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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): March 30, 2000
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 333-75489 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
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Notes and the Mortgage Loans
Prudential Securities Secured Financing Corporation registered
issuances of up to $1,500,000,000 principal amount of Mortgage-Backed Notes 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. 333-75489) (as amended, the "Registration Statement").
Pursuant to the Registration Statement, ABFS Mortgage Loan Trust 2000-1 (the
"Trust") issued approximately $235,000,000 in aggregate principal amount of its
Backed Notes Certificates (the "Notes"), on March 30, 2000. 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 Notes were issued pursuant to an Indenture (the "Indenture")
attached hereto as Exhibit 4.1, dated as of March 1, 2000, between ABFS Mortgage
Loan Trust 2000-1 (the "Trust") and The Chase Manhattan Bank, in its capacity as
indenture trustee (the "Indenture Trustee"). The Notes consist of two classes of
senior notes, the Class A-1 Notes (the "Class A-1 Notes") and the Class A-2
Notes (the "Class A-2 Notes", and, collectively with the Class A-1 Notes, the
"Class A Notes") and two classes of Trust Certificates (the "Trust
Certificates"). Only the Class A Notes were offered. The Notes 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 or commercial 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
Notes Principal Balance thereof and the then applicable Mortgage-Backed Rate
thereof. The Mortgage Rate for the Class A-1 Notes is 7.925% per annum. The
Mortgage-Backed Rate for the Class A-2 Notes is variable.
The Class A-1 Notes and the Class A-2 Notes have original Note
Principal Balances of $200,000,000, and $35,000,000 respectively.
As of the Closing Date, the Mortgage Loans possessed the
characteristics described in the Prospectus dated June 23, 1999 and the
Prospectus Supplement dated March 15, 2000 filed pursuant to Rule 424(b) (5) of
the Act on March 24, 2000.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Not applicable
(b) Not applicable
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(c) Exhibits:
1.1 Underwriting Agreement, dated March 15, 2000, between Prudential
Securities Secured Financing Corporation and Prudential Securities
Incorporated.
1.2 Indemnification Agreement, dated as of March 15, 2000, among
Prudential Securities Secured Financing Corporation, Prudential
Securities Incorporated, and Ambac Assurance Corporation.
4.1 Indenture, dated as of March 1, 2000, between ABFS Mortgage Loan
Trust 2000-1 and The Chase Manhattan Bank, as indenture trustee.
4.2 Unaffiliated Seller's Agreement, dated as of March 1, 2000, 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
2000-1, Inc.
4.3 Sale and Servicing Agreement, dated as of March 1, 2000, among
Prudential Securities Secured Financing Corporation, American
Business Credit, Inc., ABFS Mortgage Loan Trust 2000-1, Chase Bank
of Texas, N.A., and The Chase Manhattan Bank.
8.1 Opinion of Brown & Wood LLP, Counsel to Prudential Securities
Secured Corporation regarding certain tax matters.
10.1 Certificate Guaranty Insurance Policy, dated March 30, 2000.
23.1 Consent of BDO Seidman regarding financial statements of the ABFS
Mortgage Loan Trust 2000-1 and their report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
As Depositor and on behalf of ABFS
Mortgage Loan Trust 2000-1
Registrant
By: /s/ Evan Mitnick
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Name: Evan Mitnick
Title: Vice President
Dated: April 3, 2000
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EXHIBIT INDEX
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Exhibit No. Description
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1.1 Underwriting Agreement, dated March 15, 2000,
between Prudential Securities Secured Financing
Corporation and Prudential Securities Incorporated.
1.2 Indemnification Agreement, dated March 15, 2000,
among Prudential Securities Secured Financing
Corporation, Prudential Securities Incorporated,
American Business Credit, and Ambac Assurance
Corporation.
4.1 Indenture, dated as of March 1, 2000, between ABFS
Mortgage Loan Trust 2000-1 and The Chase Manhattan
Bank, as indenture trustee.
4.2 Unaffiliated Seller's Agreement, dated as of March
1, 2000, 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 2000-1, Inc.
4.3 Sale and Servicing Agreement, dated as of March 1,
2000, among Prudential Securities Secured
Financing Corporation, American Business Credit,
Inc., ABFS Mortgage Loan Trust 2000-1, Chase Bank
of Texas, N.A., and The Chase Manhattan Bank.
8.1 Opinion of Brown & Wood LLP, Counsel to Prudential
Securities Secured Corporation regarding certain
tax matters.
10.1 Certificate Guaranty Insurance Policy, dated March
30, 2000.
23.1 Consent of BDO Seidman regarding financial
statements of the Ambac Assurance Corporation and
their report.
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EXHIBIT 1.1
ABFS MORTGAGE LOAN TRUST 2000-1
MORTGAGE LOAN BACKED NOTES
SERIES 2000-1
UNDERWRITING AGREEMENT
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UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza
New York, New York 10292
March 15, 2000
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 March 15, 2000
(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 Underwriting
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]
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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:
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Name:
Title:
[Signature Page to Underwriting Agreement]
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SCHEDULE I
Title of Offered ABFS Mortgage Loan Trust 2000-1, Mortgage
Securities: Backed Notes, Series 2000-1, Class A-1 and
Class A-2.
Terms of Offered The Offered Securities shall have the terms
Securities: set forth in the Prospectus and shall conform
in all material respects to the descriptions
thereof contained therein, and shall be issued
pursuant to an Indenture, to be dated as of
March 1, 2000, between the ABFS Mortgage Loan
Trust 2000-1, as issuer, and The Chase
Manhattan Bank, as indenture trustee.
Purchase Price: The purchase price for the Offered Securities
shall be 99.70% and 99.70% of the aggregate
note principal balance of the Class A-1 Notes
and Class A-2 Notes, respectively, as of the
Closing Date, plus accrued interest at the rate
of 7.925% per annum, on the aggregate note
principal balance of the Class A-1 Notes from,
and including March 1, 2000 to, but not
including the Closing Date.
Specified funds for
payment of Purchase Price: Federal Funds (immediately available funds).
Required Ratings: Aaa by Moody's Investors Service, Inc.
AAA by Standard & Poor's Ratings Services
AAA by Duff & Phelps Credit Rating Co., if
rated by Duff & Phelps Credit Rating Co.
Closing Date: On or about March 30, 2000 at 10:00 A.M.
eastern standard time or at such other time as
the Depositor and the Underwriter shall agree.
Closing Location: Dewey Ballantine LLP, 1301 Avenue of the
Americas, New York, New York 10019-60092.
Name and address of Designated Representative: Prudential
Representative: Securities Incorporated.
Address for Notices, etc.: One New York Plaza
New York, New York 10292 Attn: Managing
Director - Asset Backed Financed Group
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STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
March 15, 2000
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. These Standard Provisions 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 these Standard Provisions
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 business purpose loans and home equity loan backed notes (the
"Securities") representing indebtedness secured primarily by the property of a
trust which consists of three pools of business purpose loans and home equity
loans (the "Mortgage Loans") and certain related property. The Securities will
be issued pursuant to an Indenture (the "Indenture") by and between ABFS
Mortgage Loan Trust 2000-1, as issuer (the "Issuer"), and The Chase Manhattan
Bank, as indenture trustee (the "Indenture Trustee"). The Mortgage Loans will be
purchased by the Depositor pursuant to an Unaffiliated Seller's Agreement (the
"Unaffiliated Seller's Agreement") by and among the Depositor, ABFS 2000-1, Inc.
(the "Unaffiliated Seller"), American Business Credit, Inc. ("ABC"),
HomeAmerican Credit, Inc. d/b/a Upland Mortgage ("Upland") and New Jersey
Mortgage and Investment Corp ("NJMIC" and, collectively with ABC and Upland, the
"Originators"). The Mortgage Loans will be sold by the Depositor to the Issuer
pursuant to the terms of a Sale and Servicing Agreement (the "Sale and Servicing
Agreement") among the Issuer, the Depositor, the Indenture Trustee, Chase Bank
of Texas, N.A., as collateral agent (the "Collateral Agent"), and ABC, as
servicer (in such capacity, the "Servicer").
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 Indenture identified in such Underwriting Agreement. The
Securities which are the subject of any particular
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Underwriting Agreement into which these Standard Provisions are 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. 333-75489),
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 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 Issuer, 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
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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 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 State or federal 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 the State of 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 Brown & Wood LLP, 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.
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(f) The Representative shall have received, on the Closing
Date, an opinion of counsel for the Servicer, the Unaffiliated
Seller and the Originators, 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 Indenture 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 counsel for the Issuer and First Union Trust
Company, National Association, as owner trustee (the "Owner
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 D hereto.
(i) The Representative shall have received, on the Closing
Date, an opinion of Brown & Wood LLP, special counsel for the
Depositor, 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 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.
(j) 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.
(k) 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;
(l) 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;
(m) The Note 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.
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(n) The Representative shall have received, on the Closing
Date, an opinion of counsel to Ambac Assurance Corporation (the
"Note Insurer"), dated the Closing Date, in form and substance
satisfactory to the Representative and counsel for the Underwriters
and containing opinions as to such matters as the Representative may
reasonably request.
(o) 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 Note Insurer's claims paying
ability by any "nationally recognized statistical rating
organization," as such term is defined for purposes of the 1933 Act.
(p) 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
December 31, 1999, of the Note 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.
(q) The Representative shall have been furnished such further
information, certificates, documents and opinions as the
Representative may reasonably request.
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
<PAGE>
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 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.
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(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
Indenture Trustee under the applicable Sale and Servicing Agreement,
(ii) the annual independent public accountants' servicing report
furnished to the Indenture Trustee pursuant to the applicable Sale
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. 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
<PAGE>
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 base 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 base 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.
(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 these
Standard Provisions, the Underwriting Agreement, the Unaffiliated
Seller's Agreement and the Sale and Servicing Agreement, except such
as may be required under state securities or
<PAGE>
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 Indenture, 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 Indenture.
(g) The execution and delivery by the Depositor of these
Standard Provisions, the Underwriting Agreement, the Unaffiliated
Seller's Agreement and the Sale and Servicing Agreement are within
the corporate power of the Depositor and none of the execution and
delivery by the Depositor of these Standard Provisions, the
Underwriting Agreement, the Unaffiliated Seller's Agreement and the
Sale 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 Unaffiliated Seller's Agreement and the Sale and Servicing
Agreement will have been, duly authorized, executed and delivered by
the Depositor.
(i) At the Closing Date, each of the Underwriting Agreement,
the Unaffiliated Seller's Agreement and the Sale and Servicing
Agreement will constitute a legal, valid and binding obligation of
the Depositor, enforceable
<PAGE>
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, the Unaffiliated Seller's Agreement
or the Sale 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 Unaffiliated Seller's Agreement and the Sale 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 both the
Unaffiliated Seller's Agreement and the Sale and Servicing Agreement
will be true and correct as of such date.
<PAGE>
(o) At the time of execution and delivery of the Unaffiliated
Seller's Agreement and the Sale 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 Issuer pursuant to the Sale and Servicing
Agreement, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively,
"Liens"), and will not have assigned to any person (other than the
Issuer and the Indenture Trustee) any of its right, title or
interest in such Mortgage Loans or in such Unaffiliated Seller's
Agreement or such Sale 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
Issuer and to transfer the Offered Securities to each of the
Underwriters, and upon execution and delivery to the Issuer of the
Sale 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 Issuer 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) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the
Underwriting Agreement, these Standard Provisions, the Indenture,
the Sale 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.
<PAGE>
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 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 "UNDERWRITING" 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
<PAGE>
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 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 Note Insurer, the Servicer, the Originators, the
Unaffiliated Seller, the Issuer, the Depositor and the Underwriter shall not be
construed as limiting the Depositor's right to enforce its rights under Section
7 of these Standard Provisions. 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.
(e) 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.
(f) 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.
(g) 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 (10%)
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
<PAGE>
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 (10%) 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
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
<PAGE>
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 Backed 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. 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. These Standard Provisions 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.
16. Governing Law. These Standard Provisions and each Underwriting
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
[Signature Page Follows]
<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:
[Signature Page to Underwriting Agreement Standard Provisions]
<PAGE>
Exhibit A
Opinions of Brown & Wood LLP,
special counsel for the Depositor
---------------------------------
(1) Each of the Unaffiliated Seller's Agreement, the Sale and
Servicing Agreement, the Underwriting Agreement and the Standard Provisions
(collectively, with the Indenture and the Indemnification Agreement, 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 Notes, assuming the due execution by the Issuer and due
authentication by the Indenture Trustee and payment therefor pursuant to the
Underwriting Agreement, are validly issued and outstanding and are entitled to
the benefits of the Indenture.
(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
Notes 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) The registration of the Trust Estate created by the Indenture
under the Investment Company Act of 1940 is not required.
(6) The statements in the Prospectus Supplement set forth under the
caption "DESCRIPTION OF THE NOTES," to the extent such statements purport to
summarize certain provisions of the Notes or of the Indenture, or of the Sale
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, each of the Documents to which it is a party.
(3) Each of the Documents to which the Servicer is a party 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 Unaffiliated
Seller, nor the execution, delivery or performance by the Servicer of the each
of the Documents to which it is a party (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
charter 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 Estate or upon the Notes, except as otherwise
contemplated by the Indenture.
(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 Unaffiliated Seller 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 the State of New York or the
Commonwealth of Pennsylvania, for the execution, delivery and performance of
each of the Documents to which it is a party or the consummation of any other
transaction contemplated thereby by the Servicer, except such which have been
obtained.
<PAGE>
(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, 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, each of the Documents to which it is a party;
(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 Indenture
Trustee
----------------------
(1) The Indenture 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 Indenture.
(2) Each of the Documents to which the Indenture Trustee is a party
have been duly authorized, executed and delivered by the Indenture Trustee and
each such Document constitutes the legal, valid and binding obligation of the
Indenture Trustee, enforceable against the Indenture 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
Indenture 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
Indenture Trustee in connection with its execution and delivery of each of the
Documents to which it is a party or the performance of its obligations
thereunder.
(4) The Notes have been duly authenticated and delivered by the
Indenture Trustee.
(5) The execution and delivery of, and performance by the Indenture
Trustee of its obligations under, each of the Documents to which it is a party
do not conflict with or result in a violation of any statute or regulation
applicable to the Indenture Trustee, or the charter or bylaws of the Indenture
Trustee, or to the best knowledge of such counsel, any governmental authority
having jurisdiction over the Indenture Trustee or the terms of any indenture or
other agreement or instrument to which the Indenture Trustee is a party or by
which it is bound.
<PAGE>
Exhibit D
Opinions of Counsel to
the Issuer
----------------------
(1) The Issuer is a Delaware business trust duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the power and authority to enter into and to take all actions required of it
under the each of the Documents to which it is a party.
(2) Each of the Documents to which the Issuer is a party have been
duly authorized, executed and delivered by the Issuer and each such Document
constitutes the legal, valid and binding obligation of the Issuer, enforceable
against the Issuer 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 Issuer, 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
Issuer in connection with its execution and delivery of the Documents to which
it is a party or the performance of its obligations thereunder.
(4) The Notes have been duly executed and delivered by the Issuer.
(5) The execution and delivery of, and performance by the Issuer of
its obligations under each of the Documents to which it is a party do not
conflict with or result in a violation of any statute or regulation applicable
to the Issuer, or the certificate of trust of the Issuer, or to the best
knowledge of such counsel, any governmental authority having jurisdiction over
the Issuer or the terms of any indenture or other agreement or instrument to
which the Issuer is a party or by which it is bound.
<PAGE>
EXHIBIT 1.2
AMBAC ASSURANCE CORPORATION,
and
PRUDENTIAL SECURITIES INCORPORATED
INDEMNIFICATION AGREEMENT
ABFS MORTGAGE LOAN TRUST 2000-1
MORTGAGE-BACKED NOTES
SERIES 2000-1
Dated as of March 15, 2000
<PAGE>
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall not
be deemed to be part of this Indemnification Agreement. All capitalized terms
used in this Indemnification Agreement and not otherwise defined shall have the
meanings set forth in Article I of this Indemnification Agreement.)
Page
- ----------
Section 1. Defined Terms.............................................3
Section 2. Other Definitional Provisions.............................4
Section 3. Representations and Warranties of the Underwriter.........4
Section 4. Representations and Warranties of the Note Insurer........4
Section 5. Indemnification...........................................6
Section 6. Amendments, Etc...........................................7
Section 7. Notices...................................................7
Section 8. Severability..............................................8
Section 9. Governing Law.............................................8
Section 10. Counterparts..............................................8
Section 11. Headings..................................................8
2
<PAGE>
INDEMNIFICATION AGREEMENT dated as of March 15, 2000 (the "Indemnification
Agreement"), by and among AMBAC ASSURANCE CORPORATION, as Note Insurer and
PRUDENTIAL SECURITIES INCORPORATED, as Underwriter.
Section 1. Defined Terms. Unless the context clearly requires otherwise,
all capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Indenture, the Servicing Agreement, the
Insurance Agreement or the Policy. For purposes of this Indemnification
Agreement, the following terms shall have the following meanings:
"Indenture" means the Indenture, dated as of March 1, 2000, relating to
the ABFS Mortgage Loan Trust 2000-1 Mortgage-Backed Notes, Series 2000-1,
between ABFS Mortgage Loan Trust 2000-1, as the Issuer and The Chase Manhattan
Bank, as the Indenture Trustee (as may be amended, modified or supplemented from
time to time).
"Insurance Agreement" means the Insurance and Indemnity Agreement (as may
be amended, modified or supplemented from time to time) dated as of March 30,
2000 by and among the Note Insurer, the Depositor, ABFS Mortgage Loan Trust
2000-1, as Issuer, American Business Credit, Inc., as Servicer and Originator,
Home American Credit, Inc. d/b/a Upland Mortgage, as Originator, New Jersey
Mortgage and Investment Corp., as Originator, ABFS 2000-1, Inc., as Seller and
The Chase Manhattan Bank, as Indenture Trustee.
"Note Insurer" means Ambac Assurance Corporation, a Wisconsin-domiciled
stock insurance corporation, or any successor thereto, as issuer of the Policy.
"Note Insurer Information" has the meaning given such term in Section 4.
"Notes" means the Class A-1 and Class A-2 Notes, each substantially in the
form of Exhibit A to the Indenture.
"Offering Document" means the Prospectus Supplement, dated March 15, 2000,
in respect of the Notes, and any amendment or supplement thereto, and any other
offering document in respect of the Notes that makes reference to the Policy
excluding any structural term sheet, collateral term sheet or computational
materials.
"Servicing Agreement" means the Sale and Servicing Agreement, dated as of
March 1, 2000, by and among American Business Credit, Inc., as Servicer, The
Chase Manhattan Bank, as Indenture Trustee and ABFS Mortgage Loan Trust 2000-1,
as Issuer (as may be amended, modified or supplemented from time to time as set
forth therein).
"Securities Act" means the Securities Act of 1933, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Underwriter" means Prudential Securities Incorporated.
"Underwriter Information" has the meaning given such term in Section 3.
<PAGE>
Section 2. Other Definitional Provisions. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Indemnification
Agreement shall refer to this Indemnification Agreement as a whole and not to
any particular provision of this Indemnification Agreement, and Section,
subsection, Schedule and Exhibit references are to this Indemnification
Agreement unless otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms.
The words "include" and "including" shall be deemed to be followed by the phrase
"without limitation."
Section 3. Representations and Warranties of the Underwriter. The
Underwriter represents and warrants 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 Notes and will make such offers and sales in the manner
to be provided in the Offering Document.
(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 Notes unless such Offering Document includes
such information relating to the Note Insurer as has been furnished by the
Note Insurer for inclusion therein and has been approved by the Note
Insurer.
(c) Underwriter Information. All material provided by the
Underwriter for inclusion in the Offering Document (as revised from time
to time), shall be true and correct in all material respects, it being
understood and agreed that the only such information furnished by the
Underwriter consists of the following information (collectively, the
"Underwriter Information"): the information contained under the heading
"Plan of Distribution" relating to the Underwriter in the Offering
Document.
Section 4. Representations and Warranties of the Note Insurer. The Note
Insurer represents and warrants to the Underwriter as follows:
(a) Organization and Licensing. The Note Insurer is a duly organized
and licensed and validly existing Wisconsin stock insurance corporation
duly qualified to conduct an insurance business in the State of New York.
(b) Corporate Power. The Note Insurer has the corporate power and
authority to issue the Policy and execute this Indemnification Agreement
and to perform all of its obligations hereunder and thereunder.
(c) Authorization; Approvals. Proceedings legally required for the
issuance of the Policy and the execution, delivery and performance of this
Indemnification Agreement have been taken and all material licenses,
orders, consents or other authorizations or approvals of any governmental
boards or bodies legally required for the enforceability of the Policy
have been obtained; any proceedings not taken and any licenses,
authorizations or approvals not obtained are not material to the
enforceability of the Policy.
4
<PAGE>
(d) Enforceability. The Policy, when issued, and this
Indemnification Agreement will each constitute a legal, valid and binding
obligation of the Note Insurer, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors' rights generally
and by general principles of equity and subject to principles of public
policy limiting the right to enforce the indemnification provisions
contained therein and herein, insofar as such provisions relate to
indemnification for liabilities arising under federal securities laws.
(e) Financial Information. The consolidated financial statements of
the Note Insurer and subsidiaries as of December 31, 1999 and December 31,
1998, and for each of the years in the three-year period ended December
31, 1999, prepared in accordance with generally accepted accounting
principles, included in the Annual Report on Form 10-K of Ambac Financial
Group, Inc., which are incorporated by reference in the Offering Document
fairly present in all material respects the financial condition of the
Note Insurer as of such dates and for the periods covered by such
statements in accordance with generally accepted accounting principles
consistently applied. Since December 31, 1999, there has been no material
change in such financial condition of the Note Insurer that would
materially and adversely affect its ability to perform its obligations
under the Policy.
(f) Note Insurer Information. The information in the Offering
Document as of the date hereof under the captions "The Note Insurer" and
"The Policy" (together, the "Note Insurer Information") is true and
correct in all material respects and does not contain any untrue statement
of a material fact.
(g) Rating. The Note Insurer is not aware of any facts that if
disclosed to Moody's, S&P or Moody's would be reasonably expected to
result in a downgrade of the rating of the financial strength of the Note
Insurer by either of such Rating Agencies.
(h) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Note Insurer's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator which, if
decided adversely, would result in a Material Adverse Change or would
materially and adversely affect its ability to perform its obligations
under the Policy or this Indemnification Agreement.
(i) Securities Act Registration. The Policy is exempt from
registration under the Securities Act.
5
<PAGE>
Section 5. Indemnification. (a) The Underwriter hereby agrees to pay, and
to protect, indemnify and save harmless, the Note Insurer and its officers,
directors, shareholders, employees, agents and each Person, if any, who controls
the Note Insurer within the meaning of either Section 15 of the Securities Act
or Section 20 of the Securities Exchange Act from and against, any and all
claims, losses, liabilities (including penalties), actions, suits, judgments,
demands, damages, costs or expenses (including reasonable fees and expenses of
attorneys, consultants and auditors and reasonable costs of investigations) of
(i) any nature arising out of or by reason of any untrue statement of a material
fact or an omission to state a material fact necessary in order to make the
statements therein in light of the circumstances in which they were made not
misleading, contained in the Underwriter Information provided by the Underwriter
or (ii) a breach of any of the representations and warranties by the Underwriter
contained in Section 3.
(b) The Note Insurer agrees to pay, and to protect, indemnify and
save harmless, the Underwriter and its respective officers, directors,
shareholders, employees, agents and each Person, if any, who controls the
Underwriter within the meaning of either Section 15 of the Securities Act
or Section 20 of the Securities Exchange Act from and against, any and all
claims, losses, liabilities (including penalties), actions, suits,
judgments, demands, damages, costs or expenses (including reasonable fees
and expenses of attorneys, consultants and auditors and reasonable costs
of investigations) of any nature arising out of or by reason of (i) any
untrue statement of a material fact or an omission to state a material
fact necessary in order to make the statements therein in light of the
circumstances in which they were made not misleading, contained in the
Note Insurer Information or (ii) a breach of any of the representations
and warranties of the Note Insurer contained in Section 4.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against any Person
(individually, an "Indemnified Party" and, collectively, the "Indemnified
Parties") in respect of which the indemnification provided in this Section
5(a) or (b) may be sought from the Underwriter, on the one hand, or the
Note Insurer, on the other (each, an "Indemnifying Party") hereunder, each
such Indemnified Party shall promptly notify the Indemnifying Party in
writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all expenses. The Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof at the expense of the Indemnified
Party; provided, however, that the fees and expenses of such separate
counsel shall be at the expense of the Indemnifying Party if (i) the
Indemnifying Party has agreed to pay such fees and expenses, (ii) the
Indemnifying Party shall have failed to assume the defense of such action
or proceeding and employ counsel reasonably satisfactory to the
Indemnified Party in any such action or proceeding or (iii) the named
parties to any such action or proceeding (including any impleaded parties)
include both the Indemnified Party and the Indemnifying Party, and the
Indemnified Party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or
additional to those available to the Indemnifying Party (in which case, if
the Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right
6
<PAGE>
to assume the defense of such action or proceeding on behalf of such
Indemnified 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 the Indemnified Parties,
which firm shall be designated in writing by the Indemnified Party). The
Indemnifying Party shall not be liable for any settlement of any such
action or proceeding effected without its written consent to the extent
that any such settlement shall be prejudicial to the Indemnifying Party,
but, if settled with its written consent, or if there is a final judgment
for the plaintiff in any such action or proceeding with respect to which
the Indemnifying Party shall have received notice in accordance with this
subsection (c), the Indemnifying Party agrees to indemnify and hold the
Indemnified Parties harmless from and against any loss or liability by
reason of such settlement or judgment.
(d) To provide for just and equitable contribution if the
indemnification provided by the Indemnifying Party is determined to be
unavailable or insufficient to hold harmless any Indemnified Party (other
than due to application of this Section), each Indemnifying Party shall
contribute to the losses incurred by the Indemnified Party on the basis of
the relative fault of the Indemnifying Party, on the one hand, and the
Indemnified Party, on the other hand.
The relative fault of each Indemnifying Party, on the one
hand, and each Indemnified Party, on the other, shall be determined by
reference to, among other things, whether the breach of, or alleged breach
of, any of its representations and warranties set forth herein was 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.
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.
Section 6. Amendments, Etc. This Indemnification Agreement may be amended,
modified, supplemented or terminated only by written instrument or written
instruments signed by the parties hereto.
Section 7. Notices. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered and
telecopied to the recipient as follows:
(a) To the Note Insurer:
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: Structured Finance Department - MBS
Telecopy No.: 212-363-1459
Confirmation: 212-668-0340
<PAGE>
(b) To the Underwriter:
Prudential Securities Incorporated
One New York Plaza, 14th Floor
New York, New York 10292-2014
Attention: Evan Mitnick
Telecopy No.: (212) 778-7401
Confirmation: (212) 778-1000
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 8. Severability. In the event that any provision of this
Indemnification Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 9. Governing Law. This Indemnification Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
Section 10. Counterparts. The Indemnification Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 11. Headings. The headings of Sections and the Table of Contents
contained in this Indemnification Agreement are provided for convenience only.
They form no part of this Indemnification Agreement and shall not affect its
construction or interpretation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement, all as of the day and year first above mentioned.
AMBAC ASSURANCE CORPORATION,
as Note Insurer
By:
----------------------------------------
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
as Underwriter
By:
----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.1
INDENTURE
dated as of March 1, 2000
by and between
ABFS MORTGAGE LOAN TRUST 2000-1,
as Issuer
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS.............................................................................................2
Section 1.01. General Definitions......................................................................2
ARTICLE II THE NOTES; PLEDGE OF SUBSEQUENT MORTGAGE LOANS.........................................................2
Section 2.01. Forms Generally..........................................................................2
Section 2.02. Form of Certificate of Authentication....................................................2
Section 2.03. General Provisions With Respect to Principal and Interest Payment........................3
Section 2.04. Denominations............................................................................3
Section 2.05. Execution, Authentication, Delivery and Dating...........................................3
Section 2.06. Registration, Registration of Transfer and Exchange......................................4
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes...............................................5
Section 2.08. Payments of Principal and Interest.......................................................6
Section 2.09. Persons Deemed Owner.....................................................................7
Section 2.10. Cancellation.............................................................................8
Section 2.11. Authentication and Delivery of Notes.....................................................8
Section 2.12. Book-Entry Note..........................................................................9
Section 2.13. Termination of Book Entry System........................................................10
Section 2.14. Pledge of Subsequent Mortgage Loans.....................................................11
ARTICLE III COVENANTS............................................................................................13
Section 3.01. Payment of Notes........................................................................13
Section 3.02. Maintenance of Office or Agency.........................................................13
Section 3.03. Money for Note Payments to Be Held In Trust.............................................13
Section 3.04. Existence of Trust......................................................................15
Section 3.05. Protection of Trust Estate..............................................................16
Section 3.06. Opinions as to the Trust Estate.........................................................16
Section 3.07. Performance of Obligations..............................................................16
Section 3.08. Investment Company Act..................................................................17
Section 3.09. Negative Covenants......................................................................17
Section 3.10. Annual Statement as to Compliance.......................................................18
Section 3.11. Restricted Payments.....................................................................18
Section 3.12. Treatment of Notes as Debt for Tax Purposes.............................................18
Section 3.13. Notice of Events of Default.............................................................19
Section 3.14. Further Instruments and Acts............................................................19
ARTICLE IV SATISFACTION AND DISCHARGE............................................................................19
Section 4.01. Satisfaction and Discharge of Indenture.................................................19
Section 4.02. Application of Trust Money..............................................................20
ARTICLE V DEFAULTS AND REMEDIES..................................................................................20
Section 5.01. Event of Default........................................................................20
Section 5.02. Acceleration of Maturity; Rescission and Annulment......................................21
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee...............22
Section 5.04. Remedies................................................................................23
Section 5.05. Indenture Trustee May File Proofs of Claim..............................................23
Section 5.06. Indenture Trustee May Enforce Claims Without Possession of Notes........................24
Section 5.07. Application of Money Collected..........................................................24
Section 5.08. Limitation on Suits.....................................................................25
Section 5.09. Unconditional Rights of Noteholders to Receive Principal and Interest...................26
Section 5.10. Restoration of Rights and Remedies......................................................26
Section 5.11. Rights and Remedies Cumulative..........................................................26
Section 5.12. Delay or Omission Not Waiver............................................................26
Section 5.13. Control by Noteholders..................................................................27
Section 5.14. Waiver of Past Defaults.................................................................27
Section 5.15. Undertaking for Costs...................................................................27
Section 5.16. Waiver of Stay or Extension Laws........................................................28
Section 5.17. Sale of Trust Estate....................................................................28
Section 5.18. Action on Notes.........................................................................29
Section 5.19. No Recourse to Other Trust Estates or Other Assets of the Trust.........................29
Section 5.20. Application of the Trust Indenture Act..................................................30
Section 5.21. Note Insurer Default....................................................................30
ARTICLE VI THE INDENTURE TRUSTEE.................................................................................30
Section 6.01. Duties of Indenture Trustee.............................................................30
Section 6.02. Notice of Default.......................................................................32
Section 6.03. Rights of Indenture Trustee.............................................................32
Section 6.04. Not Responsible for Recitals or Issuance of Notes.......................................33
Section 6.05. May Hold Notes..........................................................................33
Section 6.06. Money Held in Trust.....................................................................33
Section 6.07. Eligibility, Disqualification...........................................................34
Section 6.08. Indenture Trustee's Capital and Surplus.................................................34
Section 6.09. Resignation and Removal; Appointment of Successor.......................................34
Section 6.10. Acceptance of Appointment by Successor Indenture Trustee................................35
Section 6.11. Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee........36
Section 6.12. Preferential Collection of Claims Against Trust.........................................36
Section 6.13. Co-Indenture Trustees and Separate Indenture Trustees...................................36
Section 6.14. Authenticating Agents...................................................................38
Section 6.15. Review of Mortgage Files................................................................39
Section 6.16. Indenture Trustee Fees and Expenses.....................................................39
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS.......................................................................40
Section 7.01. Note Registrar to Furnish Indenture Trustee Names and Addresses of Noteholders..........40
Section 7.02. Preservation of Information; Communications to Noteholders..............................40
Section 7.03. Reports by Indenture Trustee............................................................41
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
Section 7.04. Reports by Trust........................................................................41
ARTICLE VIII ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES..........................................41
Section 8.01. Accounts; Investment; Collection of Moneys..............................................41
Section 8.02. Payments; Statements....................................................................44
Section 8.03. Claims against the Policy...............................................................45
Section 8.04. General Provisions Regarding the Payment Accounts and Mortgage Loans....................47
Section 8.05. Releases of Deleted Mortgage Loans......................................................48
Section 8.06. Reports by Indenture Trustee to Noteholders; Access to Certain Information..............49
Section 8.07. Release of Trust Estate.................................................................49
Section 8.08. Amendment to Sale and Servicing Agreement...............................................49
Section 8.09. Delivery of the Mortgage Files Pursuant to Sale and Servicing Agreement.................49
Section 8.10. Servicer as Agent.......................................................................49
Section 8.11. Termination of Servicer.................................................................50
Section 8.12. Opinion of Counsel......................................................................50
Section 8.13. Appointment of Collateral Agents........................................................50
Section 8.14. Rights of the Note Insurer to Exercise Rights of Noteholders............................50
Section 8.15. Trust Estate and Accounts Held for Benefit of the Note Insurer..........................51
ARTICLE IX SUPPLEMENTAL INDENTURES...............................................................................51
Section 9.01. Supplemental Indentures Without Consent of Noteholders..................................51
Section 9.02. Supplemental Indentures With Consent of Noteholders.....................................52
Section 9.03. Execution of Supplemental Indentures....................................................53
Section 9.04. Effect of Supplemental Indentures.......................................................53
Section 9.05. Conformity With Trust Indenture Act.....................................................54
Section 9.06. Reference in Notes to Supplemental Indentures...........................................54
Section 9.07. Amendments to Governing Documents.......................................................54
ARTICLE X REDEMPTION OF NOTES....................................................................................55
Section 10.01. Redemption..............................................................................55
Section 10.02. Form of Redemption Notice...............................................................56
Section 10.03. Notes Payable on Optional Redemption....................................................56
ARTICLE XI MISCELLANEOUS.........................................................................................57
Section 11.01. Compliance Certificates and Opinions....................................................57
Section 11.02. Form of Documents Delivered to Indenture Trustee........................................57
Section 11.03. Acts of Noteholders.....................................................................58
Section 11.04. Notices, etc............................................................................59
Section 11.05. Notices and Reports to Noteholders; Waiver of Notices...................................60
Section 11.06. Rules by Indenture Trustee..............................................................60
Section 11.07. Conflict With Trust Indenture Act.......................................................61
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
Section 11.08. Effect of Headings and Table of Contents................................................61
Section 11.09. Successors and Assigns..................................................................61
Section 11.10. Separability............................................................................61
Section 11.11. Benefits of Indenture...................................................................61
Section 11.12. Legal Holidays..........................................................................61
Section 11.13. Governing Law...........................................................................61
Section 11.14. Counterparts............................................................................61
Section 11.15. Recording of Indenture..................................................................61
Section 11.16. Trust Obligation........................................................................62
Section 11.17. No Petition.............................................................................62
Section 11.18. Inspection..............................................................................62
Section 11.19. Usury...................................................................................62
Section 11.20. Note Insurer Default....................................................................63
Section 11.21. Third-Party Beneficiary.................................................................63
</TABLE>
APPENDICES, SCHEDULES AND EXHIBITS
Appendix I........Defined Terms
Schedule l........Mortgage Loan Schedule
Exhibit A.........Form of Note
Exhibit B.........Form of Subsequent Pledge Agreement
Exhibit C.........Form of Note Insurer Consent for Subsequent Mortgage Loans
iv
<PAGE>
CROSS-REFERENCE TABLE
Cross-reference sheet showing the location in the Indenture of the provisions
inserted pursuant to Sections 310 through 318(a) inclusive of the Trust
Indenture Act of 1939.1
Trust Indenture Act of 1939 Indenture Section
- --------------------------- -----------------
Section 310
(a)(1).......................................... 6.07
(a)(2).......................................... 6.07, 6.08
(a)(3).......................................... 6.13
(a)(4).......................................... Not Applicable
(a)(5).......................................... 6.07
(b)............................................. 6.07, 6.09
(c)............................................. Not Applicable
Section 311
(a)............................................. 6.12
(b)............................................. 6.12
(c)............................................. Not Applicable
Section 312
(a)............................................. 7.01(a), 7.02(a)
(b)............................................. 7.02(b)
(c)............................................. 7.02(c)
(d)............................................. 7.03(a)
Section 313
(a)............................................. 7.03(a)
(b)............................................. 7.03(a)
(c)............................................. 11.05
(d)............................................. 7.03(b)
Section 314
(a)(1).......................................... 7.04
(a)(2).......................................... 7.04
(a)(3).......................................... 7.04
(a)(4).......................................... 7.04
(b)(1).......................................... 2.11(c), 11.01
(b)(2).......................................... 3.06
(c)(1).......................................... 2.11(d), 4.01,
8.02(d), 11.01
(c)(2).......................................... 2.11(c), 4.01,
8.02(d), 11.01
(c)(3).......................................... 8.02(d)
(d)(1).......................................... 11.01(a)
(d)(2).......................................... 11.01(a)
(d)(3).......................................... 11.01(a)
- -------------------
(1) This Cross-Reference Table is not part of the Indenture.
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Trust Indenture Act of 1939 Indenture Section
- --------------------------- -----------------
(e)............................................. 11.01(b)
Section 315
(a)............................................. 6.01(b), 6.01(c)(1)
(b)............................................. 6.02, 11.05
(c)............................................. 6.01(a)
(d)(1).......................................... 6.01(b), 6.01(c)
(d)(2).......................................... 6.01(c)(2)
(d)(3).......................................... 6.01(c)(3)
(e)............................................. 5.15
Section 316
(a)............................................. 5.20
(b)............................................. 5.09
(c)............................................. 5.20
Section 317
(a)(1).......................................... 5.03
(a)(2).......................................... 5.05
(b)............................................. 3.01
Section 318
(a)............................................. 11.07
vi
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This INDENTURE, dated as of March 1, 2000 (as amended or supplemented
from time to time as permitted hereby, this "Indenture"), is between ABFS
MORTGAGE LOAN TRUST 2000-1, a Delaware statutory business trust (together with
its permitted successors and assigns, the "Trust"), and THE CHASE MANHATTAN
BANK, a New York banking corporation, as indenture trustee (together with its
permitted successors in the trusts hereunder, the "Indenture Trustee").
Preliminary Statement
The Trust has duly authorized the execution and delivery of this
Indenture to provide for its Mortgage Backed Notes, Series 2000-1 (the "Notes"),
issuable as provided in this Indenture. All covenants and agreements made by the
Trust herein are for the benefit and security of the Holders of the Notes and
the Note Insurer. The Trust is entering into this Indenture, and the Indenture
Trustee is accepting the trusts created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Trust in accordance with its terms have been done.
Granting Clause
The Trust hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Notes and the Note Insurer, all of the Trust's
right, title and interest in and to (a) the Mortgage Loans in Pool I and Pool II
listed in the Mortgage Loan Schedule attached as Schedule I to this Indenture
(including property that secures a Mortgage Loan that becomes an REO Property),
including the related Mortgage Files delivered or to be delivered to the
Collateral Agent, on behalf of the Indenture Trustee, pursuant to the Sale and
Servicing Agreement, including all payments of principal received, collected or
otherwise recovered after the Cut-Off Date for each Mortgage Loan, all payments
of interest due on each Mortgage Loan after the Cut-Off Date therefor whenever
received and all other proceeds received in respect of such Mortgage Loans, any
Subsequent Mortgage Loans and any Qualified Substitute Mortgage Loan, (b) the
Unaffiliated Seller's Agreement and the Sale and Servicing Agreement, (c) the
Insurance Policies, (d) all cash, instruments or other property held or required
to be deposited in the Collection Account, the Payment Accounts, the Note
Insurance Payment Account, the Pre-Funding Accounts, the Capitalized Interest
Accounts and the Cross-collateralization Reserve Accounts, including all
investments made with funds in such Accounts (but not including any income on
funds deposited in, or investments made with funds deposited in, such Accounts
other than the Pre-Funding Accounts, which income shall belong to and be for the
account of the Servicer), and (e) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid assets,
including, without limitation, all insurance proceeds and condemnation awards.
Such Grants are made, however, in trust, to secure the Notes equally and ratably
without prejudice, priority or distinction between any Note and any other Note
by reason of difference in time of issuance or otherwise, and for the benefit of
the Note Insurer to secure (x) the payment of all amounts due on the Notes in
accordance with their terms, (y) the payment of all other sums payable under
this Indenture and (z) compliance with the provisions of this Indenture, all as
provided in this Indenture. All terms used in the foregoing Granting Clause that
are defined in Appendix I are used with the meanings given in said Appendix I.
<PAGE>
The Indenture Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions of this Indenture and agrees to
perform the duties herein required to the end that the interests of the Holders
of the Notes may be adequately and effectively protected. The Indenture Trustee
agrees that it will hold the Policy in trust and that it will hold any proceeds
of any claim upon the Policy, solely for the use and benefit of the Noteholders
in accordance with the terms hereof and the Policy. In addition, the Indenture
Trustee agrees that it will acknowledge the Grant on each Subsequent Transfer
Date of the related Subsequent Mortgage Loans pursuant to the terms of the
related Subsequent Pledge Agreement, provided that the conditions precedent to
the pledge of such Subsequent Mortgage Loans contained in this Indenture and in
the Sale and Servicing Agreement are satisfied on or prior to such Subsequent
Transfer Date.
ARTICLE I
DEFINITIONS
Section 1.01 General Definitions. Except as otherwise specified or
as the context may otherwise require, the terms defined in Appendix I have the
respective meanings set forth in such Appendix I for all purposes of this
Indenture, and the definitions of such terms are applicable to the singular as
well as to the plural forms of such terms and to the masculine as well as to the
feminine genders of such terms. Whenever reference is made herein to an Event of
Default or a Default known to the Indenture Trustee or of which the Indenture
Trustee has notice or knowledge, such reference shall be construed to refer only
to an Event of Default or Default of which the Indenture Trustee is deemed to
have notice or knowledge pursuant to Section 6.01(d). All other terms used
herein that are defined in the Trust Indenture Act (as hereinafter defined),
either directly or by reference therein, have the meanings assigned to them
therein.
ARTICLE II
THE NOTES; PLEDGE OF SUBSEQUENT MORTGAGE LOANS
Section 2.01 Forms Generally. The Notes shall be substantially in the
form set forth as Exhibit A attached hereto. Each Note may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange
on which the Notes may be listed, or as may, consistently herewith, be
determined by the Trust, as evidenced by its execution thereof. Any portion of
the text of any Note may be set forth on the reverse thereof with an appropriate
reference on the face of the Note.
The Definitive Notes may be produced in any manner determined by the
Trust, as evidenced by its execution thereof.
Section 2.02 Form of Certificate of Authentication. The form of the
Authenticating Agent's certificate of authentication is as set forth on the
signature page of the form of the Note attached hereto as Exhibit A.
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Section 2.03 General Provisions With Respect to Principal and Interest
Payment. The Notes shall be designated generally as the "ABFS Mortgage Loan
Trust 2000-1, Mortgage Backed Notes, Series 2000-1".
The Notes shall be issued in the form specified in Section 2.01 hereof.
The Notes shall be issued in two Classes, the Class A-1 Notes and the Class A-2
Notes. The aggregate Original Note Principal Balance of Notes that may be
authenticated and delivered under the Indenture is limited to $200,000,000 of
Class A-1 Notes and $35,000,000 of Class A-2 Notes, except for the Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Sections 2.06, 2.07, or 9.06 of this
Indenture.
Subject to the provisions of Sections 3.01, 5.07, 5.09 and 8.02 of this
Indenture, the principal of each Class of Notes shall be payable in installments
ending no later than the related Final Stated Maturity Date, unless the unpaid
principal of such Notes become due and payable at an earlier date by declaration
of acceleration or call for redemption or otherwise.
All payments made with respect to any Note shall be applied first to the
interest then due and payable on such Note and then to the principal thereof.
All computations of interest accrued on any Class A-1 Note shall be made on the
basis of a year of 360 days and twelve 30-day months. All computations of
interest accrued on any Class A-2 Note shall be made on the basis of a year of
360 days and the actual number of days elapsed in the related Accrual Period.
Notwithstanding any of the foregoing provisions with respect to payments
of principal of and interest on the Notes, if the Notes have become or been
declared due and payable following an Event of Default and such acceleration of
maturity and its consequences have not been rescinded and annulled, then
payments of principal of and interest on the Notes shall be made in accordance
with Section 5.07 hereof.
Section 2.04 Denominations. The Notes shall be issuable only as
registered Notes in the denominations equal to the Authorized Denominations.
Section 2.05 Execution, Authentication, Delivery and Dating. The Notes
shall be executed on behalf of the Trust by an Authorized Officer of the Owner
Trustee, acting at the direction of the Certificateholders. The signature of
such Authorized Officer of the Owner Trustee on the Notes may be manual or by
facsimile.
Notes bearing the manual or facsimile signature of an individual who was
at any time an Authorized Officer of the Owner Trustee shall bind the Trust,
notwithstanding that such individual has ceased to be an Authorized Officer of
the Owner Trustee prior to the authentication and delivery of such Notes or was
not an Authorized Officer of the Owner Trustee at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Trust may deliver Notes executed on behalf of the Trust to
the Authenticating Agent for authentication, and the Authenticating Agent shall
authenticate and deliver such Notes as provided in this Indenture and not
otherwise.
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<PAGE>
Each Note authenticated on the Closing Date shall be dated the Closing
Date. All other Notes that are authenticated after the Closing Date for any
other purpose hereunder shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for in Section
2.02 hereof, executed by the Authenticating Agent by the manual signature of one
of its Authorized Officers or employees, and such certificate of authentication
upon any Note shall be conclusive evidence, and the only evidence, that such
Note has been duly authenticated and delivered hereunder.
Section 2.06 Registration, Registration of Transfer and Exchange. The
Trust shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Trust shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee is hereby initially appointed "Note Registrar" for the purpose
of registering Notes and transfers of Notes as herein provided. The Indenture
Trustee shall remain the Note Registrar throughout the term hereof. Upon any
resignation of the Indenture Trustee, the Servicer, on behalf of the Trust,
shall promptly appoint a successor, with the approval of the Note Insurer, or,
in the absence of such appointment, the Servicer, on behalf of the Trust, shall
assume the duties of Note Registrar.
Upon surrender for registration of transfer of any Note at the office or
agency of the Trust to be maintained as provided in Section 3.02 hereof, the
Owner Trustee on behalf of the Trust, acting at the direction of the
Certificateholders, shall execute, and the Authenticating Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a like
aggregate initial Note Principal Balance.
At the option of the Holder, Notes may be exchanged for other Notes of
any authorized denominations, and of a like aggregate Note Principal Balance,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange, the Owner Trustee shall execute, and
the Authenticating Agent shall authenticate and deliver, the Notes that the
Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Trust, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in the form included in Exhibit A attached hereto, duly executed by the
Holder thereof or its attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Note Registrar, on behalf of the Trust, may require
payment of a sum sufficient to cover any tax or other governmental charge as may
be imposed in connection with any
4
<PAGE>
registration of transfer or exchange of Notes, other than exchanges pursuant to
Section 2.07 hereof not involving any transfer or any exchange made by the Note
Insurer.
No transfer of a Note shall be made to the Unaffiliated Seller or, to
the actual knowledge of a Responsible Officer of the Indenture Trustee, to any
of the Unaffiliated Seller's Affiliates, successors or assigns.
The Note Registrar shall not register the transfer of a Note unless the
Note Registrar has received a representation letter from the transferee to the
effect that either (i) the transferee is not, and is not acquiring the Note on
behalf of or with the assets of, an employee benefit plan or other retirement
plan or arrangement that is subject to Title I of the Employee Retirement Income
Security Act or 1974, as amended, or Section 4975 of the Code or (ii) the
acquisition and holding of the Note by the transferee qualifies for exemptive
relief under a Department of Labor Prohibited Transaction Class Exemption. Each
Beneficial Owner of a Note which is a Book-Entry Note shall be deemed to make
one of the foregoing representations.
Section 2.07 Mutilated, Destroyed, Lost or Stolen Notes. If (1) any
mutilated Note is surrendered to the Note Registrar or the Note Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (2) there is delivered to the Note Registrar such security or
indemnity as may be required by the Note Registrar to save each of the Trust,
the Owner Trustee, the Note Insurer and the Note Registrar harmless, then, in
the absence of notice to the Note Registrar that such Note has been acquired by
a bona fide purchaser, the Owner Trustee on behalf of the Trust, acting at the
direction of the Certificateholders, shall execute and upon its delivery of a
Trust Request the Authenticating Agent shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
new Note or Notes of the same tenor and aggregate initial principal amount
bearing a number not contemporaneously outstanding. If, after the delivery of
such new Note, a bona fide purchaser of the original Note in lieu of which such
new Note was issued presents for payment such original Note, the Note Registrar,
shall be entitled to recover such new Note from the person to whom it was
delivered or any person taking therefrom, except a bona fide purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expenses incurred by the Trust, the
Owner Trustee, the Note Insurer or the Note Registrar in connection therewith.
If any such mutilated, destroyed, lost or stolen Note shall have become or shall
be about to become due and payable, or shall have become subject to redemption
in full, instead of issuing a new Note, the Trust may pay such Note without
surrender thereof, except that any mutilated Note shall be surrendered.
Upon the issuance of any new Note under this Section 2.07, the Note
Registrar, may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Trust, the Indenture
Trustee or the Note Registrar) connected therewith.
Every new Note issued pursuant to this Section 2.07 in lieu of any
destroyed, lost or stolen Note shall constitute an original contractual
obligation of the Trust, whether or not the destroyed, lost or stolen Note shall
be at any time enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
5
<PAGE>
The provisions of this Section 2.07 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.08 Payments of Principal and Interest. (a) Payments on
Notes issued as Book-Entry Notes will be made by or on behalf of the Indenture
Trustee to the Clearing Agency or its nominee. Any installment of interest or
principal payable on any Definitive Notes that is punctually paid or duly
provided for by the Trust on the applicable Payment Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
at the close of business on the Record Date for such Class of Notes and such
Payment Date by either (i) check mailed to such Person's address as it appears
in the Note Register on such Record Date, or (ii) by wire transfer of
immediately available funds to the account of a Noteholder, if such Noteholder
(A) is the registered holder of Definitive Notes having an initial principal
amount of at least $1,000,000 and (B) has provided the Indenture Trustee with
wiring instructions in writing by five (5) Business Days prior to the related
Record Date or has provided the Indenture Trustee with such instructions for any
previous Payment Date, except for the final installment of principal payable
with respect to such Note, which shall be payable as provided in subsection (b)
of this Section 2.08. A fee may be charged by the Indenture Trustee to a Holder
of Definitive Notes for any payment made by wire transfer. Any installment of
interest or principal not punctually paid or duly provided for shall be payable
as soon as funds are available to the Indenture Trustee for payment thereof, or
if Section 5.07 applies, pursuant to Section 5.07.
(b) All reductions in the Note Principal Balance of a Note (or one or
more Predecessor Notes) effected by payments of installments of principal made
on any Payment Date shall be binding upon all Holders of such Note and of any
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, whether or not such payment is noted on such Note. The final
installment of principal of each Note shall be payable only upon presentation
and surrender thereof on or after the Payment Date therefor at the Corporate
Trust Office of the Indenture Trustee located within the United States of
America pursuant to Section 3.02.
Whenever the Indenture Trustee expects that the entire unpaid Note
Principal Balance of any Note will become due and payable on the next Payment
Date, other than pursuant to a redemption pursuant to Article X, it shall, no
later than two (2) Business Days prior to such Payment Date, telecopy or hand
deliver to each Person in whose name a Note to be so retired is registered at
the close of business on such otherwise applicable Record Date a notice to the
effect that:
(i) the Indenture Trustee expects that funds sufficient to pay such
final installment will be available in the related Payment Account on such
Payment Date; and
(ii) if such funds are available, (A) such final installment will be
payable on such Payment Date, but only upon presentation and surrender of
such Note at the office or agency of the Note Registrar maintained for such
purpose pursuant to Section 3.02 (the address of which shall be set forth in
such notice) and (B) no interest shall accrue on such Note after such
Payment Date.
6
<PAGE>
A copy of such form of notice shall be sent to the Note Insurer by the
Indenture Trustee.
Notices in connection with redemptions of Notes shall be mailed to
Noteholders in accordance with Section 10.02 hereof.
(c) Subject to the foregoing provisions of this Section 2.08, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to unpaid principal and
interest that were carried by such other Note. Any checks mailed pursuant to
subsection (a) of this Section 2.08 and returned undelivered shall be held in
accordance with Section 3.03 hereof.
(d) Each (i) Noteholder Statement, shall be prepared by the Servicer
based on the Servicer calculations of the loan level data provided in the
Servicer Remittance Report delivered to the Indenture Trustee pursuant to the
Sale and Servicing Agreement, and (ii) the Servicer Remittance Report shall be
delivered by the Indenture Trustee to the Note Insurer, the Rating Agencies, the
Owner Trustee, the Depositor and each Noteholder as the statements required
pursuant to Section 8.06 hereof. Neither the Indenture Trustee nor the
Collateral Agent shall have any responsibility to recalculate, verify or
recompute information contained in any such tape, electronic data file or disk
or any such Servicer Remittance Report except to the extent necessary to satisfy
all obligations under this Section 2.08(d).
Within ninety (90) days after the end of each calendar year, the
Indenture Trustee will be required to furnish to each Person who at any time
during the calendar year was a Noteholder, if requested in writing by such
person, a statement containing the information set forth in subclauses (a), (b)
and (c) in the definition of "Noteholder Statement," aggregated for such
calendar year or the applicable portion thereof during which such person was a
Noteholder. Such obligation will be deemed to have been satisfied to the extent
that substantially comparable information is provided pursuant to any
requirements of the Code as are from time to time in force.
From time to time (but no more than once per calendar month), upon the
written request of the Depositor, the Servicer or the Note Insurer, the
Indenture Trustee shall report to the Depositor, the Servicer and the Note
Insurer the amount then held in each Account (including investment earnings
accrued) held by the Indenture Trustee and the identity of the investments
included therein. From time to time, at the request of the Note Insurer, the
Indenture Trustee shall report to the Note Insurer with respect to the actual
knowledge of a Responsible Officer, without independent investigation, of any
breach of any of the representations or warranties relating to individual
Mortgage Loans set forth in Section 3.03 of the Unaffiliated Seller's Agreement.
The Indenture Trustee shall also provide the Note Insurer such other information
within its control as may be reasonably requested by it.
Section 2.09. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, any agent on behalf of the Trust including
but not limited to the Indenture Trustee, or the Note Insurer, may treat the
Person in whose name any Note is registered as the owner of such Note (a) on the
applicable Record Date for the purpose of receiving payments of the principal of
and interest on such Note and (b) on any other date for all
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<PAGE>
other purposes whatsoever, and none of the Trust, the Indenture Trustee or any
other agent of the Trust, or the Note Insurer shall be affected by notice to the
contrary.
Section 2.10. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Note Registrar, be delivered to the Note Registrar and
shall be promptly canceled by it. The Owner Trustee, on behalf of the Trust,
shall deliver to the Note Registrar for cancellation any Note previously
authenticated and delivered hereunder which the Owner Trustee, on behalf of the
Trust may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly canceled by the Note Registrar. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section 2.10, except as expressly permitted by this Indenture. All
cancelled Notes held by the Note Registrar shall be held by the Note Registrar
in accordance with its standard retention policy, unless the Owner Trustee, on
behalf of the Trust shall direct by a Trust Order that they be destroyed or
returned to it.
Section 2.11. Authentication and Delivery of Notes. The Notes shall be
executed by an Authorized Officer of the Owner Trustee, on behalf of the Trust,
and delivered to the Authenticating Agent for authentication, and thereupon the
same shall be authenticated and delivered by the Authenticating Agent, upon a
Trust Request and upon receipt by the Authenticating Agent of all of the
following:
(a) A Trust Order authorizing the execution, authentication and delivery
of the Notes and specifying the Note Principal Balance and the Percentage
Interest of such Notes to be authenticated and delivered.
(b) A Trust Order authorizing the execution and delivery of this
Indenture and the Sale and Servicing Agreement.
(c) One or more Opinions of Counsel (which opinion shall not be at the
expense of the Indenture Trustee or the Trust) addressed to the Authenticating
Agent and the Note Insurer or upon which the Authenticating Agent and the Note
Insurer are expressly permitted to rely, complying with the requirements of
Section 11.01, reasonably satisfactory in form and substance to the
Authenticating Agent and the Note Insurer.
In rendering the opinions set forth above, such counsel may rely upon
Officer's Certificates of the Trust, the Owner Trustee, the Unaffiliated Seller,
the Originators, the Depositor, the Servicer and the Indenture Trustee, without
independent confirmation or verification with respect to factual matters
relevant to such opinions. In rendering the opinions set forth above, such
counsel need express no opinion as to (A) the existence of, or the priority of
the security interest created by the Indenture against, any liens or other
interests that arise by operation of law and that do not require any filing or
similar action in order to take priority over a perfected security interest or
(B) the priority of the security interest created by this Indenture with respect
to any claim or lien in favor of the United States or any agency or
instrumentality thereof (including federal tax liens and liens arising under
Title IV of ERISA).
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<PAGE>
The acceptability to the Note Insurer of the Opinion of Counsel
delivered to the Authenticating Agent and the Note Insurer at the Closing Date
shall be conclusively evidenced by the delivery on the Closing Date of the
Policy.
(d) An Officer's Certificate of the Trust complying with the
requirements of Section 11.01 and stating that:
(i) the Trust is not in Default under this Indenture and the issuance of
the Notes will not result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, the Trust's Certificate of
Trust or any indenture, mortgage, deed of trust or other agreement or
instrument to which the Trust is a party or by which it is bound, or any
order of any court or administrative agency entered in any proceeding to
which the Trust is a party or by which it may be bound or to which it may be
subject, and that all conditions precedent provided in this Indenture
relating to the authentication and delivery of the Notes have been complied
with;
(ii) the Trust is the owner of each Mortgage Loan, free and clear of any
lien, security interest or charge, has not assigned any interest or
participation in any such Mortgage Loan (or, if any such interest or
participation has been assigned, it has been released) and has the right to
Grant each such Mortgage Loan to the Indenture Trustee;
(iii) the information set forth in the Mortgage Loan Schedule attached
as Schedule I to this Indenture is correct;
(iv) the Trust has Granted to the Indenture Trustee all of its right,
title and interest in each Mortgage Loan; and
(v) as of the Closing Date, no lien in favor of the United States
described in Section 6321 of the Code, or lien in favor of the Pension
Benefit Guaranty Corporation described in Section 4068(a) of the ERISA, has
been filed as described in subsections 6323(f) and 6323(g) of the Code upon
any property belonging to the Trust.
(e) An executed counterpart of the Sale and Servicing Agreement.
(f) An executed counterpart of the Unaffiliated Seller's Agreement.
(g) An executed counterpart of the Trust Agreement.
(h) An executed copy of the Insurance Agreement.
(i) An original executed copy of the Policy.
(j) A copy of a letter from Moody's that is has assigned a rating of
"Aaa" to the Notes, a copy of a letter from S&P that it has assigned a rating of
"AAA" to the Notes and a copy of a letter from DCR that it has assigned a rating
of "AAA" to the Notes.
Section 2.12. Book-Entry Note. The Notes will be issued initially as
one or more certificates in the name of Cede & Co., as nominee for the Clearing
Agency maintaining
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<PAGE>
book-entry records with respect to ownership and transfer of such Notes, and
registration of the Notes may not be transferred by the Note Registrar except
upon Book-Entry Termination. In such case, the Note Registrar shall deal with
the Clearing Agency as representative of the Beneficial Owners of such Notes for
purposes of exercising the rights of Noteholders hereunder. Each payment of
principal of and interest on a Book-Entry Note shall be paid to the Clearing
Agency, which shall credit the amount of such payments to the accounts of its
Clearing Agency Participants in accordance with its normal procedures. Each
Clearing Agency Participant shall be responsible for disbursing such payments to
the Beneficial Owners of the Book-Entry Notes that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Beneficial Owners of the Book-Entry
Notes that it represents. All such credits and disbursements are to be made by
the Clearing Agency and the Clearing Agency Participants in accordance with the
provisions of the Notes. None of the Indenture Trustee, the Note Registrar, if
any, the Trust or the Note Insurer shall have any responsibility therefor except
as otherwise provided by applicable law. Requests and directions from, and votes
of, such representatives shall not be deemed to be inconsistent if they are made
with respect to different Beneficial Owners.
Section 2.13. Termination of Book Entry System. (a) The book-entry
system through the Clearing Agency with respect to the Book-Entry Notes may be
terminated upon the happening of any of the following:
(i) The Clearing Agency advises the Indenture Trustee that the Clearing
Agency is no longer willing or able to discharge properly its
responsibilities as nominee and depositary with respect to the Notes and the
Indenture Trustee is unable to locate a qualified successor Clearing Agency
satisfactory to the Servicer, on behalf of the Trust;
(ii) The Majority Certificateholders, on behalf of the Trust, in their
sole discretion, elects to terminate the book-entry system by notice to the
Clearing Agency and the Indenture Trustee; or
(iii) After the occurrence of an Event of Default (at which time the
Indenture Trustee shall use all reasonable efforts to promptly notify each
Beneficial Owner through the Clearing Agency of such Event of Default), the
Beneficial Owners of no less than 51% of the Note Principal Balance of the
Book-Entry Notes advise the Indenture Trustee in writing, through the
related Clearing Agency Participants and the Clearing Agency, that the
continuation of a book-entry system through the Clearing Agency to the
exclusion of any Definitive Notes being issued to any person other than the
Clearing Agency or its nominee is no longer in the best interests of the
Beneficial Owners.
(b) Upon the occurrence of any event described in subsection (a) of this
Section 2.13, the Indenture Trustee shall use all reasonable efforts to notify
all Beneficial Owners, through the Clearing Agency, of the occurrence of such
event and of the availability of Definitive Notes to Beneficial Owners
requesting the same, in an aggregate outstanding Note Principal Balance
representing the interest of each, making such adjustments and allowances as it
may find necessary or appropriate as to accrued interest and previous calls for
redemption. Definitive Notes shall be issued only upon surrender to the
Indenture Trustee of the global Note
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by the Clearing Agency, accompanied by registration instructions for the
Definitive Notes. Neither the Trust nor the Indenture Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon issuance of the
Definitive Notes, all references herein to obligations imposed upon or to be
performed by the Clearing Agency shall cease to be applicable and the provisions
relating to Definitive Notes shall be applicable.
Section 2.14. Pledge of Subsequent Mortgage Loans. (a) Subject to
the satisfaction of the conditions set forth in paragraph (b) of this Section
2.14, in consideration of the Indenture Trustee's delivery on the related
Subsequent Transfer Dates to or upon the order of the Servicer, on behalf of the
Trust, of all or a portion of the balance of funds in either Pre-Funding
Account, the Trust shall on any Subsequent Transfer Date pledge, without
recourse, to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, all right, title and interest of the Trust in and to the related
Subsequent Mortgage Loans, including the outstanding principal of, and interest
due on, such Subsequent Mortgage Loans, and all other assets in the Trust Estate
relating to the Subsequent Mortgage Loans. In connection with such pledge, and
pursuant to Section 2.07 of the Unaffiliated Seller's Agreement and Section 2.09
of the Sale and Servicing Agreement, the Trust does hereby also irrevocably
pledge to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, all of its rights under the Sale and Servicing Agreement, the
Unaffiliated Seller's Agreement, the related Subsequent Contribution Agreement
and the related Subsequent Transfer Agreement, including, without limitation,
its right to exercise the remedies created by Sections 2.06 and 3.05 of the
Unaffiliated Seller's Agreement for defective documentation and for breaches of
representations and warranties, agreement and covenants of the Unaffiliated
seller contained in Section 3.01, 3.02 and 3.03 of the Unaffiliated Seller's
Agreement.
The amount released from either Pre-Funding Account with respect to a
transfer of Subsequent Mortgage Loans shall be one-hundred percent (100%) of the
Aggregate Principal Balances of the Subsequent Mortgage Loans so pledged, as of
the related Subsequent Cut-Off Date.
(b) The Subsequent Mortgage Loans and the other property and rights
related thereto described in paragraph (a) of this Section 2.14 shall be pledged
by the Trust to the Indenture Trustee, for the benefit of the Noteholders and
the Note Insurer, 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 Trust, the
Depositor, the Indenture Trustee, the Collateral Agent, the Rating Agencies
and the Note Insurer with an Addition Notice at least two (2) Business Days
prior to the Subsequent Transfer Date, 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 parties with
respect to the Subsequent Mortgage Loans;
(ii) the Unaffiliated Seller shall have caused the Servicer to deposit
in the Collection Account all collections of (x) principal in respect of the
Subsequent Mortgage
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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, neither the Unaffiliated
Seller nor the Depositor shall be insolvent, neither shall be made insolvent
by such transfer and neither shall be aware of any pending insolvency;
(iv) such Subsequent Transfer shall not result in a material adverse tax
consequence to the Trust or the Holders of the Notes;
(v) the related Pre-Funding Period shall not have terminated;
(vi) the Unaffiliated Seller shall have delivered to the Indenture
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and each complies with
the terms of the Unaffiliated Seller's Agreement, including each of the
representations and warranties made with respect thereto in Section 3.03 of
the Unaffiliated Seller's Agreement; provided, that each representation in
Section 3.03(tt) (other than clause (v)) may be waived or modified with the
prior written consent of the Note Insurer;
(vii) there shall have been delivered to the Note Insurer, the Trust,
the Collateral Agent, the Rating Agencies and the Indenture 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 Depositor, the Note Insurer, the Trust, the
Collateral Agent, the Rating Agencies and the Indenture Trustee on the
Closing Date (i.e. bankruptcy, corporate and tax opinions);
(viii) the Indenture Trustee shall have received a written consent from
the Note Insurer in the form of Exhibit C hereto;
(ix) the Originators, the Unaffiliated Seller and the Depositor shall
have delivered to the Indenture Trustee an executed copy of a Subsequent
Transfer Agreement, substantially in the form of Exhibit A to the
Unaffiliated Seller's Agreement;
(x) the Depositor and the Trust shall have delivered to the Indenture
Trustee an executed copy of a Subsequent Contribution Agreement,
substantially in the form of Exhibit G to the Sale and Servicing Agreement,
and
(xi) the Trust and the Indenture Trustee shall have executed a
Subsequent Pledge Agreement, substantially in the form of Exhibit B hereto.
(c) In connection with the transfer, assignment and pledge of the
Subsequent Mortgage Loans, the Unaffiliated Seller shall satisfy the document
delivery requirements set forth in Section 2.05 of the Sale and Servicing
Agreement.
(d) On each Subsequent Transfer Date upon written instruction from the
Unaffiliated Seller, the Indenture Trustee shall withdraw from the related
Capitalized Interest Account and pay to the Unaffiliated Seller on such
Subsequent Transfer Date the Overfunded
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Interest Amount for such Subsequent Transfer Date, as calculated by the Servicer
and subject to the approval of the Note Insurer.
ARTICLE III
COVENANTS
Section 3.01. Payment of Notes. The Servicer, on behalf of the Trust
will pay or cause to be duly and punctually paid the principal of, and interest
on, the Notes in accordance with the terms of the Notes and this Indenture. The
Notes shall be non-recourse obligations of the Trust and shall be limited in
right of payment to amounts available from the Trust Estate as provided in this
Indenture and the Trust shall not otherwise be liable for payments on the Notes.
No person shall be personally liable for any amounts payable under the Notes. If
any other provision of this Indenture conflicts or is deemed to conflict with
the provisions of this Section 3.01, the provisions of this Section 3.01 shall
control.
Section 3.02. Maintenance of Office or Agency. The Indenture Trustee
will always maintain its corporate trust office at a location in the United
States of America where Notes may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Trust in respect of the
Notes and this Indenture may be served. Such location shall be the Corporate
Trust Office of the Indenture Trustee.
The Owner Trustee, at the direction of the Majority Certificateholder,
on behalf of the Trust may also from time to time, at the expense of the
Majority Certificateholders, designate one or more other offices or agencies
within the United States of America where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, any designation of an office or agency for
payment of Notes shall be subject to Section 3.03 hereof. The Owner Trustee, at
the direction of the Majority Certificateholders, on behalf of the Trust will
give prompt written notice to the Indenture Trustee and the Note Insurer of any
such designation or rescission and of any change in the location of any such
other office or agency.
Section 3.03. Money for Note Payments to Be Held In Trust. All payments
of amounts due and payable with respect to any Notes that are to be made from
amounts withdrawn from the related Payment Account pursuant to Sections 5.07 or
8.02 hereof shall be made on behalf of the Trust by the Indenture Trustee, and
no amounts so withdrawn from the related Payment Account for payments on the
Notes shall be paid over to the Trust under any circumstances except as provided
in this Section 3.03 or in Sections 5.07 or 8.02 hereof.
With respect to Definitive Notes, if the Trust shall have a Note
Registrar that is not also the Indenture Trustee, such Note Registrar shall
furnish, no later than the fifth (5th) calendar day after each Record Date, a
list, in such form as such Indenture Trustee may reasonably require, of the
names and addresses of the Holders of Notes and of the number of Individual
Notes held by each such Holder.
Whenever the Trust shall have a Paying Agent other than the Indenture
Trustee, the Servicer, on behalf of the Trust, will, on or before the Business
Day next preceding each
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Payment Date, direct the Indenture Trustee to deposit with such Paying Agent an
aggregate sum sufficient to pay the amounts then becoming due (to the extent
funds are then available for such purpose in the related Payment Account), such
sum to be held in trust for the benefit of the Persons entitled thereto. Any
moneys deposited with a Paying Agent in excess of an amount sufficient to pay
the amounts then becoming due on the Notes with respect to which such deposit
was made shall, upon Trust Order, be paid over by such Paying Agent to the
Indenture Trustee for application in accordance with Article VIII hereof.
Subject to the prior written consent of the Note Insurer, any Paying
Agent other than the Indenture Trustee may be appointed by Trust Order and at
the expense of the Trust. The Trust shall not appoint any Paying Agent (other
than the Indenture Trustee) that is not, at the time of such appointment, a
depository institution or trust company whose obligations would be Permitted
Investments pursuant to clause (b) of the definition of the term "Permitted
Investments". The Servicer, on behalf of the Trust, will cause each Paying Agent
other than the Indenture Trustee to execute and deliver to the Indenture Trustee
and the Owner Trustee, on behalf of the Trust, an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
(a) allocate all sums received for payment to the Holders of Notes on
each Payment Date among such Holders in the proportion specified in the
applicable Noteholder Statement, in each case to the extent permitted by
applicable law;
(b) hold all sums held by it for the payment of amounts due with respect
to the Notes in trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided;
(c) if such Paying Agent is not the Indenture Trustee, immediately
resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums
held by it in trust for the payment of the Notes if at any time the Paying Agent
ceases to meet the standards set forth above required to be met by a Paying
Agent at the time of its appointment;
(d) if such Paying Agent is not the Indenture Trustee, give the
Indenture Trustee notice of any Default by the Trust (or any other obligor upon
the Notes) in the making of any payment required to be made with respect to any
Notes for which it is acting as Paying Agent;
(e) if such Paying Agent is not the Indenture Trustee, at any time
during the continuance of any such Default, upon the written request of the
Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in
trust by such Paying Agent; and
(f) comply with all requirements of the Code, and all regulations
thereunder, with respect to withholding from any payments made by it on any
Notes of any applicable withholding taxes imposed thereon and with respect to
any applicable reporting requirements in connection therewith; provided,
however, that with respect to withholding and reporting requirements applicable
to original issue discount (if any) on any of the Notes, the Servicer, on
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behalf of the Trust, has provided the calculations pertaining thereto to the
Indenture Trustee and the Paying Agent.
The Trust may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Trust
Order direct any Paying Agent, if other than the Indenture Trustee, to pay to
the Indenture Trustee all sums held in trust by such Paying Agent, such sums to
be held by the Indenture Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and upon such payment by any Paying Agent
to the Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money held by the Indenture Trustee or any Paying Agent in trust for
the payment of any amount due with respect to any Note and remaining unclaimed
for two and one-half years after such amount has become due and payable to the
Holder of such Note (or if earlier, three months before the date on which such
amount would escheat to a governmental entity under applicable law) shall be
discharged from such trust and paid to the Trust; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Trust for
payment thereof (but only to the extent of the amounts so paid to the Trust),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease. The Indenture Trustee may adopt and
employ, at the expense of the Trust, any reasonable means of notification of
such repayment (including, but not limited to, mailing notice of such repayment
to Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Indenture Trustee or any Paying
Agent, at the last address of record for each such Holder).
Section 3.04. Existence of Trust. (a) Subject to clauses (b) and (c)
of this Section 3.04, the Trust will keep in full effect its existence, rights
and franchises as a business trust under the laws of the State of Delaware or
under the laws of any other state of the United States of America, and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes and the other Basic Documents.
(b) Subject to Section 3.09(g) hereof, and with the prior written
consent of the Note Insurer, any entity into which the Trust may be merged or
with which it may be consolidated, or any entity resulting from any merger or
consolidation to which the Trust shall be a party, shall be the successor issuer
under this Indenture without the execution or filing of any paper, instrument or
further act to be done on the part of the parties hereto, anything in any
agreement relating to such merger or consolidation, by which any such Trust may
seek to retain certain powers, rights and privileges therefore obtaining for any
period of time following such merger or consolidation to the contrary
notwithstanding (other than Section 3.09(g)).
(c) Upon any consolidation or merger of or other succession to the Trust
in accordance with this Section 3.04, the Person formed by or surviving such
consolidation or merger (if other than the Trust) may exercise every right and
power of, and shall have all of the obligations of, the Trust under this
Indenture with the same effect as if such Person had been named as the issuer
herein.
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Section 3.05. Protection of Trust Estate. (a) The Trust will, from
time to time, execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action as may be
necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust Estate as
made by this Indenture;
(ii) maintain or preserve the lien of this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iv) enforce any of the Mortgage Loans, the Sale and Servicing
Agreement, or the Unaffiliated Seller's Agreement; or
(v) preserve and defend title to the Trust Estate and the rights of the
Indenture Trustee, the Noteholders and the Note Insurer in the Mortgage
Loans and the other property held as part of the Trust Estate against the
claims of all Persons and parties.
(b) The Indenture Trustee shall not, and shall not permit the Collateral
Agent to, remove any portion of the Trust Estate that consists of money or is
evidenced by an instrument, certificate or other writing from the jurisdiction
in which it was held at the Closing Date or cause or permit ownership or the
pledge of any portion of the Trust Estate that consists of book-entry securities
to be recorded on the books of a Person located in a different jurisdiction from
the jurisdiction in which such ownership or pledge was recorded at such time
unless the Indenture Trustee shall have first received an Opinion of Counsel to
the effect that the lien and security interest created by this Indenture with
respect to such property will continue to be maintained after giving effect to
such action or actions.
Section 3.06. Opinions as to the Trust Estate. On or before April 30th
in each calendar year, beginning in 2001, the Servicer, on behalf of the Trust,
shall furnish to the Indenture Trustee and the Note Insurer an Opinion of
Counsel reasonably satisfactory in form and substance to the Indenture Trustee
and the Note Insurer either stating that, in the opinion of such counsel, such
action has been taken as is necessary to maintain the lien and security interest
created by this Indenture and reciting the details of such action or stating
that in the opinion of such counsel no such action is necessary to maintain such
lien and security interest. Such Opinion of Counsel shall also describe all such
action, if any, that will, in the opinion of such counsel, be required to be
taken to maintain the lien and security interest of this Indenture with respect
to the Trust Estate until May 1st in the following calendar year.
Section 3.07. Performance of Obligations. (a) The Trust shall
punctually perform and observe all of its obligations under this Indenture and
the other Basic Documents.
(b) The Trust shall not take any action and will use its Best Efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's covenants or obligations under any of the Mortgage
Files or under any instrument included in the
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Trust Estate, or that would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any of the documents or instruments contained in the Mortgage
Files, except as expressly permitted in this Indenture, the other Basic
Documents or such document included in the Mortgage File or other instrument or
unless such action will not adversely affect the interests of the Noteholders
and the Note Insurer.
(c) If the Servicer or the Owner Trustee, on behalf of the Trust, shall
have knowledge of the occurrence of a default under the Sale and Servicing
Agreement or the Unaffiliated Seller's Agreement, the Servicer or the Owner
Trustee, as applicable, shall promptly notify the Indenture Trustee, the Note
Insurer and the Rating Agencies thereof, and, in the case of the Servicer, shall
specify in such notice the action, if any, the Servicer is taking with respect
to such default.
(d) Upon any termination of the Servicer's rights and powers pursuant to
the Sale and Servicing Agreement, the Indenture Trustee shall promptly notify
the Note Insurer and the Rating Agencies. As soon as any successor Servicer is
appointed, the Indenture Trustee shall notify the Note Insurer and the Rating
Agencies, specifying in such notice the name and address of such successor
Servicer.
Section 3.08. Investment Company Act. The Trust shall at all times
conduct its operations so as not to be subject to, or shall comply with, the
requirements of the Investment Company Act of 1940, as amended (or any successor
statute), and the rules and regulations thereunder.
Section 3.09. Negative Covenants. The Trust shall not:
(a) sell, transfer, exchange or otherwise dispose of any portion of the
Trust Estate, except as expressly permitted by this Indenture and the other
Basic Documents;
(b) claim any credit on, or make any deduction from, the principal of,
or interest on, any of the Notes by reason of the payment of any taxes levied or
assessed upon any portion of the Trust Estate;
(c) engage in any business or activity other than as permitted by the
Trust Agreement or other than in connection with, or relating to, the issuance
of the Notes pursuant to this Indenture, or amend the Trust Agreement, as in
effect on the Closing Date, other than in accordance with Section 11.01 of the
Trust Agreement;
(d) incur, issue, assume or otherwise become liable for an indebtedness
other than the Notes;
(e) incur, assume, guaranty or agree to indemnify any Person with
respect to any indebtedness of any Person, except for such indebtedness as may
be incurred by the Trust in connection with the issuance of the Notes pursuant
to this Indenture;
(f) subject to Article IX of the Trust Agreement, dissolve or liquidate
in whole or in part (until the Notes are paid in full);
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(g) (i) permit the validity or effectiveness of this Indenture or any
Grant to be impaired, or permit the lien of this Indenture to be impaired,
amended, hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations under this Indenture,
except as may be expressly permitted hereby, (ii) permit any lien, charge,
security interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or burden the
Trust Estate or any part thereof or any interest therein or the proceeds
thereof, or (iii) permit the lien of this Indenture not to constitute a valid
perfected first priority security interest in the Trust Estate; or
(h) take any other action that should reasonably be expected to, or fail
to take any action if such failure should reasonably be expected to, cause the
Trust to be taxable as (x) an association pursuant to Section 7701 of the Code
or (y) a taxable mortgage pool pursuant to Section 7701(i) of the Code.
Section 3.10. Annual Statement as to Compliance. (a) On or before
April 30, 2001, and each April 30 thereafter, the Servicer, on behalf of the
Trust, shall deliver to the Indenture Trustee, the Note Insurer and the
Depositor a written statement, signed by an Authorized Officer of the Servicer,
on behalf of the Trust, stating that:
(b) a review of the fulfillment by the Trust during such year of its
obligations under this Indenture has been made under such Authorized Officer's
supervision; and
(c) to the best of such Authorized Officer's knowledge, based on such
review, the Trust has complied with all conditions and covenants under this
Indenture throughout such year, or, if there has been a Default in the
fulfillment of any such covenant or condition, specifying each such Default
known to such Authorized Officer and the nature and status thereof.
Section 3.11. Restricted Payments. The Trust shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the Trust
or otherwise with respect to any ownership or equity interest or security in or
of the Trust or to the Servicer, (ii) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or (iii) set
aside or otherwise segregate any amounts for any such purpose; provided,
however, that the Trust may make, or cause to be made, distributions to the
Servicer, the Indenture Trustee, the Owner Trustee, the Note Insurer and the
Certificateholders as contemplated by, and to the extent funds are available for
such purpose under this Indenture and the other Basic Documents and the Trust
will not, directly or indirectly, make or cause to be made payments to or
distributions from either Payment Account except in accordance with this
Indenture.
Section 3.12. Treatment of Notes as Debt for Tax Purposes. For purposes
of federal, state and local income, franchise and any other income taxes, the
Trust will treat the Notes as indebtedness, and hereby instructs the Indenture
Trustee, Payee Agent and the Servicer, on behalf of the Trust to treat the Notes
as indebtedness for all applicable tax reporting purposes.
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Section 3.13. Notice of Events of Default. The Servicer, on behalf of
the Trust, shall give the Indenture Trustee, the Note Insurer, the Rating
Agencies and the Depositor prompt written notice of each Event of Default
hereunder, each default on the part of the Servicer of its obligations under the
Sale and Servicing Agreement and each default on the part of the Unaffiliated
Seller of its obligations under the Unaffiliated Seller's Agreement.
Section 3.14. Further Instruments and Acts. Upon written request of the
Indenture Trustee or the Note Insurer, the Owner Trustee, on behalf of the
Trust, will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. Whenever the
following conditions shall have been satisfied:
(a) either
(i) all Notes theretofore authenticated and delivered (other than (x)
Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.07 hereof, and (y) Notes for whose payment
money has theretofore been deposited in trust and thereafter repaid to the
Trust, as provided in Section 3.03 hereof) have been delivered to the Note
Registrar for cancellation; or
(ii) all Notes not theretofore delivered to the Note Registrar for
cancellation, (A) have become due and payable, or (B) will become due and
payable at the Final Stated Maturity Date within one (1) year, or (C) are to
be called for redemption pursuant to Section 10.01 hereof within one (1)
year under irrevocable arrangements satisfactory to the Indenture Trustee
for the giving of notice of redemption by the Indenture Trustee in the name,
and at the expense, of the Certificateholder or Servicer, as applicable,
and the Certificateholder, in the case of clause ii(C), or Servicer, in the case
of clauses (ii)(A), (ii)(B) or (ii)(C) above, has irrevocably deposited or
caused to be deposited with the Indenture Trustee, in trust for such purpose, an
amount sufficient to pay and discharge the entire unpaid Note Principal Balance
of such Notes not theretofore delivered to the Indenture Trustee for
cancellation, for principal and interest to the Final Stated Maturity Date or to
the applicable Redemption Date, as the case may be, and in the case of Notes
that were not paid at the Final Stated Maturity Date of their entire unpaid Note
Principal Balance, for all overdue principal and all interest payable on such
Notes to the next succeeding Payment Date therefor;
(b) the Servicer, on behalf of the Trust, has paid or caused to be paid
all other sums payable hereunder by the Trust (including, without limitation,
amounts due the Note Insurer); and
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(c) the Servicer, on behalf of the Trust, has delivered to the Indenture
Trustee and the Note Insurer an Officers' Certificate and an Opinion of Counsel
satisfactory in form and substance to the Indenture Trustee and the Note Insurer
each stating that all conditions precedent herein providing for the satisfaction
and discharge of this Indenture have been complied with;
then, upon a Trust Request, this Indenture and the lien, rights and interests
created hereby and thereby shall cease to be of further effect, and the
Indenture Trustee and each co-trustee and separate trustee, if any, then acting
as such hereunder shall, at the expense of the Trust (or of the Servicer in the
case of a redemption by the Servicer pursuant to Section 10.01 hereof), execute
and deliver all such instruments as may be necessary to acknowledge the
satisfaction and discharge of this Indenture and shall pay, or assign or
transfer and deliver, to the Trust or upon Trust Order all cash, securities and
other property held by it as part of the Trust Estate remaining after
satisfaction of the conditions set forth in clauses (a) and (b) above.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Indenture Trustee and any Paying Agent to the Trust and the
Holders of Notes under Section 3.03 hereof, the obligations of the Indenture
Trustee to the Holders of Notes under Section 4.02 hereof and the provisions of
Section 2.07 hereof with respect to lost, stolen, destroyed or mutilated Notes,
registration of transfers of Notes and rights to receive payments of principal
of and interest on the Notes shall survive.
Section 4.02. Application of Trust Money. All money deposited with the
Indenture Trustee pursuant to Sections 3.03 and 4.01 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Persons entitled thereto, of the
principal and interest for whose payment such money has been deposited with the
Indenture Trustee.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Event of Default. "Event of Default", wherever used
herein, means, with respect to Notes issued hereunder, any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) if the Trust shall fail to distribute or cause to be distributed to
the Indenture Trustee, for the benefit of the holders of the Notes, on any
Payment Date, any Interest Payment Amount or shall fail to pay any Net Mortgage
Loan Interest Shortfalls on the Final Stated Maturity Date for the applicable
Class of Notes or shall fail to pay on the Final Stated Maturity Date of the
Class A-2 Notes any Class A-2 Available Funds Cap Carry-Forward Amount due on
the Notes;
(b) if the Trust shall fail to distribute or cause to be distributed to
the Indenture Trustee, for the benefit of the holders of the Notes, (x) on any
Payment Date, an
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amount equal to the Principal Payment Amount due on the Notes on such Payment
Date, to the extent that sufficient funds are on deposit in the Collection
Account or (y) on the Final Stated Maturity Date for any Class of Notes, the
aggregate outstanding Note Principal Balance of such Class of Notes;
(c) if the Trust shall breach or default in the due observance of any
one or more of the covenants set forth in clauses (a) through (h) of Section
3.09 hereof;
(d) if the Trust shall consent to the appointment of a custodian,
receiver, trustee or liquidator (or other similar official) of itself, or of a
substantial part of its property, or shall admit in writing its inability to pay
its debts generally as they come due, or a court of competent jurisdiction shall
determine that the Trust is generally not paying its debts as they come due, or
the Trust shall make a general assignment for the benefit of creditors;
(e) if the Trust shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization in a proceeding under any
bankruptcy laws (as now or hereafter in effect) or an answer admitting the
material allegation of a petition filed against the Trust in any such
proceeding, or the Trust shall, by voluntary petition, answer or consent, seek
relief under the provisions of any now existing or future bankruptcy or other
similar law providing for the reorganization or winding-up of debtors, or
providing for an agreement, composition, extension or adjustment with its
creditors;
(f) if an order, judgment or decree shall be entered in any proceeding
by any court of competent jurisdiction appointing, without the consent (express
or legally implied) of the Trust, a custodian, receiver, trustee or liquidator
(or other similar official) of the Trust or any substantial part of its
property, or sequestering any substantial part of its respective property, and
any such order, judgment or decree or appointment or sequestration shall remain
in force undismissed, unstayed or unvacated for a period of ninety (90) days
after the date of entry thereof; or
(g) if a petition against the Trust in a proceeding under applicable
bankruptcy laws or other insolvency laws, as now or hereafter in effect, shall
be filed and shall not be stayed, withdrawn or dismissed within ninety (90) days
thereafter, or if, under the provisions of any law providing for reorganization
or winding-up of debtors which may apply to the Trust, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Trust or any
substantial part of its property, and such jurisdiction, custody or control
shall remain in force unrelinquished, unstayed or unterminated for a period of
ninety (90) days.
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default occurs and is continuing, then and in every such case, but with
the consent of the Note Insurer in the absence of a Note Insurer Default, the
Indenture Trustee may, and on request of the Note Insurer, in the absence of a
Note Insurer Default, or, with the prior written consent of the Note Insurer,
the Holders of Notes representing not less than 50% of the Note Principal
Balance of the Outstanding Notes of both of the Classes, shall, declare all the
Notes to be immediately due and payable by a notice in writing to the Trust (and
to the Indenture Trustee if given by Noteholders), and upon any such declaration
such Notes, in an amount equal to the entire unpaid Note Principal Balance of
such Notes, together with accrued and unpaid interest thereon to the
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date of such acceleration, shall become immediately due and payable, all subject
to the prior written consent of the Note Insurer in the absence of a Note
Insurer Default.
At any time after such a declaration of acceleration of maturity of the
Notes has been made and before a judgment or decree for payment of the money due
has been obtained by the Indenture Trustee as hereinafter provided in this
Article V, the Note Insurer, in the absence of a Note Insurer Default, or the
Holders of Notes representing more than 50% of the Note Principal Balance of the
Outstanding Notes of both of the Classes, with the prior written consent of the
Note Insurer, by written notice to the Trust and the Indenture Trustee, may
rescind and annul such declaration and its consequences if:
(a) the Trust has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(i) all payments of principal of, and interest on, all Outstanding Notes
and all other amounts that would then be due hereunder or upon such Notes if
the Event of Default giving rise to such acceleration had not occurred; and
(ii) all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the principal of
Notes that have become due solely by such acceleration, have been cured or
waived as provided in Section 5.14 hereof.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. Subject to the provisions of Section 3.01 hereof and the
following sentence, if an Event of Default occurs and is continuing, the
Indenture Trustee may, with the prior written consent of the Note Insurer,
proceed to protect and enforce its rights and the rights of the Noteholders and
the Note Insurer by any Proceedings the Indenture Trustee deems appropriate to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or enforce any other proper remedy. Any Proceedings brought by
the Indenture Trustee, on behalf of the Noteholders and the Note Insurer, or any
Noteholder against the Trust shall be limited to the preservation, enforcement
and foreclosure of the liens, assignments, rights and security interests under
the Indenture and no attachment, execution or other unit or process shall be
sought, issued or levied upon any assets, properties or funds of the Trust,
other than the Trust Estate relative to the Notes in respect of which such Event
of Default has occurred. If there is a foreclosure of any such liens,
assignments, rights and security interests under this Indenture, by private
power of sale or otherwise, no judgment for any deficiency upon the indebtedness
represented by the Notes may be sought or obtained by the Indenture Trustee or
any Noteholder against the Trust. The Indenture Trustee shall be entitled to
recover the costs and expenses expended by it pursuant to
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this Article V including reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel.
Section 5.04. Remedies. If an Event of Default shall have occurred and
be continuing and the Notes been declared due and payable and such declaration
and its consequences have not been rescinded and annulled, the Indenture
Trustee, at the direction of the Note Insurer (subject to Section 5.17 hereof,
to the extent applicable) may, for the benefit of the Noteholders and the Note
Insurer, do one or more of the following:
(a) institute Proceedings for the collection of all amounts then payable
on the Notes, or under this Indenture, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Trust moneys adjudged due,
subject in all cases to the provisions of Sections 3.01 and 5.03 hereof;
(b) in accordance with Section 5.17 hereof, sell the Trust Estate or any
portion thereof or rights or interest therein, at one or more public or private
Sales called and conducted in any manner permitted by law;
(c) institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture with respect to the Trust Estate; (d) exercise any
remedies of a secured party under the Uniform Commercial Code and take any other
appropriate action to protect and enforce the rights and remedies of the
Indenture Trustee or the Holders of the Notes and the Note Insurer hereunder;
and
(e) refrain from selling the Trust Estate and apply all funds on deposit
in each of the Accounts pursuant to Section 5.07 hereof.
Section 5.05. Indenture Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, composition or other judicial Proceeding relative
to the Trust or any other obligor upon any of the Notes or the property of the
Trust or of such other obligor or their creditors, the Indenture Trustee
(irrespective of whether the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand on the Trust for the payment of any
overdue principal or interest) shall, with the prior written consent of the Note
Insurer, be entitled and empowered, by intervention in such Proceeding or
otherwise to:
(a) file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel), the Noteholders and the Note Insurer allowed in such Proceeding, and
(b) collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any receiver,
assignee, trustee, liquidator, or sequestrator (or other similar official) in
any such Proceeding is hereby authorized by each
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Noteholder and the Note Insurer to make such payments to the Indenture Trustee
and, in the event that the Indenture Trustee shall consent to the making of such
payments directly to the Noteholders and the Note Insurer, to pay to the
Indenture Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel.
Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting any of the Notes or the rights of any Holder
thereof, or the Note Insurer, or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder or the Note Insurer in any such
Proceeding.
Section 5.06. Indenture Trustee May Enforce Claims Without Possession of
Notes. All rights of action and claims under this Indenture or any of the Notes
may be prosecuted and enforced by the Indenture Trustee without the possession
of any of the Notes or the production thereof in any Proceeding relating
thereto, and any such Proceeding instituted by the Indenture Trustee, at the
direction of the Note Insurer, shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the Holders of the Notes and the Note Insurer in respect of which such judgment
has been recovered after payment of amounts required to be paid pursuant to
clause (a) of Section 5.07 hereof.
Section 5.07. Application of Money Collected. If the Notes have been
declared due and payable following an Event of Default and such declaration and
its consequences have not been rescinded and annulled, any money collected by
the Indenture Trustee with respect to each Class of Notes pursuant to this
Article V or otherwise and any other monies that may then be held or thereafter
received by the Indenture Trustee as security for such Class of Notes shall be
applied in the following order, at the date or dates fixed by the Indenture
Trustee and, in case of the payment of the entire amount due on account of
principal of, and interest on, such Class of Notes, upon presentation and
surrender thereof:
(a) first, to the Indenture Trustee, any unpaid Indenture Trustee Fees
with respect to such Class then due and any other amounts payable and due to the
Indenture Trustee with respect to such Class under this Indenture, including any
costs or expenses incurred by it in connection with the enforcement of the
remedies provided for in this Article V;
(b) second, to the Servicer, any amounts required to pay the Servicer
for any unpaid Servicing Fees with respect to the related Pool then due and to
reimburse the Servicer for Periodic Advances with respect to the related Pool
previously made by, and not previously reimbursed to or retained by, the
Servicer and, upon the final liquidation of the related Mortgage Loan or the
final liquidation of the Trust Estate, Servicing Advances with respect to the
related Pool previously made by, and not previously reimbursed to or retained
by, the Servicer;
(c) third, to the payment of Interest Payment Amounts then due and
unpaid upon the Outstanding Notes of such Class through the day preceding the
date on which such payment is made;
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(d) fourth, to the payment of the Note Principal Balance of each of the
Outstanding Notes of such Class, up to the amount of their respective unpaid
Note Principal Balance, ratably, without preference or priority of any kind;
(e) fifth, to the Note Insurer, as subrogee to the rights of the
Noteholders, (x) the aggregate amount necessary to reimburse the Note Insurer
for any unreimbursed Reimbursement Amounts for such Class paid by the Note
Insurer on prior Payment Dates, together with interest thereon at the "Late
Payment Rate" specified in the Insurance Agreement from the date such
Reimbursement Amounts were due to the Note Insurer to such Payment Date, (y) the
amount of any unpaid Premium Amount for such Class then due, together with
interest thereon at the "Late Payment Rate" specified in the Insurance Agreement
from the date such amounts were due to such Payment Date and (z) any other
amounts due and owing to the Note Insurer for such Class under the Insurance
Agreement;
(f) sixth, to the payment of any Net Mortgage Loan Interest Shortfalls
of such Class, through the day preceding the date on which such payment is made;
(g) seventh, for payment in respect of the other Class of Notes, in the
priority set forth in this Section 5.07, to the extent of any shortfall in the
payment of the amounts described in clauses (a) through (f) with respect to such
other Class;
(h) eighth, with respect to the Class A-2 Notes only, to the payment of
any Class A-2 Available Funds Cap Carry-Forward Amount; and
(i) ninth, the remainder to the Holder of Trust Certificate relating to
such Class.
Section 5.08. Limitation on Suits. No Holder of a Note shall have any
right to institute any Proceedings, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(a) such Holder has previously given written notice to the Indenture
Trustee and the Note Insurer of a continuing Event of Default;
(b) the Holders of Notes representing not less than 25% of the Note
Principal Balance of the Outstanding Notes of both of the Classes shall have
made written request to the Indenture Trustee to institute Proceedings in
respect of such Event of Default in its own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture Trustee
indemnity in full against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Indenture Trustee, for sixty (60) days after its receipt of such
notice, request and offer of indemnity, has failed to institute any such
Proceeding;
(e) no direction inconsistent with such written request has been given
to the Indenture Trustee during such sixty (60) day period by the Holders of
Notes representing more than 50% of the Note Principal Balance of the
Outstanding Notes of both of the Classes; and
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(f) the consent of the Note Insurer shall have been obtained; it being
understood and intended that no one or more Holders of Notes shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders
of Notes or to obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all the Holders of
Notes.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than 50% of the Note Principal Balances of the
Outstanding Notes of both of the Classes, the Indenture Trustee shall take the
action prescribed by the group representing a greater percentage of the Note
Principal Balances of the Outstanding Notes of both of the Classes.
Section 5.09. Unconditional Rights of Noteholders to Receive Principal
and Interest. Subject to the provisions in this Indenture (including Sections
3.01 and 5.03 hereof) limiting the right to recover amounts due on a Note to
recovery from amounts in the portion of the Trust Estate relating to such Note,
the Holder of any Note shall have the right, to the extent permitted by
applicable law, which right is absolute and unconditional, to receive payment of
each installment of interest on such Note on the respective Payment Date for
such installments of interest, to receive payment of each installment of
principal of such Note when due (or, in the case of any Note called for
redemption, on the date fixed for such redemption) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
Section 5.10. Restoration of Rights and Remedies. If the Indenture
Trustee, the Note Insurer or any Noteholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason, or has been determined to be adverse
to the Indenture Trustee, the Note Insurer or to such Noteholder, then and in
every such case the Indenture Trustee, the Note Insurer and the Noteholders
shall, subject to any determination in such Proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Indenture Trustee, the Note Insurer and the Noteholders
shall continue as though no such Proceeding had been instituted.
Section 5.11. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Note Insurer or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.12. Delay or Omission Not Waiver. No delay or omission of the
Indenture Trustee, the Note Insurer or of any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee, the Note Insurer or to the Noteholders may be
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exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Note Insurer or by the Noteholders with the prior consent
of the Note Insurer, as the case may be.
Section 5.13. Control by Noteholders. The Holders of Notes representing
more than 50% of the Note Principal Balance of the Outstanding Notes of both of
the Classes on the applicable Record Date shall, with the consent of the Note
Insurer, have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee or exercising any
trust or power conferred on the Indenture Trustee; provided that:
(a) such direction shall not be in conflict with any rule of law or with
this Indenture;
(b) any direction to the Indenture Trustee to undertake a Sale of the
Trust Estate shall be by the Holders of Notes representing the percentage of the
Note Principal Balance of the Outstanding Notes specified in Section 5.17(b)(i)
hereof, unless Section 5.17(b)(ii) hereof is applicable; and
(c) the Indenture Trustee may take any other action deemed proper by the
Indenture Trustee that is not inconsistent with such direction; provided,
however, that, subject to Section 6.01 hereof, the Indenture Trustee need not
take any action that it determines might involve it in liability or be unjustly
prejudicial to the Noteholders not consenting.
Section 5.14. Waiver of Past Defaults. The Holders of Notes representing
more than 50% of the Note Principal Balance of the Outstanding Notes of both of
the Classes on the applicable Record Date may on behalf of the Holders of all
the Notes, and with the consent of the Note Insurer, waive any past Default
hereunder and its consequences, except a Default:
(a) in the payment of principal or any installment of interest on any
Note; or
(b) in respect of a covenant or provision hereof that under Section 9.02
hereof cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 5.15. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.15 shall not apply to any suit instituted by the
Indenture Trustee, to any suit instituted
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by any Noteholder, or group of Noteholders, holding in the aggregate Notes
representing more than 10% of the Note Principal Balance of the Outstanding
Notes of both of the Classes, or to any suit instituted by any Noteholder for
the enforcement of the payment of any Interest Payment Amount or Principal
Payment Amount on any Note on or after the related Payment Date or for the
enforcement of the payment of principal of any Note on or after the Final Stated
Maturity Date (or, in the case of any Note called for redemption, on or after
the applicable Redemption Date).
Section 5.16. Waiver of Stay or Extension Laws. The Trust covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension of law wherever enacted, now or at any time hereafter in
force, that may affect the covenants in, or the performance of, this Indenture;
and the Trust (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 5.17. Sale of Trust Estate. (a) The power to effect any sale
(a "Sale") of any portion of the Trust Estate pursuant to Section 5.04 hereof
shall not be exhausted by any one or more Sales as to any portion of the Trust
Estate remaining unsold, but shall continue unimpaired until the entire Trust
Estate shall have been sold or all amounts payable on the Notes and under this
Indenture with respect thereto shall have been paid. The Indenture Trustee may
from time to time postpone any public Sale by public announcement made at the
time and place of such Sale.
(b) To the extent permitted by law, the Indenture Trustee shall not in
any private Sale sell or otherwise dispose of the Trust Estate, or any portion
thereof, unless:
(i) the Holders of Notes representing not less than 50% of the Note
Principal Balance of the Notes of both of the Classes then Outstanding
consent to or direct the Indenture Trustee to make such Sale; or
(ii) the proceeds of such Sale would be not less than the entire amount
that would be payable to the Holders of the Notes, in full payment thereof
in accordance with Section 5.07 hereof, on the Payment Date next succeeding
the date of such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or disposition thereof for purposes
of this Section 5.17(b). In the absence of a Note Insurer Default, no Sale
hereunder shall be effective without the consent of the Note Insurer.
(c) Unless the Holders of all Outstanding Notes have otherwise consented
or directed the Indenture Trustee, at any public Sale of all or any portion of
the Trust Estate at which a minimum bid equal to or greater than the amount
described in paragraph (ii) of subsection (b) of this Section 5.17 has not been
established by the Indenture Trustee and no Person bids an amount equal to or
greater than such amount, the Indenture Trustee, acting in its capacity as
Indenture Trustee (i) on behalf of the Noteholders and the Note Insurer, shall
prevent
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such Sale and bid an amount (which shall include the Indenture Trustee's right,
in its capacity as Indenture Trustee, to credit bid) at least $1.00 more than
the highest other bid in order to preserve the Trust Estate on behalf of the
Noteholders and the Note Insurer.
(d) In connection with a Sale of all or any portion of the Trust Estate:
(i) any Holder or Holders of Notes may bid for and purchase the property
offered for Sale, and upon compliance with the terms of sale may hold,
retain and possess and dispose of such property, without further
accountability, and may, in paying the purchase money therefor, deliver any
Outstanding Notes or claims for interest thereon in lieu of cash up to the
amount that shall, upon distribution of the net proceeds of such Sale, be
payable thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the Holders
thereof after being appropriately stamped to show such partial payment;
(ii) the Indenture Trustee may bid for and acquire the property offered
for Sale in connection with any public Sale thereof, and, in lieu of paying
cash therefor, may make settlement for the purchase price by crediting the
gross Sale price against the sum of (A) the amount that would be payable to
the Holders of the Notes as a result of such Sale in accordance with Section
5.07 hereof on the Payment Date next succeeding the date of such Sale and
(B) the expenses of the Sale and of any Proceedings in connection therewith
which are reimbursable to it, without being required to produce the Notes in
order to complete any such Sale or in order for the net Sale price to be
credited against such Notes, and any property so acquired by the Indenture
Trustee shall be held and dealt with by it in accordance with the provisions
of this Indenture;
(iii) the Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the
Trust Estate in connection with a Sale thereof,
(iv) the Indenture Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Trust to transfer and convey its interest in any
portion of the Trust Estate in connection with a Sale thereof, and to take
all action necessary to effect such Sale; and
(v) no purchaser or transferee at such a Sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any moneys.
Section 5.18. Action on Notes. The Indenture Trustee's right to seek and
recover judgment under this Indenture shall not be affected by the seeking,
obtaining or application of any other relief under or with respect to this
Indenture. Neither the lien of this Indenture nor any rights or remedies of the
Indenture Trustee, the Note Insurer or the Holders of Notes shall be impaired by
the recovery of any judgment by the Indenture Trustee against the Trust or by
the levy of any execution under such judgment upon any portion of the Trust
Estate.
Section 5.19. No Recourse to Other Trust Estates or Other Assets of the
Trust. The Trust Estate Granted to the Indenture Trustee as security for the
Notes serves as security
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only for the Notes. Holders of the Notes shall have no recourse against the
trust estate granted as security for any other series of Notes issued by the
Trust, and no judgment against the Trust for any amount due with respect to the
Notes may be enforced against either the trust estate securing any other series
or any other assets of the Trust, nor may any prejudgment lien or other
attachment be sought against any such other trust estate or any other assets of
the Trust. The Noteholders shall have no recourse against the Owner Trustee, the
Indenture Trustee, the Note Registrar, the Authenticating Agent, the Collateral
Agent, the Depositor, the Unaffiliated Seller, the Servicer or any of their
respective Affiliates, or to the assets of any of the foregoing entities.
Section 5.20. Application of the Trust Indenture Act. Pursuant to
Section 316(a) of the TIA, all provisions automatically provided for in Section
316(a) are hereby expressly excluded.
Section 5.21. Note Insurer Default. Notwithstanding anything elsewhere
in this Indenture or in the Notes to the contrary, if a Note Insurer Default
exists, the provisions of this Article V and all other provisions of this
Indenture which (a) permit the Note Insurer to exercise rights of the
Noteholders, (b) restrict the ability of the Noteholders or the Indenture
Trustee to act without the consent or approval of the Note Insurer, (c) provide
that a particular act or thing must be acceptable to the Note Insurer, (d)
permit the Note Insurer to direct (or otherwise to require) the actions of the
Indenture Trustee or the Noteholders, (e) provide that any action or omission
taken with the consent, approval or authorization of the Note Insurer shall be
authorized hereunder or shall not subject the party taking or omitting to take
such action to any liability hereunder or (f) which have a similar effect, shall
be of no further force and effect and the Indenture Trustee shall administer the
Trust Estate and perform its obligations hereunder solely for the benefit of the
Holders of the Notes. Nothing in the foregoing sentence, nor any action taken
pursuant thereto or in compliance therewith, shall be deemed to have released
the Note Insurer from any obligation or liability it may have to any party or to
the Noteholders hereunder, under any other agreement, instrument or document
(including, without limitation, the Policy) or under applicable law.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee. (a) If an Event of
Default has occurred and is continuing, the Indenture Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee need perform only those duties that are
specifically set forth in this Indenture and no others and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
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(ii) in the absence of bad faith on its part, the Indenture Trustee may
request and conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Indenture Trustee and conforming to the requirements of
this Indenture. The Indenture Trustee shall, however, examine such
certificates and opinions to determine whether they conform on their face to
the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of subsection (b) of this
Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Indenture Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Sections 5.13 or 5.17 hereof or
exercising any trust or power or remedy conferred upon the Indenture Trustee
under this Indenture.
(d) Except with respect to duties of the Indenture Trustee prescribed by
the TIA, as to which this Section 6.01(d) shall not apply, for all purposes
under this Indenture, the Indenture Trustee shall not be deemed to have notice
or knowledge of any Event of Default described in Sections 5.01(e) or 5.01(f)
hereof or any Default described in Sections 5.01(c) or 5.01(d) hereof or of any
event described in Section 3.05 hereof unless a Responsible Officer assigned to
and working in the Indenture Trustee's corporate trust department and having
direct responsibility for this Indenture has actual knowledge thereof or unless
written notice of any event that is in fact such an Event of Default or Default
is received by the Indenture Trustee at the Corporate Trust Office, and such
notice references the Notes generally, the Trust, the Trust Estate or this
Indenture.
(e) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it under this Indenture or the other Basic Documents.
(f) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to the provisions of this Section 6.01.
(g) Notwithstanding any extinguishment of all right, title and interest
of the Trust in and to the Trust Estate following an Event of Default and a
consequent declaration of acceleration of the maturity of the Notes, whether
such extinguishment occurs through a Sale of the Trust Estate to another Person,
the acquisition of the Trust Estate by the Indenture Trustee or otherwise, the
rights, powers and duties of the Indenture Trustee with respect to the Trust
Estate
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(or the proceeds thereof), the Noteholders and the Note Insurer and the rights
of Noteholders and the Note Insurer shall continue to be governed by the terms
of this Indenture.
(h) The Indenture Trustee, the Collateral Agent or any successor
Collateral Agent appointed pursuant to Section 9.08 of the Sale and Servicing
Agreement shall at all times retain possession of the Indenture Trustee's
Mortgage Files in the State of Delaware or the State of New York (or, with
respect to the Chase Bank of Texas, N.A., as initial Collateral Agent, in the
State of Texas), except for those Indenture Trustee's Mortgage Files or portions
thereof released to the Servicer or the Note Insurer pursuant to this Indenture,
the Unaffiliated Seller's Agreement or the Sale and Servicing Agreement.
(i) Subject to the other provisions of this Indenture and without
limiting the generality of this Section 6.01, the Indenture Trustee shall have
no duty (A) to see to any recording, filing, or depositing of this Indenture or
any agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording, filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Estate from funds available in the Payment
Accounts or (D) to confirm or verify the contents of any reports or certificates
of the Servicer delivered to the Indenture Trustee pursuant to this Indenture
believed by the Indenture Trustee to be genuine and to have been signed or
presented by the proper party or parties.
Section 6.02. Notice of Default. Immediately after the occurrence of any
Default known to the Indenture Trustee, the Indenture Trustee shall transmit by
mail to the Note Insurer and the Depositor notice of each such Default and,
within ninety (90) days after the occurrence of any Default known to the
Indenture Trustee, the Indenture Trustee shall transmit by mail to all Holders
of Notes notice of each such Default, unless such Default shall have been cured
or waived; provided, however, that in no event shall the Indenture Trustee
provide notice, or fail to provide notice of a Default known to the Indenture
Trustee in a manner contrary to the requirements of the Trust Indenture Act.
Concurrently with the mailing of any such notice to the Holders of the Notes,
the Indenture Trustee shall transmit by mail a copy of such notice to the Rating
Agencies.
Section 6.03. Rights of Indenture Trustee. (a) Except as otherwise
provided in Section 6.01 hereof, the Indenture Trustee may rely on, and be
protected in acting or refraining to act upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Indenture
Trustee need not investigate any fact or matter stated in any such document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel reasonably
satisfactory in form and substance to the Indenture Trustee. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on any such Officer's Certificate or Opinion of Counsel.
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(c) With the consent of the Note Insurer, which consent shall not be
unreasonably withheld, the Indenture Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within its
rights or powers.
(e) The Indenture Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Indenture or to institute, conduct
or defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Noteholders or the Note Insurer, pursuant to the
provisions of this Indenture, unless such Noteholders or the Note Insurer shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or thereby.
(f) The Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the Noteholders
or the Note Insurer; provided, however, that if the payment within a reasonable
time to the Indenture Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Indenture Trustee, not reasonably assured to the Indenture Trustee by the
security afforded to it by the terms of this Indenture, the Indenture Trustee
may require reasonable indemnity against such cost, expense or liability as a
condition to taking any such action.
(g) The right of the Indenture Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty, and the Indenture
Trustee shall not be answerable for anything other than its negligence or
willful misconduct in the performance of such act.
Section 6.04. Not Responsible for Recitals or Issuance of Notes. The
recitals contained herein and in the Notes, except, with respect to the
Indenture Trustee, the certificates of authentication on the Notes, shall be
taken as the statements of the Trust, and the Owner Trustee, the Indenture
Trustee and the Authenticating Agent assume no responsibility for their
correctness. The Owner Trustee and the Indenture Trustee make no representations
with respect to the Trust Estate or as to the validity or sufficiency of this
Indenture or of the Notes. Neither the Indenture Trustee nor the Owner Trustee
shall be accountable for the use or application by the Trust of the Notes or the
proceeds thereof or any money paid to the Trust or upon a Trust Order pursuant
to the provisions hereof.
Section 6.05. May Hold Notes. The Indenture Trustee, any Agent, or any
other agent of the Trust, in its individual or any other capacity, may become
the owner or pledgee of Notes and, subject to Sections 6.07 and 6.13 hereof, may
otherwise deal with the Trust or any Affiliate of the Trust with the same rights
it would have if it were not Indenture Trustee, Agent or such other agent.
Section 6.06. Money Held in Trust. Money held by the Indenture Trustee
in trust hereunder need not be segregated from other funds except to the extent
required by this
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Indenture or by law. The Indenture Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed with
the Trust and except to the extent of income or other gain on investments that
are obligations of the Indenture Trustee, in its commercial capacity, and income
or other gain actually received by the Indenture Trustee on investments, which
are obligations of others.
Section 6.07. Eligibility, Disqualification. Irrespective of whether
this Indenture is qualified under the TIA, this Indenture shall always have an
indenture trustee who satisfies the requirements of TIA Sections 310(a)(1) and
310(a)(5). The Indenture Trustee shall always have a combined capital and
surplus as stated in Section 6.08 hereof. The Indenture Trustee shall be subject
to TIA Section 310(b).
Section 6.08. Indenture Trustee's Capital and Surplus. The Indenture
Trustee shall at all times (a)(i) have a combined capital and surplus of at
least $50,000,000, or (ii) be a member of a bank holding company system, the
aggregate combined capital and surplus of which is at least $100,000,000 and (b)
be rated (or have long-term debt rated) "BBB" or better by S&P and "Baa2" by
Moody's; provided, however, that the Indenture Trustee's separate capital and
surplus shall at all times be at least the amount required by TIA Section
310(a)(2). If the Indenture Trustee publishes annual reports of condition of the
type described in TIA Section 310(a)(1), its combined capital and surplus for
purposes of this Section 6.08 shall be as set forth in the latest such report.
If at any time the Indenture Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.08 and TIA Section 310(a)(2), it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article VI.
Section 6.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Indenture Trustee and no appointment of a
successor Indenture Trustee pursuant to this Article VI shall become effective
until the acceptance of appointment by the successor Indenture Trustee under
Section 6.10 hereof.
(b) The Indenture Trustee may resign at any time by giving written
notice thereof to the Trust, the Note Insurer and each Rating Agency. If an
instrument of acceptance by a successor Indenture Trustee shall not have been
delivered to the Indenture Trustee within thirty (30) days after the giving of
such notice of resignation, the resigning Indenture Trustee may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee.
(c) The Indenture Trustee may be removed at any time by the Note Insurer
or, with the consent of the Note Insurer, by Act of the Holders representing
more than 50% of the Note Principal Balance of the Outstanding Notes of both of
the Classes, by written notice delivered to the Indenture Trustee and to the
Trust.
(d) If at any time:
(i) the Indenture Trustee shall have a conflicting interest prohibited
by Section 6.07 hereof and shall fail to resign or eliminate such
conflicting interest in accordance with Section 6.07 hereof after written
request therefor by the Trust or by any Noteholder; or
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(ii) the Indenture Trustee shall cease to be eligible under Section 6.08
hereof or shall become incapable of acting or shall be adjudged bankrupt or
insolvent, or a receiver of the Indenture Trustee or of its property shall
be appointed, or any public officer shall take charge or control of the
Indenture Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (x) the Owner Trustee, on behalf of the Trust, by a
Trust Order, with the consent of the Note Insurer, may remove the Indenture
Trustee, and the Owner Trustee, on behalf of the Trust, by a Trust Order, shall
join with the Indenture Trustee in the execution, delivery and performance of
all instruments and agreements necessary or proper to appoint a successor
Indenture Trustee acceptable to the Note Insurer and to vest in such successor
Indenture Trustee any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Indenture; provided, however,
if the Owner Trustee, on behalf of the Trust, and the Note Insurer do not join
in such appointment within fifteen (15) days after the receipt by it of a
request to do so, or in case an Event of Default has occurred and is continuing,
the Indenture Trustee may petition a court of competent jurisdiction to make
such appointment, or (y) subject to Section 5.15 hereof, and, in the case of a
conflicting interest as described in clause (i) above, unless the Indenture
Trustee's duty to resign has been stayed as provided in TIA Section 310(b), the
Note Insurer or any Noteholder who has been a bona fide Holder of a Note for at
least six (6) months may, on behalf of himself and all others similarly
situated, with the consent of the Note Insurer, petition any court of competent
jurisdiction for the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Indenture
Trustee for any cause, the Owner Trustee, on behalf of the Trust, by a Trust
Order, shall promptly appoint a successor Indenture Trustee acceptable to the
Note Insurer. If within one (1) year after such resignation, removal or
incapability or the occurrence of such vacancy a successor Indenture Trustee
shall be appointed by the Note Insurer or, with the consent of the Note Insurer,
by Act of the Holders of Notes representing more than 50% of the Note Principal
Balance of the Outstanding Notes of both of the Classes delivered to the Trust
and the retiring Indenture Trustee, the successor Indenture Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Indenture Trustee and supersede the predecessor Indenture Trustee appointed by
the Trust. If no successor Indenture Trustee shall have been so appointed by the
Trust, the Note Insurer or Noteholders and shall have accepted appointment in
the manner hereinafter provided, any Noteholder who has been a bona fide Holder
of a Note for at least six (6) months may, on behalf of himself and all others
similarly situated, with the consent of the Note Insurer, petition any court of
competent jurisdiction for the appointment of a successor Indenture Trustee.
(f) The Servicer, on behalf of the Trust, shall give notice of each
resignation and each removal of the Indenture Trustee and each appointment of a
successor Indenture Trustee to the Holders of Notes, the Rating Agencies and the
Note Insurer. Each notice shall include the name of the successor Indenture
Trustee and the address of its Corporate Trust Office.
Section 6.10. Acceptance of Appointment by Successor Indenture Trustee.
Every successor Indenture Trustee appointed hereunder shall execute, acknowledge
and deliver
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to the Trust, the Note Insurer and the retiring Indenture Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Indenture Trustee shall become effective and such successor Indenture
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Indenture Trustee.
Notwithstanding the foregoing, upon a Trust Request of the Owner Trustee, on
behalf of the Trust, or the successor Indenture Trustee, such retiring Indenture
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Indenture Trustee all the rights, powers and
trusts of the retiring Indenture Trustee, and shall duly assign, transfer and
deliver to such successor Indenture Trustee all property and money held by such
retiring Indenture Trustee hereunder. Upon a written request of any such
successor Indenture Trustee, the Owner Trustee, on behalf of the Trust, shall,
with the written consent of the Note Insurer, execute and deliver any and all
instruments for more fully and certainly vesting in and confirming to such
successor Indenture Trustee all such rights, powers and trusts.
No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be qualified
and eligible under this Article VI.
Section 6.11. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee. Any corporation or banking association into which
the Indenture Trustee may be merged or converted or with which it may be
consolidated, or any corporation or banking association resulting from any
merger, conversion or consolidation to which the Indenture Trustee shall be a
party, or any corporation or banking association succeeding to all or
substantially all of the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee hereunder; provided, that such
corporation or banking association shall be otherwise qualified and eligible
under this Article VI, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Notes have
been authenticated, but not delivered, by the Indenture Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Indenture Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Indenture Trustee had
authenticated such Notes.
Section 6.12. Preferential Collection of Claims Against Trust. The
Indenture Trustee (and any co-trustee or separate trustee) shall be subject to
TIA Section 311(a), excluding any creditor relationship listed in TIA Section
31l(b), and an Indenture Trustee (and any co-trustee or separate trustee) who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
Section 6.13. Co-Indenture Trustees and Separate Indenture Trustees. At
any time or times, for the purpose of meeting the legal requirements of the TIA
or of any jurisdiction in which any of the Trust Estate may at the time be
located, the Indenture Trustee shall have power to appoint, and, upon the
written request of the Indenture Trustee, the Note Insurer or of the Holders of
Notes representing more than 50% of the Note Principal Balance of the
Outstanding Notes of both of the Classes with respect to which a co-trustee or
separate trustee is being appointed, with the written consent of the Note
Insurer, the Owner Trustee, on behalf of the Trust, shall for such purpose join
with the Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint, one or more
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Persons approved by the Indenture Trustee either to act as co-trustee, jointly
with the Indenture Trustee, of all or any part of the Trust Estate, or to act as
separate trustee of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such Person or Persons
in the capacity aforesaid, any property, title, right or power deemed necessary
or desirable, subject to the other provisions of this Section 6.13. If the Owner
Trustee, on behalf of the Trust, does not join in such appointment within
fifteen (15) days after the receipt by it of a request to do so, or in case an
Event of Default has occurred and is continuing, the Indenture Trustee alone
shall have power to make such appointment. All fees and expenses of any
co-trustee or separate trustee shall be payable by the Trust.
Should any written instrument from the Trust be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on written request, be executed, acknowledged and
delivered by the Owner Trustee, on behalf of the Trust, with the written consent
of the Note Insurer.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:
(a) The Notes shall be authenticated and delivered and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Indenture Trustee hereunder, shall be exercised,
solely by the Indenture Trustee.
(b) The rights, powers, duties and obligations hereby conferred or
imposed upon the Indenture Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by the
Indenture Trustee or by the Indenture Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Indenture
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) The Indenture Trustee at any time, by an instrument in writing,
executed by it, with the concurrence of the Owner Trustee, on behalf of the
Trust, evidenced by a Trust Order, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section 6.13, and, in case
an Event of Default has occurred and is continuing, the Indenture Trustee shall
have power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Trust, but upon the written
request of the Indenture Trustee, the Owner Trustee, on behalf of the Trust,
shall join with the Indenture Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided in this Section
6.13.
(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Indenture Trustee, or any other
such trustee hereunder.
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(e) Any Act of Noteholders delivered to the Indenture Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
Section 6.14. Authenticating Agents. The Owner Trustee, acting at the
direction of the Majority Certificateholders, shall appoint an Authenticating
Agent with power to act on the Trust's behalf, subject to the direction of the
Majority Certificateholders, in the authentication and delivery of the Notes
designated for such authentication and, containing provisions therein for such
authentication (unless the Owner Trustee, acting at the direction of the
Majority Certificateholders, has made other arrangements, satisfactory to the
Indenture Trustee and such Authenticating Agent, for notation on the Notes of
the authority of an Authenticating Agent appointed after the initial
authentication and delivery of such Notes) in connection with transfers and
exchanges under Section 2.06 hereof, as fully to all intents and purposes as
though the Authenticating Agent had been expressly authorized by Section 2.06
hereof to authenticate and deliver Notes. For all purposes of this Indenture
(other than in connection with the authentication and delivery of Notes pursuant
to Sections 2.05 and 2.11 hereof in connection with their initial issuance), the
authentication and delivery of Notes by the Authenticating Agent pursuant to
this Section 6.14 shall be deemed to be the authentication and delivery of Notes
"by the Indenture Trustee." Such Authenticating Agent shall at all times be a
Person that both meets the requirements of Section 6.07 hereof for the Indenture
Trustee hereunder and has an office for presentation of Notes in the United
States of America. The Indenture Trustee shall initially be the Authenticating
Agent and shall be the Note Registrar as provided in Section 2.06 hereof. The
office from which the Indenture Trustee shall perform its duties as Note
Registrar and Authenticating Agent shall be its Corporate Trust Office. Any
Authenticating Agent appointed pursuant to the terms of this Section 6.14 or
pursuant to the terms of any supplemental indenture shall deliver to the
Indenture Trustee as a condition precedent to the effectiveness of such
appointment an instrument accepting the trusts, duties and responsibilities of
Authenticating Agent and of Note Registrar or co-Note Registrar and indemnifying
the Indenture Trustee for and holding the Indenture Trustee harmless against,
any loss, liability or expense (including reasonable attorneys' fees) incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance, administration of the trust or exercise of authority by
such Authenticating Agent, Note Registrar or co-Note Registrar.
Any corporation or banking association into which any Authenticating
Agent may be merged or converted or with which it may be consolidated, or any
corporation or banking association resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any
corporation or banking association succeeding to the corporate trust business of
any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 6.14, without the execution or filing of any further act on the part of
the parties hereto or the Authenticating Agent or such successor corporation or
banking association.
Any Authenticating Agent may at any time resign by giving written notice
of resignation to the Trust. The Owner Trustee, acting at the direction of the
Majority Certificateholders, may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and the Indenture Trustee. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section 6.14, the
Owner Trustee,
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acting at the direction of the Majority Certificateholders, shall promptly
appoint a successor Authenticating Agent, shall give written notice of such
appointment to the Indenture Trustee, and shall mail notice of such appointment
to all Holders of Notes.
The Indenture Trustee agrees, subject to Section 6.01(e) hereof, to pay
to any Authenticating Agent from time to time reasonable compensation for its
services and the Indenture Trustee shall be entitled to be reimbursed for such
payments pursuant to Section 6.16 hereof. The provisions of Sections 2.09, 6.04
and 6.05 hereof shall be applicable to any Authenticating Agent.
Section 6.15. Review of Mortgage Files. (a) The Indenture Trustee shall,
on or prior to the Closing Date, execute and deliver the acknowledgement of
receipt of the Policy required by Section 2.06(a) of the Sale and Servicing
Agreement.
(b) The Indenture Trustee shall cause the Collateral Agent to (i) on or
prior to the Closing Date, execute and deliver the acknowledgement of receipt of
the Mortgage Loans required by Section 2.06(b)(i) of the Sale and Servicing
Agreement, (ii) on or prior to thirty (30) days following the Closing Date,
execute and deliver the Initial Certificate required by Section 2.06(b)(ii) of
the Sale and Servicing Agreement, and (iii) on or prior to ninety (90) days
following the Closing Date, execute and deliver the Final Certification required
by Section 2.06(b)(iii) of the Sale and Servicing Agreement.
(c) In giving each of the acknowledgements, the Initial Certification
and the Final Certification referred to in clauses (a) and (b) of this Section
6.15, neither the Indenture Trustee nor the Collateral Agent shall be under any
duty or obligation (i) to inspect, review or examine any such documents,
instruments, securities or other papers to determine that they or the signatures
thereto are genuine, enforceable, or appropriate for the represented purpose or
that they have actually been recorded or that they are other than what they
purport to be on their face or (ii) to determine whether any Mortgage File
should include a flood insurance policy, any rider, addenda, surety or guaranty
agreement, power of attorney, buy down agreement, assumption agreement,
modification agreement, written assurance or substitution agreement.
(d) In the event that the Mortgage Loans are required to be recorded in
accordance with the provisions of Article II of the Sale and Servicing
Agreement, no later than the fifth Business Day of each third month, commencing
in June 2000, the Indenture Trustee shall cause the Collateral Agent to deliver
to the Servicer and the Note Insurer a recordation report dated as of the first
day of such month, identifying those Mortgage Loans for which it has not yet
received (i) an original recorded Mortgage or a copy thereof certified to be
true and correct by the public recording office in possession of such Mortgage
or (ii) an original recorded Assignment of Mortgage to the Indenture Trustee and
any required intervening Assignments of Mortgage or a copy thereof certified to
be a true and correct copy by the public recording office in possession of such
Assignment of Mortgage.
Section 6.16. Indenture Trustee Fees and Expenses. The Indenture Trustee
shall be entitled to receive the Indenture Trustee Fee on each Payment Date as
provided herein. The Indenture Trustee also shall be entitled to (i) payment of
or reimbursement for expenses, disbursements and advances incurred or made by
the Indenture Trustee in accordance with any
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of the provisions of this Indenture (including, but not limited to, the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ), and (ii) indemnification against
losses, liability and expenses, including reasonable attorney's fees, incurred,
arising out of or in connection with this Indenture, the Notes and the Sale and
Servicing Agreement. The Indenture Trustee and any director, officer, employee
or agent of the Indenture Trustee shall be indemnified by, first, the Trust and,
second, the Servicer and held harmless against any loss, liability or reasonable
expense incurred in connection with this Indenture or the Notes, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence in the performance by the Indenture Trustee of its duties
hereunder. The obligations of the Servicer and the Trust under this Section 6.16
shall survive termination of the Trust and payment of the Notes, and shall
extend to any co-Indenture Trustee or separate-Indenture Trustee appointed
pursuant to this Article VI.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Note Registrar to Furnish Indenture Trustee Names and
Addresses of Noteholders. (a) The Note Registrar shall furnish or cause to
be furnished to the Indenture Trustee (i) semiannually, not less than forty-five
(45) days nor more than sixty (60) days after the Payment Date occurring closest
to six (6) months after the Closing Date and each Payment Date occurring at six
(6) month intervals thereafter, all information in the possession or control of
the Note Registrar, in such form as the Indenture Trustee may reasonably
require, as to names and addresses of the Holders of Notes, and (ii) at such
other times, as the Indenture Trustee may request in writing, within thirty (30)
days after receipt by the Note Registrar of any such request, a list of similar
form and content as of a date not more than ten (10) days prior to the time such
list is furnished; provided, however, that so long as the Indenture Trustee is
the Note Registrar, no such list shall be required to be furnished.
(b) In addition to furnishing to the Indenture Trustee the Noteholder
lists, if any, required under clause (a) of this Section 7.01, the Note
Registrar shall also furnish all Noteholder lists, if any, required under
Section 3.03 hereof at the times required by such Section 3.03.
Section 7.02. Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list, if any, furnished to the Indenture Trustee as
provided in Section 7.01 hereof and the names and addresses of the Holders of
Notes received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in Section
7.01 hereof upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Trust, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
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Section 7.03. Reports by Indenture Trustee. (a) Within sixty (60)
days after December 31 of each year (the "reporting date"), commencing December
31, 2000, (i) the Indenture Trustee shall, if required by TIA Section 313(a),
mail to all Holders a brief report dated as of such reporting date that complies
with TIA Section 313(a); (ii) the Indenture Trustee shall, to the extent not set
forth in the Noteholder Statement pursuant to Section 2.08(d) hereof, also mail
to Holders of Notes and the Note Insurer with respect to which it has made
advances, any reports with respect to such advances that are required by TIA
Section 313(b)(2); and, the Indenture Trustee shall also mail to Holders of
Notes and the Note Insurer any reports required by TIA Section 313(b)(1). For
purposes of the information required to be included in any such reports pursuant
to TIA Sections 313(a)(2), 313(b)(1) (if applicable), or 313(b)(2), the
principal amount of indenture securities outstanding on the date as of which
such information is provided shall be the Note Principal Balance of the then
Outstanding Notes covered by the report.
(b) A copy of each report required under this Section 7.03 shall, at the
time of such transmission to Holders of Notes and the Note Insurer be filed by
the Indenture Trustee with the Commission and with each securities exchange upon
which the Notes are listed. The Servicer, on behalf of the Trust, will notify
the Indenture Trustee when the Notes are listed on any securities exchange.
Section 7.04. Reports by Trust. The Servicer, on behalf of the Trust,
(a) shall deliver to the Indenture Trustee within fifteen (15) days after the
Trust is required to file the same with the Commission copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may by rules and regulations
prescribe) that the Trust is required to file with the Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and (b)
shall also comply with the other provisions of TIA Section 314(a).
ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
Section 8.01. Accounts; Investment; Collection of Moneys. (a) The Trust
hereby directs the Indenture Trustee to establish, on or before the Closing
Date, for each Class of Notes, at its Corporate Trust Office, one or more
Eligible Accounts that shall collectively be the "Payment Account" for such
Class. The Indenture Trustee shall promptly deposit in the related Payment
Account (i) the Servicer Remittance Amount for the related Pool received by it
from the Servicer on the Servicer Payment Date pursuant to the Sale and
Servicing Agreement, (ii) any other funds from any deposits for such Pool to be
made by the Servicer pursuant to the Sale and Servicing Agreement, (iii) any
amount for such Pool required to be deposited in such Payment Account pursuant
to this Section 8.01, (iv) all amounts for such Pool received pursuant to
Section 8.03 hereof, (v) any amount for such Pool required to be deposited
pursuant to Section 8.05 hereof, (vi) the Termination Price received by it from
either the Majority Certificateholder or the Servicer on the Clean-up Call Date
or Note Clean-up Call Date pursuant to Section 10.01, (vii) on each Payment
Date, in accordance with the Noteholder Statement, the Shortfall Amount for the
related Class, until paid in full, first, from the Payment Account relating to
the other Class of Notes to the extent of the Net Monthly Excess Cashflow from
the other Pool of Mortgage Loans, second, from the Cross-collateralization
Reserve Account relating to this Class of Notes,
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and third, from the Cross-collateralization Reserve Account relating to the
other Class of Notes, (viii) on each Payment Date, in accordance with the
Noteholder Statement, the Net Mortgage Loan Interest Shortfalls for the related
Class of Notes, to the extent of the Net Monthly Excess Cashflow from the other
Pool of Mortgage Loans, remaining after payment of: first, the Shortfall Amount
for the related Class, second, the Over-collateralization Increase Amount for
such other Pool and, third, the Reserve Payment Amount for such other Pool and
(ix) all other amounts for such Pool received for deposit in such Payment
Account, including the payment of any Loan Repurchase Price for a Mortgage Loan
in such Pool received by the Indenture Trustee. All amounts that are deposited
from time to time in a Payment Account are subject to withdrawal by the
Indenture Trustee for the purposes set forth in Sections 8.02 hereof. All funds
withdrawn from a Payment Account pursuant to Section 8.02 hereof for the purpose
of making payments to the Holders of Notes shall be applied in accordance with
Sections 3.03 and 8.02 hereof.
(b) The Trust hereby directs the Indenture Trustee to establish for each
Class of Notes, at its Corporate Trust Office, an Eligible Account which shall
be the "Pre-Funding Account" for such Class of Notes. On the Closing Date, the
Indenture Trustee shall deposit the Original Pre-Funded Amount for each Class of
Notes in the related Pre-Funding Account from the proceeds of the sale of the
related Class of Notes. The Indenture Trustee shall withdraw and distribute or
cause to be distributed funds on deposit therein only at the times specified
below, based on written instructions provided by the Servicer or other party as
indicated:
(i) on any Subsequent Transfer Date, the Unaffiliated Seller shall
instruct in writing the Indenture Trustee to withdraw from the related
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 in respect of the related Pool and pledged
to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, 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 2.14 hereof with respect to such transfer; the Indenture
Trustee may conclusively rely on such written instructions from the
Unaffiliated Seller;
(ii) if the Pre-Funding Amount for a Class of Notes (exclusive of
Pre-Funding Earnings for such Class) has been reduced to $100,000 or less by
the April 2000, May 2000 or June 2000 Payment Date, then, on such Payment
Date, after giving effect to any reductions in the related Pre-Funding
Account on such date, the Indenture Trustee shall withdraw, from the related
Pre-Funding Account on such date and deposit in the Payment Account relating
to such Class, the amount on deposit in such Pre-Funding Account, other than
any Pre-Funding Earnings, for payment to the related Noteholders as a
prepayment of principal on such Payment Date;
(iii) if any amounts remain on deposit in either Pre-Funding Account at
the close of business on June 30, 2000, the Indenture Trustee shall
withdraw, from such Pre-Funding Account on the following Payment Date and
deposit in the Payment Account relating to the related Class, the amount on
deposit in such Pre-Funding Account, other than any Pre-Funding Earnings,
for payment to the related Noteholders as a prepayment of principal on such
Payment Date; and
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(iv) on the April 2000, May 2000, June 2000 and July 2000 Payment Dates,
the Indenture Trustee shall transfer from each Pre-Funding Account to the
related Payment Account, the Pre-Funding Earnings, if any, applicable to
such Payment Date.
(c) The Trust hereby directs the Indenture Trustee to establish for each
Class of Notes, at its Corporate Trust Office, an Eligible Account which shall
be the "Capitalized Interest Account" for such Class of Notes. On the Closing
Date, the Indenture Trustee shall deposit the Original Capitalized Interest
Amount for each Class of Notes in the related Capitalized Interest Account from
the proceeds of the sale of the related Class of Notes. The Indenture Trustee
shall withdraw and distribute or cause to be distributed funds on deposit
therein only at the times specified below, based on written instructions
provided by the Servicer or other party as indicated:
(i) on the April 2000, May 2000, June 2000 and July 2000 Payment Dates,
the Indenture Trustee shall transfer from each Capitalized Interest Account
to the related Payment Account, the applicable Capitalized Interest
Requirement, if any, for such Class and such Payment Date; and
(ii) on the Payment Date immediately following, or on which, the amount
on deposit in the related Pre-Funding Account is reduced to zero, any
amounts remaining in the related Capitalized Interest Account, after taking
into account the transfers in respect of the Payment Date described in
clause (i) above, shall be paid to the Unaffiliated Seller.
(d) The Trust hereby directs the Indenture Trustee to establish, on or
before the Closing Date, for each Class of Notes, at its Corporate Trust Office,
an Eligible Account that shall be the "Cross-collateralization Reserve Account"
for such Class. The Indenture Trustee shall deposit and withdraw funds in each
Cross-collateralization Reserve Account in accordance with the provisions of
Sections 8.01(a) and 8.02(a) hereof.
(e) So long as no Default or Event of Default shall have occurred and be
continuing, amounts held in the Accounts, other than the Collection Account and
the Note Insurance Payment Account, shall at the written direction of the
Servicer be invested in Permitted Investments, which Permitted Investments shall
mature no later than the Business Day preceding the immediately following
Payment Date.
All income or other gains, if any, from investment of moneys deposited
in the Payment and Collection Accounts shall be for the benefit of the Servicer
and on each Payment Date, any such amounts may be released from the Accounts and
paid to the Servicer as part of its compensation for acting as Servicer. Any
loss resulting from such investment of moneys deposited in an Account shall be
reimbursed immediately as incurred to the related Account by the Servicer.
Subject to Section 6.01 hereof and the preceding sentence, neither the Indenture
Trustee nor the Servicer shall in any way be held liable by reason of any
insufficiency in the Accounts.
The Indenture Trustee shall not in any way be held liable by reason of
any insufficiency in any Account held by the Indenture Trustee resulting from
any investment loss on
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any Permitted Investment included therein (except to the extent that the
Indenture Trustee is the obligor and has defaulted thereon).
(f) Except as otherwise expressly provided herein, the Indenture Trustee
may demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture. The Indenture Trustee shall hold all such money and
property received by it as part of the Trust Estate and shall apply it as
provided in this Indenture.
If the Indenture Trustee shall not have received the Servicer Remittance
Amount by close of business on any related Servicer Payment Date, the Indenture
Trustee shall, unless the Servicer shall have made provisions satisfactory to
the Indenture Trustee for delivery to the Indenture Trustee of an amount equal
to such Servicer Remittance Amount, deliver a notice, with a copy to the Note
Insurer, to the Servicer of its failure to remit such Servicer Remittance Amount
and that such failure, if not remedied by the close of business on the Business
Day after the date upon which such notice is delivered to the Servicer, shall
constitute a Servicer Event of Default under the Sale and Servicing Agreement.
If the Indenture Trustee shall subsequently receive any such Servicer Remittance
Amount by the close of business on such Business Day, such Servicer Event of
Default shall not be deemed to have occurred. Notwithstanding any other
provision hereof, the Indenture Trustee shall deliver to the Servicer, or its
designee or assignee, any Servicer Remittance Amount received with respect to a
Mortgage Loan after the related Servicer Payment Date to the extent that the
Servicer previously made payment or provision for payment with respect to such
Servicer Remittance Amount in accordance with this Section 8.01, and any such
Servicer Remittance Amount shall not be deemed part of the Trust Estate.
Except as otherwise expressly provided in this Indenture and the Sale
and Servicing Agreement, if, following delivery by the Indenture Trustee of the
notice described above, the Servicer shall fail to remit the Servicer Remittance
Amount on any Servicer Payment Date, the Indenture Trustee shall deliver a
second notice to the Servicer, the Trust and the Note Insurer by the close of
business on the third Business Day prior to the related Payment Date indicating
that a Servicer Event of Default occurred and is continuing under the Sale and
Servicing Agreement. Thereupon, the Indenture Trustee shall take such actions as
are required of the Indenture Trustee under Article VII of the Sale and
Servicing Agreement. In addition, if a default occurs in any other performance
required under the Sale and Servicing Agreement, the Indenture Trustee may, and
upon the request of the Note Insurer or, with the consent of the Note Insurer,
the Holders of Notes representing more than 50% of the Note Principal Balance of
the Outstanding Notes of both of the Classes shall, take such action as may be
appropriate to enforce such payment or performance including the institution and
prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and to proceed thereafter as provided in Article V hereof.
Section 8.02. Payments; Statements. On each Payment Date, unless the
Notes have been declared due and payable pursuant to Section 5.02 hereof and
moneys collected by the Indenture Trustee are being applied in accordance with
Section 5.07 hereof, Available Funds on deposit in each Payment Account on any
Payment Date or Redemption Date shall be withdrawn from such Payment Account, in
the amounts required (based on the Noteholder Statement
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prepared by the Indenture Trustee on or before such Payment Date), for
application on such Payment Date in respect of payments for the related Class of
Notes as follows:
(i) to the Indenture Trustee, an amount equal to the Indenture Trustee
Fees then due to it with respect to the related Class of Notes;
(ii) from amounts then on deposit in the related Payment Account, to the
Note Insurer, the Premium Amount for such payment date;
(iii) from amounts then on deposit in the related Payment Account, to
the Holders of the related Class of Notes, the Payment Amount for such
Class;
(iv) from amounts then on deposit in the related Payment Account
(excluding any Insured Payments), to the Note Insurer, all Reimbursement
Amounts relating to such Class of Notes which have not been previously paid
as of such Payment Date and any other amounts relating to such Class then
due to the Note Insurer pursuant to the Insurance Agreement;
(v) from amounts then on deposit in the related Payment Account, to the
Cross-collateralization Reserve Account relating to the other Class of
Notes, the Reserve Payment Amount for such Class;
(vi) from amounts then on deposit in the related Payment Account, to the
Holders of the related Class of Notes, the amount of any Net Mortgage Loan
Interest Shortfalls for such Class;
(vii) from amounts then on deposit in the related Payment Account, to
the Holders of the other Class of Notes, the amount of any Net Mortgage Loan
Interest Shortfall for such other Class of Notes;
(viii) with respect to the Class A-2 Notes, from amounts then on deposit
in the Payment Account relating to the Class A-2 Notes, to the Holders of
the Class A-2 Notes, the Class A-2 Available Funds Cap Carry-Forward Amount;
and
(ix) following the making by the Indenture Trustee of all allocations,
transfers and disbursements described above, from amounts then on deposit in
the related Payment Account, the Indenture Trustee shall distribute to the
Holders of the related Trust Certificates, the amount remaining on such
Payment Date, if any.
Section 8.03. Claims against the Policy. (a) Within two (2) Business
Days of receipt of each Servicer Remittance Report, the Indenture Trustee shall
determine with respect to the immediately following Payment Date, the amount to
be on deposit in each Payment Account on such Payment Date as a result of the
(i) Servicer's remittance of the Servicer Remittance Amount on the related
Servicer Payment Date, and (ii) any transfers to each Payment Account made from
the related Capitalized Interest Account and/or the related Pre-Funding Account
relating to such Payment Date pursuant to Section 8.01 hereof, excluding the
amount of any Insured Payment and prior to the application of the amounts
described in clauses (i) through (viii) of Section 8.02 hereof for the related
Payment Date.
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(b) If on any Payment Date there is an Available Funds Shortfall for
either Pool, the Indenture Trustee shall complete a Notice in the form of
Exhibit A to the Policy and submit such notice to the Note Insurer no later than
12:00 noon New York City time on the second Business Day preceding such Payment
Date as a claim for an Insured Payment in an amount equal to such Available
Funds Shortfall for such Pool.
(c) The Indenture Trustee shall establish a separate Eligible Account
for the benefit of Holders of the Notes and the Note Insurer referred to herein
as the "Note Insurance Payment Account" over which the Indenture Trustee shall
have exclusive control and sole right of withdrawal. The Indenture Trustee shall
deposit upon receipt any amount paid under the Policy in the Note Insurance
Payment Account and distribute such amount only for purposes of payment to the
Noteholders of the related Pool of the Insured Amount for such Pool for which a
claim was made and such amount may not be applied to satisfy any costs, expenses
or liabilities of the Servicer, the Indenture Trustee or the Trust. Amounts paid
under the Policy, to the extent needed to pay the Insured Amount shall be
transferred to the related Payment Account on the related Payment Date and
disbursed by the Indenture Trustee to the Noteholders in accordance with Section
8.02. It shall not be necessary for such payments to be made by checks or wire
transfers separate from the checks or wire transfers used to pay the Insured
Amount with other funds available to make such payment. However, the amount of
any payment of principal or of interest on the Notes to be paid from funds
transferred from the Note Insurance Payment Account shall be noted as provided
in subsection (d) of this Section 8.03 in the Note Register and in the
Noteholder Statement. Funds held in the Note Insurance Payment Account shall not
be invested. Any funds remaining in the Note Insurance Payment Account on the
first Business Day following a Payment Date shall be returned to the Note
Insurer pursuant to the written instructions of the Note Insurer by the end of
such Business Day.
(d) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Note from moneys
received under the Policy. The Note Insurer shall have the right to inspect such
records at reasonable times during normal business hours upon one (1) Business
Day's prior notice to the Indenture Trustee.
(e) In the event that the Indenture Trustee has received a certified
copy of an order of the appropriate court that any Insured Payment has been
voided in whole or in part as a preference payment under applicable bankruptcy
law, the Indenture Trustee shall so notify the Note Insurer, shall comply with
the provisions of the Policy to obtain payment by the Note Insurer of such
voided Insured Payment, and shall, at the time it provides notice to the Note
Insurer, notify, by mail to the Noteholders of the affected Notes that, in the
event any Noteholder's Insured Payment is so recovered, such Noteholder will be
entitled to payment pursuant to the Policy, a copy of which shall be made
available through the Indenture Trustee, the Note Insurer or the Note Insurer's
fiscal agent, if any, and the Indenture Trustee shall furnish to the Note
Insurer or its fiscal agent, if any, its records evidencing the payments which
have been made by the Indenture Trustee and subsequently recovered from the
Noteholders, and dates on which such payments were made.
(f) The Indenture Trustee shall promptly notify the Note Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Indenture Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable
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bankruptcy, insolvency, receivership or similar law (a "Preference Claim") of
any payment made with respect to the Notes. Each Noteholder, by its purchase of
Notes, the Servicer and the Indenture Trustee agree that, the Note Insurer (so
long as no Note Insurer Default exists) may at any time during the continuation
of any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (i) the direction of any
appeal of any order relating to such Preference Claim and (ii) the posting of
any surety, supersedeas or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Note Insurer shall be subrogated
to, and each Noteholder, the Servicer and the Indenture Trustee hereby delegate
and assign to the Note Insurer, to the fullest extent permitted by law, the
rights of the Servicer, the Indenture Trustee and each Noteholder in the conduct
of any such Preference Claim, including, without limitation, all rights of any
party to any adversary proceeding or action with respect to any court order
issued in connection with any such Preference Claim.
(g) The Indenture Trustee shall, upon retirement of the Notes, furnish
to the Note Insurer a notice of such retirement, and, upon retirement of the
Notes and the expiration of the term of the Policy, surrender the Policy to the
Note Insurer for cancellation.
(h) Unless a Note Insurer Default exists and is continuing, the
Indenture Trustee and the Trust shall cooperate in all respects with any
reasonable request by the Note Insurer for action to preserve or enforce the
Note Insurer's rights or interests hereunder without limiting the rights or
affecting the interests of the Noteholders as otherwise set forth herein.
(i) Each Noteholder, by its purchase of Notes, and the Indenture Trustee
hereby agree that, unless a Note Insurer Default exists and is continuing, the
Note Insurer shall have the right to direct all matters relating to the Notes in
any proceeding in a bankruptcy of the Trust, including without limitation any
proceeding relating to a Preference Amount and the posting of any surety or Note
pending any such appeal.
(j) Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Notes which is made with moneys
received pursuant to the terms of the Policy shall not be considered payment of
the Notes from the Trust. The Trust and the Indenture Trustee acknowledge, and
each Holder by its acceptance of a Note agrees, that without the need for any
further action on the part of the Note Insurer, the Trust, the Indenture Trustee
or the Note Registrar (x) to the extent the Note Insurer makes payments,
directly or indirectly, on account of principal of or interest on the Notes to
the Holders of such Notes, the Note Insurer will be fully subrogated to, and
each Noteholder, the Trust and the Indenture Trustee hereby delegate and assign
to the Note Insurer, to the fullest extent permitted by law, the rights of such
Holders to receive such principal and interest from the Trust, including,
without limitation, any amounts due to the Noteholders in respect of securities
law violations arising from the offer and sale of the Notes, and (y) the Note
Insurer shall be paid such amounts from the sources and in the manner provided
herein for the payment of such amounts.
Section 8.04. General Provisions Regarding the Payment Accounts and
Mortgage Loans. (a) Each Payment Account shall relate solely to the Notes of
the related Class and to the Mortgage Loans in the related Pool, Permitted
Investments and other property securing the related Notes. Funds and other
property in each Payment Account shall not be
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commingled with the other Payment Account or any other moneys or property of the
Trust or any Affiliate thereof. Notwithstanding the foregoing, the Indenture
Trustee may hold any funds or other property received or held by it as part of a
Payment Account in collective accounts maintained by it in the normal course of
its business and containing funds or property held by it for other Persons
(which may include the Trust or an Affiliate); provided, that such accounts are
under the sole control of the Indenture Trustee and the Indenture Trustee
maintains adequate records indicating the ownership of all such funds or
property and the portions thereof held for credit to the related Payment
Account.
(b) If any amounts are needed for payment from a Payment Account and
sufficient uninvested funds are not available therein to make such payment, the
Indenture Trustee shall cause to be sold or otherwise converted to cash a
sufficient amount of the investments in such Payment Account.
(c) The Indenture Trustee shall, at all times while any Notes are
Outstanding, maintain in its possession, or in the possession of an agent whose
actions with respect to such items are under the sole control of the Indenture
Trustee, all certificates or other instruments, if any, evidencing any
investment of funds in the Payment Accounts. The Indenture Trustee shall
relinquish possession of such items, or direct its agent to do so, only for
purposes of collecting the final payment receivable on such investment or
certificate or, in connection with the sale of any investment held in the
Payment Accounts, against delivery of the amount receivable in connection with
any sale.
(d) The Indenture Trustee shall not invest any part of the Trust Estate
in Permitted Investments that constitute uncertificated securities (as defined
in Section 8-102 of the Uniform Commercial Code, as enacted in the relevant
jurisdiction) or in any other book-entry securities unless it has received an
Opinion of Counsel reasonably satisfactory in form and substance to the
Indenture Trustee setting forth, with respect to each type of security for which
authority to invest is being sought, the procedures that must be followed to
maintain the lien and security interest created by this Indenture with respect
to the Trust Estate.
Section 8.05. Releases of Deleted Mortgage Loans. Upon notice or
discovery by a Responsible Officer of the Indenture Trustee that any of the
representations or warranties of the Unaffiliated Seller set forth in Section
3.03 of the Unaffiliated Seller's Agreement was materially incorrect or
otherwise misleading with respect to any Mortgage Loan as of the time made, the
Indenture Trustee shall direct the Unaffiliated Seller to either cure,
repurchase or substitute for such Mortgage Loan as provided in Section 3.05 of
the Unaffiliated Seller's Agreement. Upon any purchase of or substitution for a
Deleted Mortgage Loan by the Unaffiliated Seller in accordance with Section 3.05
of the Unaffiliated Seller's Agreement, the Indenture Trustee shall cause the
Collateral Agent to deliver the Indenture Trustee's Mortgage File relating to
such Deleted Mortgage Loan to the Unaffiliated Seller, and the Trust, the
Collateral Agent and the Indenture Trustee shall execute such instruments of
transfer as are necessary to convey title to such Deleted Mortgage Loan to the
Unaffiliated Seller from the lien of this Indenture. Nothing in this Section
8.05 should be construed to obligate the Indenture Trustee to actively monitor
the correctness or accuracy of the representations and warranties of the
Unaffiliated Seller.
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Section 8.06. Reports by Indenture Trustee to Noteholders; Access to
Certain Information. On each Payment Date, the Indenture Trustee shall deliver
the written reports required by Section 2.08(d) to Noteholders of record as of
the related Record Date (including the Clearing Agency, if any).
The Indenture Trustee shall make available at its Corporate Trust
Office, during normal business hours, for review by any Noteholder or any person
identified to the Indenture Trustee as a prospective Noteholder, originals or
copies of the following items: (a) the Indenture and any amendments thereto, (b)
all Noteholder Statements and other reports delivered since the Closing Date
pursuant to Section 2.08(d) hereof, (c) any Officers' Certificates delivered to
the Indenture Trustee since the Closing Date as described in the Indenture and
(d) any Accountants' reports delivered to the Indenture Trustee since the
Closing Date as required under the Sale and Servicing Agreement. Copies of any
and all of the foregoing items will be available from the Indenture Trustee upon
request; however, the Indenture Trustee will be permitted to require payment of
a sum sufficient to cover the reasonable costs and expenses of providing such
copies and shall not be required to provide such copies without reasonable
assurances that such sum will be paid.
Section 8.07. Release of Trust Estate. The Indenture Trustee shall, at
such time as there are no Notes Outstanding, release all of the Trust Estate to
the Trust (other than any cash held for the payment of the Notes pursuant to
Section 3.03 or 4.02 hereof).
Section 8.08. Amendment to Sale and Servicing Agreement. The Indenture
Trustee may, without the consent of any Holder, enter into or consent to any
amendment or supplement to the Sale and Servicing Agreement for the purpose of
increasing the obligations or duties of any party other than the Indenture
Trustee or the Holders of the Notes. The Indenture Trustee may, in its
discretion, decline to enter into or consent to any such supplement or
amendment: (i) unless the Indenture Trustee receives an Opinion of Counsel that
the position of the Holders would not be materially adversely affected or
written confirmation of satisfaction of the Rating Agency Condition or (ii) if
its own rights, duties or immunities would be adversely affected.
Section 8.09. Delivery of the Mortgage Files Pursuant to Sale and
Servicing Agreement. As is appropriate for the servicing or foreclosure of any
Mortgage Loan, the Indenture Trustee shall cause the Collateral Agent to deliver
to the Servicer the Mortgage Files for such Mortgage Loan upon receipt by the
Indenture Trustee and the Collateral Agent on or prior to the date such release
is to be made of:
(a) such Officer's Certificates, if any, as are required by the Sale and
Servicing Agreement; and
(b) a Request for Release, executed by the Servicer, providing that the
Servicer will hold or retain the Indenture Trustee's Mortgage Files in trust for
the benefit of the Indenture Trustee, the Note Insurer and the Holders of Notes.
Section 8.10. Servicer as Agent. In order to facilitate the servicing of
the Mortgage Loans by the Servicer of such Mortgage Loans, the Servicer of the
Mortgage Loans
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has been appointed by the Trust to retain, in accordance with the provisions of
the Sale and Servicing Agreement and this Indenture, all Servicer Remittance
Amounts on such Mortgage Loans prior to their deposit into the related Payment
Account on or prior to the related Servicer Payment Date.
Section 8.11. Termination of Servicer. In the event of the occurrence of
a Servicer Event of Default specified in Section 7.01 of the Sale and Servicing
Agreement, the Indenture Trustee may, with the consent of the Note Insurer or,
with the prior written consent of the Note Insurer, the Holder of Notes
representing not less than 50% of the Note Principal Balance of the Outstanding
Notes of both of the Classes, and shall, upon the direction of the Note Insurer
(or as otherwise provided in the Sale and Servicing Agreement), terminate the
Servicer as provided in Section 7.01 of the Sale and Servicing Agreement. If the
Indenture Trustee terminates the Servicer, the Indenture Trustee shall, pursuant
to Section 7.02 of the Sale and Servicing Agreement, assume the duties of the
Servicer or appoint a successor Servicer acceptable to the Trust, the Note
Insurer and the Rating Agencies and meeting the requirements set forth in the
Sale and Servicing Agreement.
Section 8.12. Opinion of Counsel. The Indenture Trustee shall be
entitled to receive at least five (5) Business Days' notice of any action to be
taken pursuant to Sections 8.08 and 8.09 hereof (other than in connection with
releases of Mortgage Loans that were subject to a prepayment in full),
accompanied by copies of any instruments involved, and the Indenture Trustee
shall be entitled to receive an Opinion of Counsel, in form and substance
reasonably satisfactory to the Indenture Trustee, stating the legal effect of
any such action, outlining the steps required to complete the same, and
concluding that all conditions precedent to the taking of such action have been
complied with. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
Section 8.13. Appointment of Collateral Agents. The Indenture Trustee
may, at no additional cost to the Trust or to the Indenture Trustee, with the
consent of the Note Insurer, appoint one or more Collateral Agents to hold all
or a portion of the Indenture Trustee Mortgage Files, as Agent for the Indenture
Trustee. Such Collateral Agent shall meet the requirements of Article IX of the
Sale and Servicing Agreement. Matters concerning the Collateral Agents shall be
governed by said Article IX. Chase Bank of Texas, N.A. is hereby appointed as
the initial Collateral Agent hereunder.
Section 8.14. Rights of the Note Insurer to Exercise Rights of
Noteholders. By accepting its Notes, each Noteholder agrees that unless a Note
Insurer Default exists, the Note Insurer shall have the right to exercise all
rights of the Noteholders under this Indenture, without any further consent of
the Noteholders, including, without limitation:
(a) the right to require the Servicer to effect foreclosures upon
Mortgage Loans upon failure of the Servicer to do so;
(b) the right to require the Unaffiliated Seller to repurchase or
substitute for Deleted Mortgage Loans pursuant to Section 8.05;
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(c) the right to direct the actions of the Indenture Trustee during the
continuance of an Event of Default; and
(d) the right to vote on proposed amendments to this Indenture.
In addition, each Noteholder agrees that, unless a Note Insurer Default exists,
the rights specifically set forth above may be exercised by the Noteholders only
with the prior written consent of the Note Insurer.
Except as otherwise provided in Section 8.03 hereof and notwithstanding
any provision in this Indenture to the contrary, so long as a Note Insurer
Default has occurred and is continuing, the Note Insurer shall have no rights to
exercise any voting rights of the Noteholders hereunder, nor shall the Indenture
Trustee be required to obtain the consent of, or act at the direction of, the
Note Insurer.
All notices, statements, reports, certificates or opinions required by
this Indenture to be sent to any other party hereto or to the Noteholders shall
also be sent to the Note Insurer.
Section 8.15. Trust Estate and Accounts Held for Benefit of the Note
Insurer. The Collateral Agent, on behalf of the Indenture Trustee, shall hold
the Trust Estate and the Indenture Trustee's Mortgage Files, for the benefit of
the Noteholders and the Note Insurer, and all references in this Indenture and
in the Notes to the benefit of Holders of the Notes shall be deemed to include
the Note Insurer (provided there does not exist a Note Insurer Default).
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
With the consent of the Note Insurer and without the consent of the Holders of
any Notes, the Trust and the Indenture Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(a) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and confirm
unto the Indenture Trustee any property subject or required to be subjected to
the lien of this Indenture, or to subject to the lien of this Indenture
additional property;
(b) to add to the conditions, limitations and restrictions on the
authorized amount, terms and purposes of the issuance, authentication and
delivery of any Notes, as herein set forth, additional conditions, limitations
and restrictions thereafter to be observed;
(c) to evidence the succession of another Person to the Trust to the
extent permitted herein, and the assumption by any such successor of the
covenants of the Trust herein and in the Notes contained;
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(d) to add to the covenants of the Trust, for the benefit of the Holders
of all Notes and the Note Insurer, or to surrender any right or power herein
conferred upon the Trust;
(e) to cure any ambiguity, to correct or supplement any provision herein
that may be defective or inconsistent with any other provision herein, or to
amend any other provisions with respect to matters or questions arising under
this Indenture, which shall not be inconsistent with the provisions of this
Indenture, provided that such action shall not adversely affect in any material
respect the interests of the Holders of the Notes or the Holders of the Trust
Certificates; provided, that the amendment shall not be deemed to adversely
affect in any material respect the interests of the Holders of the Notes and the
Note Insurer if the Person requesting the amendment obtains written confirmation
of the satisfaction of the Rating Agency Condition; or
(f) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualification of this Indenture
under the TIA or under any similar federal statute hereafter enacted, and to add
to this Indenture such other provisions as may be expressly required by the TIA.
Section 9.02. Supplemental Indentures With Consent of Noteholders. With
the consent of the Note Insurer and with the consent of Holders of Notes
representing not less than a majority of the Note Principal Balance of all
Outstanding Notes of both of the Classes by Act of said Holders delivered to the
Trust and the Indenture Trustee, the Trust and the Indenture Trustee may enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(a) change any Payment Date or the Final Stated Maturity Date of the
Notes or, with respect to the Notes, reduce the Note Principal Balance thereof
or the Note Rate thereon, change the earliest date on which any Note may be
redeemed at the option of the Servicer, change any place of payment where, or
the coin or currency in which, any Note or any interest thereon is payable, or
impair the right to institute suit for the enforcement of the payment of any
installment of interest due on any Note on or after the Final Stated Maturity
Date thereof or for the enforcement of the payment of the entire remaining
unpaid principal amount of any Note on or after the Final Stated Maturity Date
(or, in the case of redemption, on or after the applicable Redemption Date);
(b) reduce the percentage of the Note Principal Balance of the
Outstanding Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required for
any waiver of compliance with provisions of this Indenture or Defaults hereunder
and their consequences provided for in this Indenture;
(c) modify any of the provisions of this Section 9.02 or Sections 5.13
or 5.17(b) hereof, except to increase any percentage specified therein or to
provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Note affected
thereby;
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(d) modify or alter the provisions of the proviso to the definition of
the term "Outstanding";
(e) permit the creation of any lien other than the lien of this
Indenture with respect to any part of the Trust Estate or terminate the lien of
this Indenture on any property at any time subject hereto or deprive the Holder
of any Note of the security afforded by the lien of this Indenture;
(f) modify any of the provisions of this Indenture in such manner as to
affect the calculation of the Interest Payment Amount or Principal Payment
Amount for any Payment Date and either Class (including the calculation of any
of the individual components of such amounts) or to affect rights of the Holders
of the Notes to the benefits of any provisions for the mandatory redemption of
Notes contained herein; or
(g) incur any indebtedness, other than the Notes, that would cause the
Trust or the Trust Estate to be treated as a "taxable mortgage pool" within the
meaning of Code Section 7701(i).
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
9.02 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Trust and the Indenture Trustee of
any supplemental indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Holders of the Notes to which such supplemental indenture
relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article IX or the modifications thereby of the trusts created by this
Indenture, the Indenture Trustee shall be entitled to receive, and (subject to
Section 6.01 hereof) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties or immunities under this Indenture or
otherwise. The Servicer, on behalf of the Trust, shall cause executed copies of
any supplemental indentures to be delivered to the Note Insurer and the Rating
Agencies.
Section 9.04. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article IX, this Indenture shall be
modified in accordance
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therewith, and such supplemental indenture shall form a part of this Indenture
for all purposes; and every Holder of Notes to which such supplemental indenture
relates that have theretofore been or thereafter are authenticated and delivered
hereunder shall be bound thereby.
Section 9.05. Conformity With Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article IX shall conform to the requirements
of the TIA as then in effect so long as this Indenture shall then be qualified
under the TIA.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Owner Trustee, acting at the
direction of the Majority Certificateholders, shall so determine, new Notes so
modified as to conform, in the opinion of the Indenture Trustee and the Owner
Trustee, acting at the direction of the Majority Certificateholders, to any such
supplemental indenture may be prepared by the Servicer and executed by the Owner
Trustee, acting at the direction of the Majority Certificateholders, on behalf
of the Trust, and authenticated and delivered by the Indenture Trustee in
exchange for Outstanding Notes.
Section 9.07. Amendments to Governing Documents. The Indenture Trustee
shall, upon a Trust Request, consent to any proposed amendment to the Trust's
governing documents, or an amendment to or waiver of any provision of any other
document relating to the Trust's governing documents, such consent to be given
without the necessity of obtaining the consent of the Holders of any Notes upon
receipt by the Indenture Trustee of:
(a) an Officer's Certificate, to which such proposed amendment or waiver
shall be attached, stating that such attached copy is a true copy of the
proposed amendment or waiver and that all conditions precedent to such consent
specified in this Section 9.07 have been satisfied; and
(b) written confirmation of the satisfaction of the Rating Agency
Condition with respect to such proposed amendment.
Notwithstanding the foregoing, the Indenture Trustee may decline to
consent to a proposed waiver or amendment that adversely affects its own rights,
duties or immunities under this Indenture or otherwise.
Nothing in this Section 9.07 shall be construed to require that any
Person obtain the consent of the Indenture Trustee to any amendment or waiver or
any provision of any document where the making of such amendment or the giving
of such waiver without obtaining the consent of the Indenture Trustee is not
prohibited by this Indenture or by the terms of the document that is the subject
of the proposed amendment or waiver.
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ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption. (a) At the option of the Majority
Certificateholder of the larger pool of Mortgage Loans (by Aggregate Principal
Balance) remaining or, if such Holders fail to exercise such option, at the
option of the Servicer, and, in each case at such parties' sole cost and
expense, (x) this Indenture may be terminated and all the Notes may be redeemed
in whole, but not in part, on any Redemption Date on and after the Clean-Up Call
Date at the Termination Price or (y) the Class A-1 Notes or Class A-2 Notes may
be individually redeemed, on any Redemption Date on and after the related Note
Clean-up Call Date at the applicable Termination Price.
(b) Any such purchase or redemption shall be accomplished by deposit by
the exercising party, into the related Payment Account or Accounts of the
Termination Price on the Servicer Payment Date preceding the Redemption Date.
The amounts on deposit therein shall be distributed by the Indenture Trustee on
such Redemption Date in accordance with the priority set forth in Section 8.02
hereof. No termination or redemption is permitted without the prior written
consent of the Note Insurer if only one Class of Notes is terminated or redeemed
while the other Class of Notes is still outstanding or if any termination or
redemption would result in a draw on the Policy.
(c) Notice by the Majority Certificateholder referred to in paragraph
(a) of this Section 10.01 of the election to redeem the Notes pursuant to
subsection (a) of this Section 10.01 shall be furnished to the Indenture Trustee
not later than thirty (30) days prior to the Payment Date selected for such
redemption. Upon receiving such notice, the Indenture Trustee shall notify each
Holder of such Notes and Note Insurer of such election pursuant to Section 10.02
hereof. Any expenses associated with the compliance of the provisions hereof in
connection with a redemption of the Notes shall be paid by the Majority
Certificateholder exercising such redemption or the Servicer, as the case may
be.
If the Indenture Trustee does not receive notice from the Majority
Certificateholder referred to in paragraph (a) of this Section 10.01 that they
intend to exercise their option to redeem the Notes at least thirty (30) days
prior to the first Payment Date on which they are entitled to do so, the
Indenture Trustee shall promptly notify the Servicer that it may effect a
redemption of the Notes by responding to the Indenture Trustee's notice no later
than fifteen (15) days prior to the next succeeding Payment Date.
(d) Upon the redemption of all of the Notes, the Mortgage Loans in the
Trust Estate shall be released and delivered to the Majority Certificateholder
effecting such redemption or the Servicer, as the case may be. In the case of a
redemption of the Class A-1 Notes only, the Mortgage Loans in Pool I will not be
released from the lien of the Indenture until such time as the Class A-2 Notes
are redeemed. In such case, the Pool I Mortgage Loans will continue to be
pledged to the Indenture Trustee, on behalf of the Noteholders and the Note
Insurer, to secure the obligations of the Trust with respect to the Class A-2
Notes. In the case of a redemption of the Class A-2 Notes only, the Mortgage
Loans in Pool II will not be released from the lien of the Indenture until such
time as the Class A-1 Notes are redeemed. In such case, the Pool II
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Mortgage Loans will continue to be pledged to the Indenture Trustee, on behalf
of the Noteholders and the Note Insurer, to secure the obligations of the Trust
with respect to the Class A-1 Notes.
(e) Upon receipt of the notice from the relevant Majority
Certificateholder or the Servicer of their respective election to redeem the
Notes pursuant to Section 10.01(a) hereof (which shall state, in the case of an
election by the Servicer, that the Servicer has determined that the conditions
to redemption at the option of the Servicer have been satisfied and setting
forth the amount, if any, to be withdrawn from each Payment Account and paid to
the Servicer as reimbursement for Nonrecoverable Advances in respect of the
related Mortgage Loans and such other information as may be required to
accomplish such redemption), the Indenture Trustee shall prepare and deliver to
the Trust, the Servicer and the Note Insurer, no later than the related
Redemption Date, a Noteholder Statement.
Section 10.02. Form of Redemption Notice. Notice of redemption shall be
given by the Indenture Trustee in the name of and at the expense of the Trust by
first class mail, postage prepaid, mailed not less than ten days prior to the
Redemption Date to each Holder of Notes to be redeemed, such Holders being
determined as of the Record Date for such Payment Date, and to the Note Insurer.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the price at which the Notes of such Class will be redeemed; and
(c) the fact of payment in full on such Notes, the place where such
Notes are to be surrendered for final payment (which shall be the office or
agency of the Trust to be maintained as provided in Section 3.02 hereof), and
that no interest shall accrue on such Note for any period after the date fixed
for redemption.
Failure to give notice of redemption, or any defect therein, to any
Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Note.
Section 10.03. Notes Payable on Optional Redemption. Notice of
redemption having been given as provided in Section 10.02 hereof, the Notes to
be redeemed shall, on the applicable Redemption Date, become due and payable and
(unless the Trust shall default in such payment) no interest shall accrue on
such Notes for any period after such Redemption Date; provided, however, that if
such payment is not made on the Redemption Date, the Note Principal Balance
shall, until paid, bear interest from the Redemption Date at the applicable Note
Rate.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions. (a) Upon any
application or request by any Person to the Indenture Trustee to take any action
under any provision of this Indenture, such Person shall furnish to the
Indenture Trustee an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel, if requested by the
Indenture Trustee, stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
(b) Every certificate, opinion or letter with respect to compliance with
a condition or covenant provided for in this Indenture, including one furnished
pursuant to specific requirements of this Indenture relating to a particular
application or request (other than certificates provided pursuant to TIA Section
314(a)(4)) shall include and shall be deemed to include (regardless of whether
specifically stated therein) the following:
(i) a statement that each individual signing such certificate, opinion
or letter has read such covenant or condition and the definitions herein
relating thereto;
(ii) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate, opinion or letter are based;
(iii) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(iv) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 11.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of the Trust may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such other
counsel's
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opinion and shall include a statement to the effect that such counsel believes
that such counsel and the Indenture Trustee may reasonably rely upon the opinion
of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Trust
shall deliver any document as a condition of the granting of such application,
or as evidence of the Trust's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Trust to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Section 6.01(b)(ii) hereof.
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Indenture Trustee at the request or
direction of the Trust, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Trust's right to make such request or
direction, the Indenture Trustee shall be protected in acting in accordance with
such request or direction if it does not have knowledge of the occurrence and
continuation of such Default or Event of Default as provided in Section 6.01(d)
hereof.
Section 11.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee, and,
where it is hereby expressly required, to the Trust. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Noteholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Indenture
Trustee and the Trust, if made in the manner provided in this Section 11.03.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
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(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Trust in reliance thereon, whether or not notation
of such action is made upon such Notes.
Section 11.04. Notices, etc., to Indenture Trustee, the Note Insurer and
Trust. Any request, demand, authorization, direction, notice, consent, waiver or
Act of Noteholders or other documents provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(a) the Indenture Trustee by any Noteholder or by the Trust shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with and received by the Indenture Trustee at its Corporate Trust
Office; or
(b) the Trust by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder (except as provided in Section 5.01(c)
and (d)) hereof if in writing and mailed, first-class postage prepaid, to the
Trust addressed to it at ABFS Mortgage Loan Trust 2000-1, in care of First Union
Trust Company, National Association, One Rodney Square, 920 King Street, Suite
102, Wilmington, Delaware, 19801, Attention: Corporate Trust Administration, or
at any other address previously furnished in writing to the Indenture Trustee by
the Trust.
(c) the Note Insurer by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if in writing and mailed, first-class,
postage prepaid, to Ambac Assurance Corporation addressed to it at One State
Street Plaza, New York, New York, 10004, Attention: Surveillance Department (in
each case in which notice or other communication to the Note Insurer refers to
an Event of Default, a claim on the Policy or with respect to which failure on
the part of the Note Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of each of the and shall be marked to indicate "URGENT
MATERIAL ENCLOSED"), or at any other address previously furnished in writing to
the Indenture Trustee by the Note Insurer; or
(d) the Depositor by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed, first-class,
postage paid, to Prudential Securities Secured Financing Corporation c/o
Prudential Securities Incorporated, One New York Plaza, New York, New York
10292; Attention: Managing Director - Asset-Backed Finance Group, or at any
other address previously furnished in writing to the Indenture Trustee by the
Depositor; or
(e) the Unaffiliated Seller or the Servicer by the Indenture Trustee or
by any Noteholder shall be sufficient for every purpose hereunder if in writing
and mailed, first-class, postage paid, to such party, in care of American
Business Financial Services, Inc., BalaPointe Office Centre, 111 Presidential
Boulevard, Suite 127, Bala Cynwyd, Pennsylvania, 19004,
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Attention: General Counsel or at any other address previously furnished in
writing to the Indenture Trustee by the Unaffiliated Seller or the Servicer; or
(f) the Underwriter by any party or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed, first-class,
postage prepaid, to Prudential Securities Incorporated, One New York Plaza, New
York, New York 10292, Attention: Managing Director - Asset-Backed Finance, or at
any other address previously furnished in writing to the Indenture Trustee by
the Underwriter.
Notices required to be given to the Rating Agencies by the Trust or the
Indenture Trustee shall be in writing, personally delivered or mailed
first-class postage pre-paid, to (i) in the case of Moody's, at the following
address: Moody's Investors Service, Inc., Residential Mortgage Monitoring
Department, 99 Church Street, New York, New York 10007, (ii) in the case of S&P,
at the following address: Standard & Poor's Ratings Services, 55 Water Street,
New York, New York, 10041, Attention: Asset-Backed Surveillance Department and
(iii) in the case of DCR, at the following address: Duff and Phelps Credit
Rating Co., 17 State Street, New York, NY 10004, Attention: Residential
Mortgage-Backed Securities Group; or as to each of the foregoing, at such other
address as shall be designed by written notice to the other parties.
Section 11.05. Notices and Reports to Noteholders; Waiver of Notices.
Where this Indenture provides for notice to Noteholders of any event or the
mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder as
it appears on the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report,
nor any defect in any notice or report so mailed, to any particular Noteholder
shall affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Section 11.06. Rules by Indenture Trustee. The Indenture Trustee may
make reasonable rules for any meeting of Noteholders.
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Section 11.07. Conflict With Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the TIA,
such required provision shall control.
Section 11.08. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 11.09. Successors and Assigns. All covenants and agreements in
this Indenture by the Trust shall bind its successors and assigns, whether so
expressed or not.
Section 11.10. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 11.11. Benefits of Indenture. Nothing in this Indenture or in
the Notes, expressed or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, any separate trustee or
co-trustee appointed under Section 6.14 hereof and the Noteholders, any benefit
or any legal or equitable right, remedy or claim under this Indenture.
Section 11.12. Legal Holidays. In any case where the date of any Payment
Date, Redemption Date or any other date on which principal of or interest on any
Note is proposed to be paid shall not be a Business Day, then (notwithstanding
any other provision of the Notes or this Indenture) payment need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the nominal date of any such Payment Date,
Redemption Date or other date for the payment of principal of or interest on any
Note and no interest shall accrue for the period from and after any such nominal
date, provided such payment is made in full on such next succeeding Business
Day.
Section 11.13. Governing Law. IN VIEW OF THE FACT THAT NOTEHOLDERS ARE
EXPECTED TO RESIDE IN MANY STATES AND OUTSIDE THE UNITED STATES AND THE DESIRE
TO ESTABLISH WITH CERTAINTY THAT THIS INDENTURE WILL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF A STATE HAVING A
WELL-DEVELOPED BODY OF COMMERCIAL AND FINANCIAL LAW RELEVANT TO TRANSACTIONS OF
THE TYPE CONTEMPLATED HEREIN, THIS INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
Section 11.14. Counterparts. This instrument may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.15. Recording of Indenture. This Indenture is subject to
recording in any appropriate public recording offices, such recording to be
effected by the Servicer, on behalf of the Trust, and at its expense in
compliance with any Opinion of Counsel delivered pursuant to Sections 2.11(c) or
3.06 hereof.
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Section 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Trust, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Trust or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Trust, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Trust
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of the Trust Agreement.
Section 11.17. No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder and Beneficial Owner, by accepting a Note, hereby
covenant and agree that they will not at any time institute against the
Unaffiliated Seller or the Trust, or join in any institution against the
Unaffiliated Seller or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the Basic
Documents. In addition, the Indenture Trustee will on behalf of the Holders of
the Notes, (a) file a written objection to any motion or other proceeding
seeking the substantive consolidation of any Originator with the Unaffiliated
Seller or the Trust, (b) file an appropriate memorandum of points and
authorities or other brief in support of such objection, or (c) endeavor to
establish at the hearing on such objection that the substantive consolidation of
such entity would be materially prejudicial to the Noteholders.
This Section 11.17 will survive for one year and one day following the
termination of this Indenture.
Section 11.18. Inspection. The Trust agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee and the Note
Insurer, during the Trust's normal business hours, to examine all of books of
account, records, reports and other papers of the Trust, to make copies and
extracts therefrom, to cause such books to be audited by Independent Accountants
selected by the Indenture Trustee or the Note Insurer, as the case may be, and
to discuss its affairs, finances and accounts with its officers, employees and
Independent Accountants (and by this provision the Trust hereby authorizes its
Accountants to discuss with such representatives such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any expense incident to the exercise by the Indenture Trustee of any
right under this Section 11.18 shall be borne by the Trust.
Section 11.19. Usury. The amount of interest payable or paid on any Note
under the terms of this Indenture shall be limited to an amount that shall not
exceed the maximum nonusurious rate of interest allowed by the applicable laws
of the United States or the State of
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New York (whichever shall permit the higher rate), that could lawfully be
contracted for, charged or received (the "Highest Lawful Rate"). In the event
any payment of interest on any Note exceeds the Highest Lawful Rate, the Trust
stipulates that such excess amount will be deemed to have been paid as a result
of an error on the part of both the Indenture Trustee, acting on behalf of the
Holder of such Note, and the Trust, and the Holder receiving such excess payment
shall promptly, upon discovery of such error or upon notice thereof from the
Trust or the Indenture Trustee, refund the amount of such excess or, at the
option of the Indenture Trustee, apply the excess to the payment of principal of
such Note, if any, remaining unpaid. In addition, all sums paid or agreed to be
paid to the Indenture Trustee for the benefit of Holders of Notes for the use,
forbearance or detention of money shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such Notes.
Section 11.20. Note Insurer Default. Any right conferred to the Note
Insurer shall be suspended during any period in which a Note Insurer Default
exists. At such time as the Notes are no longer Outstanding under this
Indenture, and no amounts owed to the Note Insurer under the Basic Documents
remain unpaid, the Note Insurer's rights under this Indenture shall terminate.
Section 11.21. Third-Party Beneficiary. The Note Insurer is intended as
a third- party beneficiary of this Indenture which shall be binding upon and
inure to the benefit of the Note Insurer; provided, that, notwithstanding the
foregoing, for so long as a Note Insurer Default is continuing with respect to
its obligations under the Policy, the Noteholders shall succeed to the Note
Insurer's rights hereunder. Without limiting the generality of the foregoing,
all covenants and agreements in this Indenture that expressly confer rights upon
the Note Insurer shall be for the benefit of and run directly to the Note
Insurer, and the Note Insurer shall be entitled to rely on and enforce such
covenants to the same extent as if it were a party to this Indenture.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Trust and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.
ABFS MORTGAGE LOAN TRUST 2000-1
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Owner
Trustee under the Trust Agreement
By:
------------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By:
------------------------------------------
Name:
Title:
[Signature Page to Indenture]
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SCHEDULE I
MORTGAGE LOAN SCHEDULE
[See Schedule 1 to Unaffiliated Seller's Agreement.]
<PAGE>
EXHIBIT A
FORM OF NOTE
ABFS MORTGAGE LOAN TRUST 2000-1
CLASS A-[1][2] NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE NOTE IS A NON-RECOURSE OBLIGATION OF THE TRUST, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AND THE NOTE INSURANCE POLICY
AS PROVIDED IN THE INDENTURE REFERRED TO BELOW. THE TRUST IS NOT OTHERWISE
PERSONALLY LIABLE FOR PAYMENTS ON THIS NOTE.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
-------------------------------------------
Note No.: CUSIP No.:
A-[1][2] -
Class A-[1][2] Original Note Principal Percentage Interest:
Balance: 100%
$__________ First Payment Date:
Date of Indenture: April 17, 2000
As of March 1, 2000
------------------------------------------
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ABFS MORTGAGE LOAN TRUST 2000-1
MORTGAGE BACKED NOTES, SERIES 2000-1, CLASS A-[1][2]
ABFS Mortgage Loan Trust 2000-1, a statutory business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Trust"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of $__________ (_________________________
Thousand Dollars) payable on each Payment Date in an amount equal to the result
obtained by multiplying (x) the Percentage Interest of this Note set forth on
the cover page hereof, by (y) the aggregate amount, if any, payable from the
related Payment Account in respect of principal on the Class A-[1][2] Notes,
pursuant to the Indenture, dated as of March 1, 2000, between the Trust and The
Chase Manhattan Bank, a New York banking corporation, as Indenture Trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid Note Principal
Balance of this Note shall be due and payable on the earlier of (i) the Payment
Date occurring in July 2031 (this Note's "Final Stated Maturity Date"), (ii) the
Redemption Date, if any, applicable to this Notes pursuant to Article X of the
Indenture or (iii) the date on which an Event of Default shall have occurred and
be continuing, if the Notes have been declared to be immediately due and payable
in the manner provided in Section 5.02 of the Indenture. Capitalized terms used
but not defined herein are defined in Appendix I to the Indenture.
Pursuant to the terms of the Indenture, payments will be made on the 15th day of
each month or, if such day is not a Business Day, on the Business Day
immediately following such 15th day (each a "Payment Date"), commencing on the
first Payment Date specified on the cover page hereof, to the Person in whose
name this Note is registered at the close of business on the applicable Record
Date, in an amount equal to the product of (a) the Percentage Interest evidenced
by this Note and (b) the sum of the amounts to be paid on the Class A-[1][2]
Notes with respect to such Payment Date, all as more specifically set forth in
the Indenture.
Notwithstanding the foregoing, in the case of Definitive Notes, upon written
request at least five (5) days prior to the related Record Date with appropriate
instructions by the Holder of this Note (holding an aggregate initial Note
Principal Balance of at least $1,000,000), any payment of principal or interest,
other than the final installment of principal or interest, shall be made by wire
transfer to an account in the United States of America designated by such Holder
reasonably satisfactory to the Indenture Trustee.
On each Payment Date, Noteholders will be entitled to receive interest payments
in an aggregate amount equal to the Current Interest for such Class for such
Payment Date, together with principal payments in an aggregate amount equal to
the Principal Payment Amount for such Class for such Payment Date, plus, until
the Over-collateralization Amount for the related Pool and such Payment Date is
equal to the Specified Over-collateralization Amount for such Pool and such
Payment Date, the Net Monthly Excess Cashflow, if any, for such Pool and such
Payment Date. The "Note Principal Balance" of a Note as of any date of
determination is equal to the initial Note Principal Balance thereof as of the
Closing Date, reduced by the aggregate of all amounts previously paid with
respect to such Note on account of principal.
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The principal of and interest on this Note are payable in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts. All payments made by the Trust with respect
to this Note shall be applied first to interest due and payable on this Note as
provided above and then to the unpaid principal of this Note.
This Note is one of a duly authorized issue of Notes of the Trust, designated as
the "ABFS Mortgage Loan Trust 2000-1, Mortgage Backed Notes, Series 2000-1,
Class A-[1][2]," issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Trust, the Indenture Trustee
and the Holders of the Notes. Also issued under the Indenture are the "ABFS
Mortgage Loan Trust 2000-1, Mortgage Backed Notes, Series 2000-1, Class
A[1][2]." To the extent that any provision of this Note contradicts or is
inconsistent with the provisions of the Indenture, the provisions of the
Indenture shall control and supersede such contradictory or inconsistent
provision herein. The Notes are subject to all terms of the Indenture.
The Class A-[1][2] Notes are and will be equally and ratably secured by the
Mortgage Loans in Pool [I][II], the other collateral related thereto pledged as
security therefor as provided in the Indenture, and, to the extent provided in
the Indenture, by the Mortgage Loans in Pool [I][II].
As described above, the entire unpaid Note Principal Balance of this Note shall
be due and payable on the earlier of the Final Stated Maturity Date and any
Redemption Date applicable to such Class, pursuant to Article X of the
Indenture. Notwithstanding the foregoing, the entire unpaid Note Principal
Balance of the Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing if the Indenture Trustee, at the
direction or upon the prior written consent of Ambac Assurance Corporation (the
"Note Insurer") in the absence of a Note Insurer Default, or the Holders of the
Notes representing not less than 50% of the Note Principal Balance of the
Outstanding Notes (with the prior written consent of the Note Insurer in the
absence of a Note Insurer Default) of both of the Classes, shall have declared
the Notes to be immediately due and payable in the manner provided in Section
5.02 of the Indenture. All principal payments on the Notes shall be made pro
rata to the Noteholders entitled thereto.
The Note Insurer, in consideration of the payment of the premium and subject to
the terms of the Note Guaranty Insurance Policy (the "Note Insurance Policy")
thereby has unconditionally and irrevocably guaranteed the payment of the
Insured Payments.
Pursuant to the Indenture, unless a Note Insurer Default exists (i) the Note
Insurer shall be deemed to be the holder of the Notes for certain purposes
specified in the Indenture and will be entitled to exercise all rights of the
Noteholders thereunder, including the rights of Noteholders relating to the
occurrence of, and the remedies with respect to, an Event of Default, without
the consent of such Noteholders, and (ii) the Indenture Trustee may take actions
which would otherwise be at its option or within its discretion, including
actions relating to the occurrence of, and the remedies with respect to, an
Event of Default, only at the direction of the Note Insurer. In addition, on
each Payment Date, after the Noteholders have been paid all amounts to which
they are entitled, the Note Insurer will be entitled to be reimbursed for any
unreimbursed Insured Payments, unreimbursed Premium Amounts (each with interest
thereon at the "Late Payment Rate" specified in the Insurance Agreement) and any
other amounts owed under the Policy.
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The Trust shall not be liable upon the indebtedness evidenced by the Notes
except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the Notes. The assets included in the
Trust Estate and payments under the Policy will be sole source of payments on
the Notes, and each Holder hereof, by its acceptance of this Note, agrees that
(i) such Note will be limited in right of payment to amounts available from the
Trust Estate and the Policy as provided in the Indenture and (ii) such Holder
shall have no recourse to the Trust, the Owner Trustee, the Indenture Trustee,
the Depositor, the Seller, the Servicer or any of their respective affiliates,
or to the assets of any of the foregoing entities, except the assets of the
Trust pledged to secure the Notes pursuant to the Indenture.
Payments of interest on this Note due and payable on each Payment Date, together
with the installment of principal, if any, to the extent not in full payment of
this Note, shall be made by check mailed to the Person whose name appears as the
Holder of this Note (or one or more Predecessor Notes) on the Note Register as
of the close of business on each Record Date, except that with respect to Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payments will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Such checks shall be mailed to the Person entitled thereto at the
address of such Person as it appears on the Note Register as of the applicable
Record Date without requiring that this Note be submitted for notation of
payment. Notwithstanding the foregoing, in the case of Definitive Notes, upon
written request at least five days prior to the related Record Date with
appropriate instructions by the Holder of this Note (holding an aggregate
initial Note Principal Balance of at least $1,000,000), any payment of principal
or interest, other than the final installment of principal or interest, shall be
made by wire transfer to an account in the United States of America designated
by such Holder reasonably satisfactory to the Indenture Trustee. Any reduction
in the principal amount of this Note (or any one or more Predecessor Notes)
effected by any payments made on any Payment Date shall be binding upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Note on a
Payment Date, then the Indenture Trustee, in the name of and on behalf of the
Trust, will notify the Person who was the Holder hereof as of the Record Date
preceding such Payment Date by notice mailed or transmitted by facsimile prior
to such Payment Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note at the Indenture Trustee's
principal Corporate Trust Office or at the office of the Indenture Trustee's
agent appointed for such purposes.
As provided in the Indenture, both of the Classes of Notes may be redeemed in
whole, but not in part, at the option of the Majority Certificateholder of the
Trust Certificates in respect of which the largest pool of Mortgage Loans (by
Aggregate Principal Balance) is remaining or, if such Majority Certificateholder
elects not to exercise such option, by the Servicer, on any Payment Date on and
after the date on which the aggregate unpaid Note Principal Balance of the Notes
is less than or equal to 10% of the aggregate Original Note Principal Balance of
the Notes.
As provided in the Indenture, any Class of Notes may be redeemed in whole, but
not in part at the option of the Majority Certificateholder of the Trust
Certificates in respect of which the largest pool of Mortgage Loans (by
Aggregate Principal Balance) is remaining or, if such
A-4
<PAGE>
Majority Certificateholder elects not to exercise such option, by the Servicer,
on any Payment Date on and after the date on which the aggregate unpaid Note
Principal Balances of the related class of Notes is less than or equal to 10% of
the aggregate Original Note Principal Balance of the related class of Notes.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Trust pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
In the case of a transfer of a Class A-[1][2] Note, the Note Registrar shall not
register the transfer of this Note unless the Note Registrar has received a
representation letter from the transferee to the effect that either (i) the
transferee is not, and is not acquiring the Note on behalf of or with the assets
of, an employee benefit plan or other retirement plan or arrangement that is
subject to Title I of the Employee Retirement Income Security Act or 1974, as
amended, or Section 4975 of the Code or (ii) the acquisition and holding of this
Note by the transferee qualifies for exemptive relief under a Department of
Labor Prohibited Transaction Class Exemption. Each Beneficial Owner, by
acceptance of a beneficial interest herein, shall be deemed to make one of the
foregoing representations.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the case of
a Beneficial Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Trust, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Trust or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Trust, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Indenture Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
Each Noteholder or Beneficial Owner, by acceptance of a Note or, in the case of
a Beneficial Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the
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Indenture that such Noteholder or Beneficial Owner will not at any time
institute against American Business Financial Services, Inc. or the Trust, or
join in any institution against American Business Financial Services, Inc. or
the Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture, the Trust Agreement, the Unaffiliated Seller's Agreement, the Sale
and Servicing Agreement, the Insurance Agreement and the Indemnification
Agreement (the "Basic Documents").
The Trust has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Trust
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Beneficial Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Trust.
Prior to the due presentment for registration of transfer of this Note, the
Trust, the Indenture Trustee and any agent of the Trust or the Indenture Trustee
may treat the Person in whose name this Note (as of the day of determination or
as of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and none of
the Trust, the Indenture Trustee or any such agent shall be affected by notice
to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trust and the rights of the Holders of the Notes under the Indenture at any time
by the Trust with the consent of the Note Insurer and the Holders of Notes
representing a majority of the Note Principal Balance of all Outstanding Notes.
The Indenture also contains provisions permitting the (i) Note Insurer or (ii)
if a Note Insurer Default exists, the Holders of Notes representing specified
percentages of the Note Principal Balance of Outstanding Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Trust with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Note Insurer or by the
Holder of this Note (or any one or more Predecessor Notes) shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the amendment thereof, in certain limited
circumstances, or the waiver of certain terms and conditions set forth in the
Indenture, without the consent of Holders of the Notes issued thereunder.
The term "Trust" as used in this Note includes any successor to the Trust under
the Indenture.
Initially, each Class of Notes will be represented by one Note registered in the
name of Cede & Co. as nominees of the Clearing Agency. The Notes will be
delivered in denominations as provided in the Indenture and subject to certain
limitations therein set forth. The Notes are exchangeable for a like aggregate
initial Note Principal Balance of Notes of different authorized denominations,
as requested by the Holder surrendering the same.
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THIS NOTE AND THE INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Trust, which is absolute
and unconditional, to pay the principal of and interest on this Note at the
times, place and rate, and in the coin or currency herein prescribed.
Unless the certificate of authentication hereon has been executed by the
Authenticating Agent whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to herein, or
be valid or obligatory for any purpose.
A-7
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this Instrument to be signed, manually
or in facsimile, by its Authorized Officer, as of the date set forth below.
Dated:
ABFS MORTGAGE LOAN TRUST 2000-1
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By:
-------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[1][2] Notes designated above and referred to in the
within-mentioned Indenture.
Dated:
THE CHASE MANHATTAN BANK,
as Authenticating Agent
By:
-------------------------------------
Authorized Signatory
A-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ________________________________________, attorney, to transfer
said Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: */
----------------------------------------------
Signature Guaranteed:
*/
- -----------------------------------------------------
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-9
<PAGE>
EXHIBIT B
FORM OF SUBSEQUENT PLEDGE AGREEMENT
This SUBSEQUENT PLEDGE AGREEMENT, dated as of _____________, 2000 (the
"Subsequent Transfer Date"), is entered into by and between ABFS MORTGAGE LOAN
TRUST 2000-1, as issuer (the "Trust"), and THE CHASE MANHATTAN BANK, as
indenture trustee (the "Indenture Trustee").
W I T N E S S E T H:
Reference is hereby made to that certain Indenture, dated as of March 1,
2000 (the "Indenture"), by and between the Trust and the Indenture Trustee.
Pursuant to the Indenture, the Trust agreed to pledge, and the Indenture Trustee
agreed to accept, from time to time, a security interest in Subsequent Mortgage
Loans (as defined below). The Indenture provides that each such pledge of
Subsequent Mortgage Loans be evidenced by the execution and delivery of a
Subsequent Pledge Agreement such as this Subsequent Pledge Agreement.
The assets pledged to the Indenture Trustee pursuant to this Subsequent
Pledge Agreement consist of (a) the Subsequent Mortgage Loans in Pool I and Pool
II listed in the Mortgage Loan Schedule attached hereto (including property that
secures a Subsequent Mortgage Loan that becomes an REO Property), including the
related Mortgage Files delivered or to be delivered to the Collateral Agent, on
behalf of the Indenture Trustee, including all payments of principal received,
collected or otherwise recovered after the Subsequent Cut-Off Date for each
Subsequent Mortgage Loan, all payments of interest accruing on each Subsequent
Mortgage Loan after the Subsequent Cut-Off Date therefor whenever received and
all other proceeds received in respect of such Subsequent Mortgage Loans, (b)
the Insurance Policies relating to the Subsequent Mortgage Loans, and (c) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid assets, including, without limitation, all insurance
proceeds and condemnation awards.
The "Subsequent Mortgage Loans" are those listed on the Schedule of
Mortgage Loans attached hereto. The Aggregate Principal Balance of such
subsequent Mortgage Loans as of the Subsequent Cut-Off Date is $__________ in
Pool I and $___ for Pool II.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this Subsequent Pledge
Agreement, capitalized terms used herein but not otherwise defined shall have
the respective meanings assigned to such terms in Appendix I to the Indenture.
Section 2. Pledge. In consideration of the receipt of $__________ (such
amount being approximately 100% of the Aggregate Principal Balance of the
Subsequent Mortgage Loans) from the Indenture Trustee, the Trust hereby pledges
to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, without recourse, all of the Trust's right, title and
B-1
<PAGE>
interest in, to, and under the Subsequent Mortgage Loans and related assets
described above, whether now existing or hereafter arising.
In connection with such pledge, the Originators and the Unaffiliated
Seller shall satisfy the document delivery requirements set forth in Section
2.05 of the Sale and Servicing Agreement with respect to each Subsequent
Mortgage Loan.
In connection with such pledge, the Servicer shall make a Special
Advance of $________ as set forth in Section 5.18(b) of the Sale and Servicing
Agreement.
Section 3. Representations and Warranties Concerning the Subsequent
Mortgage Loans. With respect to each Subsequent Mortgage Loan, the Trust hereby
assigns each of the representations and warranties made by the Originators and
the Unaffiliated Seller in Section 3 of the Subsequent Transfer Agreement, for
the benefit of the Indenture Trustee, the Note Insurer and the Noteholders, on
which the Indenture Trustee relies in accepting the pledge of the Subsequent
Mortgage Loans and the Note Insurer relies in connection with the Policy. Such
representations and warranties speak as of the Subsequent Transfer Date unless
otherwise indicated, and shall survive each pledge, assignment, transfer and
conveyance of the respective Subsequent Mortgage Loans to the Indenture Trustee,
for the benefit of the Noteholders and the Note Insurer.
Section 4. Repurchase of Subsequent Mortgage Loans. Upon discovery by
any of the Depositor, the Unaffiliated Seller, an Originator, the Indenture
Trustee, the Servicer (on behalf of the Trust), the Note Insurer or any
Noteholder of a breach of any of the representations and warranties made by the
Originators and the Unaffiliated Seller pursuant to Section 3.03 of the
Unaffiliated Seller's Agreement or Section 3 of any Subsequent Transfer
Agreement, the party discovering such breach shall give prompt written notice to
such other Person; provided, that the Indenture Trustee shall have no duty to
inquire or to investigate the breach of any such representations and warranties.
The Originators and the Unaffiliated Seller will be obligated to repurchase a
Subsequent Mortgage Loan which breaches a representation or warranty in
accordance with the provisions of Section 4.02 of the Sale and Servicing
Agreement or to indemnify as described in Section 3.05(g) of the Unaffiliated
Seller's Agreement. Such repurchase and indemnification obligation of the
Originators and the Unaffiliated Seller shall constitute the sole remedy against
the Originators and the Unaffiliated Seller, and the Trust for such breach
available to the Servicer, the Trust, the Owner Trustee, the Indenture Trustee,
the Depositor, the Note Insurer and the Noteholders.
Section 5. Amendment. This Subsequent Pledge Agreement may be amended
from time to time by the Trust and the Indenture Trustee only with the prior
written consent of the Note Insurer (or, in the event of a Note Insurer Default,
the Majority Holders).
Section 6. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS SUBSEQUENT PLEDGE
AGREEMENT AND ANY AMENDMENT HEREOF PURSUANT TO SECTION 5 SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSEQUENT PLEDGE
B-2
<PAGE>
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM
THEREIN.
Section 7. Counterparts. This Subsequent Pledge Agreement may be
executed in counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which shall constitute one and
the same instrument.
Section 8. Binding Effect; Third-Party Beneficiaries. This Subsequent
Pledge Agreement will inure to the benefit of and be binding upon the parties
hereto, the Note Insurer, the Noteholders, and their respective successors and
permitted assigns.
Section 9. Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
Section 10. Exhibits. The exhibits attached hereto and referred to
herein shall constitute a part of this Subsequent Pledge Agreement and are
incorporated into this Subsequent Pledge Agreement for all purposes.
[Remainder of Page Intentionally Left Blank]
B-3
<PAGE>
IN WITNESS WHEREOF, the Trust and the Indenture Trustee have caused this
Subsequent Pledge Agreement to be duly executed by their respective officers as
of the day and year first above written.
ABFS MORTGAGE LOAN TRUST
2000-1, as Issuer
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Owner Trustee
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By:
-------------------------------------
Name:
Title:
[Signature Page to Subsequent Pledge Agreement]
B-4
<PAGE>
EXHIBIT C
FORM OF NOTE INSURER CONSENT TO
SUBSEQUENT MORTGAGE LOANS
__________, 2000
The Chase Manhattan Bank,
as Indenture Trustee
450 West 33rd Street, 14th Floor
New York, New York 10001
Attention: Capital Markets Fiduciary Services
Re: ABFS Mortgage Loan Trust 2000-1;
Mortgage Backed Notes, Series 2000-1
------------------------------------
Ladies and Gentlemen:
Reference is made to the Indenture, dated as of March 1, 2000 (the
"Indenture"), by and between ABFS Mortgage Loan Trust 2000-1, as issuer (the
"Trust"), and you, as indenture trustee (the "Indenture Trustee"). Pursuant to
Section 2.14(b)(viii) of the Indenture, the undersigned hereby approves and
consents to the acquisition of the Subsequent Mortgage Loans listed on Schedule
I attached hereto aggregating $____________ in Aggregate Principal Balance by
the Trust and the subsequent pledge of such Subsequent Mortgage Loans by the
Trust to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer.
AMBAC ASSURANCE CORPORATION
By:
-------------------------------------
Name:
Title:
C-1
<PAGE>
APPENDIX I
DEFINED TERMS
"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 and the Payment
Accounts.
"Accountant": A Person engaged in the practice of accounting
who (except when the Indenture provides that an Accountant must be Independent)
may be employed by or affiliated with the Trust or an Affiliate of the Trust.
"Accredited Investor": The meaning assigned to such term in
Section 2.12(b)(i) of the Indenture.
"Accrual Period": With respect to the Class A Notes and any
Payment Date, the period from and including the prior Payment Date (or, in the
case of the first Payment Date, from and including the Closing Date) to and
including the day immediately preceding such Payment Date.
"Act": With respect to any Noteholder, as defined in Section
11.03 of the Indenture.
"Addition Notice": A written notice from the Depositor, the
Trust, the Indenture Trustee, the Collateral Agent and the Initial Purchaser
that the Originators desire to make a Subsequent Transfer.
"Advance Amount": The lesser of (i) 96.00% of the aggregate
outstanding Principal Balance of the Mortgage Loans and (ii) 92.00% of the
aggregate Market Value of the Mortgage Loans, in each case as of the date of
determination.
"Affiliate": With respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent": Any Note Registrar, Collateral Agent, or
Authenticating Agent.
"Aggregate Principal Balance": With respect to any Mortgage
Loans and any date of determination, the aggregate of the Principal Balances of
such Mortgage Loans as of such date of determination.
"Amortization Event": The occurrence of any of the following:
<PAGE>
(i) A Collateral Deficiency Event which is not cured within
five (5) Business Days;
(ii) Failure of the Redemption Date to have occurred on or
before September 30, 2000;
(iii) A Servicer Event of Default set forth in Section
9.01(a)(viii) or (a)(ix) of the Sale and Servicing
Agreement;
(iv) A breach of any of the representations, warranties or
covenants set forth in Article III or Section 4.01 of
the Sale and Servicing Agreement or Section 3.17 of the
Indenture; and
(v) Failure to make any payment on the Class A Notes when
due.
"Appraised Value": As to any Mortgaged Property, the appraised
value of the Mortgaged Property based upon the appraisal made by or on behalf of
the related Originator at the time referred to in the related Basic Documents
or, in the case of a Mortgage Loan that is a purchase money mortgage loan, the
sales price of the Mortgaged Property, if such sales price is less than such
appraised value.
"Assignment of Mortgage": With respect to each Mortgage Loan,
an assignment of the Mortgage, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
"Authenticating Agent": The Person, if any, appointed as
Authenticating Agent by the Owner Trustee, acting at the direction of the
Majority Certificateholders, pursuant to Section 6.14 of the Indenture, until
any successor Authenticating Agent for the Notes is named, and thereafter
"Authenticating Agent" shall mean such successor. The initial Authenticating
Agent shall be the Indenture Trustee. Any Authenticating Agent other than the
Indenture Trustee shall sign an instrument under which it agrees to be bound by
all of the terms of this Indenture applicable to the Authenticating Agent.
"Authorized Denominations": A minimum Percentage Interest
corresponding to a minimum denomination of $1,000 or integral multiples of
$1,000 in excess thereof; provided, however, that one Class A Note is issuable
in a denomination equal to any such multiple plus an additional amount such that
the aggregate denomination of all Notes shall be equal to the Original Note
Principal Balance.
"Authorized Officer": With respect to (i) the Indenture
Trustee, any Responsible Officer, (ii) the Owner Trustee or the Collateral
Agent, the president, any vice president, any assistant vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, any
trust officer, any financial services officer or any other officer of the Owner
Trustee or the Collateral Agent customarily performing functions similar to
those performed by the above officers and (iii) any other Person, the chairman,
chief operating officer, president or any vice president of such Person.
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<PAGE>
"Available Funds": With respect to any Payment Date and any
Payment Account, the amount to be on deposit in such Payment Account on such
Payment Date as a result of (a) the Servicer's remittance of the Servicer
Remittance Amount related to such Payment Account on the related Servicer
Payment Date, and (b) any transfers to such Payment Account in respect of the
Shortfall Amount and such Payment Date pursuant to Section 8.01 of the
Indenture, until such Shortfall Amount is paid in full, made to the extent of
the Net Monthly Excess Cashflow from the Payment Account. For purposes of
calculating the Available Funds, any Loan Repurchase Price or Substitution
Adjustment that is paid shall be deemed deposited in the Payment Account in the
Due Period preceding such Servicer Payment Date.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
"Basic Documents": The Indenture, the Trust Agreement and the
Sale and Servicing Agreement.
"Best Efforts": Efforts determined to be in good faith and
reasonably diligent by the Person performing such efforts, specifically the
Trust or the Servicer or any other agent of the Trust, as the case may be, in
its reasonable discretion. Such efforts do not require the Trust or the Servicer
or any other agent of the Trust, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Trust or the Servicer or any other agent of the Trust, as the case
may be, to advance or expend fees or sums of money in addition to those
specifically set forth in this Indenture and the Sale and Servicing Agreement.
"Business Day": Any day other than (i) a Saturday or Sunday or
(ii) a day that is either a legal holiday or a day on which banking institutions
in the State of New York, the State of Delaware, the State of New Jersey, the
State of North Carolina, or the state in which the Indenture Trustee's office
from which payments will be made to Certificateholders, are authorized or
obligated by law, regulation or executive order to be closed.
"Business Purpose Property": Any mixed-use property,
commercial property, or four or more unit multifamily property.
"CERCLA": The Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
"Change of Control": Any of the following:
(a) any transaction or event as a result of which Guarantor
ceases to own, beneficially and of record, 100% of the Stock of Issuer;
(b) the sale, transfer, or other disposition of all or
substantially all of the Issuer's assets (excluding any such action
taken in connection with any securitization transactions);
(c) the consummation of a merger or consolidation of the
Guarantor with or into another entity or any other corporate
reorganization, if more than 50% of the combined voting power of the
continuing or surviving entity's Stock outstanding immediately after
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<PAGE>
such merger, consolidation or such other reorganization is owned by
persons who were not stockholders of the Guarantor immediately prior to
such merger, consolidation or other reorganization; or
(d) the sale, transfer, or other disposition of all or
substantially all of the Guarantor's assets.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief
Act of 1940, as amended.
"Class": The class of Notes designated as the Class A Notes.
"Class A Carry-Forward Amount": As of any Payment Date, the
sum of (a) the amount, if any, by which (i) the Class A Interest Payment Amount
as of the immediately preceding Payment Date exceeded (ii) the amount of
interest actually paid to the Holders of the Class A Notes on such immediately
preceding Payment Date and (b) thirty (30) days' interest on the amount
described in clause (a), calculated at an interest rate equal to the Class A
Note Rate.
"Class A Current Interest": With respect to the Class A Notes
for any Payment Date, the interest accrued during the related Accrual Period at
the Class A Note Rate applicable to such Payment Date on the Class A Note
Principal Balance as of such Payment Date (and prior to making any payments on
such Payment Date).
"Class A Interest Payment Amount": With respect to the Class A
Notes for any Payment Date, an amount equal to (a) the related Class A Current
Interest, plus (b) the Class A Carry-Forward Amount.
"Class A Note": Any Note designated as a "Class A Note" on the
face thereof, in the form of Exhibit A to the Indenture. The Class A Notes shall
be issued with an initial aggregate Note Principal Balance equal to the Original
Note Principal Balance therefor.
"Class A Note Principal Balance": As of any date of
determination, the Original Note Principal Balance of the Class A Notes less any
amounts actually paid with respect to principal thereon on all prior Payment
Dates.
"Class A Note Rate": With respect to each business day, the
per annum rate equal to the LIBOR rate for such day plus 1.00%, plus any
increase in the Initial Purchaser's funding costs, which costs shall be provided
to the Indenture Trustee; provided, that on any day on or after the occurrence
of an Event of Default, the rate shall be LIBOR plus 5.00%.
"Class A Payment Amount": With respect to the Class A Notes
for any Payment Date, the amount to be paid to the Holders of the Class A Notes
on such Payment Date, applied first to interest and then to principal, which
amount shall be the sum of the Class A Interest Payment Amount and the Class A
Principal Payment Amount.
"Class A Principal Payment Amount": For any Payment Date, the
amount necessary to reduce the Class A Note Principal Balance to an amount equal
to the Advance Amount as of such Payment Date; provided, however, that for
purposes of calculating the Class
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<PAGE>
A Principal Payment Amount on any Payment Date, the Principal Balance of Pledged
Mortgage Loans that are more than 60 days past due shall equal zero.
[["Clean-Up Call Date": The first Payment Date after the Class
A Note Principal Balance is less than or equal to 10% of the Original Note
Principal Balance of the Class A Notes.]]
"Closing Date": March __, 2000 and each date thereafter on
which Subsequent Mortgage Loans are purchased by the Trust.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral": The Pledged Mortgage Loans, Accounts and other
collateral described in the Granting Clause securing payment of the Notes.
"Collateral Agent": Chase Bank of Texas, N.A., a national
banking association, or its successor-in-interest, or any successor Collateral
Agent appointed as provided in Section 11.08 of the Sale and Servicing
Agreement.
"Collateral Deficiency Event": A situation which shall be
deemed to be existing as of any day on which (a) the outstanding principal
amount of the Class A Notes as of such day exceeds, (b) the sum of (A) all funds
held by the Indenture Trustee in the Reserve Account and (B) the lesser of (i)
the outstanding principal balance of all Pledged Mortgage Loans then pledged to
the Indenture Trustee under the Indenture (disregarding the outstanding
principal balance of any such Pledged Mortgage Loans to be pledged to the
Indenture Trustee on such date) and (ii) the product of (x) the Market Value of
all Pledged Mortgage Loans (disregarding the Market Value of any such Pledged
Mortgage Loans proposed to be pledged to the Indenture Trustee on such day) and
(y) Advance Rate.
"Collection Account": The Eligible Account established and
maintained by the Servicer pursuant to Section 7.02(b) of the Sale and Servicing
Agreement.
"Combined Loan-to-Value Ratio" or "CLTV": As to any Mortgage
Loan at any time, the fraction, expressed as a percentage, the numerator of
which is the sum of (i) the Principal Balance thereof at such time and (ii) if
such Mortgage Loan is subject to a second mortgage, the unpaid principal balance
of any related first mortgage loan or loans, if any, as of such time, and the
denominator of which is the Appraised Value of any related Mortgaged Property or
Properties as of the date of the appraisal used by or on behalf of the
Originators to underwrite such Mortgage Loan.
"Compensating Interest": As defined in Section 8.05 of the
Sale and Servicing Agreement.
"Corporate Trust Office": With respect to (x) the Indenture
Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of the Basic Documents is located at
450 West 33rd Street, New York, New York, 10001, Attention: ABFS Mortgage Loan
Warehouse Trust 2000-1; (y) the Owner Trustee, the principal office of the Owner
Trustee at
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which at any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of the Basic Documents
is located at One Rodney Square, 920 King Street, Suite 102, Wilmington,
Delaware 19801, Attention: Corporate Trust Administration; and (z) the
Collateral Agent, the principal office of the Collateral Agent at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of the Basic Documents is located at
801 West Greens Road, Houston, Texas 77067, Attention: Custody Manager.
"Cumulative Loan Loss": With respect to any period, the sum of
all Liquidated Loan Losses which occurred during such period.
"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.
"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.
"Cut-Off Date Aggregate Principal Balance": Means the
aggregate unpaid principal balance of the Initial Mortgage Loans as of the
Initial Cut-Off Date (or, with respect to Initial Mortgage Loans which were
originated after the Initial Cut-Off Date, as of the date of origination). The
Cut-Off Date Aggregate Principal Balance for the Trust is $[[ ]].
"Cut-Off Date Principal Balance": Means as to each Initial
Mortgage Loan, its unpaid principal balance as of the Initial Cut-Off Date (or,
with respect to Initial Mortgage Loans which were originated after the Initial
Cut-Off Date, as of the date of origination).
"DCR": The meaning assigned to such term in Section 5.01(n) of
the Indenture.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the Bankruptcy Code, except such a
reduction that constitutes a Deficient Valuation or a permanent forgiveness of
principal.
"Default": Any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding Principal Balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
"Definitive Notes": Notes other than Book-Entry Notes.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
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<PAGE>
"Delinquency Ratio": With respect to any Payment Date, the
percentage equivalent of a fraction (a) the numerator of which equals the
aggregate Principal Balances of all Mortgage Loans that are sixty (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": [[Warehouse Co.]].
"Due Date": With respect to each Mortgage Loan and any Payment
Date, the day of the calendar month preceding the calendar month in which such
Payment Date occurs on which the Monthly Payment for such Mortgage Loan was due.
"Due Period": With respect to each Payment Date, the calendar
month preceding the related Payment Date.
"Eligible Account": Either (A) an account or accounts
maintained with an institution (which may include the Indenture Trustee;
provided, that the Indenture Trustee otherwise meets these requirements) whose
deposits are insured by the FDIC, the unsecured and uncollateralized debt
obligations of which institution shall be rated "AA" or better by S&P and "Aa2"
or better by Moody's and in the highest short term rating category by S&P and
Moody's, and which is (i) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (ii) an
institution (including the Indenture Trustee) duly organized, validly existing
and in good standing under the applicable banking laws of any state, (iii) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws or (iv) a principal subsidiary of a bank
holding company or (B) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution or trust
company (which may include the Indenture Trustee; provided, that the Indenture
Trustee otherwise meets these requirements), having capital and surplus of not
less than $50,000,000, acting in its fiduciary capacity.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"Event of Default": As defined in Section 5.01 of the
Indenture.
"Fannie Mae": The Federal National Mortgage Association, and
any successor thereto.
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<PAGE>
"FDIC": The Federal Deposit Insurance Corporation, and any
successor thereto.
"Final Certification": A certification as to the completeness
of each Indenture Trustee's Mortgage File prepared by the Collateral Agent, on
behalf of the Indenture Trustee, and provided by the Collateral Agent within
ninety (90) of the Closing Date pursuant to Section 2.06(a)(iii) of the Sale and
Servicing Agreement.
"Final Stated Maturity Date": The April 2030 Payment Date.
"Fitch": The meaning assigned to such term in Section 5.01(n)
of the Indenture.
"Foreclosure Profits": As to any Payment Date, the excess, if
any, of (i) Net Liquidation Proceeds in respect of each Mortgage Loan that
became a Liquidated Mortgage Loan during the related Due Period over (ii) the
sum of the unpaid Principal Balance of each such Liquidated Mortgage Loan plus
accrued and unpaid interest at the applicable Mortgage Interest Rate on the
unpaid Principal Balance thereof from the Due Date on which interest was last
paid by the Mortgagor (or, in the case of a Liquidated Mortgage Loan that had
been an REO Mortgage Loan, from the Due Date on which interest was last deemed
to have been paid pursuant to Section 7.06 of the Sale and Servicing Agreement)
to the next succeeding Due Date following the date such Loan became a Liquidated
Mortgage Loan.
"Freddie Mac": The Federal Home Loan Mortgage Corporation, and
any successor thereto.
"GAAP": Generally accepted accounting principles, consistently
applied.
"Grant": To assign, transfer, mortgage, pledge, create and
grant a security interest in, deposit, set-over and confirm. A Grant of a
Mortgage Loan and the related Mortgage Files, a Permitted Investment, the Sale
and Servicing Agreement, or any other instrument shall include all rights,
powers and options (but none of the obligations) of the Granting party
thereunder, including without limitation the immediate and continuing right to
claim for, collect, receive and give receipts for principal and interest
payments thereunder, Insurance Proceeds, Loan Purchase Prices and all other
moneys payable thereunder and all proceeds thereof, to give and receive notices
and other communications, to make waivers or other agreements, to exercise all
rights and options, to bring Proceedings in the name of the Granting party or
otherwise, and generally to do and receive anything that the Granting party is
or may be entitled to do or receive thereunder or with respect thereto.
"Guarantor": American Business Financial Services, Inc.
"Highest Lawful Rate": As defined in Section 11.19 of the
Indenture.
"Indenture": The Indenture, dated as of March 1, 2000, between
the Trust and the Indenture Trustee, relating to the issuance of the Notes.
"Indenture Trustee": The Chase Manhattan Bank, a New York
banking corporation, or its successor-in-interest, or any successor Indenture
Trustee appointed as provided for in Section 6.09 of the Indenture.
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"Indenture Trustee Fee": As to any Payment Date, the fee
payable to the Indenture Trustee in respect of its services as Indenture Trustee
pursuant to Section 6.16 of the Indenture that accrues at a monthly rate equal
to one-twelfth of 0.015% on the Principal Balance of each Mortgage Loan, as of
the immediately preceding Due Date.
"Indenture Trustee's Mortgage File": The documents delivered
to the Collateral Agent, on behalf of the Indenture Trustee, pursuant to Section
2.05 of the Sale and Servicing Agreement.
"Indenture Trustee's Remittance Report": The statement
prepared pursuant to Section 2.08(d) of the Indenture, containing the following
information with respect to each Class:
(a) the amount of the payment with respect to the Class A
Notes and the Trust Certificates;
(b) the amount of such payments allocable to principal,
separately identifying the aggregate amount of any Prepayments or other
unscheduled recoveries of principal included therein;
(c) the amount of such payments allocable to interest and the
calculation thereof;
(d) the Note Principal Balance of Class A Notes as of such
Payment Date after giving effect to any payment of principal on such
Payment Date;
(e) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in such payment;
(f) the amounts, if any, of any Liquidated Loan Losses for
consumer purpose loans and for business purpose loans for the related
Due Period and cumulative Liquidated Loan Losses since the Closing Date
for consumer purpose loans and for business purpose loans;
(g) [[LIBOR]] for such Payment Date [[DO WE WANT AVERAGE OF
DAILY LIBOR DETERMINATIONS]];.
Items (a), (b) and (c) above shall, with respect to the Class
A Notes, be presented on the basis of a Note having a $1,000 denomination. In
addition, by January 31 of each calendar year following any year during which
the Notes are outstanding, the Indenture Trustee shall furnish a report to each
Holder of record if so requested in writing at any time during each calendar
year as to the aggregate of amounts reported pursuant to (a), (b) and (c) with
respect to the Notes for such calendar year.
"Independent": When used with respect to any specified Person,
means such a Person who (i) is in fact independent of the Trust and any other
obligor upon the Notes, (ii) does not have any direct financial interest or any
material indirect financial interest in the Trust or in any such other obligor
or in an Affiliate of the Trust or such other obligor, and (iii) is not
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connected with the Trust or any such other obligor as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions. Whenever it is herein provided that any Independent Person's opinion
or certificate shall be furnished to the Indenture Trustee, such Person shall be
appointed by a Trust Order and such opinion or certificate shall state that the
signer has read this definition and that the signer is Independent within the
meaning hereof.
"Individual Note": A Note of an Original Note Principal
Balance of $1,000; a Note of an Original Note Principal Balance in excess of
$1,000 shall be deemed to be a number of Individual Notes equal to the quotient
obtained by dividing such Original Note Principal Balance amount by $1,000.
"Initial Certification": A certification as to the
completeness of each Mortgage File prepared by the Collateral Agent, on behalf
of the Indenture Trustee, and provided by the Collateral Agent within thirty
(30) of the Closing Date pursuant to Section 2.06(b)(ii) of the Sale and
Servicing Agreement.
"Initial Cut-Off Date": The close of business on [[February
29, 2000]] (or with respect to any Initial Mortgage Loan originated or otherwise
acquired by an Originator after [[February 29, 2000]], the date of origination
or acquisition of such Initial Mortgage Loan).
"Initial Mortgage Loans": The Mortgage Loans delivered by the
Trust on the Closing Date.
"Initial Purchaser: [[Prudential Securities, Inc./Prudential
Securities Credit Corp.]]
"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."
"Interest Payment Amount": The Class A Interest Payment
Amount.
"Lenders": The meaning assigned to such term in Section
5.01(j) of the Indenture.
"LIBOR": With respect to any business day, the rate determined
by the Indenture Trustee on the basis of the offered rates of the Reference
Banks for one-month U.S. dollar deposits, as such rates appear on Telerate Page
3750, as of 11:00 a.m. (London time) on such day. On each business day, LIBOR
will be established by the Indenture Trustee as follows:
(a) If on such business day two or more Reference Banks
provide such offered quotations, LIBOR shall be the arithmetic mean of
such offered quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%).
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(b) If on such business day fewer than two Reference Banks
provide such offered quotations, LIBOR shall be the higher of (i) LIBOR
as determined on the previous business day and (ii) the Reserve
Interest Rate.
"Licensee": The meaning assigned to such term in Section
3.17(a)(ii) of the Indenture.
"Liquidated Loan Loss": With respect to any Payment 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 Payment
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 next succeeding Due Date following the date such Loan became
a Liquidated Mortgage Loan, over (ii) Net Liquidation Proceeds with respect to
such Liquidated Mortgage Loan.
"Liquidated Mortgage Loan": 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 7.04 and 7.06 of the Sale and Servicing Agreement respecting the
related Mortgage Loan and any unreimbursed expenditures for real property taxes
or for property restoration or preservation of the related Mortgaged Property.
Liquidation Expenses shall not include any previously incurred expenses in
respect of an REO Mortgage Loan which have been netted against related REO
Proceeds.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds) received by the Servicer in connection with (i) the taking of all or a
part of Mortgaged Property by exercise of the power of eminent domain or
condemnation, (ii) the liquidation of a defaulted Mortgage Loan through an
Indenture Trustee's sale, foreclosure sale, REO Disposition or otherwise or
(iii) the liquidation of any other security for such Mortgage Loan, including,
without limitation, pledged equipment, inventory and working capital and
assignments of rights and interests made by the related Mortgagor.
"Loan Repurchase Price": With respect to any Mortgage Loan,
the Principal Balance of such Mortgage Loan as of the date of purchase, plus all
accrued and unpaid interest on such Principal Balance computed, as of the next
succeeding Due Date for such repurchased Mortgage Loan, at the Mortgage Interest
Rate, 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 Payment
Date, after deducting therefrom any amounts received in respect of such
repurchased Mortgage Loan or
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Loans and being held in the Collection Account for future payment to the extent
such amounts have not yet been applied to principal or interest on such Mortgage
Loan.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage
Loan as of its date of origination, the ratio on such date borne by the
outstanding Principal Balance of the Mortgage Loan to the Appraised Value of the
related Mortgaged Property.
"Majority Certificateholders": The Holder or Holders of Trust
Certificates evidencing Percentage Interests in excess of 51% in the aggregate.
"Majority Noteholders": The Holder or Holders of Notes
evidencing Percentage Interests in excess of 51% in the aggregate.
"Market Value": As of any date and with respect to any Pledged
Mortgage Loan, the whole-loan servicing-retained fair market value of such
Pledged Mortgage Loan as of such date as determined by the Initial Purchaser (or
an affiliate thereof) in its sole and reasonable discretion. [[To the extent
that on any day (x) the aggregate outstanding principal balance of Pledged
Mortgage Loans which as of the last payment due date were past due for a period
of 31-59 days and continue to be past due exceeds (y) ____ percent (__%) of the
aggregate outstanding principal balance of all Pledged Mortgage Loans, the fair
market value of such excess portion will be deemed to be zero.]] To the extent
that on any day a Pledged Mortgage Loan is greater than 59 days past due, the
fair market value of such will be deemed zero.
"Material Adverse Effect": The meaning assigned to such term
in Section 3.17(b)(viii) of the Indenture.
"Maximum Collateral Amount": The sum of the Original Pool
Principal Balance and [[ ]] for the Class A Notes.
"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 7.08 of the
Sale and Servicing Agreement.
"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 in any Securitization Agreement.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on the Mortgaged Property.
"Mortgage File": As described in Exhibit A to the Sale and
Servicing Agreement.
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"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 Schedule": The schedule of Initial Mortgage
Loans as of the Initial Cut-Off Date attached as Schedule I to the Indenture,
which will be deemed to be modified automatically to reflect 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 Principal Balance as of the applicable Cut-Off Date; (viii)
the Mortgage Interest Rate; and (ix) the scheduled monthly payment of principal
and interest.
"Mortgage Loans": The Initial Mortgage Loans and the
Subsequent Mortgage Loans, together with any Qualified Substitute Mortgage Loans
substituted therefor in accordance with the Basic Documents, as from time to
time are held as a part of the Trust, the Initial Mortgage Loans originally so
held being identified in the initial Mortgage Loan Schedule. When used in
respect of any Payment Date, the term Mortgage Loans shall mean all Mortgage
Loans (including those in respect of which the Indenture Trustee has acquired
the related Mortgaged Property) which have not been repaid in full prior to the
related Due Period, did not become Liquidated Mortgage Loans prior to such
related Due Period or were not repurchased or replaced by the Originators (or
the Depositor) prior to such related Due Period.
"Mortgage Note": The original, executed note or other evidence
of any indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgaged Property": The underlying property or properties
securing a Mortgage Loan, consisting of a fee simple interest in one or more
parcels of land.
"Mortgagor": The obligor on a Mortgage Note.
"Net Foreclosure Profits": As to any Payment Date, the excess,
if any, of (i) the aggregate Foreclosure Profits with respect to such Payment
Date over (ii) Liquidated Loan Losses with respect to such Payment Date.
"Net Liquidation Proceeds": As to any Liquidated Mortgage
Loan, Liquidation Proceeds net of Liquidation Expenses and net of any
unreimbursed Periodic Advances and Servicing Advances made by the Servicer. For
all purposes of the Basic Documents, Net Liquidation Proceeds shall be allocated
first to accrued and unpaid interest on the related Mortgage Loan and then to
the unpaid Principal Balance thereof.
"Net Monthly Excess Cashflow": With respect to any Payment
Date, the excess of (x) the Available Funds then on deposit in the Payment
Account over (y) the sum of (i) the Interest Payment Amount for such Payment
Date, (ii) the Principal Payment Amount for such Payment Date, and (iii) the
Indenture Trustee Fees for such Payment Date.
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"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 Servicing Fee Rate.
"Net Worth": The meaning assigned to such term in section
3.17(b)(i) of the Indenture.
"Nonrecoverable Advances": With respect to any Mortgage Loan,
(a) any Periodic Advance previously made and not reimbursed from late
collections pursuant to Section 7.03 of the Sale and Servicing Agreement, or (b)
a Periodic Advance proposed to be made in respect of a Mortgage Loan or REO
Property either of which, in the good faith business judgment of the Servicer,
as evidenced by an Officer's Certificate delivered to the Indenture Trustee no
later than the Business Day following such determination, would not ultimately
be recoverable pursuant to Section 7.03 of the Sale and Servicing Agreement.
"Note": Any Class A Note executed by the Owner Trustee on
behalf of the Trust and authenticated by the Indenture Trustee.
"Noteholder" or "Holder": Each Person in whose name a Note is
registered in the Note Register, except that, solely for the purposes of giving
any consent, waiver, request or demand pursuant to the Indenture, any Note
registered in the name of the Servicer or any Subservicer, or any Affiliate of
any of them, shall be deemed not to be outstanding and the undivided Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite percentage of Notes necessary to effect any such consent,
waiver, request or demand has been obtained. For purposes of any consent,
waiver, request or demand of Noteholders pursuant to the Indenture, upon the
Indenture Trustee's request, the Servicer shall provide to the Indenture Trustee
a notice identifying any of its Affiliates or the Affiliates of any Subservicer
that is a Noteholder as of the date(s) specified by the Indenture Trustee in
such request.
"Note Principal Balance": As to any particular Note and date
of determination, the product of the Percentage Interest evidenced thereby and
the aggregate principal balance of all Notes of the same Class as of such date
of determination. The Trust Certificates do not have a "Note Principal Balance".
"Note Rate": The Class A Note Rate.
"Note Register": As defined in Section 2.06 of the Indenture.
"Note Registrar": As defined in Section 2.06 of the Indenture.
"Notes": The Class A Notes.
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"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, the Servicer, or
the Depositor, or, with respect to the Trust, a certificate signed by a
Responsible Officer of the Owner Trustee, at the direction of the related
Majority Certificateholders as required by any Basic Document.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be counsel for the Servicer, the Depositor, the Indenture
Trustee, the Owner Trustee, a Noteholder or a Noteholder's prospective
transferee (including except as otherwise provided herein, in-house counsel)
reasonably acceptable to each addressee of such opinion and experienced in
matters relating to the subject of such opinion.
"Original Note Principal Balance": As of the Closing Date and
as to the Class A Notes, $[[ ]]. The Trust Certificates do not
have an "Original Note Principal Balance."
"Original Pool Principal Balance": The aggregate Principal
Balance of the Mortgage Loans, as of the Initial Cut-Off Date, which amount for
the Trust is equal to $[[ ]].
"Originators": American Business Credit, Inc., HomeAmerican
Credit, Inc., d/b/a Upland Mortgage and New Jersey Mortgage and Investment Corp.
"Other Debt Agreement": The meaning assigned to such term in
section 3.17(a)(iv) of the Indenture.
"Outstanding": As of the date of determination, all Notes
theretofore authenticated and delivered under the Indenture except:
(a) Definitive Notes theretofore canceled by the Note
Registrar or delivered to the Note Registrar for cancellation;
(b) Notes or portions thereof for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Indenture Trustee in trust for the Holders of such Notes; provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor, satisfactory to the Indenture Trustee, has been made;
(c) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser (as defined by the Uniform
Commercial Code of the applicable jurisdiction); and
(d) Notes alleged to have been destroyed, lost or stolen that
have been paid as provided for in Section 2.07 of the Indenture;
provided, however, that in determining whether the Holders of the requisite
percentage of the Note Principal Balance of the Outstanding Notes have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Notes owned by the Trust, any other obligor upon
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the Notes or any Affiliate of the Trust, the Servicer or the Depositor or such
other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Indenture Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes that the Indenture Trustee knows to be so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Trust, any other obligor upon the Notes or any Affiliate of
the Trust, the Servicer or the Depositor or such other obligor.
"Over-collateralization Deficit": As of any Payment Date, the
amount, if any, by which (a) the aggregate Note Principal Balance of the Class A
Notes, after taking into account the payment of the Principal Payment Amount
(except for any amount in respect of the Over-collateralization Deficit) on such
date exceeds (b) the Aggregate Principal Balances of the Mortgage Loans
determined as of the end of the immediately preceding Due Period.
"Owner-Occupied Mortgaged Property": A Residential Dwelling as
to which (a) the related Mortgagor represented an intent to occupy as such
Mortgagor's primary residence at the origination of the Mortgage Loan, and (b)
the Originators have no actual knowledge that such Residential Dwelling is not
so occupied.
"Ownership Interest": As to any Note, any ownership or
security interest in such Note, including any interest in such Note as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
"Owner Trustee": First Union Trust Company, National
Association, a national banking association, not in its individual capacity, but
solely as owner trustee under the Trust Agreement, and any successor owner
trustee thereunder.
"Owner Trustee Fee": As defined in Section 8.01 of the Trust
Agreement.
"Pass-Through Transfer": The sale or transfer of some or all
of the Mortgage Loans to a trust to be formed as part of a publicly issued
and/or privately placed, rated or unrated, mortgage pass-through or other
mortgage-backed securities transaction, retaining the Servicer as "servicer"
(with or without a master servicer) thereunder.
"Paying Agent": The Indenture Trustee or any other depository
institution or trust company that is authorized by the Trust pursuant to Section
3.03 of the Indenture to pay the principal of, or interest on, any Notes on
behalf of the Trust, which agent, if not the Indenture Trustee, shall have
signed an instrument agreeing to be bound by the terms of the Indenture
applicable to such Paying Agent.
"Payment Account": With respect to each Class of Notes, the
segregated trust account, which shall be an Eligible Account, established and
maintained pursuant to Section 8.01(a) of the Indenture and entitled "The Chase
Manhattan Bank, as Indenture Trustee for ABFS Mortgage Loan Warehouse Trust
2000-1 Mortgage Backed Notes, Series 2000-1, Class A Payment Account," on behalf
of the related Noteholders.
"Payment Amount": The Class A Payment Amount.
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"Payment Date": The 15th day of any month or if such 15th day
is not a Business Day, the first Business Day immediately following, commencing
on April 15, 2000.
"Percentage Interest": With respect to a Class A Note, the
portion evidenced by such Note, expressed as a percentage rounded to four
decimal places, equal to a fraction the numerator of which is the denomination
represented by original principal balance of such Note and the denominator of
which is the Original Note Principal Balance. With respect to a Trust
Certificate, the portion evidenced thereby as stated on the face of such Trust
Certificate.
"Periodic Advance": The aggregate of the advances required to
be made by the Servicer on any Servicer Payment Date pursuant to Section 7.18 of
the Sale and Servicing Agreement, the amount of any such advances being equal to
the sum of:
(a) with respect to each Mortgage Loan that was Delinquent as
of the close of business on the last day of the Due Period preceding
the related Servicer Payment 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 proceeds from the REO Property transferred to
the Payment Account for such Payment Date;
provided, however, that in each such case such advance has not been determined
by the Servicer to be a Nonrecoverable Advance.
"Permitted Investments": As used herein, Permitted Investments
shall include the following:
(a) obligations of, or guaranteed as to principal and interest
by, the United States or any agency or instrumentality thereof when
such obligations are backed by the full faith and credit of the United
States;
(b) repurchase agreements on obligations specified in clause
(a) maturing not more than three months from the date of acquisition
thereof, provided that the unsecured obligations of the party agreeing
to repurchase such obligations are at the time rated in one of the two
highest rating categories by the Rating Agencies;
(c) certificates of deposit, time deposits and bankers'
acceptances (which, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days) of any U.S.
depository institution or trust company, incorporated under the laws of
the United States or any state; provided, that the debt obligations of
such depository institution or trust company at the date of acquisition
thereof have been rated in one of the two highest rating categories by
the Rating Agencies;
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(d) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated in the highest short-term rating category by the Rating
Agencies;
(e) the VISTA U.S. Government Money Market Fund, the VISTA
Prime Money Market Fund and the VISTA Treasury Plus Fund, so long as
any such fund is rated in the highest rating category by Moody's or
S&P;
provided, that no instrument described hereunder shall evidence either the right
to receive (x) only interest with respect to the obligations underlying such
instrument or (y) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": A pension or benefit plan or individual retirement
arrangement that is subject to ERISA or Section 4975 of the Code.
"Pledged Mortgage Loans": The Mortgage Loans pledged to the
Indenture Trustee pursuant to the Indenture.
"Predecessor Notes": With respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.07 of the Indenture in lieu of
a lost, destroyed or stolen Note shall be deemed to evidence the same debt as
the lost, destroyed or stolen Note.
"Preference Amount": Any amounts paid in respect of the Notes
which are recovered from any Holder of a Note as a voidable preference by a
trustee in bankruptcy pursuant to the Bankruptcy Code or other similar law in
accordance with a final, nonappealable order of a court having competent
jurisdiction and which have not theretofore been repaid to such Holder.
"Preference Claim": As defined in Section 8.03(f) of the
Indenture.
"Prepayment Assumption": A constant prepayment rate of 25%
HEP, used solely for determining the accrual of original issue discount and
market discount on the Notes for federal income tax purposes.
"Prepayment Interest Shortfall": With respect to any Payment
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
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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 Servicing Fee Rate over (b) the amount of
interest actually remitted by the Mortgagor in connection with such Principal
Prepayment less the Servicing Fee for such Mortgage Loan in such month.
"Principal Balance": As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination after giving effect to prepayments received prior to
the end of the related Due Period and Deficient Valuations incurred prior to
such date of determination. The Principal Balance of a Mortgage Loan that is
greater than 59 days past due or that becomes a Liquidated Mortgage Loan on or
prior to such date of determination shall be zero.
"Principal Payment Amount": For any Payment Date the sum,
without duplication, of:
(i) all principal in respect of the Mortgage Loans
actually collected during the related Due Period;
(ii) the principal balance of each Mortgage Loan that
either was repurchased by the Originators or the Depositor or
purchased by the Servicer on the related Servicer Payment
Date, to the extent such principal balance is actually
received by the Indenture Trustee;
(iii) any Substitution Adjustments delivered by the
Originators or the Depositor on the related Servicer Payment
Date in connection with a substitution of a Mortgage Loan to
the extent such Substitution Adjustments are actually received
by the Indenture Trustee;
(iv) the Net Liquidation Proceeds actually collected by
the Servicer with respect to Mortgage Loans during the related
Due Period (to the extent such Net Liquidation Proceeds relate
to principal);
(v) the proceeds received by the Indenture Trustee upon
the exercise by the Trust Certificateholders or the Servicer
of the optional redemption of the Notes pursuant to Section
10.01 of the Indenture (to the extent such proceeds relate to
principal);
(vi) the amount of any Over-collateralization Deficit
for such Payment Date;
(vii) the proceeds received by the Indenture Trustee on
any termination of the Trust pursuant to Section 10.01 of the
Indenture (to the extent such proceeds relate to principal);
In no event will the Principal Payment Amount with respect to
any Payment Date be (x) less than zero or (y) greater than the then aggregate
outstanding Note Principal Balance of the Notes.
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"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date.
"Proceeding": Any suit in equity, action at law or other
judicial or administrative proceeding.
"Prospective Owner": The meaning assigned to such term in
section 2.12(a) of the Indenture.
"PSI": The meaning assigned to such term in section
10.01(a)(ii) of the Indenture.
"Purchase Price": [[ ]].
"Qualified Appraiser": An appraiser, duly appointed by the
Originators, 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 Substitute Mortgage Loan": A mortgage loan or
mortgage loans substituted for a Deleted Mortgage Loan pursuant to Section
2.06(b) or 4.02(b) of the Sale and Servicing Agreement, 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 or have the same occupancy
status as the Deleted Mortgage Loan or is or are Owner-Occupied Mortgaged
Property(ies), (c) matures or mature no later than (and not more than one year
earlier than) the Deleted Mortgage Loan, (d) has or have a Loan-to-Value Ratio
or Loan-to-Value Ratios at the time of such substitution no higher than the
Loan-to-Value of the Deleted Mortgage Loan, (e) has or have a Combined
Loan-to-Value Ratio or Combined Loan-to-Value Ratios at the time of such
substitution no higher than the Combined Loan-to-Value Ratio of the Deleted
Mortgage Loan, (f) has or have a Principal Balance or Principal Balances (after
application of all payments received on or prior to the date of substitution)
not substantially less and not more than the Principal Balance of the Deleted
Mortgage Loan as of such date, and (g) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01 of
the Sale and Servicing Agreement.
"Record Date": The Business Day immediately preceding the
related Payment Date.
"Redemption Date": The Payment Date, if any, on which the
Indenture is terminated and all of the Notes are redeemed pursuant to Article X
of the Indenture, which date may occur on or after the Clean-Up Call Date;
provided, however, that in no event shall a Redemption Date occur between [[ ]]
and [[ ]].
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"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 Originators 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 Indenture
Trustee.
"Remaining Excess Cashflow": For a Payment Date, the Net
Monthly Excess Cashflow remaining, if any, after payment of the Shortfall
Amount.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REO Disposition": The final sale by the Servicer of a
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.
"REO Proceeds": Proceeds received in respect of any REO
Mortgage Loan (including, without limitation, proceeds from the rental of the
related Mortgaged Property).
"REO Property": A Mortgaged Property acquired by the Servicer
in the name of the Indenture Trustee on behalf of the Noteholders through
foreclosure or deed-in-lieu of foreclosure.
"Reporting Date". The meaning assigned to such term in section
7.03(a).
"Request for Release": A request for release in substantially
the form attached as Exhibit F of the Sale and Servicing Agreement.
"Residential Dwelling": A one- to four-family dwelling, a unit
in a planned unit development, a unit in a condominium development or a
townhouse.
"Responsible Officer": When used with respect to the Indenture
Trustee or the Owner Trustee, any officer assigned to the Corporate Trust
Division (or any successor thereto), including any Vice President, Second Vice
President, Senior Trust Officer, Trust Officer, Assistant Trust Officer, any
Assistant Secretary, any trust officer or any other officer of the Indenture
Trustee or the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers 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
Servicer, the president or any vice president, assistant vice president, or any
secretary or assistant secretary.
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"Restoration Amount": As of any date of determination, the
amount, if any, by which (i) the outstanding principal amount of the Class A
Notes as of such date (including accrued interest thereon) exceeds (ii) the sum
of (A) all funds held by the Indenture Trustee in the Reserve Account and (B)
the lesser of (1) the product of (x) the Market Value of all Pledged Mortgage
Loans then pledged to the Indenture Trustee hereunder (disregarding the Market
Value of any such Pledged Mortgage Loans proposed to be pledged to the Indenture
Trustee on such date) and (y) the Advance Rate, and (2) the outstanding
principal balance of all such Pledged Mortgage Loans (disregarding the
outstanding principal balance of any such Pledged Mortgage Loans to be pledged
to the Indenture Trustee on such date).
"Sale": The meaning specified in Section 5.17 of the
Indenture.
"Sale and Servicing Agreement": The Sale and Servicing
Agreement, dated as of March 1, 2000, among the Trust, the Servicer, the
Originators, the Depositor, the Collateral Agent, the Guarantor and the
Indenture Trustee, providing for, among other things, the sale of the Mortgage
Loans from the Depositor to the Trust and the servicing of the Mortgage Loans.
"Securities Act": The Securities Act of 1933, as amended.
"Securitization": The retirement of the Notes issued by the
Trust through the offering of new securities secured or otherwise backed by the
Mortgage Loans through a owner trust, REMIC, FASIT, collateralized mortgage
obligation or other securitization vehicle.
"Securitization Agreement": The agreement or agreements
entered into by the Servicer and certain third parties on the Securitization
Date(s) with respect to any or all of the Mortgage Loans serviced hereunder, in
connection with a Pass-Through Transfer as set forth in Section 14.01 of the
Sale and Servicing Agreement, including, but not limited to, a pooling and
servicing agreement, trust agreement or indenture and/or a subservicing/master
servicing agreement and related custodial/trust agreement and related documents
with respect to a Pass-Through Transfer. Such agreement or agreements shall
prescribe the rights and obligations of the Servicer in servicing the related
Mortgage Loans and shall provide for servicing compensation to the Servicer
(calculated on a weighted average basis for all the related Mortgage Loans as of
the Securitization Date) at least equal to the Servicing Fee due the Servicer in
accordance with this Agreement. The form of relevant Securitization Agreement to
be entered into by the master servicer or trustee and the Servicer with respect
to Pass-Through Transfers shall be reasonably satisfactory in form and substance
to the Initial Purchaser and the Servicer (giving due regard to any rating or
master servicing requirements) and the representations and warranties and
servicing provisions contained therein shall be substantially similar to those
contained in this Agreement, unless otherwise mutually agreed by the parties.
"Securitization Date": The date or dates on which any or all
of the Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and securitized as part of a Pass-Through Transfer pursuant to Section
14.01 of the Sale and Servicing Agreement. On such date or dates, the Mortgage
Loans transferred shall cease to be covered by this Agreement and the Servicer's
servicing responsibilities shall cease under this Agreement with respect to the
related transferred Mortgage Loans.
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"Senior Debt": The meaning assigned to such term in Section
5.01(j) of the Indenture.
"Senior Lender": The meaning assigned to such term in /section
5.01(j) of the Indenture.
"Senior Loan Agreement": The meaning assigned to such term in
Section 5.01(j) of the Indenture.
"Servicer": American Business Credit, Inc., a Pennsylvania
corporation, or any successor appointed as herein provided.
"Servicer Event of Default": As defined in Section 9.01 of the
Sale and Servicing Agreement.
"Servicer Extension Notice": As defined in Section 10.04 of
the Sale and Servicing Agreement.
"Servicer Payment Date": With respect to any Payment Date, the
10th day of the month in which such Payment Date occurs, or if such 10th day is
not a Business Day, the Business Day preceding such 10th day.
"Servicer Remittance Amount": With respect to any Servicer
Payment Date, an amount equal to the sum of (i) all collections of principal and
interest on the Mortgage Loans (including Principal Prepayments, Net REO
Proceeds and Net Liquidation Proceeds, if any) collected by the Servicer during
the related Due Period, (ii) all Periodic Advances made by the Servicer with
respect to interest payments due to be received on the Mortgage Loans on the
related Due Date and (iii) any other amounts required to be placed in the
Collection Account by the Servicer pursuant to the Sale and Servicing Agreement
but excluding the following:
(a) amounts received on particular Mortgage Loans as late
payments of interest and respecting which the Servicer has previously
made an unreimbursed Periodic Advance;
(b) amounts received on a particular Mortgage Loan with
respect to which the Servicer has previously made an unreimbursed
Servicing Advance, to the extent of such unreimbursed Servicing
Advance;
(c) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(d) that portion of Liquidation Proceeds and REO Proceeds to
the extent of any unpaid Servicing Fee;
(e) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
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(f) all amounts in respect of late fees, assumption fees,
prepayment fees and similar fees;
(g) certain other amounts which are reimbursable to the
Servicer, as provided in this Sale and Servicing Agreement; and
(h) Net Foreclosure Profits.
"Servicer Remittance Report": The monthly report prepared by
the Servicer and delivered to the parties specified in Section 7.16(a) of the
Sale and Servicing Agreement.
"Servicing Advances": All reasonable and customary
"out-of-pocket" costs and expenses incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost 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 7.06 of the Sale and Servicing Agreement, all of which
reasonable and customary out-of-pocket costs and expenses are reimbursable to
the Servicer to the extent provided in Sections 7.03 and 7.06 of the Sale and
Servicing Agreement.
"Servicing Compensation": The Servicing Fee and other amounts
to which the Servicer is entitled pursuant to Section 7.08 of the Sale and
Servicing Agreement.
"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) Servicing Fee Rate, 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 Balance 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 Fee Rate": 0.50% per annum
"Servicing Officer": Any officer of the Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee and the Collateral Agent by the Servicer, as such list may
from time to time be amended.
"Shortfall Amount": With respect to any Payment Date and any
Class of Notes, an amount, not less than zero, equal to the excess, if any, of
(A) the sum of (i) the Interest Payment Amount for such Payment Date, (ii)
Liquidated Loan Losses, (iii) the Indenture Trustee Fee for such Payment Date,
(iv) the sum of the amount of all Reimbursement Amounts relating to the Class A
Notes which have not been previously paid as of such Payment Date, and (v) the
amount specified in clause (vi) of the definition of the Principal Payment
Amount for such Class over (B) the Available Funds for such Class and such
Payment Date, without taking into account any Shortfall Amount and prior to the
application of the amounts described in Section 8.02 of the Indenture.
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"Special Advance": As defined in Section 7.18(b) of the Sale
and Servicing Agreement.
"Startup Day": The day designated as such pursuant to Section
2.07(a) of the Trust Agreement.
"Stock": All shares, options, warrants, interests,
participation or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or nonvoting, including common
stock, preferred stock, convertible debentures and all agreements, instruments
and documents convertible, in whole or in part, into any one or more or all of
the foregoing.
"Subsequent Cut-Off Date": With respect to any Subsequent
Mortgage Loans, the close of business on the last day of the calendar month
preceding the month in which the Subsequent Transfer Date for such Subsequent
Mortgage Loans occurred or, with respect to any Subsequent Mortgage Loans that
were originated or acquired after such date, the Subsequent Cut-Off Date shall
be the date of origination or acquisition of such Subsequent Mortgage Loans.
"Subsequent Contribution Agreement": Any Subsequent
Contribution Agreement, between the Depositor and the Trust, in the form of
Exhibit G to the Sale and Servicing Agreement, relating to the contribution to
the Trust of Subsequent Mortgage Loans.
"Subsequent Mortgage Loans": The Mortgage Loans hereafter
purchased by the Trust and pledged to the Indenture Trustee.
"Subsequent Pledge Agreement": Any Subsequent Pledge
Agreement, between the Trust and the Indenture Trustee, in the form of Exhibit B
to the Indenture, relating to the pledge to the Indenture Trustee, on behalf of
the Noteholders, of Subsequent Mortgage Loans.
"Subsequent Transfer": The purchase by the Trust and pledge to
the Indenture Trustee of the Subsequent Mortgage Loans.
"Subsequent Transfer Agreement": Any Subsequent Transfer
Agreement, among the Originators and the Depositor, in the form of Exhibit A to
the Sale and Servicing Agreement, relating to the transfer to the Depositor of
any Subsequent Mortgage Loans.
"Subsequent Transfer Date": The date on which Subsequent
Mortgage Loans are purchased by the Trust.
"Subservicers": HomeAmerican Credit, Inc., d/b/a Upland
Mortgage, a Pennsylvania corporation, or its successor in interest and New
Jersey Mortgage and 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 7.13 of the Sale and Servicing Agreement,
a copy of which shall be delivered, along with any modifications thereto, to the
Indenture Trustee and the Initial Purchaser.
25
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"Substitution Adjustment": As to any date on which a
substitution occurs pursuant to Sections 2.06(b) or 4.02(b) of the Sale and
Servicing Agreement, the amount (if any) by which the aggregate principal
balances (after application of principal payments received on or before the date
of substitution) of any Qualified Substitute Mortgage Loans as of the date of
substitution, are less than the aggregate of the Principal Balances of the
related Deleted Mortgage Loans together with 30-days' interest thereon at the
Mortgage Interest Rate.
"Supplemental Mortgage Loan Schedule": The meaning assigned to
such term in Section 3.18(a) of the Indenture.
"Tangible Net Worth": The meaning assigned to such term in
Section 3.17(b)(i) of the Indenture.
"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).
"Termination Price": The sum of (i) 100% of the Aggregate
Principal Balance of each outstanding Mortgage Loan and (ii) the greater of (A)
the aggregate amount of accrued and unpaid interest on the Mortgage Loans
through the related Due Period and (B) thirty (30) days' interest thereon,
computed at a rate equal to the related Mortgage Interest Rate, in each case net
of the Servicing Fee.
"Transaction Documents": The meaning assigned to such term in
Section 3.17(a.)(ii) of the Indenture.
"Trust": ABFS Mortgage Loan Warehouse Trust 2000-1, a Delaware
statutory business trust.
"Trust Agreement": The Trust Agreement, dated as of March 1,
2000, between the Depositor and the Owner Trustee, relating to the establishment
of the Trust.
"Trust Certificate": The certificate evidencing the entire
beneficial ownership interest in the Trust.
"Trust Certificateholder" or "Holder": A Person in whose name
a Trust Certificate is registered.
"Trust Estate": All money, instruments and other property
subject or intended to be subject to the lien of the Indenture, for the benefit
of the Noteholders, as of any particular time, including, without limitation,
all property and interests, including all proceeds thereof, Granted to the
Indenture Trustee, for the benefit of the Noteholders, pursuant to the Granting
Clauses of the Indenture.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of
1939, as it may be amended from time to time.
26
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"Trust Order" and "Trust Request": A written order or request
of the Trust signed on behalf of the Trust by an Authorized Officer of the Owner
Trustee, at the direction of the related Majority Certificateholders and
delivered to the Indenture Trustee or the Authenticating Agent, as applicable.
"Twelve Month Loss Amount": With respect to any Payment Date,
an amount equal to the aggregate of all Liquidated Loan Losses on the Mortgage
Loans which became Liquidated Mortgage Loans during the twelve (12) preceding
Due Periods.
"Underwriting Guidelines": The underwriting guidelines of the
Originators as approved by the Initial Purchaser and the Depositor.
"Uniform Commercial Code": The Uniform Commercial Code as in
affect in the State of New York.
"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.
27
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EXHIBIT 4.2
UNAFFILIATED SELLER'S AGREEMENT
dated as of March 1, 2000
by and among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as Depositor,
ABFS 2000-1, INC.,
as Unaffiliated Seller
and
AMERICAN BUSINESS CREDIT, INC.,
HOMEAMERICAN CREDIT, INC., D/B/A UPLAND MORTGAGE, and
NEW JERSEY MORTGAGE AND INVESTMENT CORP.,
as Originators
<PAGE>
TABLE OF CONTENTS
Page
Article I DEFINITIONS.........................................................1
Section 1.01 Definitions ..................................................1
Article II PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS....................3
Section 2.01 Agreement to Purchase the Initial Mortgage Loans .............3
Section 2.02 Agreement to Purchase the Subsequent Mortgage Loans ..........3
Section 2.03 Purchase Price ...............................................4
Section 2.04 Conveyance of Mortgage Loans; Possession of Mortgage Files ...4
Section 2.05 Delivery of Mortgage Loan Documents ..........................5
Section 2.06 Acceptance of Mortgage Loans .................................6
Section 2.07 Transfer of Mortgage Loans; Assignment of Agreement ..........7
Section 2.08 Examination of Mortgage Files ................................7
Section 2.09 Books and Records ............................................8
Section 2.10 Cost of Delivery and Recordation of Documents ................8
Article III REPRESENTATIONS AND WARRANTIES....................................8
Section 3.01 Representations and Warranties as to the Originators .........8
Section 3.02 Representations and Warranties as to the Unaffiliated
Seller. .....................................................10
Section 3.03 Representations and Warranties Relating to the Mortgage
Loans .......................................................13
Section 3.04 Representations and Warranties of the Depositor .............25
Section 3.05 Repurchase Obligation for Defective Documentation and for
Breach of a Representation or Warranty.......................25
Article IV THE UNAFFILIATED SELLER...........................................28
Section 4.01 Covenants of the Originators and the Unaffiliated Seller ....28
Section 4.02 Merger or Consolidation .....................................29
Section 4.03 Costs .......................................................29
Section 4.04 Indemnification .............................................29
Article V CONDITIONS OF CLOSING..............................................32
Section 5.01 Conditions of Depositor's Obligations .......................32
Section 5.02 Conditions of Unaffiliated Seller's Obligations .............34
Section 5.03 Termination of Depositor's Obligations ......................35
Article VI MISCELLANEOUS.....................................................35
Section 6.01 Notices .....................................................35
Section 6.02 Severability of Provisions ..................................35
i
<PAGE>
Section 6.03 Agreement of Unaffiliated Seller ............................36
Section 6.04 Survival ....................................................36
Section 6.05 Effect of Headings and Table of Contents ....................36
Section 6.06 Successors and Assigns ......................................36
Section 6.07 Confirmation of Intent; Grant of Security Interest ..........36
Section 6.08 Miscellaneous ...............................................37
Section 6.09 Amendments ..................................................37
Section 6.10 Third-Party Beneficiaries ...................................38
Section 6.11 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL .......................................................38
Section 6.12 Execution in Counterparts ...................................39
SCHEDULES AND EXHIBITS
Schedule I - Mortgage Loan Schedule
Exhibit A - Form of Subsequent Transfer Agreement
ii
<PAGE>
This UNAFFILIATED SELLER'S AGREEMENT, dated as of March 1, 2000
(this "Agreement"), by and among PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION, a Delaware corporation, (the "Depositor"), ABFS 2000-1, INC., a
Delaware corporation (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 AND
INVESTMENT CORP., a New Jersey corporation ("NJMIC", and together with ABC and
Upland, the "Originators").
W I T N E S S E T H:
- - - - - - - - - --
WHEREAS, Schedule I attached hereto and made a part hereof lists
certain fixed rate business purpose loans 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, the Unaffiliated Seller
desires to sell to the Depositor and that the Depositor desires to purchase; and
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 sell the Mortgage Loans to the ABFS Mortgage Loan Trust 2000-1,
a Delaware statutory business trust (the "Trust") pursuant to a Sale and
Servicing Agreement to be dated as of March 1, 2000 (the "Sale and Servicing
Agreement"), to be entered into by and among the Depositor, as depositor, the
Trust, as issuer, ABC, as servicer (in such capacity, the "Servicer"), Chase
Bank of Texas, N.A., a national banking association, as collateral agent (the
"Collateral Agent"), and The Chase Manhattan Bank, a New York banking
corporation, as indenture trustee (the "Indenture Trustee"), and (b) the Trust
shall issue its Mortgage Backed Notes (the "Notes"), pursuant to an Indenture,
to be dated as of March 1, 2000 (the "Indenture"), by and between the Trust and
the Indenture Trustee, which Notes will be secured by a pledge of the assets of
the Trust.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. (a) Whenever used herein, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article I:
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Prospectus" means the Prospectus dated June 23, 1999 relating to
the offering by the Depositor from time to time of its Mortgage Backed Notes
(Issuable in Series) 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 Notes.
<PAGE>
"Prospectus Supplement" means the Prospectus Supplement dated March
15, 2000, relating to the offering of the Notes 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 Notes.
"Registration Statement" means that certain registration statement
on Form S-3, as amended (Registration No. 333-75489) relating to the offering by
the Depositor from time to time of its Mortgage Backed Notes (Issuable in
Series) as heretofore declared effective by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"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 Notes, 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 Note 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 Notes; (ii) a general
moratorium on commercial banking activities in the State of 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 Notes on the terms and in the manner contemplated
in the Prospectus Supplement.
(b) Capitalized terms used herein that are not otherwise defined
shall have the respective meanings ascribed thereto in Appendix I to the
Indenture.
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ARTICLE II
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.
(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 Mortgage Loan Schedule is
attached hereto as Schedule I. The Mortgage Loan Schedule shall conform to the
requirements of the Depositor and to the definition of "Mortgage Loan Schedule"
in Appendix I to the Indenture.
(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, New York time, on the Closing Date, or such other place
and time as the parties shall agree.
Section 2.02 Agreement to Purchase the Subsequent Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth in Section 2.14(b)
of the Indenture, (i) in consideration of the Unaffiliated Seller's delivery on
the related Subsequent Transfer Dates to or upon the order of the Originators of
all or a portion of the balance of funds on deposit in the Pre-Funding Accounts,
the Originators shall on any Subsequent Transfer Date sell, transfer, assign,
set over and convey to the Unaffiliated Seller, without recourse, but subject to
the 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 of, and all interest due on, such Subsequent Mortgage Loans, and all
other assets included or to be included in the Trust Estate 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 all or a portion of the
balance of funds on deposit in the Pre-Funding Accounts, the Unaffiliated Seller
shall on any Subsequent Transfer Date sell, transfer, assign, set over and
convey to the Depositor, without recourse, but subject to the terms and
provisions of this Agreement, all of the right, title and interest of the
Unaffiliated Seller in and to the Subsequent Mortgage Loans, including all
principal of, and all interest due on, such Subsequent Mortgage Loans, and all
other assets included or to be included in the Trust Estate.
The amount released from a Pre-Funding Account with respect to a
transfer of Subsequent Mortgage Loans to the related Pool shall be one-hundred
percent (100%) of the Aggregate Principal Balance of such Subsequent Mortgage
Loans so transferred, as of the related Subsequent Cut-Off Date.
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The obligation of the Depositor to purchase a Subsequent Mortgage
Loan on any Subsequent Transfer Date is subject to the satisfaction of the
requirements set forth in Section 2.14(b) of the Indenture.
Section 2.03 Purchase Price. (a) On the Closing Date, as
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) 99.70% and 99.70% of the Original Note
Principal Balance as of the Closing Date of the Class A-1 Notes and Class A-2
Notes, respectively, plus (B) accrued interest on the Original Note Principal
Balance of the Class A-1 Notes at the rate of 7.925% per annum, from (and
including) March 1, 2000 to (but not including) the Closing Date, minus (C) the
Original Pre-Funded Amount and the Original Capitalized Interest Amount for each
Class of Notes, payable by wire transfer of same day funds.
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, or at the direction of, the Unaffiliated Seller (i) an amount in
cash equal to the sum of (A) 99.70% and 99.70% of the Original Note Principal
Balance as of the Closing Date of the Class A-1 Notes and Class A-2 Notes,
respectively, plus (B) accrued interest on the Original Note Principal Balance
of the Class A-1 Notes at the rate of 7.925% per annum, from (and including)
March 1, 2000 to (but not including) the Closing Date, minus (C) the Original
Pre-Funded Amount and the Original Capitalized Interest Amount for each Class of
Notes, payable by wire transfer of same day funds, and (ii) the Trust
Certificates to be issued pursuant to the Trust Agreement.
(b) On each Subsequent Transfer Date, as full consideration for the
Originators' sale of the Subsequent Mortgage Loans 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 of the related Pool 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 related 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 and all of its rights under this Agreement with respect to the Mortgage
Loans from and after the related Cut-Off Date or the Subsequent Cut-Off Date, as
applicable, 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 related 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 related Cut-Off Date or the Subsequent Cut-Off Date, as
applicable. 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,
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set over and conveyed to the Depositor 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 related Cut-Off
Date or the Subsequent Cut-Off Date, as applicable.
(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 Indenture Trustee's
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 related 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 Sale and Servicing Agreement, the Depositor
shall, on the Closing Date, assign all of its right, title and interest in and
to the Initial Mortgage Loans to the Trust. Pursuant to the Indenture, the Trust
shall, on the Closing Date, pledge all of its right, title and interest in and
to the Initial Mortgage Loans to the Indenture Trustee, for the benefit of the
Noteholders and the Note 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 Collateral Agent, on behalf of the Indenture Trustee (as
pledgee of the Trust pursuant to the Indenture, the Trust being the assignee of
the Depositor pursuant to the Sale and Servicing Agreement), each of the
documents for each applicable Mortgage Loan in accordance with the provisions of
Section 2.05 of the Sale and Servicing Agreement.
(b) As promptly as practicable, but in any event within thirty (30)
days from the Closing Date or the Subsequent Transfer Date, as applicable, the
Unaffiliated Seller shall 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 Section 2.05(a)(iv) of the Sale
and Servicing Agreement. The Collateral Agent, on behalf of the Indenture
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 submit each
such assignment for recording.
(c) The Unaffiliated Seller or the related Originator shall, within
five (5) Business Days after the receipt thereof, deliver or cause to be
delivered to the Collateral Agent, on behalf of the Indenture Trustee (as
pledgee of the Trust pursuant to the Indenture, the Trust being the assignee of
the Depositor pursuant to the Sale and Servicing Agreement): (i) the original
recorded Mortgage and related power of attorney, if any, in those instances
where a copy
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thereof certified by the related Originator was delivered to the Collateral
Agent, on behalf of the Indenture Trustee, pursuant to Section 2.05 of the Sale
and Servicing Agreement; (ii) the original recorded assignment of Mortgage from
the related Originator to the Indenture Trustee, which, together with any
intervening assignments of Mortgage, evidences a complete chain of assignment
from the originator of the Mortgage Loan to the Indenture Trustee in those
instances where copies of such assignments certified by the related Originator
were delivered to the Collateral Agent, on behalf of the Indenture Trustee,
pursuant to Section 2.05 of the Sale and Servicing Agreement; and (iii) the
title insurance policy or title opinion required in Section 2.05(a)(vi) of the
Sale and Servicing Agreement.
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 Collateral Agent, on behalf of the Indenture
Trustee, 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 Collateral Agent, on behalf of the
Indenture Trustee, 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 Collateral Agent, on behalf of the Indenture Trustee, as
permitted by Section 2.05(a) hereof are and shall be held by the Servicer, the
Unaffiliated Seller or the related Originator in trust for the benefit of the
Indenture Trustee, on behalf of the Noteholders and the Note 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 an Indenture Trustee's Mortgage File, such document
shall be delivered promptly to the Collateral Agent, on behalf of the Indenture
Trustee. 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 Indenture Trustee, such title shall be retained in trust for
the Trust as the owner of the Mortgage Loans, as the Depositor's assignee, and
the Indenture Trustee, as the Trust's pledgee.
Section 2.06 Acceptance of Mortgage Loans. (a) To evidence the
transfer of the Mortgage Loans and related Mortgage Files to the Collateral
Agent, on behalf of the Indenture Trustee, the Collateral Agent shall deliver
the acknowledgement of receipt, the Initial Certification and the Final
Certification required to be delivered pursuant to Section 2.06(b) of the Sale
and Servicing Agreement.
(b) The Sale and Servicing Agreement provides that, if the
Collateral Agent during the process of reviewing the Indenture Trustee's
Mortgage Files, finds any document constituting a part of an Indenture 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 of the Sale and Servicing Agreement or the
description thereof as set forth in the Mortgage Loan Schedule, the Collateral
Agent shall
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promptly so notify the Servicer, the Unaffiliated Seller, the Indenture Trustee,
the related Originator and the Note Insurer. The Unaffiliated Seller and the
Originators agree that in performing any such review, the Collateral Agent may
conclusively rely on the Unaffiliated Seller and the Originators 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 an Indenture
Trustee's Mortgage File of which it is notified. If, however, within sixty (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 Noteholders in the related Mortgage Loan or the interests of the Note
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 hereof.
(c) The failure of the Collateral Agent, the Indenture Trustee or
the Note Insurer to give any notice contemplated herein within the time periods
specified above shall not affect or relieve the Unaffiliated Seller's or the
Originators obligation to repurchase for any Mortgage Loan pursuant to this
Section 2.06 or Section 3.05 of this Agreement.
Section 2.07 Transfer of Mortgage Loans; Assignment of Agreement.
The Originators and the Unaffiliated Seller each hereby acknowledges and agrees
that the Depositor or the Trust may assign its interest under this Agreement to
the Indenture Trustee as may be required to effect the purposes of the Indenture
and the Sale and Servicing Agreement, without further notice to, or consent of,
the Unaffiliated Seller or the Originators, and the Indenture Trustee shall
succeed to such of the rights and obligations of the Depositor and the Trust
hereunder as shall be so assigned. The Depositor shall, pursuant to the Sale 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 Trust, and the Trust shall, pursuant to
the Indenture, pledge such right, title and interest to the Indenture Trustee,
for the benefit of the Noteholders and the Note Insurer. Each of the Originators
and the Unaffiliated Seller agrees that, upon such assignment to the Trust and
pledge to the Indenture Trustee, such representations, warranties, agreements
and covenants will run to and be for the benefit of the Indenture Trustee and
the Indenture Trustee may enforce, without joinder of the Depositor or the
Trust, 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
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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, the
Collateral Agent or the Indenture 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 Indenture Trustee to demand repurchase or other
relief as provided in this Agreement.
Section 2.09 Books and Records. The transfer 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, by the
Unaffiliated Seller to the Depositor and by the Depositor to the Trust;
provided, that the Unaffiliated Seller's tax returns shall not reflect the
transfer from the Unaffiliated Seller to the Depositor and from the Depositor to
the Trust as a sale of the Mortgage Loans. 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 Trust, and the
pledge of each Mortgage Loan by the Trust to the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer.
Section 2.10 Cost of Delivery and Recordation of Documents. The
costs relating to the delivery and recordation of the documents in connection
with the Mortgage Loans as specified in this Article II and in Article II of the
Sale and Servicing Agreement shall be borne by the Unaffiliated Seller or the
Originators.
ARTICLE III
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) with respect to ABC and Upland,
the State of Pennsylvania, or (ii) with respect to NJMIC, the State of New
Jersey, 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
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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, or compliance by the Originator 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 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
Indenture Trustee (or the Servicer as the agent of the Indenture 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 (other than the information under the caption
"Underwriting") 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;
(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 will 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,
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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 Mortgage File by the Depositor (or its
assignee) under this Agreement, the Depositor (or its assignee) will have
good title to each related Mortgage Loan and such other items comprising
the corpus of the Trust Estate 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 Trust and the Indenture 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;
(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:
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(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 Indenture Trustee (or the
Servicer as the agent of the Indenture 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 (other than the information under the caption
"Underwriting") 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;
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(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 will 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 Mortgage File by the Depositor (or its
assignee) under this Agreement, the Depositor (or its assignee) will have
good title to each related Mortgage Loan and such other items comprising
the corpus of the Trust Estate 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;
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(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 Trust and the Indenture 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 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 Depositor, 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
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such Originator has transferred all right, title and interest in each
Mortgage Loan to the Depositor or the Unaffiliated Seller, as applicable;
(e) As of the applicable Cut-Off Date, no payment of principal or
interest on or in respect of any Mortgage Loan remains unpaid for thirty
(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 Initial Cut-Off Date, no Mortgage Loan has a Mortgage
Interest Rate less than 7.59% per annum in Pool I, 9.10% per annum in Pool
II and the weighted average Mortgage Interest Rate of the Mortgage Loans
is 11.78% in Pool I and 12.64% in Pool II;
(g) At origination, no Mortgage Loan in Pool I or Pool II had an
original term to maturity of greater than 360 months;
(h) As of the Initial Cut-Off Date, the weighted average remaining
term to maturity of the Mortgage Loans is 248.50 months for the Mortgage
Loans in Pool I and 233.97 months for the Mortgage Loans in Pool 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;
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(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 Depositor and the Indenture Trustee on behalf
of the Unaffiliated Seller;
(o) No Mortgage Loan had, at the date of origination, a CLTV in
excess of 100% for Pool I and 100% for Pool II, and the weighted average
CLTV of all Mortgage Loans as of the Initial Cut-Off Date is approximately
77.76% in Pool I and 76.52% for Pool II;
(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
Cut-Off Date Aggregate Principal Balance are secured by Mortgaged
Properties located in the following states:
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Pool I
-------------------------------------------
Percentage of
Cut-Off Date
Aggregate
State Principal Balance
--------------------- ------------------
Alabama 0.09
Arizona 0.02
Arkansas 0.09
Colorado 0.08
Connecticut 1.71
Delaware 1.32
Florida 10.11
Georgia 3.62
Illinois 4.87
Indiana 1.40
Kansas 0.10
Kentucky 0.57
Louisiana 0.09
Massachusetts 3.10
Maryland 2.30
Michigan 1.61
Minnesota 0.01
Mississippi 0.11
Missouri 0.64
New Hampshire 0.31
New Jersey 13.97
New York 28.77
North Carolina 2.56
North Dakota 0.04
Ohio 4.51
Oklahoma 0.04
Oregon 0.11
Pennsylvania 10.89
Rhode Island 0.51
South Carolina 1.51
Tennessee 1.67
Vermont 0.19
Virginia 2.63
Washington 0.09
West Virginia 0.11
Wisconsin 0.14
-----------------
100.00%
=================
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Pool II
------------------------------------------
Percentage of
Cut-Off Date
Aggregate
State Principal Balance
-------------------- ------------------
Connecticut 6.96
Florida 3.68
Georgia 4.35
Illinois 7.59
Indiana 1.18
Massachusetts 2.87
Maryland 0.54
Michigan 2.53
New Jersey 13.23
New York 34.27
North Carolina 1.89
Ohio 4.90
Pennsylvania 6.46
South Carolina 1.12
Tennessee 0.27
Virginia 5.84
Vermont 0.51
Wisconsin 1.84
-----------------
100.00%
=================
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(r) The Mortgage Loans were not selected by the Unaffiliated Seller
or the Originators for sale hereunder or inclusion in the Trust Estate on
any basis adverse to the Trust Estate 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;
(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 applicable 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 applicable 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 Indenture Trustee and which has been delivered to the Collateral
Agent, on behalf of the Indenture 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;
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(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 Collateral Agent, on behalf of the Indenture
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;
(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
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<PAGE>
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 Collateral Agent, on behalf of the Indenture Trustee, pursuant to
Section 2.04(a)(iv) of the Sale and Servicing Agreement is in recordable
form and is acceptable for recording under the laws of the applicable
jurisdiction. The endorsement of the Mortgage Note, the delivery to the
Collateral Agent, on behalf of the Indenture 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 Indenture 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;
(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 Indenture Trustee's inspection, and shall deliver to the
Indenture 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;
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<PAGE>
(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 Indenture 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 Indenture Trustee upon the consummation of the
transactions contemplated by this Agreement. No claims have been made
under such mortgage title insurance policy and none of the Unaffiliated
Seller, the Originators 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 Indenture 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
Noteholders to the Indenture Trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor;
(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, a manufactured dwelling, or a
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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 log-constructed home, or (vii) 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 applicable
Cut-Off Date and required to be deposited in the related Distribution
Account have been so deposited in the related Distribution Account and
are, as of the Closing Date, or will be as of the Subsequent Transfer
Date, as applicable, in the related Distribution 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 Aggregate Principal Balance,
the Mortgagors with respect to at least 88.27% of the Mortgage Loans in
Pool I and 83.69% of the Mortgage Loans in Pool 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;
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(rr) [Reserved];
(ss) With respect to second lien Mortgage Loans:
(i) the Unaffiliated Seller and the Originators have 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
CLTV 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 Indenture Trustee, the Note Insurer and the
Noteholders that as of the Subsequent Cut-Off Date all representations and
warranties set forth in clauses (a) through (ss) above and (uu) through
(ww) below 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 correct: (i) each Subsequent Mortgage
Loan may not be thirty (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 for Pool I and 360
months for Pool II; (iii) such Subsequent Mortgage Loan must have a
mortgage interest rate of at least 7.50% for Pool I and 9.25% for Pool II;
(iv) the purchase of the Subsequent Mortgage Loans is consented to by the
Note Insurer and the Rating Agencies, notwithstanding the fact that the
Subsequent Mortgage Loans meet the parameters stated herein; (v) the
principal balance of any such Subsequent Mortgage Loan may not exceed
$250,000 for Pool I and $650,000 for Pool II; (vi) no such Subsequent
Mortgage Loan shall have a CLTV of more than (a) for consumer purpose
loans, 100% for Pool I and 100% for Pool II, and (b) for business purpose
loans, 77.00% for Pool I and 77.00% for Pool II; and (vii) following the
purchase of such Subsequent Mortgage Loans by the Trust, (a) no more than
24.00% for Pool I and 47.00% for Pool II of the aggregate principal
balance of the Mortgage Loans may be second liens; (b) no more than 45.00%
for Pool I and 60.00% for Pool II of the Mortgage Loans may be Balloon
Loans; (c) no more than 7.00% for Pool I and 23.00% for Pool II of the
Mortgage Loans may be secured by mixed-use properties, commercial
properties, or five or more unit multifamily properties; (d) no more than
13.00% of the aggregate mortgage loans are made to limited documentation
or no documentation borrowers; (e) no more than 23.00% of the Mortgage
Loans are made to "B" quality borrowers; (f) no more than 12.00% of the
Mortgage Loans are made to "C" quality borrowers; (g) no more
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<PAGE>
than 3.00% of the Mortgage Loans are made to "D" quality borrowers; (h) no
more than 1.25% of the Mortgage Loans are secured by mortgage properties
within a single zip code; (i) no more than 30.00% of the Mortgage Loans
are secured by mortgage properties in the state of New York; (j) no more
than 15.00% of the Mortgage Loans are secured by mortgage properties in
the state of New Jersey; (k) no more than 12.00% of the Mortgage Loans are
secured by mortgage properties in the state of Pennsylvania; (l) no more
than 12.00% of the Mortgage Loans are secured by mortgage properties in
the state of Florida; (m) the Mortgage Loans will have a weighted average
mortgage interest rate, (I) for consumer purpose loans, of at least 11.40%
for Pool I and 11.60% for Pool II and (II) for business purpose loans, of
at least 16.00% for Pool I and 15.75% for Pool II; and (n) the Mortgage
Loans will have a weighted average CLTV of not more than (I) for consumer
purpose loans, 80.00% for Pool I and 80.00% for Pool II, and (II) for
business purpose loans, 64.00% for Pool I, 61.00% for Pool II.
(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 (other than properly stored
materials used for reasonable residential purposes) , 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 Unaffiliated
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, if
any, becomes subject to any
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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 and the
Originators, 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);
(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
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Mortgage Loans, the subsequent transfer thereof by the Depositor to the Trust
and the subsequent pledge thereof by the Trust to the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer, 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,
the Sale and Servicing Agreement or the Indenture.
(b) With respect to any representation or warranty contained in
Sections 3.01 or 3.03 hereof 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 knowledge, if it is discovered by the Servicer, any
Subservicer, the Indenture Trustee, the Collateral Agent, the Depositor, the
Note Insurer or any Noteholder that the substance of such representation and
warranty was inaccurate as of the Closing Date or the Subsequent Transfer Date,
as applicable, 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
Indenture Trustee, the Collateral Agent, the Note Insurer, the Depositor or any
Noteholder 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 Noteholders, or which materially and adversely affects the interests of the
Note Insurer or the Noteholders 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 this Section 3.05(b) and pursuant to Section
4.02 of the Sale and Servicing Agreement, prompt written notice to the others.
Subject to the last paragraph of this Section 3.05(b), within sixty (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 Loan Repurchase Price, or (c)
remove such Mortgage Loan from the Trust Estate (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans. Any such substitution shall be accompanied by payment by the Unaffiliated
Seller of the Substitution Adjustment, if any, to be deposited in the related
Distribution Account pursuant to the Sale 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 Indenture Trustee and the Collateral Agent, a certification
in the form attached to the Sale and Servicing Agreement as Exhibit H, executed
by a Servicing Officer and the documents described in Section 2.05(a) of the
Sale and Servicing Agreement for such Qualified Substitute Mortgage Loan or
Loans. Pursuant to the Sale and Servicing Agreement, upon receipt by the
Indenture Trustee and the Collateral
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Agent of a certification of a Servicing Officer of such substitution or purchase
and, in the case of a substitution, upon receipt by the Collateral Agent, on
behalf of the Indenture Trustee of the related Mortgage File, and the deposit of
certain amounts in the related Distribution Account pursuant to Section 2.07(b)
of the Sale and Servicing Agreement (which certification shall be in the form of
Exhibit H to the Sale and Servicing Agreement), the Collateral Agent, on behalf
of the Indenture Trustee, shall be required to release to the Servicer for
release to the Unaffiliated Seller the related Indenture 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 Sale and Servicing Agreement, the Servicer shall
deposit in the related Distribution 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 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 Sale and Servicing
Agreement, the Servicer shall be required to give written notice to the
Indenture Trustee, the Collateral Agent and the Note 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 Sale 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 Indenture, the Sale 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 Sale and
Servicing Agreement, the Servicer will deposit into the related Distribution
Account, an amount equal to the Substitution Adjustment, if any.
(e) With respect to any Mortgage Loan that has been converted to an
REO Mortgage Loan, all references in this Section 3.05 or Section 2.06 to
"Mortgage Loan" shall be deemed to refer to such REO Mortgage Loan. With respect
to any Mortgage Loan that the Originator or Unaffiliated Seller is required to
repurchase that is or becomes a Liquidated Mortgage Loan, in lieu of
repurchasing such Mortgage Loan, the Originator or Unaffiliated Seller shall
deposit into the related Payment Account, pursuant to Section 8.01 of the
Indenture an amount equal to the amount of the Liquidated Loan Loss, if any,
incurred in connection with the liquidation of such Mortgage Loan within the
same time period in which the Originator or Unaffiliated Seller would have
otherwise been required to repurchase such Mortgage Loan.
(f) 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 Indenture Trustee, the Note Insurer and the Noteholders
respecting a breach of the foregoing representations and warranties.
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(g) The Unaffiliated Seller and the Originator shall be obligated to
indemnify the Indenture Trustee, the Trust, the Depositor, the Owner Trustee,
the Collateral Agent, the Noteholders and the Note Insurer (in their individual
and trust capacities) and their successors, assigns, agents and servants
(collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against any Indemnified Party in any way relating to or arising out of a breach
by the Unaffiliated Seller or the related Originator of the representations or
warranties herein. The indemnities contained in this Section 3.05 shall survive
the resignation or termination of the Owner Trustee or the termination of this
Agreement.
(h) 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, the Indenture and the Sale and Servicing Agreement.
(i) 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 Indenture Trustee for all amounts
payable in respect of such Mortgage Loan.
Article IV
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 Notes 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
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of the Mortgage Loans to the Depositor and the subsequent transfer thereof
to the Indenture Trustee, and the rating, issuance and sale of the Notes.
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 Note Insurer which approval shall not be unreasonably
withheld. If the approval of the Note 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 Indenture Trustee and the Note
Insurer.
Section 4.03 Costs. In connection with the transactions contemplated
under this Agreement, the Trust Agreement, the Indenture and the Sale 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
(50% of fees up to $30,000 and then 100% thereafter), the Unaffiliated Seller's
and the Originators' counsel; (b) the fees of S&P, DCR and Moody's; (c) any of
the fees of the Indenture Trustee and the fees and disbursements of the
Indenture Trustee's counsel; (d) any of the fees of the Owner Trustee and the
fees and disbursements of the Owner Trustee's counsel; (e) expenses incurred in
connection with printing the Prospectus, the Prospectus Supplement, any
amendment or supplement thereto, any preliminary prospectus and the Notes; (f)
fees and expenses relating to the filing of documents with the Commission
(including without limitation periodic reports under the Exchange Act); (g) the
shelf registration amortization fee of 0.04% of the Note Principal Balance of
the Notes on the Closing Date, paid in connection with the issuance of Notes;
(h) the fees and disbursements for Deloitte & Touche LLP, accountants for the
Originators; and (i) all of the initial expenses (not to exceed $65,000) of the
Note 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 Note 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 Indenture
Trustee's or Owner Trustee's fees and expenses in connection with the
transactions contemplated by this Agreement, the Trust Agreement, the Indenture
and the Sale and Servicing Agreement. All other costs and expenses in connection
with the transactions contemplated hereunder shall be borne by the party
incurring such expenses.
Section 4.04 Indemnification. (a) The Originators and the
Unaffiliated Seller, jointly and severally, agree
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(i) 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; and
(ii) 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
Indenture, the Indenture Trustee shall reimburse the Unaffiliated Seller
in accordance with the Indenture 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.
(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
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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 Notes. 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 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
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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 V
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 and the Originators
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 and the Originators.
(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 including, but not limited to the information under the captions
"Prepayment and Yield Considerations" and "The Mortgage Loan Pools" regarding
any numerical information in any marketing materials relating to the Notes and
regarding any other information as reasonably requested by the Depositor.
(c) The Mortgage Loans will be acceptable to the Depositor, in its
sole reasonable discretion.
(d) The Depositor shall have received the following additional
closing documents, in form and substance reasonably satisfactory to the
Depositor and its counsel:
(i) the Mortgage Loan Schedule;
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(ii) this Agreement, the Sale and Servicing Agreement, the
Indenture, the Trust Agreement, and the Underwriting Agreement dated as of
March 15, 2000 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;
(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 in a form acceptable
to the Depositor, its counsel, the Note Insurer, S&P, DCR and Moody's (it
being agreed that the opinion shall expressly provide that the Indenture
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, the Note Insurer, S&P and
Moody's as to such matters as shall be required for the assignment of a
rating to the Notes of "AAA" by S&P, "AAA" by DCR, and "AAA" by Moody's
(it being agreed that such opinions shall expressly provide that the
Indenture Trustee shall be entitled to rely on such opinions);
(vii) a letter from Moody's to the effect that it has assigned a
rating of "Aaa" to the Notes;
(viii) a letter from S&P to the effect that it has assigned a rating
of "AAA" to the Notes;
(ix) a copy of a letter from DCR to the Depositor to the effect that
it has assigned a rating of "AAA" to the Notes;
(x) an opinion of counsel for the Indenture Trustee in form and
substance acceptable to the Depositor, its counsel, the Note Insurer,
Moody's, DCR and S&P (it being agreed that the opinion shall expressly
provide that the Unaffiliated Seller shall be entitled to rely on the
opinion);
(xi) an opinion of counsel for the Owner Trustee in form and
substance acceptable to the Depositor, its counsel, the Note Insurer,
Moody's, DCR and S&P (it being agreed that the opinion shall expressly
provide that the Unaffiliated Seller shall be entitled to rely on the
opinion);
(xii) an opinion or opinions of counsel for the Servicer, in form
and substance acceptable to the Depositor, its counsel, the Note Insurer,
Moody's, DCR 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
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(xiii) an opinion or opinions of counsel for the Note Insurer, in
each case in form and substance acceptable to the Depositor, its counsel,
Moody's, DCR 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 Policy shall have been duly executed, delivered and issued
with respect to the Notes.
(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.
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) this Agreement and the Sale 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 Notes , a copy of a letter
from DCR to the Depositor to the effect that it has assigned a rating of
"AAA" to the Notes 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 Notes.
(iii) an opinion of counsel for the Indenture Trustee in form and
substance acceptable to the Unaffiliated Seller and its counsel;
(iv) an opinion of counsel for the Owner Trustee in form and
substance acceptable to the Unaffiliated Seller and its counsel;
(v) an opinion of counsel for the Note Insurer in form and substance
acceptable to the Unaffiliated Seller and its counsel;
34
<PAGE>
(vi) an opinion of the counsel for the Depositor as to securities
and tax matters; and
(vii) 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.
ARTICLE VI
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: Managing Director - Asset Backed Finance Group, or to such other
address as the Depositor may designate in writing to the Unaffiliated Seller and
the Originators and if to the Unaffiliated Seller or an Originator, addressed to
the Unaffiliated Seller, 3411 Silverside Road, 103 Springer Bldg., Wilmington,
Delaware 19810, Attention: Jeffrey Ruben, or to such Originator at Balapointe
Office Centre, 111 Presidential Boulevard, Suite 127, Bala Cynwyd, Pennsylvania
19004, Attention: Mr. Anthony Santilli, Jr., or to such other address as the
Unaffiliated Seller or such Originator 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
35
<PAGE>
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 Note 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 Note Insurer; provided, however, that the Depositor may assign
its rights hereunder without the consent of the Unaffiliated Seller.
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 as contemplated by this
Unaffiliated Seller's Agreement be, and be treated for all purposes as, a sale
of the Mortgage Loans and that the conveyance of the Mortgage Loans by the
Unaffiliated Seller to the Depositor as contemplated by this Unaffiliated
Seller's Agreement be, and be treated for accounting purposes as, a sale of the
Mortgage Loans. It is, further, not the intention of the parties that any 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,
36
<PAGE>
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 (or its
assignee) 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 (or its
assignee) 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 Note Insurer, without notice to
or consent of the Noteholders, and with prior written notice to the Owner
Trustee 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 (i) an Opinion of Counsel, at the expense of
the party requesting the change, delivered to the Indenture Trustee or (ii) a
letter from each Rating Agency confirming that such amendment will not result in
the reduction, qualification or withdrawal of the then current rating of the
Notes, adversely affect in any material respect the interests of any Noteholder;
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 Note without the consent of the Holder of such
Note, or change the rights or obligations of any other party hereto without the
consent of such party.
(b) This Agreement may be amended from time to time by the
Originators, the Unaffiliated Seller and the Depositor with the consent of the
Note Insurer, the Majority Noteholders and the Holders of the majority of the
Percentage Interest in the Trust Certificates and with prior written notice to
the Owner Trustee 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 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 Note
without the consent of the Holder of such Note or reduce the percentage for each
Class the Holders of which are required to consent to any
37
<PAGE>
such amendment without the consent of the Holders of 100% of each Class of Notes
affected thereby.
(c) It shall not be necessary for the consent of Holders under this
Section 6.09 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 Trust, the Owner Trustee, the Note Insurer and the Indenture 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 Trust and then to the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer, pursuant to
the Sale and Servicing Agreement and the Indenture, respectively, 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 ORIGINATORS, 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
ORIGINATORS, 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 ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED
SELLER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
EITHERS' RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER
JURISDICTION.
38
<PAGE>
(c) THE ORIGINATORS, 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]
39
<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 2000-1, 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 AND INVESTMENT CORP.
By:
----------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT A
FORM OF SUBSEQUENT
TRANSFER AGREEMENT
This SUBSEQUENT TRANSFER AGREEMENT, dated as of ________, 2000 (the
"Subsequent Transfer Date"), is entered into by and among ABFS 2000-1, INC., as
unaffiliated seller (the "Unaffiliated Seller"), AMERICAN BUSINESS CREDIT, INC.,
as an originator ("ABC"), HOMEAMERICAN CREDIT, INC. D/B/A UPLAND MORTGAGE, as an
originator ("Upland"), NEW JERSEY MORTGAGE AND INVESTMENT CORP., as an
originator ("NJMIC") (ABC, Upland and NJMIC are collectively referred to herein
as the "Originators"), and PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as depositor (the "Depositor").
W I T N E S S E T H:
Reference is hereby made to (x) that certain Unaffiliated Seller's
Agreement, dated as of March 1, 2000 (the "Unaffiliated Seller's Agreement"), by
and among the Unaffiliated Seller, the Originators and the Depositor, and (y)
that certain Indenture, dated as of March 1, 2000 (the "Indenture"), by and
between the ABFS Mortgage Loan Trust 2000-1 (the "Trust") and The Chase
Manhattan Bank, as indenture trustee (the "Indenture Trustee"). Pursuant to the
Unaffiliated Seller's Agreement, the Originators have agreed to sell, assign and
transfer, and the Unaffiliated Seller has agreed to accept, from time to time,
Subsequent Mortgage Loans (as defined below), and the Unaffiliated Seller has
agreed to sell, assign and transfer, and the Depositor has agreed to accept,
from time to time, such Subsequent Mortgage Loans. The Unaffiliated Seller's
Agreement provides that each such sale of Subsequent Mortgage Loans be evidenced
by the execution and delivery of a Subsequent Transfer Agreement such as this
Subsequent Transfer Agreement.
The assets sold to the Unaffiliated Seller, and then sold to the Depositor
pursuant to this Subsequent Transfer Agreement consist of (a) the Subsequent
Mortgage Loans in Pool I and Pool II listed in the Mortgage Loan Schedule
attached hereto (including property that secures a Subsequent Mortgage Loan that
becomes an REO Property), including the related Mortgage Files delivered or to
be delivered to the Collateral Agent, on behalf of the Indenture Trustee,
including all payments of principal received, collected or otherwise recovered
after the Subsequent Cut-Off Date for each Subsequent Mortgage Loan, all
payments of interest due on each Subsequent Mortgage Loan after the Subsequent
Cut-Off Date therefor whenever received and all other proceeds received in
respect of such Subsequent Mortgage Loans, (b) the Insurance Policies relating
to the Subsequent Mortgage Loans, and (c) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
assets, including, without limitation, all insurance proceeds and condemnation
awards.
The "Subsequent Mortgage Loans" are those listed on the Schedule of
Mortgage Loans attached hereto. The Aggregate Principal Balance of such
Subsequent Mortgage Loans as of the Subsequent Cut-Off Date is $__________ in
Pool I and $__________ in Pool II.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this Subsequent Transfer
Agreement, capitalized terms used herein but not otherwise defined shall have
the respective meanings assigned to such terms in Appendix I to the Indenture.
Section 2. Sale, Assignment and Transfer. In consideration of the receipt
of $__________ (such amount being approximately 100% of the Aggregate Principal
Balance of the Subsequent Mortgage Loans) from the Unaffiliated Seller, each of
the Originators hereby sells, assigns and transfers to the Unaffiliated Seller,
without recourse, all of their respective right, title and interest in, to, and
under the Subsequent Mortgage Loans and related assets described above, whether
now existing or hereafter arising.
In consideration of receipt of $__________ (such amount being
approximately 100% of the Aggregate Principal Balance of the Subsequent Mortgage
Loans) from the Depositor, the Unaffiliated Seller hereby sells, assigns and
transfers to the Depositor, without recourse, all of its right, title and
interest in, to, and under the Subsequent Mortgage Loans and related assets
described above, whether now existing or hereafter arising.
In connection with each such sale, assignment and transfer, the
Originators and the Unaffiliated Seller shall satisfy the document delivery
requirements set forth in Section 2.05 of the Sale and Servicing Agreement with
respect to each Subsequent Mortgage Loan.
Section 3. Representations and Warranties of the Originators and the
Unaffiliated Seller. With respect to each Subsequent Mortgage Loan, each of the
Originators and the Unaffiliated Seller hereby remake each of the
representations, warranties and covenants made by the Originators and the
Unaffiliated Seller in Section 3.03 of the Unaffiliated Seller's Agreement, on
which the Depositor relies in accepting the Subsequent Mortgage Loans. Such
representations and warranties speak as of the Subsequent Transfer Date unless
otherwise indicated, and shall survive each sale, assignment, transfer and
conveyance of the Subsequent Mortgage Loans to the Depositor.
Each of the Originators and the Unaffiliated Seller hereby acknowledge
that the Depositor is transferring the Subsequent Mortgage Loans to the Trust,
and that the Trust is pledging the Subsequent Mortgage Loans to the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer, on the date
hereof. Each of the Originators and the Unaffiliated Seller hereby acknowledge
and agree that the Depositor may assign to the Trust, and the Trust may assign
to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, its interest in the representations and warranties set forth in this
Section 3. Each of the Originators and the Unaffiliated Seller agrees that, upon
such assignment to the Trust and pledge to the Indenture Trustee, such
representations, warranties, agreements and covenants will run to and be for the
benefit of the Indenture Trustee and the Indenture Trustee may enforce, without
joinder of the Depositor or the Trust, the repurchase and indemnification
obligations of the Unaffiliated Seller and the Originators set forth herein with
respect to breaches of such representations, warranties, agreements and
covenants.
2
<PAGE>
Section 4. Repurchase of Subsequent Mortgage Loans. Upon discovery by any
of the Depositor, the Unaffiliated Seller, an Originator, the Indenture Trustee,
the Servicer on behalf of the Trust, the Note Insurer or any Noteholder of a
breach of any of the representations and warranties made by the Originators and
the Unaffiliated Seller pursuant to Section 3.03 of the Unaffiliated Seller's
Agreement or this Section 3, the party discovering such breach shall give prompt
written notice to each other Person; provided, that the Indenture Trustee shall
have no duty to inquire or to investigate the breach of any such representations
and warranties. The Originators and the Unaffiliated Seller will be obligated to
repurchase a Subsequent Mortgage Loan which breaches a representation or
warranty in accordance with the provisions of Section 4.02 of the Sale and
Servicing Agreement or to indemnify as described in Section 3.05(g) of the
Unaffiliated Seller's Agreement. Such repurchase and indemnification obligation
of the Originators and the Unaffiliated Seller shall constitute the sole remedy
against the Originators and the Unaffiliated Seller, and the Trust for such
breach available to the Servicer, the Trust, the Owner Trustee, the Depositor,
the Indenture Trustee, the Note Insurer and the Noteholders.
Section 5. Amendment. This Subsequent Transfer Agreement may be amended
from time to time by the Originators, the Unaffiliated Seller and the Depositor
only with the prior written consent of the Note Insurer (or, in the event of a
Note Insurer Default, the Majority Holders), and to the extent such amendment
materially affects the interests of the Owner Trustee, upon written notice to
the Owner Trustee.
Section 6. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS SUBSEQUENT TRANSFER
AGREEMENT AND ANY AMENDMENT HEREOF PURSUANT TO SECTION 5 SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSEQUENT TRANSFER AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM THEREIN.
Section 7. Counterparts. This Subsequent Transfer Agreement may be
executed in counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which shall constitute one and
the same instrument.
Section 8. Binding Effect; Third-Party Beneficiaries. This Subsequent
Transfer Agreement will inure to the benefit of and be binding upon the parties
hereto, the Note Insurer, the Trust, the Owner Trustee, the Noteholders, and
their respective successors and permitted assigns.
Section 9. Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
Section 10. Exhibits. The exhibits attached hereto and referred to herein
shall constitute a part of this Subsequent Transfer Agreement and are
incorporated into this Subsequent Transfer Agreement for all purposes.
3
<PAGE>
Section 11. Intent of the Parties; Security Agreement. The Originators,
the Unaffiliated Seller and the Depositor intend that the conveyance of all
right, title and interest in and to the Subsequent Mortgage Loans and related
assets described above by the Originators to the Unaffiliated Seller and by the
Unaffiliated Seller to the Depositor pursuant to this Subsequent Transfer
Agreement shall be, and be construed as, a sale of the Subsequent Mortgage Loans
from the Originators to the Unaffiliated Seller and from the Unaffiliated Seller
to the Depositor.
It is, further, not intended that such conveyances be deemed to be pledges
of the Subsequent Mortgage Loans by the Originators to the Unaffiliated Seller
and by the Unaffiliated Seller to the Depositor to secure a debt or other
obligation of the Originators or of the Unaffiliated Seller, as the case may be.
However, in the event that the Subsequent Mortgage Loans are held to be property
of the Originators or the Unaffiliated Seller, or if for any reason this
Subsequent Transfer Agreement is held or deemed to create a security interest in
the Subsequent Mortgage Loans, then it is intended that: (a) this Subsequent
Transfer Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the Uniform Commercial Code of any other
applicable jurisdiction; (b) the conveyance provided for in this Subsequent
Transfer Agreement 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 the Originators' and the Unaffiliated Seller's
respective right, title and interest, whether now owned or hereafter acquired,
in and to the Subsequent Mortgage Loans and related assets described above. The
Originators and the Unaffiliated Seller, as applicable, shall, to the extent
consistent with this Subsequent Transfer Agreement, take such reasonable actions
as may be necessary to ensure that, if this Subsequent Transfer Agreement were
deemed to create a security interest in the Subsequent Mortgage Loans and the
other property described above, such 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 Subsequent Transfer Agreement.
[Remainder of Page Intentionally Left Blank]
4
<PAGE>
IN WITNESS WHEREOF, the Originators, the Unaffiliated Seller and the Depositor
have caused this Subsequent Transfer Agreement to be duly executed by their
respective officers as of the day and year first above written.
AMERICAN BUSINESS CREDIT, INC.
By:
----------------------------------
Name:
Title:
HOMEAMERICAN CREDIT, INC. D/B/A
UPLAND MORTGAGE
By:
----------------------------------
Name:
Title:
NEW JERSEY MORTGAGE AND
INVESTMENT, INC.
By:
----------------------------------
Name:
Title:
ABFS 2000-1, INC.
By:
----------------------------------
Name:
Title:
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:
----------------------------------
Name:
Title:
[Signature Page to Subsequent Transfer Agreement]
<PAGE>
EXHIBIT 4.3
SALE AND SERVICING AGREEMENT
dated as of March 1, 2000
by and among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as Depositor,
ABFS MORTGAGE LOAN TRUST 2000-1,
as Issuer,
AMERICAN BUSINESS CREDIT, INC.,
as Servicer,
CHASE BANK OF TEXAS, N.A.,
as Collateral Agent,
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................1
Section 1.01. Certain Defined Terms........................................1
Section 1.02. Provisions of General Application............................1
Section 1.03. Business Day Certificate.....................................2
ARTICLE II SALE AND CONVEYANCE OF THE MORTGAGE LOANS.........................2
Section 2.01. Purchase and Sale of Initial Mortgage Loans..................2
Section 2.02. Purchase and Sale of Subsequent Mortgage Loans...............3
Section 2.03. Purchase Price...............................................3
Section 2.04. Possession of Mortgage Files; Access to Mortgage Files.......4
Section 2.05. Delivery of Mortgage Loan Documents..........................4
Section 2.06. Acceptance of the Trust Estate; Certain Substitutions;
Certification by the Collateral Agent......................7
Section 2.07. Grant of Security Interest...................................9
Section 2.08. Further Action Evidencing Assignments.......................10
Section 2.09. Assignment of Agreement.....................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................11
Section 3.01. Representations of the Servicer.............................11
Section 3.02. Representations, Warranties and Covenants of the
Depositor.................................................12
Section 3.03. Representations, Warranties and Covenants of the
Collateral Agent..........................................13
Section 3.04. Representations, Warranties and Covenants of the
Indenture Trustee.........................................13
ARTICLE IV THE MORTGAGE LOANS...............................................14
Section 4.01. Representations and Warranties Concerning the Mortgage
Loans.....................................................14
Section 4.02. Purchase and Substitution...................................14
ARTICLE V ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS................16
Section 5.01. The Servicer................................................16
Section 5.02. Collection of Certain Mortgage Loan Payments;
Collection Account........................................17
Section 5.03. Permitted Withdrawals from the Collection Account...........18
Section 5.04. Hazard Insurance Policies; Property Protection Expenses.....19
Section 5.05. Assumption and Modification Agreements......................20
Section 5.06. Realization Upon Defaulted Mortgage Loans...................20
Section 5.07. Indenture Trustee to Cooperate..............................22
Section 5.08. Servicing Compensation; Payment of Certain Expenses by
Servicer..................................................22
Section 5.09. Annual Statement as to Compliance...........................22
Section 5.10. Annual Independent Public Accountants' Servicing Report.....23
Section 5.11. Access to Certain Documentation.............................23
Section 5.12. Maintenance of Fidelity Bond................................23
(i)
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Section 5.13. The Subservicers............................................23
Section 5.14. Reports to the Indenture Trustee; Collection Account
Statements................................................24
Section 5.15. Optional Purchase of Defaulted Mortgage Loans...............24
Section 5.16. Reports to be Provided by the Servicer......................25
Section 5.17. Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans....................................26
Section 5.18. Periodic Advances; Special Advance..........................26
Section 5.19. Indemnification; Third Party Claims.........................27
Section 5.20. Maintenance of Corporate Existence and Licenses; Merger
or Consolidation of the Servicer..........................28
Section 5.21. Assignment of Agreement by Servicer; Servicer Not to
Resign....................................................29
Section 5.22. Periodic Filings with the Securities and Exchange
Commission; Additional Information........................29
ARTICLE VI APPLICATION OF FUNDS.............................................29
Section 6.01. Deposits to the Payment Account.............................29
Section 6.02. Collection of Money.........................................30
Section 6.03. Application of Principal and Interest.......................30
Section 6.04. Information Concerning the Mortgage Loans...................30
Section 6.05. Compensating Interest.......................................30
Section 6.06. Effect of Payments by the Note Insurer; Subrogation.........30
ARTICLE VII SERVICER DEFAULT................................................31
Section 7.01. Servicer Events of Default..................................31
Section 7.02. Indenture Trustee to Act; Appointment of Successor..........33
Section 7.03. Waiver of Defaults..........................................35
Section 7.04. Rights of the Note Insurer to Exercise Rights of the
Noteholders...............................................35
Section 7.05. Indenture Trustee To Act Solely with Consent of the
Note Insurer..............................................36
Section 7.06. Mortgage Loans, Trust Estate and Accounts Held for
Benefit of the Note Insurer...............................36
Section 7.07. Note Insurer Default........................................36
ARTICLE VIII TERMINATION....................................................37
Section 8.01. Termination.................................................37
Section 8.02. Additional Termination Requirements.........................38
Section 8.03. Accounting Upon Termination of Servicer.....................38
ARTICLE IX THE COLLATERAL AGENT.............................................38
Section 9.01. Duties of the Collateral Agent..............................38
Section 9.02. Certain Matters Affecting the Collateral Agent..............40
Section 9.03. Collateral Agent Not Liable for Notes or Mortgage Loans.....41
Section 9.04. Collateral Agent May Own Notes..............................41
Section 9.05. Collateral Agent's Fees and Expenses; Indemnity.............41
Section 9.06. Eligibility Requirements for Collateral Agent...............42
Section 9.07. Resignation and Removal of the Collateral Agent.............42
(ii)
<PAGE>
Section 9.08. Successor Collateral Agent..................................42
Section 9.09. Merger or Consolidation of Collateral Agent.................43
ARTICLE X MISCELLANEOUS PROVISIONS..........................................43
Section 10.01. Limitation on Liability....................................43
Section 10.02. Acts of Noteholders........................................44
Section 10.03. Amendment..................................................44
Section 10.04. Recordation of Agreement...................................45
Section 10.05. Duration of Agreement......................................45
Section 10.06. Notices....................................................45
Section 10.07. Severability of Provisions.................................46
Section 10.08. No Partnership.............................................46
Section 10.09. Counterparts...............................................46
Section 10.10. Successors and Assigns.....................................46
Section 10.11. Headings...................................................46
Section 10.12. The Note Insurer Default...................................47
Section 10.13. Third Party Beneficiary....................................47
Section 10.14. Intent of the Parties......................................47
Section 10.15. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL......................................................47
EXHIBITS
EXHIBIT A Contents of the Mortgage File
EXHIBIT B Indenture Trustee's Acknowledgement of Receipt
EXHIBIT C Collateral Agent's Acknowledgement of Receipt
EXHIBIT D Initial Certification of Collateral Agent
EXHIBIT E Final Certification of Collateral Agent
EXHIBIT F Request for Release of Documents
EXHIBIT G Form of Subsequent Contribution Agreement
SCHEDULES
SCHEDULE I Mortgage Loan Schedule
(iii)
<PAGE>
SALE AND SERVICING AGREEMENT, dated as of March 1, 2000 (this
"Agreement"), by and among PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
a Delaware corporation, as depositor (the "Depositor"), ABFS MORTGAGE LOAN TRUST
2000-1, a Delaware statutory business trust, as issuer (the "Trust"), AMERICAN
BUSINESS CREDIT, INC., a Pennsylvania corporation, as servicer (the "Servicer"),
CHASE BANK OF TEXAS, N.A., a national banking association, as collateral agent
(the "Collateral Agent"), and THE CHASE MANHATTAN BANK, a New York banking
corporation, as indenture trustee (the "Indenture Trustee").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Depositor desires to sell to the Trust, and the Trust
desires to purchase from the Depositor, the mortgage loans (the "Mortgage
Loans") listed on Schedule I to this Agreement;
WHEREAS, immediately after such purchase, the Trust will pledge such
Mortgage Loans to the Indenture Trustee pursuant to the terms of an Indenture,
dated as of March 1, 2000 (the "Indenture"), between the Trust and the Indenture
Trustee, and issue the ABFS Mortgage Loan Trust 2000-1, Mortgage Backed Notes
(the "Notes");
WHEREAS, the Servicer has agreed to service the Mortgage Loans,
which constitute the principal assets of the Trust;
WHEREAS, the Collateral Agent will hold, on behalf of the Indenture
Trustee, the Mortgage Loans and certain other assets pledged to the Indenture
Trustee pursuant to the Indenture; and
WHEREAS, Ambac Assurance Corporation (the "Note Insurer") is
intended to be a third-party beneficiary of this Agreement, and is hereby
recognized by the parties hereto as a third-party beneficiary of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Trust, the Depositor, the Servicer, the
Collateral Agent and the Indenture Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. Capitalized terms used herein
but not defined herein shall have the meanings ascribed to such terms in
Appendix I attached hereto.
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 herein and in Appendix I to the Indenture
include the plural as well as the singular.
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(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 with respect to the Class A-1 Notes
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-2
Notes provided for herein shall be on the basis of a 360-day year and the actual
number of days elapsed in the related Accrual Period. All calculations of
interest with respect to any Mortgage Loan provided for herein shall be made in
accordance with the terms of the related Mortgage Note and Mortgage or, if such
documents do not specify the basis upon which interest accrues thereon, on the
basis of a 360-day year consisting of twelve 30-day months, to the extent
permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the date
such payment is actually received by the Servicer; provided, however, that, for
purposes of calculating payments on the Notes, prepayments with respect to any
Mortgage Loan are deemed to be received on the date they are applied in
accordance with Accepted Servicing Practices consistent with the terms of the
related Mortgage Note and Mortgage to reduce the outstanding Principal Balance
of such Mortgage Loan on which interest accrues.
Section 1.03. Business Day Certificate. On the Closing Date (with
respect to the calendar year 2000) and thereafter, within fifteen (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 Indenture Trustee and the Collateral Agent a certificate of a Servicing
Officer specifying the days on which banking institutions in the Commonwealth of
Pennsylvania are authorized or obligated by law, executive order or governmental
decree to be closed.
ARTICLE II
SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. Purchase and Sale of Initial Mortgage Loans. The
Depositor does hereby sell, transfer, assign, set over and convey to the Trust,
without recourse, but subject to the terms and provisions of this Agreement, all
of the right, title and interest of the Depositor in and to the Initial Mortgage
Loans, including the outstanding principal of, and interest due on, such Initial
Mortgage Loans listed on Schedule I attached hereto, and all other assets
included or to be included in the Trust Estate. 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 Trust all of its rights under the Unaffiliated
Seller's Agreement, including, without limitation, its right to exercise the
remedies created by Sections 2.06 and 3.05 of the Unaffiliated Seller's
Agreement for defective documentation and for breaches of representations and
warranties, agreements and covenants of the Unaffiliated
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Seller and the Originators contained in Sections 3.01, 3.02 and 3.03 of the
Unaffiliated Seller's Agreement.
Section 2.02. Purchase and Sale of Subsequent Mortgage Loans. (a)
Subject to the satisfaction of the conditions set forth in Section 2.14(b) of
the Indenture, in consideration of the Trust'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 related Pre-Funding Account, the
Depositor shall on any Subsequent Transfer Date sell, transfer, assign, set over
and convey to the Trust 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 in the related Pool, 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 Estate. In connection with such
transfer and assignment, and pursuant to Section 2.07 of the Unaffiliated
Seller's Agreement, the Depositor will also irrevocably transfer, assign, set
over and otherwise convey to the Trust all of its rights under the Unaffiliated
Seller's Agreement and the related Subsequent Transfer Agreement, including,
without limitation, its right to exercise the remedies created by Sections 2.06
and 3.05 of the Unaffiliated Seller's Agreement for defective documentation and
for breaches of representations and warranties, agreements and covenants of the
Unaffiliated Seller and the Originators contained in Sections 3.01, 3.02 and
3.03 of the Unaffiliated Seller's Agreement.
The amount released from a Pre-Funding Account with respect to a
transfer of Subsequent Mortgage Loans to the related Pool shall be one-hundred
percent (100%) of the Aggregate Principal Balances of the Subsequent Mortgage
Loans so transferred, as of the related Subsequent Cut-Off Date.
(b) In connection with the transfer and assignment of the Subsequent
Mortgage Loans to the Trust, the Depositor shall cause the Unaffiliated Seller
to satisfy the document delivery requirements set forth in Section 2.05 hereof.
(c) 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 Payment Date, the Servicer will deposit into the Payment Account 30
days' interest at the related 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 such first Due Date occurs.
Section 2.03. Purchase Price. On the Closing Date, as full
consideration for the Depositor's sale of the Initial Mortgage Loans to the
Trust, the Underwriter, on behalf of the Trust, will deliver to, or at the
direction of, the Depositor (i) an amount in cash equal to the sum of (A) 99.70%
and 99.70% of the Original Note Principal Balance as of the Closing Date of the
Class A-1 Notes and the Class A-2 Notes, respectively, plus (B) accrued interest
on the Original Note Principal Balance of the Class A-1 Notes at the rate of
7.925% per annum from (and including) March 1, 2000 to (but not including) the
Closing Date, minus (C) the Original Pre-Funded Amount and the Original
Capitalized Interest Amount with respect to each Class of Notes, payable by wire
transfer of same day funds, and (ii) the Trust Certificates to be issued
pursuant to the Trust Agreement.
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Section 2.04. Possession of Mortgage Files; Access to Mortgage
Files. (a) Upon the receipt by the Depositor, or its designee, of the purchase
price for the Initial Mortgage Loans set forth in Section 2.03 hereof and the
issuance of the Notes pursuant to the Indenture, the ownership of each Mortgage
Note, each Mortgage and the contents of the Mortgage File related to each
Initial Mortgage Loan will be vested in the Trust, and will be pledged to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
(b) Pursuant to Section 2.05 hereof and Section 2.05 of the
Unaffiliated Seller's Agreement, the Unaffiliated Seller has delivered or caused
to be delivered the Indenture Trustee's Mortgage File related to each Initial
Mortgage Loan to the Collateral Agent, on behalf of the Indenture Trustee.
(c) The Collateral Agent will be the custodian, on behalf of the
Indenture Trustee, to hold the Indenture Trustee's Mortgage Files in trust for
the benefit of all present and future Noteholders and the Note Insurer. In the
event the Collateral Agent resigns or is removed, the Indenture Trustee shall
either (x) hold the Indenture Trustee's Mortgage Files, or (y) appoint a
successor Collateral Agent to hold the Indenture Trustee's Mortgage Files as set
forth in Section 9.08 hereof.
(d) The Collateral Agent shall afford the Depositor, the Trust, the
Note 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 prior written request and during
normal business hours at the offices of the Collateral Agent.
Section 2.05. Delivery of Mortgage Loan Documents. (a) In connection
with the transfer and assignment of the Mortgage Loans, the Depositor shall on
or before the Closing Date, with respect to the Initial Mortgage Loans, and
shall on or before the Subsequent Transfer Date with respect to Subsequent
Mortgage Loans, deliver, or cause the Unaffiliated Seller to deliver, to the
Collateral Agent, on behalf of the Indenture Trustee (as pledgee of the Trust
pursuant to the Indenture), 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 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 such Originator's option, be combined
with the assignment referred to in subpart (iv) hereof, in which case it
must be in recordable form, but need not have been previously recorded);
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<PAGE>
(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 Indenture 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 related
Originator to the Unaffiliated Seller, and by the Unaffiliated Seller to the
Collateral Agent, on behalf of the Indenture 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 related 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 Collateral Agent, on behalf of the Indenture 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 Collateral Agent, on behalf of the Indenture Trustee, the
assignment in recordable form, otherwise complete except for recording
information.
The Collateral Agent, at the direction and authority of the parties
to this Agreement, on behalf of the Indenture Trustee, shall promptly upon
receipt thereof, with respect to each Mortgage Note described in Section
2.05(a)(i) hereof and each assignment described in Section 2.05(a)(iv) hereof,
endorse such Mortgage Note and assignment as follows: "The Chase Manhattan Bank,
as Indenture Trustee under the Indenture dated as of March 1, 2000, ABFS
Mortgage Loan Trust 2000-1."
(b) As promptly as practicable, but in any event within thirty (30)
days from the Closing Date or the Subsequent Transfer Date, as applicable, the
Unaffiliated Seller shall 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 Section 2.05(a)(iv). The
Collateral Agent, on behalf of the Indenture Trustee, shall 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 submit each such assignment for recording. The costs relating
to the delivery and recordation of the documents in connection with the Mortgage
Loans as specified in this Article II shall be borne by the Unaffiliated Seller.
5
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(c) The Unaffiliated Seller or the related Originator shall, within
five (5) Business Days after the receipt thereof, deliver, or cause to be
delivered, to the Collateral Agent, on behalf of the Indenture Trustee: (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 Collateral Agent, on behalf of the Indenture Trustee; (ii) the original
recorded assignment of Mortgage from the related Originator to the Indenture
Trustee, which, together with any intervening assignments of Mortgage, evidences
a complete chain of assignment from the originator of the Mortgage Loan to the
Indenture Trustee, in those instances where copies of such assignments certified
by the related Originator were delivered to the Collateral Agent, on behalf of
the Indenture Trustee, and (iii) the title insurance policy or title opinion
required in Section 2.05(a)(vi). The Collateral Agent shall review the recorded
assignment to confirm the information contained therein. The Collateral Agent
shall notify the Indenture Trustee, the Note Insurer and the Servicer, of any
defect in such assignment based on such review. The Servicer shall have a period
of sixty (60) days following such notice to correct or cure such defect.
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 Collateral Agent, on behalf of the Indenture
Trustee, 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 Collateral Agent, on behalf of the
Indenture Trustee, additional original documents evidencing any assumption or
modification of a Mortgage Loan.
(d) All original documents relating to the Mortgage Loans that are
not delivered to the Collateral Agent, on behalf of the Indenture Trustee, as
permitted by Section 2.05(a) hereof are, and shall be, held by the Servicer, the
Unaffiliated Seller or the related Originator, as the case may be, in trust for
the benefit of the Indenture Trustee, on behalf of the Noteholders and the Note
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 an Indenture Trustee's Mortgage
File, such document shall be delivered promptly to the Collateral Agent, on
behalf of the Indenture Trustee. From and after the sale of the Mortgage Loans
to the Trust 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 Trust, such title shall be retained in trust
for the Trust as the owner of the Mortgage Loans, and the Indenture Trustee, as
the pledgee of the Trust under the Indenture. In acting as custodian of any
original document which is part of the Indenture Trustee's Mortgage Files, the
Servicer agrees further that it does not and will not have or assert any
beneficial ownership interest in the related Mortgage Loans or the Mortgage
Files. Promptly upon the Servicer's receipt of any such original document, the
Servicer, on behalf of the Trust, shall mark conspicuously each such original
document, and its master data processing records with a legend evidencing that
the Trust has purchased the related Mortgage Loan and all right and title
thereto and interest therein, and pledged such Mortgage Loan and all right and
title thereto and interest therein to the Indenture Trustee, on behalf of the
Noteholders and the Note Insurer.
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Section 2.06. Acceptance of the Trust Estate; Certain Substitutions;
Certification by the Collateral Agent. (a) The Indenture Trustee agrees to
execute and deliver to the Depositor, the Note Insurer, the Collateral Agent and
the Servicer on or prior to the Closing Date an acknowledgement of receipt of
the Policy in the form attached as Exhibit B hereto.
(b) The Collateral Agent is authorized and directed, on behalf of
the Indenture Trustee, to do the following:
(i) execute and deliver to the Depositor, the Note Insurer, the
Indenture Trustee, the Servicer and the Unaffiliated Seller, on or prior
to the Closing Date or any Subsequent Transfer Date, as applicable, with
respect to each Mortgage Loan transferred on such date, an acknowledgement
of receipt of the Mortgage File containing the original Mortgage Note
(with any exceptions noted), in the form attached as Exhibit C 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 Estate and delivered to the Collateral Agent, on
behalf of the Indenture Trustee, subject to the conditions set forth
herein, for the benefit of the Noteholders and the Note Insurer.
(ii) to review (or cause to be reviewed) each Indenture Trustee's
Mortgage File within thirty (30) days after the Closing Date or any
Subsequent Transfer Date, as applicable (or, with respect to any Qualified
Substitute Mortgage Loans, within thirty (30) days after the receipt by
the Collateral Agent, on behalf of the Indenture Trustee, thereof), and to
deliver to the Unaffiliated Seller, the Servicer, the Depositor, the
Indenture Trustee and the Note Insurer a certification, in the form
attached hereto as Exhibit D, to the effect that, except as otherwise
noted, 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 appears, on its face, not to have been mutilated,
damaged, torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical alteration if they
reasonably appear to have been initialed), 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" accurately reflects the
information set forth in the Indenture Trustee's Mortgage File delivered
on such date.
(iii) to review (or cause to be reviewed) each Indenture Trustee's
Mortgage File within ninety (90) days after the Closing Date or any
Subsequent Transfer Date, as applicable (or, with respect to any Qualified
Substitute Mortgage Loans, within ninety (90) days after the receipt by
the Collateral Agent, on behalf of the Indenture Trustee, thereof), and to
deliver to the Unaffiliated Seller, the Servicer, the Depositor, the
Indenture Trustee, the Rating Agencies and the Note Insurer a
certification in the form attached hereto as Exhibit E to the effect that,
except as otherwise noted, 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
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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 they reasonably
appear to be 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 the definition
of "Mortgage Loan Schedule" accurately reflects the information set forth
in the Indenture Trustee's Mortgage File delivered on such date.
In performing any such review, the Collateral Agent may conclusively
rely on the Unaffiliated Seller as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Collateral Agent's review of the Indenture Trustee's Mortgage Files is limited
solely to confirming that the documents listed in Section 2.05 have been
executed and received and relate to the Indenture Trustee's Mortgage Files
identified in the related Mortgage Loan Schedule. The Collateral Agent 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.
(c) If the Collateral Agent during the process of reviewing the
Indenture Trustee's Mortgage Files finds any document constituting a part of a
Indenture 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
Collateral Agent shall promptly so notify the Servicer, the Unaffiliated Seller,
the Originators, the Note Insurer and the Indenture Trustee. Pursuant to Section
2.06(b) of 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 an Indenture Trustee's
Mortgage File of which it is so notified by the Collateral Agent. If, however,
within sixty (60) days after the Collateral Agent's notice to it respecting such
defect the Unaffiliated Seller or the Originators have not caused to be remedied
the defect and the defect materially and adversely affects the interest of the
Noteholders and the Note Insurer in the related Mortgage Loan, the Unaffiliated
Seller and the Originators will be obligated, pursuant to Section 3.05 of 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 3.05 of the Unaffiliated Seller's Agreement
or (ii) purchase such Mortgage Loan at a purchase price equal to the Loan
Repurchase Price. Upon receipt by the Collateral Agent and the Indenture Trustee
of a certification, in the form attached hereto as Exhibit F, of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt by the Collateral Agent, on behalf of the Indenture Trustee, of the
related Indenture Trustee's Mortgage File, and the deposit of the amounts
described above in the Collection Account, the Collateral Agent shall release to
the Servicer for release to the Unaffiliated Seller the related Indenture
Trustee's Mortgage File and the Indenture Trustee shall execute, without
recourse, and deliver such instruments of transfer furnished by the Unaffiliated
Seller as may be necessary to transfer such Mortgage Loan to the Unaffiliated
Seller. The Collateral Agent shall report to the Indenture
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Trustee, who shall notify the Note Insurer if the Unaffiliated Seller fails to
repurchase or substitute for a Mortgage Loan in accordance with the foregoing.
Section 2.07. Grant of Security Interest. (a) It is intended that
the conveyance of the Mortgage Loans and other property by the Depositor to the
Trust as provided in this Article II be, and be construed as, a sale of the
Mortgage Loans and such other property by the Depositor to the Trust. 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 Trust 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
Article II shall be deemed to be a grant by the Depositor to the Trust 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 Payment Account, whether
in the form of cash, instruments, securities or other property; (iii) the
possession by the Collateral Agent, on behalf of the Indenture Trustee, of the
Mortgage Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to the Uniform Commercial Code; and (iv) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from financial intermediaries, bailees or agents, as applicable,
of the Indenture Trustee for the purpose of perfecting such security interest
under applicable law. The Depositor, the Servicer, on behalf of the Trust, the
Collateral Agent and the Indenture Trustee, shall, to the extent consistent with
this Agreement, take such actions as may be reasonably 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.
(b) The Unaffiliated Seller, the Depositor and the Servicer shall
take no action inconsistent with the Trust's ownership of the Trust Estate 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 other assets in
the Trust Estate are held by the Collateral Agent, on behalf of the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer. The Collateral
Agent is authorized to act, pursuant to the terms of this Agreement, as agent
and bailee of the Indenture Trustee for the benefit of the Noteholders and Note
Insurer and shall be authorized to act at the direction of such parties. In
addition, the Unaffiliated Seller, 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 Estate by stating that it is not the owner of
such asset and that the Trust is the owner of such Mortgage Loan or other asset
in the Trust Estate, which is held by the Collateral Agent, on behalf of the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
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Section 2.08. Further Action Evidencing Assignments. (a) The
Servicer agrees that, from time to time, at its expense, it shall cause the
Unaffiliated Seller to (and the Depositor on behalf of itself also agrees that
it shall), promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or appropriate, or that the
Servicer, the Indenture Trustee or the Collateral Agent may reasonably request,
in order to perfect, protect or more fully evidence the transfer of ownership of
the Mortgage Loans and other assets in the Trust Estate or to enable the
Collateral Agent, on behalf of the Indenture Trustee, to exercise or enforce any
of its rights hereunder. Without limiting the generality of the foregoing, the
Servicer and the Depositor will, upon the request of the Servicer, the Indenture
Trustee or the Collateral Agent 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, the Indenture
Trustee and the Collateral Agent 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.
Section 2.09. Assignment of Agreement. The Depositor hereby
acknowledges and agrees that the Trust may assign its interest under this
Agreement to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, as may be required to effect the purposes of the Indenture,
without further notice to, or consent of, the Depositor, and the Indenture
Trustee shall succeed to such of the rights and obligations of the Trust
hereunder as shall be so assigned. The Trust shall, pursuant to the Indenture,
assign all of its right, title and interest in and to the Mortgage Loans and its
right to exercise the remedies created by Section 2.06 and 3.05 of the
Unaffiliated Seller's Agreement 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 of the Unaffiliated Seller's Agreement,
assign such right, title and interest to the Indenture Trustee, for the benefit
of the Noteholders and the Note Insurer. The Depositor agrees that, upon such
assignment to the Indenture Trustee, such representations, warranties,
agreements and covenants will run to and be for the benefit of the Indenture
Trustee and the Indenture Trustee may enforce, without joinder of the Depositor
or the Trust, the repurchase obligations of the Unaffiliated Seller and the
Originators set forth herein with respect to breaches of such representations,
warranties, agreements and covenants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Servicer. The Servicer hereby
represents and warrants to the Indenture Trustee, the Depositor, the Collateral
Agent, the Trust, the Note Insurer and the Noteholders as of the Closing Date
and during the term of this Agreement that:
(a) Each of the Servicer and the Subservicers is duly organized,
validly existing and in good standing under the laws of their respective states
of incorporation and has the power to own its assets and to transact the
business in which it is currently engaged. Each of the Servicer and the
Subservicers is duly qualified to do business as a foreign corporation and is
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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 Servicer
or the Subservicers or the performance of their respective obligations
hereunder;
(b) The Servicer 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, and assuming the due
authorization, execution and delivery hereof by the other parties hereto
constitutes, or will constitute, the legal, valid and binding obligation of the
Servicer, enforceable in accordance with its terms, except as enforcement of
such terms 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);
(c) The Servicer is not 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
Servicer will not violate any provision of any existing law or regulation or any
order or decree of any court or the charter or bylaws of the Servicer, or
constitute a breach of any mortgage, indenture, contract or other Agreement to
which the Servicer 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 or the Subservicers which, either in any one
instance or in the aggregate, is, in the Servicer's judgment, likely to result
in any material adverse change in the business, operations, financial condition,
properties, or assets of the Servicer 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
Notes, or the Mortgage Loans or of any action taken or to be taken in connection
with the obligations of the Servicer or the Subservicers contemplated herein or
therein, or which would be likely to impair materially the ability of the
Servicer or the Subservicers to perform their respective obligations hereunder;
(f) Neither this Agreement nor any statement, report, or other
document furnished by the Servicer or the Subservicers pursuant to this
Agreement or in connection with the transactions contemplated hereby, including,
without limitation, the sale or placement of the Notes, contains any untrue
statement of fact provided by or on behalf of the Servicer or omits to state a
fact necessary to make the statements provided by or on behalf of the Servicer
contained herein or therein not misleading:
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(g) The Servicer 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; and
(h) None of 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 Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf
of the Indenture Trustee or to another custodian, as the case may be, and inure
to the benefit of the Indenture Trustee.
Section 3.02. Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Indenture Trustee, the Trust, the Collateral Agent and the Servicer 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;
(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
other parties hereto, 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
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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 Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf
of the Indenture Trustee or to another custodian, as the case may be, and shall
inure to the benefit of the Indenture Trustee.
Section 3.03. Representations, Warranties and Covenants of the
Collateral Agent. The Collateral Agent hereby represents, warrants and covenants
to the Indenture Trustee, the Trust, the Servicer and the Depositor that as of
the date of this Agreement or as of such date specifically provided herein:
(a) The Collateral Agent is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America;
(b) The Collateral Agent has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement; and
(c) This Agreement has been duly and validly authorized, executed
and delivered by the Collateral Agent, all requisite corporate action having
been taken, and, assuming the due authorization, execution and delivery hereof
by the other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Collateral Agent, enforceable against the Collateral
Agent in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.03(b) and 3.03(c) shall survive delivery
of the respective Indenture Trustee's Mortgage Files to the Collateral Agent, on
behalf of the Indenture Trustee or to another custodian, as the case may be, and
shall inure to the benefit of the Indenture Trustee.
Section 3.04. Representations, Warranties and Covenants of the
Indenture Trustee. The Indenture Trustee hereby represents, warrants and
covenants to the Collateral
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Agent, the Trust, the Servicer and the Depositor that as of the date of this
Agreement or as of such date specifically provided herein:
(a) The Indenture Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York;
(b) The Indenture Trustee has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed
and delivered by the Indenture Trustee, all requisite corporate action having
been taken, and, assuming the due authorization, execution and delivery hereof
by the other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.04 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf
of the Indenture Trustee or to another custodian, as the case may be.
ARTICLE IV
THE MORTGAGE LOANS
Section 4.01. Representations and Warranties Concerning the Mortgage
Loans. With respect to each Mortgage Loan, the Depositor hereby assigns to the
Trust, pursuant to Section 2.07 of the Unaffiliated Seller's Agreement, the
representations, warranties and covenants of the Unaffiliated Seller and the
Originators set forth in Sections 3.01, 3.02 and 3.03 of the Unaffiliated
Seller's Agreement. Such representations, warranties and covenants are made or
deemed to be made (x) with respect to the Initial Mortgage Loans, as of the
Initial Cut-Off Date and (y) with respect to the Subsequent Mortgage Loans, as
of the related Subsequent Cut-Off Date.
Section 4.02. 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 the purchase by
the Depositor of the Mortgage Loans, the subsequent transfer thereof by the
Depositor to the Trust, the subsequent pledge thereof by the Trust to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, and
the delivery of the Notes to the Noteholders, 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 Unaffiliated Seller's Agreement.
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(b) Upon discovery by the Unaffiliated Seller, the Depositor, the
Servicer, any Subservicer, the Indenture Trustee, the Note Insurer or a
Noteholder of a breach of any of the representations and warranties in Sections
3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement which materially and
adversely affects the value of the Mortgage Loans or the interest of the
Noteholders or the Note Insurer, or which materially and adversely affects the
interests of the Note Insurer or the Noteholders 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 or the Originator's best knowledge), the party discovering
such breach or failure shall promptly (and in any event within five (5) days of
the discovery) give written notice thereof to the others. Within forty-five (45)
days of the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Servicer shall, or shall cause the Unaffiliated
Seller or an Originator to, (a) promptly cure such breach in all material
respects, (b) purchase such Mortgage Loan on the next succeeding Servicer
Payment Date, in the manner and at the price specified in Section 2.06(b) and
this Section 4.02, or (c) remove such Mortgage Loan from the Trust Estate (in
which case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner specified in Section 2.06(b)
and this Section 4.02. The Collateral Agent shall give prompt written notice to
the Indenture Trustee, who shall deliver such notice to the Note Insurer and the
Rating Agencies of any repurchase or substitution made pursuant to this Section
4.02 or Section 2.06(b).
(c) 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 Indenture Trustee a certification, in the
form attached hereto as Exhibit F, executed by a Servicing Officer, and the
documents described in Sections 2.05(a)(i)-(vi) for such Qualified Substitute
Mortgage Loan or Loans.
(d) The Servicer shall deposit in the Payment 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 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 Indenture Trustee, the Collateral
Agent and the Note 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.
(e) With respect to any Mortgage Loan that has been converted to an
REO Mortgage Loan, all references in this Section 4.02 or Section 2.06 to
"Mortgage Loan" shall be deemed to also refer to the REO Mortgage Loan. With
respect to any Mortgage Loan that the Servicer, Originator or Unaffiliated
Seller is required to repurchase that is or becomes a Liquidated Mortgage Loan,
in lieu of repurchasing such Mortgage Loan, the Servicer, Originator or
Unaffiliated Seller shall deposit into the related Payment Account, pursuant to
Section 8.01 of
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the Indenture, an amount equal to the amount of the Liquidated Loan Loss, if
any, incurred in connection with the liquidation of such Mortgage Loan within
the same time period in which the Servicer, Originator or Unaffiliated Seller
would have otherwise been required to repurchase such Mortgage Loan.
(f) It is understood and agreed that the obligations of the
Unaffiliated Seller and the Originators set forth in Sections 2.06 and 3.05 of
the Unaffiliated Seller's Agreement to, and the Servicer's obligation set forth
in this Section 4.02 to cause the Unaffiliated Seller and the Originators to,
cure, purchase or substitute for a defective Mortgage Loan, or to indemnify as
described in Section 3.05(g) of the Unaffiliated Seller's Agreement, constitute
the sole remedies of the Indenture Trustee, the Collateral Agent, the Note
Insurer and the Noteholders respecting a breach of the representations and
warranties of the Unaffiliated Seller and the Originators set forth in Sections
3.01, 3.02 and 3.03 of the Unaffiliated Seller's Agreement.
(g) Pursuant to Section 3.05(g) of the Unaffiliated Seller's
Agreement, the Unaffiliated Seller and the Originators shall be obligated to
indemnify the Indenture Trustee, the Depositor, the Trust, the Owner Trustee,
the Collateral Agent, the Noteholders and the Note Insurer for any third party
claims arising out of a breach by the Unaffiliated Seller or the related
Originator of representations or warranties regarding the Mortgage Loans.
(h) Pursuant to Section 3.05(h) of the Unaffiliated Seller's
Agreement, the Unaffiliated Seller and each of the Originators shall be jointly
and severally responsible for any repurchase, cure or substitution obligation of
the Unaffiliated Seller or any of the Originators under this Agreement, the
Unaffiliated Seller's Agreement or the Indenture.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01. The Servicer. 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 Indenture 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 Indenture Trustee, to execute and deliver, on
behalf of itself, the Noteholders and the Indenture 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 Indenture Trustee of any such waiver, release, discharge,
modification, indulgence or other such matter by delivering to the Indenture
Trustee an Officer's Certificate certifying that such agreement is in compliance
with this Section 5.01 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
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related Indenture Trustee's 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 unless (i) the modifications do
not decrease the Mortgage Interest Rate, reduce or increase the principal
balance, decrease the lien priority, increase the current LTV above the lesser
of the current LTV or the original LTV, or change the final maturity date on or
of such Mortgage Loan and (ii) the Note 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 Note Insurer.
The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Indenture 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 Accepted Servicing Practices. Consistent with the foregoing,
the Servicer may in its discretion waive any assumption fees or other fees which
may be collected in the ordinary course of servicing such Mortgage Loans.
(b) The Servicer shall establish and maintain, in the name of the
Indenture Trustee, the Collection Account, in trust for the benefit of the
Noteholders and the Note 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 related Cut-Off Date, and thereafter, on each Business Day
(except as otherwise permitted herein), the following payments and collections
received or made by it (other than in respect of principal collected and
interest due on the Mortgage Loans on or before the related 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, 4.02 or 5.05;
(iv) the Substitution Adjustment received in connection with
Mortgage Loans for which Qualified Substitute Mortgage Loans are received
pursuant to Sections 2.06, 4.02 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 Section 5.04
hereof).
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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 Servicer shall invest any funds in the Collection Account in
Permitted Investments, which shall mature not later than the Business Day next
preceding the Servicer Payment Date next following the date of such investment
(except that any investment held by the Indenture Trustee may mature on such
Servicer Payment 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
Servicer Payment 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
Servicer may make withdrawals from the Collection Account, on or prior to any
Servicer Payment 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 Section
5.03(a)) and amounts representing proceeds of other insurance policies covering
the property subject to the related Mortgage deposited in the Collection Account
pursuant to Section 5.02(c)(v)-(vi);
(c) to pay to the Unaffiliated Seller amounts received in respect of
any Defective Mortgage Loan purchased or substituted for by the Unaffiliated
Seller to the extent that the payment of any such amounts on the Servicer
Payment Date upon which the proceeds of such purchase are paid would make the
total amount distributed in respect of any such Mortgage Loan on such Servicer
Payment 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;
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(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 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 the 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 this Section 5.03.
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 (x) the maximum insurable value of the related Mortgaged Property or
(y) 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 sum of the 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 acceptable to the Rating Agencies and the Note 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.
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(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 sum of the Principal Balance of the related Mortgage Loan and the principal
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 Note 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 Indenture Trustee and the Collateral
Agent that any assumption and modification agreement has been completed by
delivering to the Indenture Trustee, the Collateral Agent and the Note 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 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
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satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 5.02(a). Prior to conducting any sale in a foreclosure
proceeding or accepting a deed-in-lieu of foreclosure with respect to any
Mortgaged Property, the Servicer shall cause an environmental review to be
performed, in accordance with Accepted Servicing Practices on the Mortgaged
Property by a company such as Equifax, Inc. or Toxicheck. If such review reveals
that the Mortgaged Property has on it, under it or is near hazardous or toxic
material or waste or reveals any other environmental problem, the Servicer shall
not foreclose or accept a deed-in-lieu of foreclosure, without the prior written
consent of the Note Insurer. In connection with such foreclosure or other
conversion, the Servicer shall follow such practices (including, in the case of
any default on a related senior mortgage loan, the advancing of funds to correct
such default) and procedures which are consistent with Accepted Servicing
Practices as it shall deem necessary or advisable and as shall be normal and
usual in its general first and second mortgage loan servicing activities.
Notwithstanding the foregoing, 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 Indenture Trustee, or to its nominee, on behalf of
Noteholders and the Note Insurer.
(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 Trust Certificateholders of all the Mortgage Loans and
REO Properties in the Trust Estate pursuant to Section 10.01 of the Indenture)
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 Interest Rate (or at such lesser rate as may be in effect for such
Mortgage Loan pursuant to application of the 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 Payment Date on which such amounts are to be
paid if such determination has not yet been made, minus any unpaid Servicing
Fees with respect to such Mortgage Loan; fourth, to the extent of the Principal
Balance of the Mortgage Loan outstanding immediately prior to the receipt of
such proceeds, as a recovery of principal of the related Mortgage Loan; and
fifth, to any prepayment or late payment charges or penalty interest payable in
connection with the receipt of such proceeds and to all other fees and charges
due and payable with respect to such Mortgage Loan. The amount of any gross
Insurance Proceeds and Liquidation Proceeds received with respect to any
Mortgage Loan or REO Property minus the amount of any unreimbursed Servicing
Advances, unreimbursed Periodic Advances or unpaid Servicing Fees, in each case,
with respect to the related Mortgage Loan, are the "Net Recovery Proceeds" with
respect to such Mortgage Loan or REO Property.
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Section 5.07. Indenture Trustee to Cooperate. Upon the payment in
full of the Principal Balance of any Mortgage Loan, the Servicer will notify the
Indenture Trustee and the Collateral Agent by a certification (which
certification shall include a statement to the effect that all amounts received
in connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 5.02 have been so deposited) of a
Servicing Officer. Upon any such payment in full, the Servicer is authorized to
execute, pursuant to the authorization contained in Section 5.01, an instrument
of satisfaction regarding the related Mortgage, which instrument of satisfaction
shall be recorded by the Servicer if required by applicable law and be delivered
to the Person entitled thereto, it being understood and agreed that no expenses
incurred in connection with such instrument of satisfaction shall be reimbursed
from the Collection Account. From time to time and as appropriate for the
servicing or foreclosure of any Mortgage Loan, the Collateral Agent shall, upon
request of the Servicer and delivery to the Collateral Agent of a Request for
Release signed by a Servicing Officer, release the related Mortgage File to the
Servicer and shall execute, as Collateral Agent on behalf of the Indenture
Trustee, such documents as shall be necessary for the prosecution of any such
proceedings. Such Request for Release shall obligate the Servicer to return the
Indenture Trustee's Mortgage File to the Collateral Agent 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 Request for Release shall be released by the
Collateral Agent to the Servicer.
Section 5.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. On each Payment Date, the Servicer shall be entitled to receive, and
the Indenture 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 aggregate outstanding Principal Balance of each Pool of
Mortgage Loans 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, payment of the Indenture Trustee Fee and payment of the Collateral
Agent Fee to the extent that monies in the Collection Account are insufficient
therefor, as provided in Section 6.16 of the Indenture and 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 Indenture Trustee, the Collateral Agent, the Rating Agencies, the
Note Insurer and each Noteholder, on or before April 30 of each year, beginning
April 30, 2001, 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.
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Section 5.10. Annual Independent Public Accountants' Servicing
Report. On or before April 30 of each year, beginning April 30, 2001, 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
Indenture Trustee, the Collateral Agent, the Rating Agencies and each Noteholder
to the effect that such firm has examined certain documents and records relating
to the servicing of mortgage loans under servicing agreements (including this
Agreement) substantially similar to this Agreement, and that such examination,
which has been conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers (to the extent that the procedures in
such audit guide are applicable to the servicing obligations set forth in such
agreements), has disclosed no items of noncompliance with the provisions of this
Agreement which, in the opinion of such firm, are material, except for such
items of noncompliance as shall be set forth in such report.
Section 5.11. Access to Certain Documentation. The Servicer shall
permit the designated agents or representatives of each Noteholder, the Note
Insurer, the Collateral Agent and the Indenture 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
relating to the Mortgage Loans and (ii) to visit the offices and properties of
the Servicer for the purpose of examining such materials and to discuss matters
relating to the Mortgage Loans and the Servicer's performance under this
Agreement with any of the officers or employees of the Servicer having knowledge
thereof and with the independent public accountants of the Servicer (and by this
provision the Servicer authorizes its 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 Noteholder, the Note Insurer,
the Collateral Agent or the Indenture 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.
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Section 5.14. Reports to the Indenture Trustee; Collection Account
Statements. Not later than fifteen (15) days after each Payment Date, the
Servicer shall provide to the Indenture Trustee, the Collateral Agent and the
Note 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
Payment Date, stating that all payments required by this Agreement to be made by
the Servicer on behalf of the Indenture Trustee have been made (or if any
required payment 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. 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 Payment
Date occurs. Copies of such statement shall be provided by the Indenture Trustee
to any Noteholder upon request.
Section 5.15. Optional Purchase of Defaulted Mortgage Loans. (a)
Subject to Sections 5.15(b) and 5.15(c), 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 Indenture Trustee
and the Note Insurer), but shall not be obligated, to purchase for its own
account from the Trust any Mortgage Loan which is ninety (90) days or more
Delinquent in the manner and at the Loan Purchase Price (except that the amount
described in clause (ii) of the definition of Loan Purchase Price shall in no
case be net of the Servicing Fee). The purchase price for any Mortgage Loan
purchased hereunder shall be deposited in the Collection Account and the
Collateral Agent, upon the Indenture Trustee's receipt of such deposit, shall
release or cause to be released to the purchaser of such Mortgage Loan the
related Indenture 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 Indenture 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 Indenture Trustee, the Collateral Agent, the Note Insurer or the Noteholders
with respect thereto. The purchaser of such Mortgage Loan shall give written
notice to the Note Insurer of the means by which any Mortgage Loan purchased
pursuant to this Section 5.15 is ultimately disposed of.
(b) After the Unaffiliated Seller or an Affiliate of the
Unaffiliated Seller has repurchased any Mortgage Loans which are 90 days or more
Delinquent in an Aggregate Principal Balance equal to 1% of the Maximum
Collateral Amount, then notwithstanding the foregoing, unless the Note 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 Note 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 Note
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Insurer fails to respond to such request within ten (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 Note Insurer. Notice to the Note Insurer shall
be delivered in accordance with the terms of the Insurance and Indemnity
Agreement.
(c) After the Unaffiliated Seller or an Affiliate of the
Unaffiliated Seller has repurchased any Mortgage Loans which are 90 days or more
Delinquent in an Aggregate Principal Balance equal to 5% of the Maximum
Collateral Amount, then notwithstanding the foregoing, unless the Note Insurer
consents, any such Unaffiliated Seller or Affiliate of the Unaffiliated Seller
may not repurchase such additional Mortgage Loans.
Section 5.16. Reports to be Provided by the Servicer.
(a) On each Servicer Payment Date, the Servicer shall deliver to the
Indenture Trustee and the Note Insurer (i) a Noteholder Statement and (ii) a
Servicer Remittance Report for such Servicer Payment Date setting forth 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):
(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) 31-59 days Delinquent, (B) 60-89 days Delinquent and
(C) 90 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
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Balance of all Mortgage Loans relating to REO Properties and the number,
Aggregate Principal Balances of all Mortgage Loans and percentage (based
on the Aggregate Principal Balances of the Mortgage Loans) of any such
Mortgage Loans also included in any of the statistics described in the
foregoing clause (i);
(v) the weighted average Mortgage Interest Rate as of the Due Date
occurring in the Due Period related to such Payment Date;
(vi) the weighted average remaining term to stated maturity of all
Mortgage Loans;
(vii) the book value of any REO Property;
(viii) the Cumulative Loan Losses and the aggregate Cumulative Loan
Losses since the Closing Date; and
(ix) the total number of Mortgage Loans and the Pool Principal
Balance.
(b) In connection with the transfer of the Notes, the Indenture
Trustee on behalf of any Noteholder may request that the Servicer make available
to any prospective Noteholder annual audited financial statements of the
Servicer for one or more of the most recently completed five (5) fiscal years
for which such statements are publicly available, which request shall not be
unreasonably denied or unreasonably delayed. Such annual audited financial
statements also shall be made available to the Note Insurer upon request.
(c) The Servicer also agrees to make available on a reasonable basis
to the Note Insurer or any prospective Noteholder 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 Note Insurer or any prospective Noteholder to inspect
the Servicer's servicing facilities during normal business hours for the purpose
of satisfying the Note Insurer or such prospective Noteholder 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 each Mortgage Loan and each Payment Date
shall be offset on such Payment Date by an amount equal to the Prepayment
Interest Shortfall with respect to such Mortgage Loan to the extent that it is
the subject of Principal Prepayments during the month preceding the month of
such Payment Date. The amount of any offset against the Monthly Servicing Fee
with respect to any Payment 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 Mortgage Loan,
and the rights of the Noteholders to the offset of the aggregate Prepayment
Interest Shortfalls against the Monthly Servicing Fee shall not be cumulative.
Section 5.18. Periodic Advances; Special Advance. (a) If, on any
Servicer Payment Date, the Servicer determines that any Monthly Payments due on
the Due Date immediately preceding such Servicer Payment Date have not been
received as of the end of the
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related Due Period, the Servicer shall determine the amount of any Periodic
Advance required to be made with respect to the related Payment Date. The
Servicer shall, one (1) Business Day after such Servicer Payment Date, deliver a
magnetic tape or diskette to the Indenture Trustee indicating the payment status
of each Mortgage Loan as of such Servicer Payment Date. The Servicer shall
include in the amount to be deposited in the Collection Account on such Servicer
Payment 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 payment or withdrawal on or in connection with Payment Dates in
subsequent months. Any funds being held for future payment to Noteholders 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 Payment Date to the extent that funds in the Collection Account on such
Servicer Payment Date shall be less than payments to Noteholders required to be
made on such date; provided, however, that at no time may the aggregate
outstanding amount of Periodic Advances funded by such amounts held for future
payment exceed the sum of (i) the aggregate amount of Monthly Payments due and
received after the end of the most recently ended Due Period and on or prior to
the most recent Servicer Payment Date and (ii) 15% of unscheduled principal
collections received after the end of the most recently ended Due Period and on
or prior to the most recent Servicer Payment Date and to the extent that the
aggregate outstanding amount of Periodic Advances funded by such amounts held
for future payments exceeds the sum of the amounts specified in clauses (i) and
(ii) above, the Servicer shall immediately make a payment from its own funds to
the Collection Account of an amount equal to such excess.
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
hereof.
(b) In addition to the Periodic Advances, the Servicer shall make
special advances ("Special Advances") on the Servicer Payment Date occurring in
April 2000, of $611,239.97, with respect to interest on Mortgage Loans in Pool I
not having their first payment due until after March 2000 and $108,178.53, with
respect to interest on Mortgage Loans in Pool II not having their first payment
due until after March 2000. The Special Advances shall be made without regard to
recoverability, and shall not be reimbursable. In no event shall the Indenture
Trustee, as successor Servicer, be liable for the payment of the Special
Advances.
On each Subsequent Transfer Date, the Servicer will make the Special
Advance set forth in the related subsequent Pledge Agreement.
Section 5.19. Indemnification; Third Party Claims. (a) The Servicer
agrees to indemnify and to hold each of the Trust, the Owner Trustee, the
Depositor, the Indenture Trustee, the Collateral Agent, the Unaffiliated Seller,
the Note Insurer and each Noteholder 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 Trust, the Owner Trustee, the
Depositor, the Indenture Trustee, the Collateral Agent, the Unaffiliated Seller,
the Note Insurer and any Noteholder 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 and the other Basic Documents. Each
indemnified party and the Servicer shall immediately notify the
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other indemnified parties if a claim is made by a third party with respect to
this Agreement and the other Basic Documents, 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 Trust, the Owner Trustee,
the Depositor, the Servicer, the Indenture Trustee, the Collateral Agent, the
Unaffiliated Seller, the Note Insurer and/or a Noteholder in respect of such
claim. The Indenture Trustee shall reimburse the Servicer in accordance with
Section 5.08 hereof, out of collections on the Mortgage Loans for the Due
Period, for all amounts advanced by it pursuant to the preceding sentence except
to the extent that 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. The
obligations of the Servicer under this Section 5.19 arising prior to any
resignation or termination of the Servicer hereunder shall survive the
resignation or termination of the Servicer.
(b) The Indenture Trustee may, if necessary, reimburse the Servicer
from amounts otherwise distributable on the Trust Certificates for all amounts
advanced by it pursuant to Section 4.04(a)(ii) of the Unaffiliated Seller's
Agreement, except to the extent that the claim relates directly to the failure
of the Servicer, if it is the Unaffiliated Seller, or is an Affiliate of the
Unaffiliated Seller, to perform its obligations to service and administer the
Mortgages in compliance with the terms of the Unaffiliated Seller's Agreement
and this Agreement, or the failure of the Unaffiliated Seller to perform its
duties in compliance with the terms of this Agreement.
(c) The Indenture Trustee shall reimburse the Unaffiliated Seller
from amounts otherwise distributable on the Trust 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 Owner Trustee, the
Indenture Trustee, the Collateral Agent and the Note Insurer.
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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
Owner Trustee, on behalf of the Trust, at the direction of the Trust
Certificateholders, the Depositor, the Servicer, the Unaffiliated Seller, the
Note Insurer, the Collateral Agent and the Indenture 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 Note 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 Indenture Trustee, the
Collateral Agent, the Unaffiliated Seller, the Trust, the Depositor and the Note
Insurer. No such resignation shall become effective until the Indenture 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 Indenture Trustee, the
Collateral Agent, the Rating Agencies and the Note 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 Indenture 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 Notes) any and all reports, statements and information respecting the
Trust and/or the Notes required to be filed, and shall solicit any and all
proxies of the Noteholders 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 Notes.
Fees and expenses incurred by the Indenture Trustee in connection with the
foregoing shall be reimbursed pursuant to Section 6.16 of the Indenture and
shall not be paid by the Trust.
The Servicer and the Depositor each agree to promptly furnish to the
Indenture Trustee, from time to time upon request, such further information,
reports and financial statements as the Indenture Trustee deems appropriate to
prepare and file all necessary reports with the Commission.
ARTICLE VI
APPLICATION OF FUNDS
Section 6.01. Deposits to the Payment Account. On each Servicer
Payment Date, the Servicer shall cause to be deposited in the Payment 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 Payment Date, minus any portion thereof payable to the Servicer
pursuant to Section 5.03. On each Servicer Payment Date, the Servicer shall also
deposit into the Payment Account any Periodic Advances with respect to the
related Payment Date calculated in accordance with Section 5.18 and any amounts
required to be
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deposited in connection with a Subsequent Mortgage Loan pursuant to Section
2.14(b) of the Indenture; on the Servicer Payment Date occurring in April 2000,
the Servicer also will deposit the related Special Advance pursuant to Section
5.18(b).
Section 6.02. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Indenture 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 Indenture Trustee by the Servicer or by any
Subservicer and (b) Insured Payments. The Indenture Trustee shall hold all such
money and property received by it, as part of the Trust Estate and shall apply
it as provided in the Indenture.
Section 6.03. 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 6.04. Information Concerning the Mortgage Loans. No later
than 12:00 noon Pennsylvania time on the fourth Business Day preceding each
Payment Date, the Servicer shall deliver to the Indenture Trustee a report in
computer-readable form containing such information as to each Mortgage Loan and
as to each Mortgage Loan Pool as of such Payment Date and such other information
as the Indenture Trustee shall reasonably require.
Section 6.05. Compensating Interest. Not later than the close of
business on the third Business Day prior to the Payment Date, the Servicer shall
remit to the Indenture Trustee (without right to reimbursement therefor) for
deposit into the related Payment Account, an amount equal to, for each Mortgage
Loan, the lesser of (a) the Prepayment Interest Shortfall for such Mortgage Loan
for the related Payment Date resulting from Principal Prepayments during the
related Due Period and (b) its Monthly Servicing Fees with respect to such
Mortgage Loan received in the related Due Period (the "Compensating Interest").
Section 6.06. Effect of Payments by the Note Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on the Notes which is made with moneys received
pursuant to the terms of the Policy shall not be considered payment of the Notes
from the Trust Estate. The Depositor, the Servicer, the Trust, the Collateral
Agent and the Indenture Trustee acknowledge and agree, that without the need for
any further action on the part of the Note Insurer, the Depositor, the Servicer,
the Trust, the Collateral Agent, the Indenture Trustee or the Note Registrar (a)
to the extent the Note Insurer makes payments, directly or indirectly, on
account of principal of or interest on the Notes to the Holders of such Notes,
the Note Insurer will be fully subrogated to, and each Noteholder, the Servicer,
the Depositor, the Trust, the Collateral Agent and the Indenture Trustee hereby
delegate and assign to the Note Insurer, to the fullest extent permitted by law,
the rights of such Holders to receive such principal and interest from the Trust
Estate, including, without limitation, any amounts due to the Noteholders in
respect of securities law violations arising from the offer and sale of the
Notes, and (b) the Note Insurer shall be paid such amounts from the sources and
in the
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manner provided herein for the payment of such amounts and as provided in the
Insurance Agreement. The Indenture Trustee, the Collateral Agent and the
Servicer shall cooperate in all respects with any reasonable request by the Note
Insurer for action to preserve or enforce the Note Insurer's rights or interests
under this Agreement without limiting the rights or affecting the interests of
the Holders as otherwise set forth herein.
ARTICLE VII
SERVICER DEFAULT
Section 7.01. Servicer Events of Default. (a) The following events
shall each constitute a "Servicer Event of Default" hereunder:
(i) any failure by the Servicer to remit to the Indenture Trustee
any payment required to be made by the Servicer under the terms of this
Agreement (other than Servicing Advances covered by clause (ii) below),
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 Note Insurer by the
Indenture Trustee or to the Servicer and the Indenture Trustee by the Note
Insurer or Noteholders of Notes evidencing Percentage Interests of at
least 25%;
(ii) the failure by the Servicer to make any required Servicing
Advance, which failure continues unremedied for a period of thirty (30)
days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the
Indenture Trustee or to the Servicer and the Indenture Trustee by any
Noteholder or the Note 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(a) hereof to
be true and correct which continues unremedied for a period of thirty (30)
days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the
Indenture Trustee or to the Servicer and the Indenture Trustee by any
Noteholder or the Note 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 liquidation 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 ninety (90)
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
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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 generally 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 Note Insurer shall notify the Indenture Trustee of any
"event of default" under the Insurance Agreement;
(viii)if on any Payment Date the Rolling Six Month Delinquency Rate
exceeds 12.50% of the sum of aggregate outstanding Principal Balance for
the Mortgage Loans and any amount on deposit in the Pre-Funding Accounts;
(ix) if on any Payment Date, commencing in March 2001, the Twelve
Month Loss Amount exceeds 2.50% of the sum of aggregate outstanding
Principal Balance for the Mortgage Loans and any amount on deposit in the
Pre-Funding Accounts, as of the close of business on the first day of the
twelfth preceding calendar month;
(x) if on any Payment Date, the occurrence of a Company
Stockholders' Equity Trigger; and
(xi) the occurrence of an Event of Default under the Indenture.
(b) So long as a Servicer Event of Default shall have occurred and
not have been remedied: (x) with respect solely to Section 7.01(a)(i), 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 Payment Date, the Indenture Trustee, upon
receipt of written notice or discovery by a Responsible Officer of such failure,
shall give immediate telephonic and facsimile notice of such failure to a
Servicing Officer of the Servicer and to the Note Insurer and the Indenture
Trustee shall, with the consent of the Note Insurer, terminate all of the rights
and obligations of the Servicer under this Agreement, except for the Servicer's
indemnification obligation under Section 5.19, and the Indenture 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 Section 7.01(a)(i) not referred to in the preceding
clause (x) and with respect to clauses (ii), (iii), (iv), (v), (vi) and (vii) of
Section 7.01, the Indenture Trustee shall, but only at the direction of the Note
Insurer or the Majority Noteholders, by notice in writing to the Servicer and a
Responsible Officer of the Indenture Trustee and subject to the prior written
consent of the Note Insurer, in the case of any removal at the direction of the
Majority Noteholders, and in addition to whatever rights such Noteholders 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, except for the Servicer's indemnification obligations under Section
5.19, and in and to the Mortgage Loans and the proceeds thereof, as servicer;
and (z) with respect to clauses (viii)-(x) of Section 7.01(a), the Indenture
Trustee shall, but only at the direction of the
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Note Insurer, after notice in writing to the Servicer and a Responsible Officer
of the Indenture Trustee, terminate all the rights and obligations of the
Servicer under this Agreement, except for the Servicer's indemnification
obligations under Section 5.19, 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 Indenture Trustee, or its designee approved by the
Note Insurer, and the Indenture 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 Indenture Trustee in effecting the termination of
the Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Indenture 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 Indenture Trustee shall promptly notify the Note Insurer and
the Rating Agencies of the occurrence of a Servicer Event of Default.
Section 7.02. Indenture Trustee to Act; Appointment of Successor(a)
On and after the time the Servicer receives a notice of termination pursuant to
Section 7.01 or the Indenture 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 this Article VII, in which event the Indenture
Trustee shall promptly notify the Rating Agencies, except as otherwise provided
in Section 7.01, the Indenture 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 Indenture 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 4.02 hereof. The Indenture Trustee, as successor Servicer,
shall be obligated to pay Compensating Interest pursuant to Section 6.05 in any
event and to make advances pursuant to Section 5.18 unless, and only to the
extent the Indenture 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 Indenture
Trustee delivered to the Note Insurer.
(b) Notwithstanding the above, the Indenture Trustee may, if it
shall be unwilling to so act, or shall, if it is unable to so act or if the
Majority Noteholders with the consent of the Note Insurer or the Note Insurer so
requests in writing to the Indenture Trustee, appoint, pursuant to such
direction of the Majority Noteholders and Note Insurer or the Note Insurer, or
if no such direction is provided to the Indenture Trustee, pursuant to the
provisions set forth in Section 7.02(c), or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
acceptable to the Note 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.
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(c) In the event the Indenture 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 Indenture Trustee is unable or unwilling to
act as successor Servicer, the Indenture 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 (30)
days after any such public announcement, the Indenture 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 Indenture Trustee shall deduct from any sum received by the
Indenture 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 Indenture Trustee. After such deductions, the remainder of
such sum shall be paid by the Indenture Trustee to the Servicer at the time of
such sale, transfer and assignment to the Servicer's successor.
(d) The Indenture 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 Indenture Trustee and any
successor Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Indenture
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 Indenture 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 Indenture Trustee and remitted directly to the
Indenture Trustee or, at the direction of the Indenture Trustee, to the
successor Servicer. Neither the Indenture Trustee nor any other successor
Servicer shall be held liable by reason of any failure to make, or any delay in
making, any payment 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 Servicer under this Agreement
shall be effective until the Indenture Trustee and the Note Insurer shall have
consented thereto, and written notice of such proposed appointment shall have
been provided by the Indenture Trustee to the Note Insurer and to each
Noteholder. The Indenture Trustee shall not resign as Servicer until a successor
Servicer reasonably acceptable to the Note Insurer has been appointed. The Note
Insurer shall have the right to remove the Indenture Trustee as successor
Servicer under this Section 7.02 without cause, and the Indenture Trustee shall
appoint such other successor Servicer as directed by the Note Insurer.
(e) Pending appointment of a successor Servicer hereunder, the
Indenture Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Indenture Trustee may make
such arrangements for the compensation of
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such successor Servicer 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 Indenture Trustee and such
successor Servicer 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 Noteholders may, on
behalf of all Noteholders, and subject to the consent of the Note Insurer, waive
any events permitting removal of the Servicer as servicer pursuant to this
Article VII; provided, however, that the Majority Noteholders may not waive a
default in making a required payment on a Note without the consent of the Holder
of such Note. Upon any waiver of a past default, such default shall cease to
exist, and any Servicer 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 Indenture Trustee to the Rating Agencies and the Note Insurer.
Section 7.04. Rights of the Note Insurer to Exercise Rights of the
Noteholders. By accepting its Note, each Noteholder agrees that unless a Note
Insurer Default exists, the Note Insurer shall be deemed to be the Noteholders
for all purposes (other than with respect to the receipt of payment on the
Notes) and shall have the right to exercise all rights of the Noteholders under
this Agreement and under the Notes without any further consent of the
Noteholders, including, without limitation:
(a) the right to require the Unaffiliated Seller to repurchase
Mortgage Loans pursuant to Sections 2.06 and 4.02 hereof to the extent set forth
therein;
(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 Indenture Trustee during
the continuance of a Servicer Event of Default pursuant to Sections 7.01 and
7.02 hereof;
(d) the right to institute proceedings against the Servicer pursuant
to Section 7.01 hereof;
(e) the right to remove the Indenture Trustee pursuant to Section
6.09 of the Indenture;
(f) 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
(g) any rights or remedies expressly given the Majority Noteholders.
In addition, each Noteholder agrees that, subject to Section 10.02,
unless a Note Insurer Default exists, the rights specifically enumerated above
may only be exercised by the Noteholders with the prior written consent of the
Note Insurer.
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Section 7.05. Indenture Trustee To Act Solely with Consent of the
Note Insurer. Unless a Note Insurer Default exists, the Indenture Trustee shall
not, without the Note Insurer's consent or unless directed by the Note 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 Note 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 Note Insurer's consent for any period of time.
Section 7.06. Mortgage Loans, Trust Estate and Accounts Held for
Benefit of the Note Insurer. (a) The Indenture Trustee shall hold the Trust
Estate and the Indenture Trustee's Mortgage Files, for the benefit of the
Noteholders and the Note Insurer, and all references in this Agreement and in
the Notes to the benefit of Noteholders shall be deemed to include the Note
Insurer. The Indenture Trustee shall cooperate in all reasonable respects with
any reasonable request by the Note Insurer for action to preserve or enforce the
Note Insurer's rights or interests under this Agreement and the Notes unless, as
stated in an Opinion of Counsel addressed to the Indenture Trustee and the Note
Insurer, such action is adverse to the interests of the Noteholders or
diminishes the rights of the Noteholders or imposes additional burdens or
restrictions on the Noteholders.
(b) The Servicer hereby acknowledges and agrees that it shall
service the Mortgage Loans for the benefit of the Noteholders and for the
benefit of the Note Insurer, and all references in this Agreement to the benefit
of or actions on behalf of the Noteholders shall be deemed to include the Note
Insurer.
Section 7.07. Note Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Notes to the contrary, if a Note Insurer
Default exists, or if and to the extent the Note 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 Note Insurer to exercise rights of the Noteholders, (b) restrict the ability
of the Noteholders, the Servicer, the Collateral Agent or the Indenture Trustee
to act without the consent or approval of the Note Insurer, (c) provide that a
particular act or thing must be acceptable to the Note Insurer, (d) permit the
Note Insurer to direct (or otherwise to require) the actions of the Indenture
Trustee, the Collateral Agent, the Servicer or the Noteholders, (e) provide that
any action or omission taken with the consent, approval or authorization of the
Note Insurer shall be authorized hereunder or shall not subject the party taking
or omitting to take such action to any liability hereunder or (f) which have a
similar effect, shall be of no further force and effect and the Indenture
Trustee shall administer the Trust Estate and perform its obligations hereunder
solely for the benefit of the Holders of the Notes. Nothing in the foregoing
sentence, nor any action taken pursuant thereto or in compliance therewith,
shall be deemed to have released the Note Insurer from any obligation or
liability it may have to any party or to the Noteholders
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hereunder, under any other agreement, instrument or document (including, without
limitation, the 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 Indenture Trustee of either: (i)
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 Note Insurer and the Indenture Trustee or (ii) mutual consent of
the Owner Trustee, on behalf of the Trust, at the direction of the Trust
Certificateholders, the Indenture Trustee, the Collateral Agent, the Servicer,
the Note Insurer and all Noteholders in writing.
(b) In addition, subject to Section 8.02, certain of the Trust
Certificateholders or the Servicer may, at their respective option and at their
respective sole cost and expense, call the Notes or terminate the Trust in
accordance with the terms of Section 10.01 of the Indenture.
(c) If on any Payment Date, the Servicer determines that there are
no outstanding Mortgage Loans and no other funds or assets in the Trust Estate
other than funds in the Payment Account, the Servicer shall send a final payment
notice promptly to each Noteholder in accordance with Section 8.01(d).
(d) Notice of any termination, specifying the Payment Date upon
which the Trust will terminate and the Noteholders shall surrender their Notes
to the Indenture Trustee for final payment and cancellation, shall be given
promptly by the Servicer by letter to Noteholders mailed during the month of
such final payment before the Servicer Payment Date in such month, specifying
(i) the Payment Date upon which final payment of the Notes will be made upon
presentation and surrender of Notes at the office of the Indenture Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Payment Date is not applicable,
payments being made only upon presentation and surrender of the Notes at the
office of the Indenture Trustee therein specified. The Servicer shall give such
notice to the Indenture Trustee therein specified at the time such notice is
given to Noteholders. The obligations of the Note Insurer hereunder shall
terminate upon the deposit by the Servicer with the Indenture Trustee of a sum
sufficient to purchase all of the Mortgage Loans and REO Properties as set forth
in Section 10.01 of the Indenture or when the Note Principal Balance of the
Notes has been reduced to zero.
(e) In the event that all of the Noteholders do not surrender their
Notes for cancellation within six (6) months after the time specified in the
above-mentioned written notice, the Servicer shall give a second written notice
to the remaining Noteholders to surrender their Notes for cancellation and
receive the final payment with respect thereto. If within six (6) months after
the second notice, all of the Notes shall not have been surrendered for
cancellation, the Indenture Trustee may take appropriate steps, or may appoint
an agent to take appropriate steps, to contact the remaining Noteholders
concerning surrender of their Notes and the cost thereof shall be paid out of
the funds and other assets which remain subject hereto. If within
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nine (9) months after the second notice all the Notes shall not have been
surrendered for cancellation, the related Trust Certificateholders shall be
entitled to all unclaimed funds and other assets which remain subject hereto and
the Indenture Trustee upon transfer of such funds shall be discharged of any
responsibility for such funds and the Noteholders shall look only to the related
Trust Certificateholders for payment and not to the Note Insurer. Such funds
shall remain uninvested.
Section 8.02. Additional Termination Requirements. By their
acceptance of the Notes, 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 Noteholders hereby appoint the Indenture Trustee as their
attorney in fact to sign such plan) as appropriate or upon the written request
of the Note Insurer and (ii) to take such other action in connection therewith
as may be reasonably required to carry out such plan of complete liquidation all
in accordance with the terms hereof.
Section 8.03. Accounting Upon Termination of Servicer. Upon
termination of the Servicer, the Servicer shall, at its expense:
(a) deliver to the successor Servicer or, if none shall yet have
been appointed, to the Indenture Trustee, the funds in any Account;
(b) deliver to the successor Servicer or, if none shall yet have
been appointed, to the Indenture Trustee all Indenture Trustee's Mortgage Files
and related documents and statements held by it hereunder and a Mortgage Loan
portfolio computer tape;
(c) deliver to the successor Servicer or, if none shall yet have
been appointed, to the Indenture Trustee and, upon request, to the Noteholders 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 the successor Servicer and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer under this
Agreement.
ARTICLE IX
THE COLLATERAL AGENT
Section 9.01. Duties of the Collateral Agent. (a) The Collateral
Agent, 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 Collateral
Agent shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
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(b) The Collateral Agent, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Collateral Agent which are specifically required to
be furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform on their face to the requirements of this
Agreement; provided, however, that the Collateral Agent shall not be responsible
for the accuracy or content of any resolution, certificate, statement, opinion,
report, document, order or other instrument furnished by any Person hereunder.
If any such instrument is found not to conform on its face to the requirements
of this Agreement, the Collateral Agent shall note it as such on the Initial
Certification or Final Certification delivered pursuant to Section 2.06(b).
(c) No provision of this Agreement shall be construed to relieve the
Collateral Agent from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the duties
and obligations of the Collateral Agent shall be determined solely by the
express provisions of this Agreement, the Collateral Agent shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Collateral Agent
and, in the absence of bad faith on the part of the Collateral Agent, the
Collateral Agent may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Collateral Agent and conforming
to the requirements of this Agreement;
(ii) the Collateral Agent shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or other
officers of the Collateral Agent, unless it shall be proved that the
Collateral Agent was negligent in ascertaining the pertinent facts;
(iii) the Collateral Agent shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Note Insurer or the
Indenture Trustee or with the consent of the Note Insurer or the Indenture
Trustee;
(iv) the Collateral Agent shall not be required to expend or risk
its own funds or otherwise incur financial liability for the performance
of any of its duties hereunder or the exercise of any of its rights or
powers if there is reasonable ground for believing that the repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it and none of the provisions contained in this
Agreement shall in any event require the Collateral Agent to perform, or
be responsible for the manner of performance of, any of the obligations of
the Servicer or the Indenture Trustee under this Agreement; and
(v) subject to the other provisions of this Agreement and without
limiting the generality of this Section 9.01, the Collateral Agent shall
have no duty (A) to see to any
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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 Estate, the
Noteholders or the Mortgage Loans, (D) to confirm or verify the contents
of any reports or certificates of any Person delivered to the Collateral
Agent pursuant to this Agreement believed by the Collateral Agent to be
genuine and to have been signed or presented by the proper party or
parties.
Section 9.02. Certain Matters Affecting the Collateral Agent. Except
as otherwise provided in Section 9.01 hereof:
(a) the Collateral Agent may rely and shall be protected in acting
or refraining from acting upon any resolution, Officer's Certificate, Opinion of
Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) the Collateral Agent may consult with counsel and any Opinion of
Counsel 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;
(c) the Collateral Agent shall be under no obligation to exercise
any of the powers vested in it by this Agreement or to institute, conduct or
defend by litigation hereunder or in relation hereto at the request, order or
direction of the Note Insurer or any of the Noteholders, pursuant to the
provisions of this Agreement, unless such Noteholders or the Note Insurer, as
applicable, shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein by the Collateral Agent or thereby; nothing contained herein shall,
however, relieve the Collateral Agent of the obligation, upon the occurrence of
an Event of Default (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;
(d) the Collateral Agent shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(e) the Collateral Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by the Note Insurer or Holders of Class A Notes evidencing Percentage Interests
aggregating not less than 25%; provided, however, that if the payment within a
reasonable time to the Collateral Agent of the costs, expenses or liabilities
likely to be incurred by it in the
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making of such investigation is, in the opinion of the Collateral Agent, not
reasonably assured to the Collateral Agent by the security afforded to it by the
terms of this Agreement, the Collateral Agent may require reasonable indemnity
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 Collateral Agent, shall be repaid by the Servicer upon demand
from the Servicer's own funds;
(f) the right of the Collateral Agent to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty, and the
Collateral Agent shall not be answerable for anything other than its negligence
or willful misconduct in the performance of such act;
(g) the Collateral Agent may execute any of the powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys.
Section 9.03. Collateral Agent Not Liable for Notes or Mortgage
Loans. (a) The recitals contained herein shall be taken as the statements of the
Trust and the Servicer, as the case may be, and the Collateral Agent assumes no
responsibility for their correctness. The Collateral Agent makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document. The Collateral Agent shall not be accountable
for the use or application of any funds paid to the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account by the
Servicer. The Collateral Agent shall not be responsible for the legality or
validity of the Agreement or the validity, priority, perfection or sufficiency
of the security for the Notes issued or intended to be issued under the
Indenture.
Section 9.04. Collateral Agent May Own Notes. (a) The Collateral
Agent in its individual or any other capacity may become the owner or pledgor of
Notes with the same rights it would have if it were not Collateral Agent, and
may otherwise deal with the parties hereto.
Section 9.05. Collateral Agent's Fees and Expenses; Indemnity. (a)
The Collateral Agent acknowledges that in consideration of the performance of
its duties hereunder it is entitled to receive its fees and expenses from the
Servicer, as separately agreed between the Servicer and the Collateral Agent.
The Trust, the Depositor, the Indenture Trustee and the Note Insurer shall not
pay any of the Collateral Agent fees and expenses in connection with this
transaction. The Collateral Agent shall not be entitled to compensation for any
expense, disbursement or advance as may arise from its negligence or bad faith,
and the Collateral Agent shall have no lien on the Trust Estate for the payment
of its fees and expenses.
(b) The Collateral Agent and any director, officer, employee or
agent of the Collateral Agent 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 Estate or the Collateral Agent 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 Collateral Agent in the performance of its duties hereunder or by reason of
the Collateral Agent 's reckless disregard of obligations and duties hereunder.
The obligations of the Servicer under this Section 9.05 arising prior to any
resignation or termination of the Servicer hereunder shall survive termination
of the Servicer and payment of the Notes.
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Section 9.06. Eligibility Requirements for Collateral Agent. The
Collateral Agent hereunder shall at all times be a banking entity (a) organized
and doing business under the laws of any state or the United States of America
subject to supervision or examination by federal or state authority, (b)
authorized under such laws to exercise corporate trust powers, including taking
title to the Trust Estate on behalf of the Indenture Trustee, for the benefit of
the Noteholders and the Note Insurer, (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 Note Insurer, and
(e) reasonably acceptable to the Note 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 9.06, the amount set forth in its most recent report
of condition so published shall be deemed to be its combined capital and
surplus. In case at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of this Section 9.06, the Collateral Agent shall
resign immediately in the manner and with the effect specified in Section 9.07.
Section 9.07. Resignation and Removal of the Collateral Agent. (a)
The Collateral Agent may at any time resign and be discharged from the trusts
hereby created by giving thirty (30) days' written notice thereof to the
Indenture Trustee, the Servicer, and the Note Insurer.
(b) If at any time the Collateral Agent 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 Indenture Trustee, the Servicer or the Note
Insurer, or if at any time the Collateral Agent shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Collateral Agent or of its property shall be appointed, or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Indenture Trustee or the Servicer, with the consent of the Note Insurer, or the
Note Insurer may remove the Collateral Agent.
(c) If the Collateral Agent fails to perform in accordance with the
terms of this Agreement, the Indenture Trustee, the Servicer or the Majority
Noteholders, with the consent of the Note Insurer, or the Note Insurer may
remove the Collateral Agent.
(d) Upon removal or receipt of notice of resignation of the
Collateral Agent, the Indenture Trustee shall either (i) take possession of the
Indenture Trustee's Mortgage Files and assume the duties of the Collateral Agent
hereunder or (ii) appoint a successor Collateral Agent pursuant to Section 9.08.
If the Indenture Trustee shall assume the duties of the Collateral Agent
hereunder, it shall notify the Trust, the Depositor, the Servicer and Note
Insurer in writing.
Section 9.08. Successor Collateral Agent. Upon the resignation or
removal of the Collateral Agent, the Indenture Trustee may appoint a successor
Collateral Agent, with the written approval of the Note Insurer; provided,
however, that the successor Collateral Agent so appointed shall in no event be
the Unaffiliated Seller, the Depositor or the Servicer or any Person known to a
Responsible Officer of the Indenture Trustee to be an Affiliate of the
Unaffiliated Seller, the Depositor or the Servicer and shall be approved by the
Note Insurer. The Indenture
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Trustee or such custodian, as the case may be, shall assume the duties of the
Collateral Agent hereunder. Any successor Collateral Agent appointed as provided
in this Section 9.08 shall execute, acknowledge and deliver to the Trust, the
Depositor, the Note Insurer, the Servicer, the Indenture Trustee and to its
predecessor Collateral Agent an instrument accepting such appointment hereunder,
and thereupon the resignation or removal of the predecessor Collateral Agent
shall become effective and such successor Collateral Agent, without any further
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as if
originally named as Collateral Agent herein. The predecessor Collateral Agent
shall deliver to the successor Collateral Agent all Indenture Trustee's Mortgage
Files and related documents and statements held by it hereunder, and the
Servicer and the predecessor Collateral Agent shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor Collateral Agent all
such rights, powers, duties and obligations. The cost of any such transfer to
the successor Collateral Agent shall be for the account of the Collateral Agent
in the event of the resignation of the Collateral Agent, and shall be for the
account of the Servicer in the event of the removal of the Collateral Agent. No
successor Collateral Agent shall accept appointment as provided in this Section
9.08 unless at the time of such acceptance such successor Collateral Agent shall
be eligible under the provisions of Section 9.06. Upon acceptance of appointment
by a successor Collateral Agent as provided in this Section 9.08, the Servicer
shall mail notice of the succession of such Collateral Agent hereunder to all
Noteholders at their addresses as shown in the Note Register and to the Rating
Agencies. If the Servicer fails to mail such notice within ten (10) days after
acceptance of appointment by the successor Collateral Agent, the successor
Collateral Agent shall cause such notice to be mailed at the expense of the
Servicer.
Section 9.09. Merger or Consolidation of Collateral Agent. Any
Person into which the Collateral Agent may be merged or converted or with which
it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation or national banking association
succeeding to the business of the Collateral Agent, shall be the successor of
the Collateral Agent hereunder; provided, that such corporation or national
banking association shall be eligible under the provisions of Section 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.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Limitation on Liability. None of the Trust, the Owner
Trustee, the Depositor, the Servicer, the Collateral Agent, the Indenture
Trustee or any of the directors, officers, employees or agents of such Persons
shall be under any liability to the Trust, the Noteholders or the Note 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 Trust, the Owner Trustee, the
Depositor, the Servicer, the Collateral Agent, the Indenture Trustee or any such
Person against any breach of warranties or
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representations made herein by such party, or against any specific liability
imposed on each such party pursuant to this Agreement or against any liability
which would otherwise be imposed upon such party 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 Trust, the
Owner Trustee, the Depositor, the Servicer, the Collateral Agent, the Indenture
Trustee and any director, officer, employee or agent of such Person may rely in
good faith on any document of any kind which, prima facie, is properly executed
and submitted by any appropriate Person respecting any matters arising
hereunder.
Section 10.02. Acts of Noteholders. (a) Except as otherwise
specifically provided herein, whenever Noteholder 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
Noteholders if the Majority Noteholders or the Note Insurer agrees to take such
action or give such consent or approval.
(b) The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Trust, nor entitle such Noteholder'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, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(c) No Noteholder 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, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Notes, be construed
so as to constitute the Noteholders from time to time as partners or members of
an association; nor shall any Noteholder 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 Owner Trustee, on behalf of the Trust, the Servicer, the
Depositor, the Collateral Agent and the Indenture Trustee by written agreement,
upon the prior written consent of the Note Insurer, without notice to or consent
of the Noteholders 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 (i) an Opinion of Counsel,
at the expense of the party requesting the change, delivered to the Indenture
Trustee or (ii) a letter from each Rating Agency confirming that such action
will not result in the reduction, qualification or withdrawal of the
then-current ratings on the Notes, adversely affect in any material respect the
interests of any Noteholder; 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 paid on any Note without the consent of
such Noteholder, or change the rights or obligations of any other party hereto
without the consent of such party. The Indenture Trustee shall give prompt
written notice to the Rating Agencies of any amendment made pursuant to this
Section 10.03.
(b) This Agreement may be amended from time to time by the Owner
Trustee, on behalf of the Trust, the Servicer, the Depositor, the Collateral
Agent and the Indenture
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Trustee, with the consent of the Note Insurer, the Majority Noteholders and the
Holder of the majority of the Percentage Interest of the Trust 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 Noteholders; provided, however, 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 paid on any Class of Notes without the consent of
the Holders of such Class of Notes 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 Notes affected thereby.
(c) It shall not be necessary for the consent of Holders under this
Section 10.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
(d) In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by Article IX of the Indenture or the
modifications thereby of the trusts created by the Indenture, the Indenture
Trustee shall be entitled to receive, and (subject to Section 6.01 of the
Indenture) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by the Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties or immunities under the Indenture or
otherwise. The Servicer, on behalf of the Trust, shall cause executed copies of
any supplemental indentures to be delivered to the Note Insurer and the Rating
Agencies.
Section 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 Noteholders' expense on direction and at
the expense of Majority Noteholders 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 Noteholders 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, the Subservicers or the
Originators, addressed to such Person, c/o American Business Financial Services,
Inc., Balapointe Office Centre, 111 Presidential Boulevard, Suite 127, Bala
Cynwyd, Pennsylvania 19004, Attention: General Counsel; (ii) in the case of the
Unaffiliated Seller, 3411 Silverside Road, 103 Springer Bldg., Wilmington,
Delaware 19810, Attention: Jeffrey Ruben, Executive Vice President; (iii) in the
case of the Trust, ABFS Mortgage Loan Trust 2000-1, c/o the Owner Trustee at its
Corporate Trust Office, Attention: Corporate Trust Administration; (iv) in the
case of the Collateral Agent, Chase Bank of Texas,
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N.A., 1111 Fannin, 12th floor, Houston, Texas 77002, Attention: Document Custody
Manager; (v) in the case of the Indenture Trustee, c/o The Chase Manhattan Bank,
450 West 33rd Street, 14th Floor, New York, New York, 10001, Attention: Capital
Markets Fiduciary Services, telephone (212) 946-3200, telecopy (212) 946-7317;
(vi) 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: Managing Director- Asset Backed
Finance Group; (vii) in the case of the Note Insurer, Ambac Assurance
Corporation, One State Street Plaza, New York, New York 10004 Attention:
Structure Finance Department- MBS (in each case in which notice or other
communication to the Note Insurer refers to an Event of Default, a Servicer
Event of Default or a claim on the Policy or with respect to which failure on
the part of the Note Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of each of the General Counsel, and shall be marked to
indicate "URGENT MATERIAL ENCLOSED"); (viii) in the case of Standard & Poor's
Rating Services, 55 Water Street, New York, New York 10041 Attention:
Residential Mortgage Surveillance Group; (ix) in the case of Moody's Investors
Service, Inc., 99 Church Street, New York, New York 10007 Attention: Home Equity
Monitoring Group; (x) in the case of Duff & Phelps Credit Rating Co., 17 State
Street, New York, New York 10004 Attention: Residential Mortgage-Backed
Securities Group, and (xi) in the case of the Noteholders, as set forth in the
Note Register. 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 Noteholders 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 Noteholders.
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 Trust, the Servicer, the Depositor, the
Indenture Trustee, the Collateral Agent and the Noteholders 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.
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Section 10.12. The Note Insurer Default. Any right conferred to the
Note Insurer shall be suspended during any period in which a Note Insurer
Default exists. At such time as the Notes are no longer outstanding hereunder,
and no amounts owed to the Note Insurer hereunder remain unpaid, the Note
Insurer's rights hereunder shall terminate.
Section 10.13. Third Party Beneficiary. The parties agree that each
of the Owner Trustee, the Unaffiliated Seller and the Note 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
parties hereto and Noteholders that, for federal income taxes, state and local
income or franchise taxes and other taxes imposed on or measured by income, the
Notes be treated as debt. The parties to this Agreement and the Holder of each
Note, by acceptance of its Note, and each Beneficial Owner thereof, agree to
treat, and to take no action inconsistent with the treatment of, the related
Notes 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. 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 TRUST, THE SERVICER, THE DEPOSITOR, THE COLLATERAL AGENT AND
THE INDENTURE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN
THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 10.06
HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER
THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE
TRUST, THE DEPOSITOR, THE SERVICER, THE COLLATERAL AGENT AND THE INDENTURE
TRUSTEE EACH HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION 10.15 SHALL AFFECT THE RIGHT OF THE TRUST, THE
DEPOSITOR, THE SERVICER, THE COLLATERAL AGENT OR THE INDENTURE TRUSTEE TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS
TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE TRUST, THE DEPOSITOR, THE SERVICER, THE COLLATERAL AGENT AND
THE INDENTURE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT.
47
<PAGE>
INSTEAD, ANY DISPUTE WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
[Remainder of Page Intentionally Left Blank]
48
<PAGE>
IN WITNESS WHEREOF, the Servicer, the Trust, the Indenture Trustee,
the Collateral Agent and the Depositor have caused their names to be signed
hereto by their respective officers thereunto duly authorized as of the day and
year first above written.
PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION, as Depositor
By:
------------------------------------
Name:
Title:
ABFS MORTGAGE LOAN TRUST 2000-1
By: FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee
under the Trust Agreement
By:
------------------------------------
Name:
Title:
AMERICAN BUSINESS CREDIT, INC., as
Servicer
By:
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Indenture
Trustee
By:
------------------------------------
Name:
Title:
CHASE BANK OF TEXAS, N.A., as Collateral
Agent
By:
------------------------------------
Name:
Title:
[Signature Page to Sales and Servicing Agreement]
<PAGE>
SCHEDULE I
MORTGAGE LOAN SCHEDULE
[See Schedule I to Unaffiliated Seller's Agreement]
<PAGE>
APPENDIX I
DEFINED TERMS
[See Appendix I to Indenture]
<PAGE>
[Letterhead of Brown and Wood LLP]
March 30, 2000
The Addressees Listed
on Schedule I Hereto
Re: ABFS Mortgage Loan Trust 2000-1,
Mortgage Backed Notes, Series 2000-1
------------------------------------
Ladies and Gentlemen:
We have acted as special tax counsel in connection with the issuance and
delivery of (x) certain mortgage backed notes denominated as ABFS Mortgage Loan
Trust 2000-1, Mortgage Backed Notes, Series 2000-1, Class A-1 (the "Class A-1
Notes"), Class A-2 (the "Class A-2 Notes" and, together with the Class A-1
Notes, the "Notes"), pursuant to an Indenture, dated as of March 1, 2000 (the
"Indenture"), by and between the ABFS Mortgage Loan Trust 2000-1 (the "Trust")
and The Chase Manhattan Bank, as indenture trustee (the "Indenture Trustee"),
and (y) two classes of trust certificates (the "Trust Certificates"), pursuant
to a Trust Agreement, dated as of March 1, 2000 (the "Trust Agreement"), by and
among First Union Trust Company, National Association, as owner trustee (the
"Owner Trustee"), Prudential Securities Secured Financing Corporation, and ABFS
2000-1, Inc., as unaffiliated seller (the "Unaffiliated Seller").
Each class of Notes will be secured by a pledge of a separate portion of
the assets of the Trust. The assets of the Trust (the "Trust Estate") will
consist primarily of two pools of fixed-rate, closed-end, monthly-pay, business
and consumer purpose home equity loans secured by first- or second-lien
mortgages or deeds of trust on residential or commercial real properties (the
"Mortgage Loans"). The Class A-1 Notes will be secured by the Mortgage Loans in
the first pool ("Pool I") and the Class A-2 Notes will be secured by the
Mortgage Loans in the second pool ("Pool II"). Each pool will constitute a
separate sub-trust of the Trust. Each class of Trust Certificates evidences the
entire beneficial ownership interest in the sub-trust of the Trust consisting of
the related pool of Mortgage Loans.
As special tax counsel, we have examined such documents as we deemed
appropriate for the purposes of rendering the opinion set forth below, including
the following: (a) a Prospectus, dated June 23, 1999, and a Prospectus
Supplement, dated March 15, 2000 (together the "Prospectus"), with respect to
the Notes, (b) an executed copy of the Indenture and the exhibits attached
thereto, and (c) an executed copy of the Trust Agreement and the exhibits
attached thereto. Terms capitalized herein and not otherwise defined herein
shall have their respective meanings as set forth in Appendix I to the
Indenture.
<PAGE>
To the Addressees Listed
on Schedule I Hereto
March 30, 2000
Page 2
In rendering this opinion, we do not express any opinion concerning any
law other than the Federal tax law of the United States. In addition, we do not
express any opinion on any issue not expressly addressed below. In rendering
this opinion, we have relied on the Code, Treasury regulations issued
thereunder, as well as various judicial and administrative precedents, all of
which are subject to change and any such change can be retroactively effective.
We undertake no obligation to update this opinion in the event of any such
changes.
Based upon and subject to the foregoing, we are of the opinion that for
Federal income tax purposes:
1. The statements under the caption "Material Federal Income Tax
Consequences" in the Prospectus are accurate and complete in all material
respects.
2. The Notes will be treated as indebtedness.
3. The Trust will not be classified as an association or as a
publicly traded partnership taxable as a corporation or as a taxable
mortgage pool.
4. Neither sub-trust will be classified as an association or as a
publicly traded partnership taxable as a corporation or as a taxable
mortgage pool.
This opinion is rendered as of the Closing Date, at the request of the
addressees hereof, for the sole benefit of each addressee, and no other person
or entity is entitled to rely hereon without our prior written consent. Copies
of this opinion may not be furnished to any other person or entity, nor may any
portion of this opinion be quoted, circulated or referred to in any other
document, without our prior written consent.
Very truly yours,
<PAGE>
SCHEDULE I
Ambac Assurance Corporation Prudential Securities Incorporated
One State Street Plaza One New York Plaza
New York, New York 10004 New York, New York 10292
Chase Bank of Texas, N.A., Prudential Securities Secured Financing
as Collateral Agent Corporation
1111 Fannin One New York Plaza
12th Floor New York, New York 10292
Houston, Texas 77002
Standard & Poor's Ratings Services Moody's Investors Service, Inc.
55 Water Street 99 Church Street
New York, New York 10041 New York, New York 10007
American Business Credit, Inc. The Chase Manhattan Bank,
BalaPointe Office Centre as Indenture Trustee
111 Presidential Boulevard, Suite 127 Capital Markets Fiduciary Services
Bala Cynwyd, PA 19004 Structured Finance Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
ABFS Mortgage Loan Trust 2000-1 First Union Trust Company, National
c/o First Union Trust Company, National Association, as Owner Trustee
Association, as Owner Trustee One Rodney Square
One Rodney Square 920 King Street, Suite 102
920 King Street, Suite 102 Wilmington, Delaware 19801
Wilmington, Delaware 19801
Duff & Phelps Credit Rating Co.
17 State Street
New York, New York 10004
<PAGE>
EXHIBIT 10.1
[Letterhead of Ambac Assurance Corporation]
Certificate Guaranty Insurance Policy
Insured Obligations: Policy Number:
ABFS Mortgage Loan Trust 2000-1 AB0351BE
Mortgage-Backed Notes, Series 2000-1
Premium:
As specified in the endorsement
attached hereto.
Ambac Assurance Corporation (Ambac) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee for
the benefit of the Holders of the Insured Obligations, that portion of the
Insured Amounts which shall become Due for Payment but shall be unpaid by reason
of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later of
(a) one (1) Business Day following notification to Ambac of Nonpayment or (b)
the Business Day on which the Insured Amounts are Due for Payment. Such payments
of principal or interest shall be made only upon presentation of an instrument
of assignment in form and substance satisfactory to Ambac, transferring to Ambac
all rights under such Insured Obligations to receive the principal of and
interest on the Insured Obligation. Ambac shall be subrogated to all the
Holders' rights to payment on the Insured Obligations to the extent of the
insurance disbursements so made. Once payments of the Insured Amounts have been
made to the Trustee, Ambac shall have no further obligation hereunder in respect
of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any payment
of principal or interest on an Insured Obligation which has become Due for
Payment and which is made to a Holder by or on behalf of the Trustee has been
deemed a preferential transfer and theretofore recovered from its Holder
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Holder will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is not
refundable for any reason. This Policy does not insure against loss of any
prepayment or other acceleration payment which at any time may become due in
respect of any Insured Obligation, other than at the sole option of Ambac, nor
against any risk other than Nonpayment, including failure of the Trustee to make
any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all tights and defenses, to the extent such rights
and defenses may be available to Ambac, to avoid payment of its obligations
under this Policy in accordance with the express provisions hereof.
Any capitalized terms not defined herein shall have the meaning given such terms
in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile to
become effective as their original signatures and binding upon Ambac by virtue
of the countersignature of its duly authorized representative.
President Secretary
Effective Date: March 30, 2000 Authorized Representative
<PAGE>
CERTIFICATE GUARANTY INSURANCE POLICY ENDORSEMENT
Attached to and forming part of Effective Date of Endorsement:
Certificate Guaranty Insurance March 30, 2000
Policy #AB0351BE
issued to:
The Chase Manhattan Bank,
as Indenture Trustee for the Holders of
ABFS Mortgage Loan Trust 2000-1,
Mortgage-Backed Notes, Series 2000-1
For all purposes of this Policy, the following terms shall have the
following meanings:
"Agreement" shall mean the Sale and Servicing Agreement, dated as
of March 1, 2000, among Prudential Securities Secured Financing Corporation,
as Depositor, ABFS Mortgage Loan Trust 2000-1, as Issuer, American Business
Credit, Inc., as Servicer, Chase Bank of Texas, N.A., as Collateral Agent and
The Chase Manhattan Bank, as Indenture Trustee.
"Deficiency Amount" means, for each Payment Date, the excess, if
any, of Required Distributions over the Net Available Funds.
"Due for Payment" shall mean with respect to any Insured Payment or
Preference Amount, such amount is due and payable pursuant to the terms of the
Indenture.
"First Payment Date" shall mean April 17, 2000.
"Holder" shall mean the registered owner or beneficial owner of any
Note.
"Indenture" shall mean the Indenture dated as of March 1, 2000
between ABFS Mortgage Loan Trust 2000-1, as Issuer and The Chase Manhattan Bank,
as Indenture Trustee, as such agreement may be amended, modified or supplemented
from time to time as set forth in the Indenture.
"Indenture Trustee" shall mean The Chase Manhattan Bank, in its
capacity as Indenture Trustee under the Indenture, or if any successor Indenture
Trustee or any co-trustee shall be appointed as provided therein, then
"Indenture Trustee" shall also mean such successor trustee or such co-trustee,
as the case may be, subject to the provisions thereof.
"Insurance Agreement" shall mean the Insurance and Indemnity
Agreement, dated as of March 30, 2000, Ambac Assurance Corporation, as Note
Insurer, Prudential Securities Secured Financing Corporation, as Depositor, ABFS
Mortgage Loan Trust 2000-1, as Issuer, American Business Credit, Inc., as
Servicer and Originator, HomeAmerican Credit, Inc. d/b/a Upland Mortgage, as
Originator, New Jersey Mortgage And Investment Corp., as
<PAGE>
Originator, ABFS 2000-1, Inc., as Seller and The Chase Manhattan Bank, as
Indenture Trustee, as such agreement may be amended, modified or supplemented
from time to time.
"Insured Amounts" shall mean, with respect to any Payment Date, any
Deficiency Amount for such Payment Date.
"Insured Payments" shall mean, with respect to any Payment Date, the
aggregate amount paid by the Note Insurer to the Indenture Trustee in respect of
(i) Insured Amounts for such Payment Date and (ii) Preference Amounts for any
given Business Day.
"Late Payment Rate" shall mean for any Payment Date, the greater of
(i) the rate of interest, as it is publicly announced by Citibank, N.A. at its
principal office in New York, New York as its prime rate (any change in such
prime rate of interest to be effective on the date such change is announced by
Citibank, N.A.) plus 2% and (ii) the then applicable highest rate of interest on
the Notes. The Late Payment Rate shall be computed on the basis of a year of 360
days and the actual number of days elapsed. In no event shall the Late Payment
Rate exceed the maximum rate permissible under any applicable law limiting
interest rates.
"Net Available Funds" on any Payment Date means the Available Funds
on deposit in the Payment Accounts on such Payment Date, less the Indenture
Trustee's Fee and the Premium Amount.
"Nonpayment" shall mean, with respect to any Payment Date, an
Insured Amount is Due for Payment but has not been paid pursuant to the
Agreement.
"Note Insurer" means Ambac Assurance Corporation, a
Wisconsin-domiciled stock insurance corporation, or any successor thereto, as
issuer of the Policy.
"Notes" means, collectively, the Class A-1 and Class A-2 Notes,
substantially in the form set forth in Exhibit A to the Indenture.
"Notice" shall mean the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Amount which shall be
due and owing on the applicable Payment Date.
"Payment Account" shall have the meaning set forth in Section 8.02
of the Indenture.
"Payment Date" shall mean the 15th day of any month (or if such 15th
day is not a Business Day, the first Business Day immediately following)
beginning in April 2000.
"Policy" shall mean this Certificate Guaranty Insurance Policy
together with each and every endorsement hereto.
"Preference Amount" means any payment of principal or interest on a
Note which has become Due for Payment and which is made to a Holder by or on
behalf of the Indenture Trustee which has been deemed a preferential transfer
and theretofore recovered from its Holder
<PAGE>
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction.
"Premium Amount" shall mean the amount payable to the Note Insurer
on each Payment Date calculated at the Premium Percentage.
"Premium Percentage" shall have the meaning set forth in the
Insurance Agreement.
"Reimbursement Amount" shall mean, as to any Payment Date, the sum
of (x) (i) all Insured Payments paid by the Note Insurer, but for which the Note
Insurer has not been reimbursed prior to such Payment Date pursuant to Section
8.02 of the Indenture, plus (ii) interest accrued on such Insured Payments not
previously repaid calculated at the Late Payment Rate from the date the
Indenture Trustee received the related Insured Payments, and (y) without
duplication (i) any amounts then due and owing to the Note Insurer under the
Insurance Agreement, as certified to the Indenture Trustee by the Note Insurer
plus (ii) interest on such amounts at the Late Payment Rate.
"Required Distributions" shall mean, with respect to (i) any Payment
Date occurring prior to the Payment Date in July 2031, the Interest Payment
Amount; (ii) any Over-collateralization Deficit after application of Available
Funds from both groups; and (iii) the Final Stated Maturity Date, the aggregate
Outstanding Note Principal Balance, after giving effect to all other payments of
principal on the Notes on that Payment Date.
Capitalized terms used herein as defined terms and not otherwise
defined herein shall have the meaning assigned to them in the Insurance
Agreement, the Sale and Servicing Agreement and the Indenture.
As provided by the Policy, the Note Insurer will pay any amount
payable hereunder no later than 12:00 noon, New York City time, on the later of
the Payment Date on which the related Insured Amount is due or the Business Day
following receipt in New York, New York on a Business Day by the Note Insurer of
a Notice; provided that, if such Notice is received after 12:00 noon, New York
City time, on such Business Day, it will be deemed to be received on the
following Business Day. If any such Notice is not in proper form or is otherwise
insufficient for the purpose of making a claim under the Policy, it shall be
deemed not to have been received for purposes of this paragraph, and the Note
Insurer shall promptly so advise the Trustee and the Trustee may submit an
amended Notice.
As provided in the third paragraph of the Policy, the Note Insurer
shall pay any Preference Amount when due to be paid pursuant to the Order
referred to below, but in any event no earlier than the third Business Day
following receipt by the Note Insurer of (i) a certified copy of a final,
non-appealable order of a court or other body exercising jurisdiction in such
insolvency proceeding to the effect that the Indenture Trustee, or Holder, as
applicable, is required to return such Preference Amount paid during the term of
this Policy because such payments were avoided as a preferential transfer or
otherwise rescinded or required to be restored by the Indenture Trustee or
Holder (the "Order"), (ii) a certificate by or on behalf of the Indenture
Trustee or Holder that the Order has been entered and is not subject to any
stay, (iii) an
<PAGE>
assignment, in form and substance satisfactory to the Note Insurer, duly
executed and delivered by the Indenture Trustee or Holder, irrevocably assigning
to the Note Insurer all rights and claims of the Indenture Trustee or Holder
relating to or arising under the Indenture against the estate of the Indenture
Trustee or otherwise with respect to such Preference Amount and (iv) a Notice of
Nonpayment (in the form attached hereto as Exhibit A) appropriately completed
and executed by the Indenture Trustee. Such payment shall be disbursed to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order, and not to the Holder directly, unless the Holder has made a payment
of the Preference Amount to the court or such receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
the Note Insurer will pay the Holder, subject to the delivery of (a) the items
referred to in clauses (i), (ii), (iii) and (iv) above to the Note Insurer and
(b) evidence satisfactory to the Note Insurer that payment has been made to such
court or receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order.
The Note Insurer hereby agrees that if it shall be subrogated to the
rights of Holders by virtue of any previous payment under this Policy, no
recovery of such payment will occur unless the full amount of the Holders'
allocable distributions for such Payment Date can be made. In so doing, the Note
Insurer does not waive its rights to seek full payment of all Reimbursement
Amounts owed to it under the Agreement.
The terms and provisions of the Agreement constitute the instrument
of assignment referred to in the second paragraph of the face of this Policy.
A premium will be payable on this Policy on each Payment Date as
provided in Section 8.02 of the Indenture, beginning with the first Payment
Date, in an amount equal to the Premium Amount.
THE INSURANCE PROVIDED BY THE POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
The Policy to which this Endorsement is attached and of which it
forms a part is hereby amended to provide that there shall be no acceleration
payment due under the Policy unless such acceleration is at the sole option of
the Note Insurer.
Nothing herein contained shall be held to vary, alter, waive or
extend any of the terms, conditions, provisions, agreements or limitations of
the above mentioned Policy other than as above stated.
This Policy is issued under and pursuant to, and shall be construed
in accordance with, the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, Ambac Assurance Corporation has caused this
Endorsement to the Policy to be signed by its duly authorized officers.
- ------------------------------ -------------------------------
Assistant Secretary First Vice President
<PAGE>
EXHIBIT 10.1
EXHIBIT A
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
--------------------------------------------
Policy No. AB0351BE
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: [ ]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy No.
AB0351BE (the "Policy") issued by Ambac Assurance Corporation ("Ambac"). Terms
capitalized herein and not otherwise defined shall have the meanings specified
in the Policy and the Indenture, as the case may be, unless the context
otherwise requires.
The Trustee hereby certifies as follows:
1. The Indenture Trustee is the Indenture Trustee under the
Indenture for the Holders.
2. The relevant Payment Date is [date].
3. Payment on the Notes in respect of the Payment Date is due to
be received on ___________________ under the Indenture, in an
amount equal to $___________.
4. There is an Insured Amount of $__________ in respect of the
Notes, which amount is Due for Payment pursuant to the terms
of the Indenture.
5. The Indenture Trustee has not heretofore made a demand for the
Insured Amount in respect of the Payment Date.
6. The Indenture Trustee hereby requests the payment of the
Insured Amount that is Due For Payment be made by Ambac under
the Policy and directs that payment under the Policy be made
to the following account by bank wire transfer of federal or
other immediately available funds in accordance with the terms
of the Policy to: _____________ (Indenture Trustee's account
number).
<PAGE>
7. The Indenture Trustee hereby agrees that, following receipt of
the Insured Payment from Ambac, it shall (a) hold such amounts
in trust and apply the same directly to the distribution of
payment on the Notes when due; (b) not apply such funds for
any other purpose; (c) deposit such funds to the Note Account
and not commingle such funds with other funds held by
Indenture 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.
ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE
COMPANY OR OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR STATEMENT OF CLAIM
CONTAINING ANY MATERIALLY FALSE INFORMATION, OR CONCEALS FOR THE PURPOSE OF
MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO, COMMITS A
FRAUDULENT INSURANCE ACT, WHICH IS A CRIME AND SHALL ALSO BE SUBJECT TO A CIVIL
PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS AND THE STATED VALUE OF THE CLAIM
FOR EACH SUCH VIOLATION.
By:
-------------------------------------
Indenture Trustee
Title:
----------------------------------
(Officer)
<PAGE>
EXHIBIT 23.1
[Letterhead of BDO Seidman, LLP]
Consent of Independent Certified Public Accountants
American Business Financial Services, Inc.
Bala Cynwyd, Pennsylvania
We hereby consent to the incorporation in the Prospectus Supplement of
Prudential Securities Secured Financing Corporation relating to the ABFS
Mortgage Loan Trust 2000-1 of our report dated March 15, 2000, relating to the
balance sheet of ABFS Mortgage Loan Trust 2000-1 as of March 15, 2000.
BDO Seidman, LLP
Philadelphia, Pennsylvania
March 22, 2000
