00 216000.00
3019838313 MICHELE F CARBONE 95537.00 95537.00
3019838320 DANIEL JOSEPH 225000.00 225000.00
3019838345 CAMILLE WILLIAMS 90750.00 90750.00
3019838352 PATRICIA FORTE 148500.00 148500.00
3019838353 KEVIN WILLIAMS 208250.00 208250.00
3019838369 VENEZUELA R BUNCH 40000.00 40000.00
3019838418 FRANK WIEGEL 29400.00 29400.00
3019838445 WILLIAM GILLESPIE 30000.00 30000.00
3019838451 EDWARD STEWART 33600.00 33600.00
3019838477 TANIA LOMBARDO 33500.00 33500.00
3019838488 MANUEL GONZALEZ 131750.00 131750.00
3019838490 LAUREN MURPHY 136850.00 136850.00
3019838575 MICHAEL E. SHAY 135000.00 135000.00
3019838596 JEROME GOODEN 124650.00 124650.00
3019838675 FLORENCE L HALBERT 40000.00 40000.00
3019838684 MILTON OHM 65450.00 65450.00
3019838685 REGNEL GEORGE 94200.00 94200.00
3019838713 DOROTHY R MUMMA 90000.00 90000.00
3019838730 JOSEPH J BALOBECK 15000.00 15000.00
3019838746 CHERRY BAILEY 220000.00 220000.00
3019838803 GERMAN HERRERA 86250.00 86250.00
3019838850 FRANCIS SAMKABBA 139500.00 139500.00
3019838855 LEE DALTON 29000.00 29000.00
3019838857 DELOMA WALKER 81600.00 81600.00
3019838862 ANTONIO CRUZ 100000.00 100000.00
3019838897 HAROLD ARCHER 97750.00 97750.00
3019838900 SHARON THOMAS 72750.00 72750.00
3019838935 JEAN REYNALD DULCIO 174000.00 174000.00
3019839038 RICHARD KONADU 105400.00 105400.00
3019839062 LINDA F ANDERSON 120000.00 120000.00
3019839065 EMILLE A BROWN 44000.00 44000.00
3019839110 DEIGHTON S. GRIFFITH 60000.00 60000.00
3019839161 MARIA F. LEITE 65000.00 65000.00
3019839181 DEXTER C. BURTON 121500.00 121500.00
3019839217 MARIA L. BROWN 72000.00 72000.00
3019839269 DONALD KORSHNAK 99025.00 99025.00
3019839311 NICOLA GRANATA 106200.00 106200.00
3019839313 STEVEN A CURTIS 110500.00 110500.00
3019839375 ANNIE MAE WHITE 24000.00 24000.00
3019839376 KIRA COPELAND 47700.00 47700.00
3019839557 RALPH J. ESQUIVEL 14000.00 14000.00
3019839629 BERTHA TYNER 121500.00 121500.00
3019839723 JOHN KARCHER 164900.00 164900.00
3019891218 AUDREY J JONES 131750.00 131750.00
3019891261 DIANE K. LONG 66000.00 65875.51
3019891546 JOHN L NEWTON 133000.00 133000.00
3019891548 JAMES A. WILLIAMS 28700.00 28700.00
3019891559 DEBORAH HAMILTON 35750.00 35515.46
3019891567 FAYE CARTER 54000.00 54000.00
3019891610 TERRY A. WILSON 84600.00 84600.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3019891615 JAMES B MORRIS 116000.00 116000.00
3019891633 FAYE A. VEGA 67200.00 66907.05
3019891661 MELODY W. FIGGS 69600.00 69600.00
3019891680 ARLINE COFIELD 30000.00 30000.00
3019891681 INDIANA TURNER 39000.00 39000.00
3019891687 JOHN T CLARKE 151000.00 151000.00
3019891767 JOHN D. FRYE 64000.00 64000.00
3019891785 GEORGIA S. HICKS 45600.00 45600.00
3019891786 EDDIE JEROME WATSON 45000.00 45000.00
3019891825 PETER XANTHAKOS 93600.00 93600.00
3019891844 DENISE C UL'SALAAM 37000.00 37000.00
3019891850 NANCY R. BEALL 16000.00 16000.00
3019891866 KEVIN GRAVES 82000.00 82000.00
3019891878 ROBERT D McENTEE JR 184500.00 184500.00
3019891911 JESSIE J. SHANKS 26400.00 26400.00
3019891922 ALPHONSO FALTZ 47200.00 47200.00
3019891940 TREVOR A SPIVEY 109650.00 109650.00
3019891962 ANITA L THOMPSON 50400.00 50400.00
3039805460 DOMINICK J. MARTINI 36000.00 36000.00
3039805631 ROBERT A CLARK 26000.00 26000.00
3039805694 STEPHEN T SILAN 16000.00 15877.76
3039805703 HOPE E. NOAH 70000.00 69942.66
3039805907 BRUCE McCULLOUGH 35665.00 35665.00
3039805943 CLAUDIA BOONYASITH 17500.00 17500.00
3039806200 WALTER I HIMES III 25000.00 25000.00
3039832316 STEPHEN L ROTHBAUM 33000.00 32832.84
3039833889 DOMINICK TONDO 40000.00 40000.00
3039834210 MICHAEL BONELLI 32500.00 32391.12
3039834283 WILLIAM F. FRETZ 30000.00 29849.26
3039834512 EDUARDO RODRIGUEZ 65000.00 64413.01
3039834853 PETER PUMP 15960.00 15848.46
3039834973 JEFFEREY J. BOTT 44105.00 43975.81
3039835254 JEFFREY FOSTER 30000.00 29824.15
3039835392 JAMES R. DIRIENZI 68000.00 68000.00
3039835405 TATIA GOODMAN 29000.00 28933.33
3039835526 PETER W LOMBARDO 17000.00 16879.01
3039835661 FRANK MARESCA JR. 45500.00 45447.45
3039835662 PERRY CRISTIANO 28491.00 28193.63
3039836251 GUSTAVO MONSANTO 28000.00 28000.00
3039836261 ROBERT DELANEY 49170.00 49170.00
3039836311 JAMES CARLL 22000.00 21703.48
3039836324 FRANCESCO M D'ANGELO 20000.00 19911.42
3039836443 RAMON ZENAROSA 75200.00 75200.00
3039836807 MICHAEL ESPOSITO 17800.00 17774.28
3039836964 ANTHONY BISULCA 47153.00 47072.31
3039837013 THOMAS CAPERS 46600.00 46600.00
3039837354 MARY WATKINS 37398.00 37237.44
3039837596 WILSON W. FIELDS 50000.00 49642.78
3039837913 THOMAS E BURDI 108773.00 108773.00
3039838026 DEBORAH TYLER 19162.00 19162.00
3039838250 ANISSA CARROLL 31753.00 31753.00
3039838413 ELIAS SITARAS 30000.00 30000.00
3039838415 MARK ARCUTI 44000.00 44000.00
3039838740 GREGORY R MARTUCCI 30000.00 30000.00
3039838981 STEVEN MARTELL 85509.00 85509.00
3039839538 CRISTINA ROSARIO 62000.00 62000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3039891784 VITA P. NASH 35000.00 35000.00
3039891793 RICHARD J. HALL 55000.00 55000.00
3039892001 DAVID E WILLIAMS 26700.00 26700.00
3119836848 KENNETH ALLEYNE 187500.00 187500.00
3119836910 ROBERT W. GRANTZ 77600.00 77515.80
3119837169 BRANDON FISHER JOHNSON 67500.00 67500.00
3119837194 JUDIE FORMICA 204000.00 204000.00
3119837234 MICHAEL D. KIDD 48000.00 48000.00
3119837271 DAVID R. PERRINE 100000.00 100000.00
3119837278 PAMELA Y. LANCASTER 72800.00 72800.00
3119837303 KEITH D CLARK SR 126900.00 126724.10
3119837508 RONALD J SCARTOCCI 114000.00 114000.00
3119837520 JOANN KOLDEN 165000.00 165000.00
3119837615 ERNEST O BUTLER 38000.00 38000.00
3119837777 ANTHONY S ROMERO 202000.00 202000.00
3119837851 DENNIS E. OHNESORGE 54500.00 54500.00
3119837871 NAOMI S HUMPHREY 62100.00 62100.00
3119837945 CLARE A. VARA 40000.00 40000.00
3119837970 ALEXANDER S. JOHNSON 119000.00 119000.00
3119838165 LAURA L CANIZE 130500.00 130500.00
3119838211 NICHOLAS A DACCHILLE 192000.00 192000.00
3119838224 BRENDA FRAZIER HAMPTON 15000.00 15000.00
3119838260 LUCIA GRASSO 50000.00 50000.00
3119838333 THOMAS E. MARTIN 71000.00 71000.00
3119838393 VINCENZA J GUIDO 112000.00 112000.00
3119838439 DONALD H COWART 68000.00 68000.00
3119838495 KENNETH J. LOFECHECK 28800.00 28800.00
3119838540 MICHAEL D. SOUTHERLAND 23250.00 23250.00
3119838705 MICHAEL D SOUTHERLAND 57800.00 57800.00
3119838728 EDWIN SANCHEZ 148000.00 148000.00
3119838744 GWENDOLYN CLARK 23250.00 23250.00
3119838933 JUDITH HOWELL 111750.00 111750.00
3119838985 KRISTINE M. KILANOWSKI 97750.00 97750.00
3119839019 ELIZABETH MCCORMICK 85000.00 85000.00
3119839036 SHELDON G RUSH 36000.00 36000.00
3119839080 CATHEE WOERFEL 40000.00 40000.00
3119839227 RAYMOND GIACOBBE 148000.00 148000.00
3139836874 MICHAEL A PAPALIA 30370.00 30370.00
3139836989 PAUL A. ROBBINS, JR. 43400.00 43400.00
3139837225 EARL D. RAFFERTY 12210.00 12210.00
3139838228 LINDA FRYE 45000.00 45000.00
3139838454 HERMAN ROBINSON 25130.00 25130.00
1721 $119,842,853.67
1824 $139,904,460.46
</TABLE>
<PAGE>
Exhibit 10.1
FINANCIAL FINANCIAL GUARANTY
SECURITY INSURANCE POLICY
ASSURANCE(R)
Trust: As described in Endorsement No. 1 Policy No.: 50723-N
Certificates: $198,000,000 ABFS Mortgage Loan Trust Date of Issuance: 9/29/98
1998-3, Mortgage Pass-Through Certificates, Series 1998-3,
Class A-1, Class A-2, Class A-3 and Class A-4
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to the
Trustee for the benefit of each Holder, subject only to the terms of this Policy
(which includes each endorsement hereto), the full and complete payment of
Guaranteed Distributions with respect to the Certificates of the Trust referred
to above.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees payment of the amount of any
distribution of principal or interest with respect to the Certificates made
during the Term of this Policy to such Holder that is subsequently avoided in
whole or in part as a preference payment under applicable law.
Payment of any amount required to be paid under this Policy
will be made following receipt by Financial Security of notice as described in
Endorsement No. 1 hereto.
Financial Security shall be subrogated to the rights of each
Holder to receive distributions with respect to each Certificate held by such
Holder to the extent of any payment by Financial Security hereunder.
Except to the extent expressly modified by Endorsement No. 1
hereto, the following terms shall have the meanings specified for all purposes
of this Policy. "Holder" means the registered owner of any Certificate as
indicated on the registration books maintained by or on behalf of the Trustee
for such purpose or, if the Certificate is in bearer form, the holder of the
Certificate. "Trustee", "Guaranteed Distributions" and "Term of this Policy"
shall have the meanings set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial
Security, and shall not be modified, altered or affected by any other agreement
or instrument, including any modification or amendment thereto. Except to the
extent expressly modified by an endorsement hereto, the premiums paid in respect
of this Policy are nonrefundable for any reason whatsoever. This Policy may not
be canceled or revoked during the Term of this Policy. An acceleration payment
shall not be due under this Policy unless such acceleration is at the sole
option of Financial Security. THIS POLICY IS NOT
<PAGE>
COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN
ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has
caused this Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By __________________________________________
AUTHORIZED OFFICER
A subsidiary of Financial Security
Assurance Holdings Ltd.
350 Park Avenue
New York, N.Y. 10022-6022 (212) 826-0100
2
<PAGE>
ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
TRUST: Established pursuant to the Pooling and Servicing Agreement,
dated as of September 1, 1998, among Prudential Securities
Secured Financing Corporation, as Depositor, American
Business Credit, Inc., as Servicer, and The Chase Manhattan
Bank, as Trustee
CERTIFICATES: $198,000,000 ABFS Mortgage Loan Trust 1998-3, Mortgage
Pass-Through Certificates, Series 1998-3, Class A-1, Class
A-2, Class A-3 and Class A-4.
POLICY NO.: 50723-N
DATE OF ISSUANCE: September 29, 1998
1. Definitions. For all purposes of this Policy, the terms
specified below shall have the meanings or constructions provided below.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings provided in the Pooling and Servicing Agreement unless the context
shall otherwise require.
"Business Day" means any day other than (i) a Saturday or
Sunday, or (ii) a day on which banking institutions in the City of New York or
Bala Cynwyd, Pennsylvania are authorized or obligated by law or executive order
to be closed.
"Guaranteed Distributions" means, with respect to each
Distribution Date, the distribution to be made to Holders in an aggregate amount
equal to the Insured Distribution Amount, in each case in accordance with the
original terms of the Certificates when issued and without regard to any
amendment or modification of the Certificates or the Pooling and Servicing
Agreement except amendments or modifications to which Financial Security has
given its prior written consent. Guaranteed Distributions shall not include, nor
shall coverage be provided under this Policy in respect of, any taxes,
withholding or other charge imposed by any governmental authority due in
connection with the payment of any Guaranteed Distribution to a Holder.
"Policy" means this Financial Guaranty Insurance Policy and
includes each endorsement thereto.
"Policy Payments Account" means the "Certificate Insurance
Payment Account" as defined in the Pooling and Servicing Agreement.
<PAGE>
Policy No.: 50723-N Date of Issuance: September 29, 1998
"Pooling and Servicing Agreement" means the Pooling and
Servicing Agreement, dated as of September 11, 1998, among Prudential Securities
Secured Financing Corporation, as Depositor, American Business Credit, Inc., as
Servicer, and The Chase Manhattan Bank, as Trustee, as amended from time to time
with the consent of Financial Security.
"Receipt" and "Received" mean actual delivery to Financial
Security and to the Fiscal Agent (as defined below), if any, prior to 12:00
noon, New York City time, on a Business Day; delivery either on a day that is
not a Business Day, or after 12:00 noon, New York City time, shall be deemed to
be receipt on the next succeeding Business Day. If any notice or certificate
given hereunder by the Trustee is not in proper form or is not properly
completed, executed or delivered, it shall be deemed not to have been Received,
and Financial Security or its Fiscal Agent shall promptly so advise the Trustee
and the Trustee may submit an amended notice.
"Term of This Policy" means the period from and including the
Date of Issuance to and including the date on which (i) the Certificate
Principal Balance of all of the Certificates is zero, (ii) any period during
which any payment on the Certificates could have been avoided in whole or in
part as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law has expired, and (iii) if any proceedings requisite
to avoidance as a preference payment have been commenced prior to the occurrence
of (i) and (ii), a final and nonappealable order in resolution of each such
proceeding has been entered.
"Trustee" means The Chase Manhattan its capacity as Trustee
under the Pooling and Servicing Agreement and any such capacity.
2. Notices and Conditions to Payment in Respect of Guaranteed
Distributions. Following Receipt by Financial Security of a notice and
certificate from the Trustee in the form attached as Exhibit A to this
Endorsement, Financial Security will pay any amount payable hereunder in respect
of Guaranteed Distributions out of the funds of Financial Security on the later
to occur of (a) 12:00 noon, New York City time, on the second Business Day
following such Receipt; and (b) 12:00 noon, New York City time, on the
Distribution Date to which such claim relates. Payments due hereunder in respect
of Guaranteed Distributions will be disbursed by wire transfer of immediately
available funds to the Policy Payments Account established pursuant to the
Pooling and Servicing Agreement or, if no such Policy Payments Account has been
established, to the Trustee.
Financial Security shall be entitled to pay any amount
hereunder in respect of Guaranteed Distributions, including any acceleration
payment, whether or not any notice and certificate shall have been received by
Financial Security as provided above, provided, however, that by acceptance of
this Policy the Trustee agrees to provide upon request to Financial Security a
notice and certificate in respect of any such payments made by Financial
Security. Financial Security shall be entitled to pay principal hereunder
(including Liquidated Loan Losses) on an accelerated basis if Financial Security
shall so elect in its sole discretion, at anytime or from time to time, in whole
or
2
<PAGE>
Policy No.: 50723-N Date of Issuance: September 29, 1998
in part, at an earlier Distribution Date than provided in the definition of
"Guaranteed Distributions," if such principal would have been payable under the
Pooling and Servicing Agreement were funds sufficient to make such payment
available to the Trustee for such purposes. Guaranteed Distributions insured
hereunder shall not include interest, in respect of principal paid hereunder on
an accelerated basis, accruing from after the date of such payment of principal.
Financial Security's obligations hereunder in respect of Guaranteed
Distributions shall be discharged to the extent funds are disbursed by Financial
Security as provided herein whether or not such funds are properly applied by
the Trustee.
3. Notices and Conditions to Payment in Respect of Guaranteed
Distributions Avoided as Preference Payments. If any Guaranteed Distribution is
avoided as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law, Financial Security will pay such amount out of the
funds of Financial Security on the later of (a) the date when due to be paid
pursuant to the Order referred to below or (b) the first to occur of (i) the
fourth Business Day following Receipt by Financial Security from the Trustee of
(A) a certified copy of the order of the court or other governmental body which
exercised jurisdiction to the effect that the Holder is required to return
principal or interest distributed with respect to the Certificates during the
Term of this Policy because such distributions were avoidable as preference
payments under applicable bankruptcy law (the "Order"), (B) a certificate of the
Holder that the Order has been entered and is not subject to any stay and (C) an
assignment duly executed and delivered by the Holder, in such form as is
reasonably required by Financial Security and provided to the Holder by
Financial Security, irrevocably assigning to Financial Security all rights and
claims of the Holder relating to or arising under the Certificates against the
debtor which made such preference payment or otherwise with respect to such
preference payment or (ii) the date of Receipt by Financial Security from the
Trustee of the items referred to in clauses (A), (B) and (C) above if, at least
four Business Days prior to such date of Receipt, Financial Security shall have
Received written notice from the Trustee that such items were to be delivered on
such date and such date was specified in such notice. Such payment shall be
disbursed to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order and not to the Trustee or any Holder directly
(unless a Holder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Trustee for distribution to such Holder
upon proof of such payment reasonably satisfactory to Financial Security). In
connection with the foregoing, Financial Security shall have the rights provided
pursuant to Sections 6.04(f) and 6.10 of the Pooling and Servicing Agreement.
4. Governing Law. This Policy shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term of this Policy,
Financial Security may appoint a fiscal agent (the "Fiscal Agent") for purposes
of this Policy by written notice to the Trustee at the notice address specified
in the Pooling and Servicing Agreement specifying the name and notice address of
the Fiscal Agent. From and after
3
<PAGE>
Policy No.: 50723-N Date of Issuance: September 29, 1998
the date of receipt of such notice by the Trustee, (i) copies of all notices and
documents required to be delivered to Financial Security pursuant to this Policy
shall be simultaneously delivered to the Fiscal Agent and to Financial Security
and shall not be deemed Received until Received by both and (ii) all payments
required to be made by Financial Security under this Policy may be made directly
by Financial Security or by the Fiscal Agent on behalf of Financial Security.
The Fiscal Agent is the agent of Financial Security only and the Fiscal Agent
shall in no event be liable to any Holder for any acts of the Fiscal Agent or
any failure of Financial Security to deposit, or cause to be deposited,
sufficient funds to make payments due under this Policy.
6. Waiver of Defenses. To the fullest extent permitted by
applicable law, Financial Security agrees not to assert, and hereby waives, for
the benefit of each Holder, all rights (whether by counterclaim, setoff or
otherwise) and defenses (including, without limitation, the defense of fraud),
whether acquired by subrogation, assignment or otherwise, to the extent that
such rights and defenses may be available to Financial Security to avoid payment
of its obligations under this Policy in accordance with the express provisions
of this Policy.
7. Notices. All notices to be given hereunder shall be in
writing (except as otherwise specifically provided herein) and shall be mailed
by registered mail or personally delivered or telecopied to Financial Security
as follows:
Financial Security Assurance
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President - Surveillance
Re: ABFS Mortgage Loan Trust Series 1998-3
Telecopy No.: (212) 339-3518
Confirmation:. (2.12) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trustee.
8. Priorities. In the event any term or provision of the face
of this Policy is inconsistent with the provisions of this Endorsement, the
provisions of this Endorsement shall take precedence and shall be binding.
9. Exclusions From Insurance Guaranty Funds. This Policy is
not covered by the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law. This Policy is not covered by the
Florida Insurance Guaranty Association created under Part II of Chapter 631 of
the Florida Insurance Code. In the event Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage by
the California Insurance Guaranty Association, established pursuant to Article
14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.
4
<PAGE>
Policy No.: 50723-N Date of Issuance: September 29, 1998
10. Surrender of Policy. The Trustee shall surrender this
Policy to Financial Security for cancellation upon expiration of the Term of
this Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Managing Director.
FINANCIAL SECURITY ASSURANCE INC.
By ___________________________________
Authorized Officer
5
<PAGE>
Policy No.: 50723-N Date of Issuance: September 29, 1998
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
-------------------------------
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
The undersigned, a duly authorized officer of The Chase
Manhattan Bank (the "Trustee"), hereby certifies to Financial Security Assurance
Inc. ("Financial Security"), with reference to Financial Guaranty Insurance
Policy No. 50723-N dated September 29, 1998 (the "Policy") issued by Financial
Security in respect of the ABFS Mortgage Loan Trust 1998-3, Mortgage
Pass-Through Certificates Series 1998-3, Class A-1, Class A-2, Class A-3 and
Class A-4 (the "Certificates"), that:
(i) The Trustee is the Trust Pooling and Servicing Agreement
for the Holders.
(ii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Certificate Account and available for distribution to
the Holders pursuant to the Pooling and Servicing Agreement will be
$_________ (the "Shortfall") less than the Guaranteed Distributions
with respect to the Distribution Date occurring on [insert date].
(iii) The Trustee is making a claim under the Policy for the
Shortfall to be applied to distributions of principal or interest or
both with respect to the Certificates.
(iv) The Trustee agrees that, following receipt of funds from
Financial Security, it shall (a) hold such amounts in trust and apply
the same directly to the payment of Guaranteed Distributions on the
Certificates when due; (b) not apply such funds for any other purpose;
(c) not commingle such funds with other funds held by the Trustee and
(d) maintain an accurate record of such payments with respect to each
Certificate and the corresponding claim on the Policy and proceeds
thereof and, if the Certificate is required to be surrendered or
presented for such payment, shall stamp on each such Certificate the
legend "$[insert applicable amount] paid by Financial Security and the
balance hereof has been canceled and reissued" and then shall deliver
such Certificate to Financial Security.
(v) The Trustee, on behalf of the Holders, hereby assigns to
Financial Security the rights of the Holders with respect to the
Certificates to the extent of any payments under the Policy, including,
without limitation, any amounts due to the Holders in respect of
securities law violations arising from the offer and sale of the
Certificates. The foregoing assignment is in addition to, and not in
limitation of, rights of subrogation otherwise available to Financial
Security in respect of such payments. The foregoing assignment is in
addition to, and not in
A-1
<PAGE>
Policy No.: 50723-N Date of Issuance: September 29, 1998
limitation of, the rights of subrogation otherwise available to
Financial Security in respect of Guaranteed Distributions. The Trustee
shall take such action and deliver such instruments as may be
reasonably requested or required by Financial Security to effectuate
the purpose or provisions of this clause (v).
(vi) The Trustee, on its behalf and on behalf of the Holders,
hereby appoints Financial Security as agent and attorney-in-fact for
the Trustee and each such Holder in any legal proceeding with respect
to the Certificates. The Trustee hereby agrees that, so long as a
Certificate Insurer Default (as defined in the Pooling and Servicing
Agreement) shall not exist, Financial Security may at any time during
the continuation of any proceeding relating to the Sponsor or the
Certificates under the United States Bankruptcy Code or any other
applicable bankruptcy, insolvency, receivership, rehabilitation or
similar law (an "Insolvency Proceeding") direct all matters relating to
such Insolvency Proceeding, including without limitation, (A) all
matters relating to any claim in connection with an Insolvency
Proceeding seeking the avoidance as a preferential transfer of any
payment made with respect to the Certificates (a "Preference Claim"),
(B) the direction of any appeal of any order relating to any Preference
Claim at the expense of Financial Security but subject to reimbursement
as provided in the Insurance Agreement and (C) the posting of any
surety, supersede as or performance bond pending any such appeal. In
addition, the Trustee hereby agrees that Financial Security shall be
subrogated to, and the Trustee on its behalf and on behalf of each
Holder, hereby delegates and assigns to Financial Security, to the
fullest extent permitted by law, the rights of the Trustee and each
Holder in the conduct of any Insolvency Proceeding, including, without
limitation, all rights of any party to an adversary proceeding or
action with respect to any court order issued in connection with any
such Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to [the
Policy Payments Account].
Unless the context otherwise requires, capitalized terms used
in this Notice of Claim and Certificate and not defined herein shall have the
meanings provided in the Policy.
A-2
<PAGE>
Policy No.: 50723-N Date of Issuance: September 29, 1998
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Notice of Claim and Certificate as of the _____ day of ________________,
____.
THE CHASE MANHATTAN BANK,
as Trustee
By ___________________________________
Title ________________________________
_______________________________________________
For Financial Security or Fiscal Agent Use Only
Wire transfer sent on ________ by _____________
Confirmation Number ____________
A-3
<PAGE>
Exhibit 23.1
[PricewaterhouseCoopers LLP Letterhead]
CONSENT OF INDEPENDENT ACCOUNTANTS
-------------
September 25, 1998
We consent to the incorporation by reference in the Prospectus Supplement of
Prudential Securities Secured Financing Corporation relating to the ABFS
Mortgage Loan Trust 1998-3 of our report dated January 26, 1998 on our audits of
the consolidated financial statements of Financial Security Assurance Inc. and
Subsidiaries as of December 31, 1997 and 1996, and for each of the three years
in the period ended December 31, 1997. We also consent to the reference to our
Firm under the caption "Experts".
PricewaterhouseCoopers LLP
